Document:

Blueprint

 

 Exhibit
10.28

 

AMENDMENT NO.2

 

TO THE

 

LOAN AGREEMENT

 

 

THIS AMENDMENT (this “Amendment No.2”) is entered into
on this 27 day of February, 2017 (the “Effective Date”) by and between
Gilla Inc. (“Gilla”, the “Company” or the
“Borrower”), and
Sarasvati Investments Inc. (“Sarasvati” or the
“Lender”) to
amend the terms of the Loan Agreement (the “Loan Agreement”), dated January
18, 2016, as amended though the Loan Amendment No.1 (the
“Loan Amendment
No.1”), dated July 15, 2016.

 

RECITALS:

 

A.

On January 18,
2016, Gilla and Sarasvati entered into the Loan Agreement whereby
Sarasvati made available to Gilla a term loan facility in the
aggregate principal amount of CAD $1,000,000, such Loan Agreement
attached hereto as Exhibit “A”.

 

B.

On July 15, 2016,
Gilla and Sarasvati entered into a Loan Amendment No.1 to amend the
terms of the Loan Agreement whereby Sarasvati extended to Gilla an
additional CAD $600,000 in principal and to extended the maturity
date of the loan to July 2, 2018, such Loan Amendment No.1 attached
hereto as Exhibit “B”.

 

C.

Gilla and Sarasvati
intend to amend further terms and conditions of the Loan Agreement,
as amended, by entering into this Amendment No.2.

 

NOW, THEREFORE, for and in consideration of the mutual
promises herein contained and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, Gilla and Sarasvati, intending to be legally bound
hereby, agree as follows:

 

1.

Recitals and Loan Agreement. The
foregoing recitals are true and correct and, together with the Loan
Agreement, attached hereto as Exhibit “A”, and the Loan
Amendment No.1, attached hereto as Exhibit “B”,
incorporated herein by this reference.

 

2.

Cash Sweep Report. Sarasvati and Gilla
hereby agree to amend the cash sweep report used to calculate the
cash flow available for debt service on the loan set forth in
Section 2.7 of the Loan Agreement. The parties hereby agree to
amend and replace Section 2.7(a) and Section 2.7(b) of the Loan
Agreement with the following effective as of January 1, 2017 and
onwards: “$0.01667 per ml of E-liquid sold by the Borrower,
and its subsidiaries within the monthly period.” This
amendment shall be retroactively applied as of January 1, 2017
requiring recalculations of monthly cash sweep reports and cash
flow available for debt service on such amended terms since such
date.

 

3.

Outstanding Payments. Sarasvati hereby
agrees to waive any applicable interest penalties whatsoever on the
delinquent November 2016, December 2016 and January 2017 interest
and principal payments due under the Loan Agreement, as amended, to
the extent that Gilla remediates such delinquent payments by
February 28, 2017 by evidencing a deposit or wire transfer to
Sarasvati. To the extent that Gilla does not remediate and pay to
Sarasvati the delinquent interest and principal payments by
February 28, 2017, any applicable interest penalties shall be
retroactively applied under the terms of the Loan Agreement, as
amended, and due immediately.

 

4.

Early Repayment. Sarasvati and Gilla
hereby agree to cancel any early repayment penalty as outlined in
the Loan Agreement, as amended. Further, the parties hereby agree
to amend and replace the early repayment clause set forth in
Section 2.4 of the Loan Agreement with the following: “The
Borrower may elect to repay the Loan together with all accrued and
unpaid interest thereon prior to the Maturity Date of the Loan
without any Early Repayment Penalty.”

 

1

 

 

5.

Warrants. Upon execution of this
Amendment No.2, Sarasvati or parties designated by Sarasvati shall
receive a total of two hundred and fifty thousand (250,000) fully
vested purchase warrants (each a “Warrant” and collectively the
“Warrants”),
each Warrant entitling the holder to purchase one (1) common share
of Gilla, a publicly listed company trading on the OTCQB under the
symbol “GLLA”. The Warrants shall have an exercise
price of twenty United States cents (US $0.20) per share and shall
expire twelve (12) months from the Effective Date of this Amendment
No.2. The securities, if exercised and issued, will be subject to
the standard restrictions as required by the regulators, the stock
exchange and the U.S. Securities and Exchange
Commission.

 

6.

Common Shares. Upon the execution of
this Amendment No.2, Sarasvati or parties designated by Sarasvati
shall receive a total of five hundred thousand (500,000) common
shares of Gilla (the “Common
Shares”). The securities will be subject to the
standard restrictions as required by the regulators, the stock
exchange and the U.S. Securities and Exchange Commission. Further,
the holder will be required to separately complete and execute a
subscription agreement for the Common Shares prior to
issuance.

 

7.

Entire Agreement. The provisions of this
Amendment No.2 along with the unaltered provisions of the Loan
Agreement and the Amendment No.1 inclusive of their appendices
thereto, incorporated herein by reference, collectively constitutes
the entire agreement (the “Entire Agreement”) between the
parties with respect to its subject matter. All prior or
contemporaneous oral and written agreements, memoranda and
representations relating to the Loan Agreement are superseded by
this Entire Agreement.

 

8.

Amendments. This Entire Agreement may be
amended only by a subsequent writing signed by authorized
representatives of both parties hereto, indicating an intent to
amend the Entire Agreement.

 

9.

Counterparts. This Amendment No.2 may be
executed by each party upon a separate counterpart, each of which
shall be deemed an original and all of which together shall
constitute one agreement. Facsimile signature pages shall be
acceptable as originals.

 

[signature page follows]

 

2

 

 

 

IN WITNESS WHEREOF, the parties have caused this Amendment
No.2 to be signed by their duly authorized representatives as of
the day and year first written above.

 

 

	

 

	
GILLA
INC.

	

 

	

 

	

 

	

 

	

 

	
 

	
Per:  

	
/s/ 
Ashish
Kapoor

	

 

	

 

	

 

	
Name:
Ashish Kapoor	

 

	

 

	

 

	Title: Chief
Financial Officer	

 

	

 

	

 

	 	

 

	

 

	SARASVATI
INVESTMENTS INC.	

 

	

 

	

 

	 	

 

	

 

	

 

	
/s/
Ashok
Gautam	

 

	

 

	

 

	Name: Ashok
Gautam	

 

	

 

	

 

	Title:
President	

 

 

 

3

 

 

Exhibit “A”

 

LOAN AGREEMENT

 

Loan agreement dated January 18, 2016 (this
“Agreement”) between Gilla Inc. (the
“Borrower”) and Sarasvati Investments
Inc. (the “Lender”).

 

RECITALS

 

WHEREAS the Borrower and the Lender entered into a
revolving credit facility loan agreement, dated August 1,
2014;

 

WHEREAS the Borrower and the Lender have mutually agreed
to terminate and retire the revolving credit facility loan
agreement as of the date hereof and wish to replace such facility
with this Agreement;

 

WHEREAS the Borrower desires that the Lender make
available a term loan facility to the Borrower in the aggregate
principal amount of $1,000,000;

 

AND WHEREAS the Lender is prepared to extend such a term loan
facility to the Borrower subject to the terms and conditions set
out herein;

 

NOW,
THEREFORE, in consideration of
the premises and the agreements, provisions and covenants herein
contained and other good and valuable consideration (the receipt
and sufficiency of which are hereby acknowledged), the Borrower and
the Lender agree as follows:

 

 

4

 

 

ARTICLE 1

 

INTERPRETATION

 

Section 1.1 Defined
Terms.

 

As used in this Agreement, the following terms have the following
meanings:

 

“Applicable
Rate” means, at any given
time, the greater of: (a) 16% per annum; and (b) from the Closing
Date up to and including the Maturity Date, the highest interest
rate per annum paid, or payable, by the Borrower to any arm’s
length commercial lender (or syndicate of lenders) pursuant to a
financing arrangement with such lender (or lenders) for the
purposes set out in Section 2.2 on terms and conditions equivalent
to the terms and conditions of this Agreement.

 

“Borrower” means Gilla Inc. and its successors and
permitted assigns.

 

“Business Day” means any day of the year, other than a
Saturday, Sunday or any day on which major banks are closed for
business in Toronto, Ontario.

 

“Cash
Sweep Report” means a
monthly Cash Sweep Report, substantially in the form of Schedule
“A”, certified by the Borrower’s
management.

 

“CFADS” means the cash flow available for debt
service on the Loan as indicated in the monthly Cash Sweep
Report.

 

“Closing Date” means the date on which this Agreement
becomes effective.

 

“Default” means an event which, with the giving of
notice or passage of time, or both, would constitute an Event of
Default.

 

“Draw” means the initial draw on the Loan
facility by the Borrower from the Lender pursuant to this Agreement
on the Closing Date.

 

“Early
Repayment Penalty” has
the meaning specified in Section
2.4.

 

“Event
of Default” has the
meaning specified in Section 6.1.

 

5

 

 

“E-Liquid
Bottle” means the
e-liquid bottles sold by the Borrower under the brands as listed in
Schedule “B”. Schedule “B” to be amended or
restated from time to time upon mutual agreement between the
Borrower and the Lender.

 

“Funded Debt” of any Person means (i) all indebtedness
of such Person for or in respect of, borrowed money, bankers
acceptances, letters of credit or letters of guarantee, (ii) all
indebtedness of such Person for the deferred purchase price of
property or services represented by a note, bond, debenture or
other evidence of indebtedness, (iii) all indebtedness created or
arising under any conditional sale or other title retention
agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or
sale of such property), (iv) all current liabilities of such Person
represented by a note, bond, debenture or other evidence of
indebtedness, and (v) all obligations under leases which have been
or should be, in accordance with U.S. GAAP, recorded as capital
leases in respect of which such Person is liable as
lessee.

 

“U.S.
GAAP” means generally
accepted accounting principles in the United States, as approved by
the Financial Accounting Standards Board, as in effect from time to
time.

 

“Governmental
Entity” means (i) any
international, multinational, national, federal, provincial, state,
municipal, local or other governmental or public department,
central bank, court, commission, board, bureau, agency or
instrumentality, domestic or foreign, (ii) any subdivision or
authority of any of the above, (iii) any stock exchange and (iv)
any quasi-governmental or private body exercising any regulatory,
expropriation or taxing authority under or for the account of any
of the above.

 

“Indemnified
Person” has the meaning
specified in Section 7.4.

 

“Intercreditor and Subordination
Agreement” means the
intercreditor and subordination agreement, dated August 1, 2014,
among Gravitas Financial Inc., the Lender and the Borrower, as
amended, restated, amended and restated or replaced from time to
time.

 

“Key
Personnel” means J.
Graham Simmonds serving as the Borrower’s Chief Executive
officer and Ashish Kapoor serving as the Borrower’s Chief
Financial Officer.

 

“Lender” means Sarasvati Investments Inc. and its
successors and assigns.

 

”Loan” means the term loan facility in the
aggregate principal amount of $1,000,000 to be made available to
the Borrower by the Lender under this Agreement for the purposes
set out in Section 2.2.

 

“Lien” means any mortgage, charge, pledge,
hypothecation, security interest, assignment, encumbrance, lien
(statutory or otherwise), title retention agreement or arrangement,
restrictive covenant or other encumbrance of any nature or any
other arrangement or condition that in substance secures payment or
performance of an obligation.

 

“Loan
Documents” means this
Agreement, the Intercreditor and Subordination Agreement, the
Warrant, the Warrant Extension, the Security Documents and all
other documents to be executed and delivered to the Lender by the
Borrower pursuant to or in connection with this
Agreement.

 

“Material Adverse
Effect” means a material
adverse effect on the business, operations, results of operations,
prospects, assets, liabilities or financial condition of the
Borrower.

 

“Material
Agreement” means any
contract or agreement to which the Borrower is a party or by which
it is bound, the termination or cancellation of which (prior to the
scheduled termination date) could have a Material Adverse
Effect.

 

“Maturity
Date” means July 3,
2017.

 

6

 

 

“Permitted
Liens” means, in respect
of any Person, any one or more of the
following:

 

(a)

Liens
for taxes, assessments or governmental charges or levies which are
not delinquent or the validity of which is being contested at the
time by the Person in good faith by proper legal proceedings if, in
the Lender’s opinion, adequate provision has been made for
payment;

 

(b)

inchoate
or statutory Liens of contractors, subcontractors, mechanics,
workers, suppliers, materialmen, carriers and others in respect of
construction, maintenance, repair or operation of assets of the
Person, provided that such Liens are related to obligations not due
or delinquent, are not registered against title to any assets of
the Person and in respect of which adequate holdbacks are being
maintained as required by applicable law or such Liens are being
contested in good faith by appropriate proceedings and in respect
of which there has been set aside a reserve (segregated to the
extent required by U.S. GAAP) in an adequate amount and provided
further that such Liens do not, in the Lender’s reasonable
opinion, reduce the value of the asset so affected or materially
interfere with the use of such asset in the operation of the
business of the Person;

 

(c)

the
right reserved to or vested in any Governmental Entity by any
statutory provision or by the terms of any lease, licence,
franchise, grant or permit of the Person, to terminate any such
lease, licence, franchise, grant or permit, or to require annual or
other payments as a condition to the continuance thereof;
and

 

(d)

Liens
in favour of the Lender created by the Security
Documents.

 

“Person” means a natural person, partnership,
corporation, joint stock company, trust, unincorporated
association, joint venture or other entity or Governmental Entity
and pronouns have a similarly extended meaning.

 

“Security” means, at any time, the security interest
in favour of the Lender, in those assets and properties of the
Borrower securing its obligations under this Agreement and the
other Loan Documents to which it is a party.

 

"Security
Agreement” means the
security agreement, dated August 1, 2014, by the Borrower in favour
of the Lender.

 

“Security
Documents” means the
Security Agreement and any other security granted to the Lender, as
security for the obligations of the Borrower under this Agreement and the other Loan
Documents.

 

“Warrant” means the warrant granted by Borrower to
Karen Gautam, containing terms acceptable to Karen Gautam in its
sole and reasonable discretion, entitling Karen Gautam to purchase
250,000 common shares of the Borrower at an exercise price equal to
US$0.20, which warrant is to remain in effect from the Closing Date
until December 31, 2017.

 

7

 

 

“Warrant
Extension” means the
warrant extension granted by Borrower to Karen Gautam, extending
the term of the warrants issued on August 1, 2014 to Karen Gautam
to December 31, 2017, with all other terms of the warrants
remaining the same.

 

Section 1.2       Gender
and Number.

 

Any reference in the Loan Documents to gender
includes all genders and words importing the singular number only
include the plural and vice versa.

 

Section 1.3       Headings,
etc.

 

The
division of this Agreement into Articles and Sections and the
insertion of headings are for convenient reference only and are not
to affect the interpretation of this Agreement.

 

Section 1.4       Currency.

 

All
references in the Loan Documents to dollars, unless otherwise
specifically indicated, are expressed in Canadian
currency.

 

Section 1.5       Certain
Phrases, etc.

 

In
any Loan Document (i) (a) the words “including” and
“includes” mean “including (or includes) without
limitation” and (b) the phrase “the aggregate
of”, “the total of”, “the sum of”, or
a phrase of similar meaning means “the aggregate (or total or
sum), without duplication, of”, and (ii) in the computation
of periods of time from a specified date to a later specified date,
unless otherwise expressly stated, the word “from”
means “from and including” and the words
“to” and “until” each mean “to but
excluding”.

 

Section 1.6       Accounting
Terms.

 

All
accounting terms not specifically defined in this Agreement shall
be interpreted in accordance with U.S. GAAP.

 

Section 1.7       Conflict.

 

The
provisions of this Agreement prevail in the event of any conflict
or inconsistency between its provisions and the provisions of any
of the other Loan Documents.

 

8

 

 

ARTICLE 2

 

CREDIT FACILITY

 

Section 2.1       Availability.

 

(1)

The
Lender agrees, on the terms and subject to the conditions of this
Agreement, to make the Loan available on the Closing
Date.

 

(2)

The
Loan shall be a term loan facility. For greater certainty, the
Borrower shall be entitled to Draw the Loan on the Closing Date
and, subject to Section 2.4, repay the outstanding principal amount
under the Loan with the Early Repayment Penalty.

 

(3)

The
Lender shall maintain, in accordance with its usual practice,
records evidencing the amounts owing under this Agreement; and the
information entered into such records shall constitute conclusive
evidence of such amounts owed absent manifest error.

 

Section 2.2      Purpose.

 

The
Loan shall be used by the Borrower, or any of its
subsidiaries’, for capital expenditures, marketing
expenditures and working capital.

 

Section 2.3       Repayment
of Principal and Interest Payments.

 

(1)

The
principal amount of the outstanding Loan shall bear interest at the
Applicable Rate.

 

(2)

Interest
shall accrue daily and shall be calculated and payable monthly, in
arrears.

 

(3)

Borrower
shall disburse the CFADS as indicated in the monthly Cash Sweep
Report to the Lender in the following priority:

 

a)

First, the funds
required to make the monthly interest payable on the Loan;
and

 

b)

Second, the
residual monthly CFADS to repay principal outstanding on the
Loan.

 

9

 

 

(4)

Borrower
shall be required to pay the monthly interest payment on the Loan
regardless of the sufficiency of the CFADS to cover such interest
payment.

 

(5)

Borrower
shall make one (1) monthly installment of interest and principal
repayment within fifteen (15) Business Days of each months’
end.

 

(6)

Subject
to Section 6.2, the outstanding principal amount of the Loan
together with all accrued and unpaid interest thereon shall become
due and payable on the Maturity Date, if any.

 

(7)

If
a change in Key Personnel shall occur (a) the Borrower will, within
ten (10) Business Days of occurrence thereof, give the Lender
notice thereof describing in reasonable detail the facts and
circumstances giving rise thereto and (b) the Lender may, by
fifteen (15) Business Days’ notice to the Borrower given not
later than ten (10) Business Days after receipt of such notice of
change in Key Personnel, terminate the Loan, which shall thereupon
be terminated, and declare the principal amount of the Loan
together with all accrued and unpaid interest thereon become,
immediately due and payable.

 

Section 2.4       Early Repayment.

 

In
the event that the Borrower elects to repay the Loan together with
all accrued and unpaid interest thereon prior to the Maturity Date,
the Borrower shall also pay an Early Repayment Penalty of the
maximum of i) three (3) months interest on the outstanding
principal amount under the Loan; or ii) fifty percent (50%) of the
interest payable on the outstanding principal amount under the Loan
until the Maturity Date.

 

Section 2.5       Payments
under this Agreement.

 

(1)

Unless
otherwise expressly provided in this Agreement or by the parties in
writing, the Borrower shall make any payment required to be made by
it to the Lender by depositing the amount of the payment to an
account specified by the Lender not later than 4:00 p.m. (Toronto
time) on the date the payment is due.

 

(2)

All
amounts owed by the Borrower to the Lender, which are not paid when
due (whether at stated maturity, by acceleration or otherwise)
shall bear interest (both before and after default and judgment),
from the date on which such amount is due until such amount is paid
in full, payable on demand, at a rate per annum equal to the
Applicable Rate, plus 2%

 

Section 2.6       Computations
of Interest.

 

(1)

All
computations of interest shall be made by the Lender taking into
account the actual number of days occurring in the period for which
such interest is payable, on the basis of a year of 365
days.

 

(2)

For purposes of the Interest Act
(Canada), (i) whenever any interest or
fee under this Agreement is calculated using a rate based on a year
of 365 days, the rate determined pursuant to such calculation, when
expressed as an annual rate, is equivalent to (x) the Applicable
Rate based on a year of 365 or 366 days, as the case may be, (y)
multiplied by the actual number of days in the calendar year in
which the period for which such interest or fee is payable (or
compounded) ends, and (z) divided by 365 or 366 days, as the case
may be, (ii) the principle of deemed reinvestment of interest does
not apply to any interest calculation under this Agreement, and
(iii) the rates of interest stipulated in this Agreement are
intended to be nominal rates and not effective rates or
yields.

 

 

10

 

 

Section 2.7       Cash
Sweep Report.

 

The
Borrower shall provide to the Lender a monthly Cash Sweep Report,
substantially in the form of Schedule “A”, certified by
the Borrower’s management and deliverable within ten (10)
Business Days of each month until the earlier of i) the Maturity
Date or ii) the principal amount of the Loan together with all
accrued and unpaid interest thereon is repaid in full. The Cash
Sweep Report shall indicate the CFADS on the Loan based on the
following:

 

a)

$0.50
per 0-15ml E-Liquid Bottle sold by the Borrower, and its
subsidiaries, within the monthly period; and

 

b)

$1.00
per >15ml E-Liquid Bottle sold by the Borrower, and its
subsidiaries, within the monthly period.

 

The
Cash Sweep Report shall total the CFADS and will indicate the
appropriate disbursement of such funds towards interest payments
and principal re-payments on the Loan.

 

ARTICLE 3

 

CONDITIONS OF LENDING

 

Section 3.1       Conditions
Precedent to Initial Draw.

 

The
Lender shall have no obligation to make the initial Draw hereunder
unless at the time of making such draw the following terms and
conditions shall have been satisfied:

 

(a)

the
Lender has received, in form, substance, scope and dated a date
satisfactory to it and its counsel:

 

(i)

an
executed copy of each of the Loan Documents; and

 

(ii)

evidence
of registration of the Security Documents in such jurisdictions as
the Lender may reasonably require, including all required consents
to obtain such registrations.

 

 

11

 

 

ARTICLE 4

 

REPRESENTATIONS AND WARRANTIES

 

Section 4.1       Representations
and Warranties.

 

The
Borrower represents and warrants to the Lender, acknowledging and
confirming that the Lender is relying on such representations and
warranties without independent inquiry in entering into this
Agreement and providing the Loan that:

 

(a)

Incorporation and
Qualification. The Borrower is
a corporation duly incorporated, organized and validly existing
under the laws of the State of Nevada. The Borrower is qualified,
licensed or registered to carry on business under the laws
applicable to it in all jurisdictions in which such qualification,
licensing or registration is necessary or where failure to be so
qualified would have a Material Adverse Effect;

 

(b)

Corporate Power.
The Borrower has all requisite
corporate power and authority to (i) own, lease and operate its
properties and assets and to carry on its business as now being
conducted by it, and (ii) enter into and perform its obligations
under the Loan Documents;

 

(c)

Conflict with Other
Instruments. The execution and
delivery by the Borrower and the performance by it of its
obligations under, and compliance with the terms, conditions and
provisions of, the Loan Documents will not (i) conflict with or
result in a breach of any of the terms or conditions of (t) its
constating documents, (u) any applicable law, rule or regulation,
(v) any contractual restriction binding on or affecting it or its
properties, or (w) any judgment, injunction, determination or award
which is binding on it, or (ii) result in, require or permit (x)
the imposition of any Lien in, on or with respect to any of its
assets or property (except in favour of the Lender), (y) the
acceleration of the maturity of any Funded Debt binding on or
affecting the Borrower, or (z) any third party to terminate or
acquire rights under any Material Agreement;

 

(d)

Corporate Action, Governmental
Approvals, etc. The execution
and delivery of each of the Loan Documents by the Borrower and the
performance by the Borrower of its obligations under the Loan
Documents has been duly authorized by all necessary corporate
action including, without limitation, the obtaining of all
necessary shareholder consents. No authorization, consent,
approval, registration, qualification, designation, declaration or
filing with any Governmental Entity or other Person, is or was
necessary in connection with the execution, delivery and
performance of obligations under the Loan Documents except as are
in full force and effect, unamended, at the date of this
Agreement;

 

(e)

Execution and Binding
Obligation. This Agreement and
the other Loan Documents have been duly executed and delivered by
the Borrower and constitute legal, valid and binding obligations of
the Borrower enforceable against it in accordance with its terms,
subject only to any limitation under applicable laws relating to
(i) bankruptcy, insolvency, arrangement or creditors’ rights
generally, and (ii) the discretion that a court may exercise in the
granting of equitable remedies;

 

(f)

Authorizations, etc.
The Borrower possesses all
authorizations, permits, consents, registrations and approvals
necessary to properly conduct its businesses and to enter into and
perform its obligations under the Loan Documents and all such
authorizations, permits, consents, registrations and approvals are
in good standing and in full force and effect;

 

(g)

Ownership and Use of
Property. Except for Permitted
Liens, the Borrower has good and marketable title to all the real
and personal property reflected as assets in its books and records.
The Borrower owns, leases or has the lawful right to use all of the
assets necessary for the conduct of its
businesses;

 

(h)

Compliance with Laws.
The Borrower is in compliance with all
applicable laws, judgments and orders and rulings, guidelines and
decisions having force of law;

 

(i)

No Default. The Borrower is not in violation of its constating
documents, or any shareholders’ agreement applicable to it or
any Material Agreement; and

 

(j)

No Material Adverse
Agreements. The Borrower is not
party to any agreement or instrument or subject to any restriction
(including any restriction set forth in its constating documents,
any shareholders’ agreement applicable to it or any Material
Agreement) which has or may have a Material Adverse
Effect.

 

 

12

 

 

Section 4.2       Survival
of Representations and Warranties.

 

The
representations and warranties in this Agreement and in any
certificates or documents delivered to the Lender shall not merge
in or be prejudiced by and shall continue in full force and effect
so long as any amounts are owing by the Borrower to the Lender
under this Agreement.

 

ARTICLE 5

 

COVENANTS OF THE BORROWER

 

Section 5.1       Affirmative
Covenants.

 

So
long as there remains any outstanding amount owing under the Loan
or the Lender has any obligation under this Agreement, the Borrower
shall:

 

(a)

Corporate Existence.
Preserve and maintain its corporate
existence;

 

(b)

Compliance with Laws,
etc. Comply with the
requirements of all applicable laws, judgments, orders, decisions,
awards, Material Agreements and Loan Documents;

 

(c)

Payment of Taxes and
Claims. Pay when due, (i) all
taxes, assessments and governmental charges or levies imposed upon
it or upon its income, sales, capital or profit or any other
property belonging to, and (ii) all claims which, if unpaid, might
by law become a Lien upon the assets, except any such tax,
assessment, charge, levy or claim which is being contested in good
faith and by proper proceedings and in respect of which the
Borrower has established adequate reserves in accordance with U.S.
GAAP or which are Permitted
Liens;

 

(d)

Keeping of Books.
Keep proper books of record and
account, in which full and correct entries shall be made in respect
of its business and operations;

 

(e)

Ordinary Course.
The Borrower shall conduct its
business in a manner consistent with past practices, and in the
ordinary course of its normal day-to-day operations;
and

 

(f)

Further Assurances.
At its cost and expense, upon the
reasonable request of the Lender, execute and deliver or cause to
be executed and delivered to the Lender such further instruments,
agreements and security documents and do and cause to be done such
further acts as may be necessary or proper in the reasonable
opinion of the Lender to carry out more effectually the provisions
and purposes of the Loan Documents.

 

 

13

 

 

Section 5.2       Negative
Covenants.

 

So
long as there remains any outstanding amount owing under the Loan
or the Lender has any obligation under this Agreement, the Borrower
shall not create, incur, assume or suffer to exist any Lien on any
of its property or assets covered by the Security other than
Permitted Liens.

 

ARTICLE 6

 

EVENTS OF DEFAULT

 

Section 6.1 
      Events of
Default.

 

If any of the following events (each an
“Event
of Default”) occurs and
is continuing:

 

(a)

the
Borrower fails to pay any amount under the Loan, any interest
thereon or any other amounts due under any Loan Document when such
amount becomes due and payable;

 

(b)

any
representation or warranty or certification made or deemed to be
made by the Borrower or any of its respective directors or officers
in any Loan Document shall prove to have been incorrect when made
or deemed to be made;

 

(c)

the
Borrower fails to perform, observe or comply with any other term,
covenant or agreement contained in any Loan Document to which it is
a party and such failure remains unremedied for thirty (30)
days;

 

(d)

any
judgment or order for the payment of money in excess of $3,000,000
(or the equivalent amount in any other currency) is rendered
against the Borrower and either (i) enforcement proceedings have
been commenced by a creditor upon the judgment or order, or (ii)
there is any period of fifteen (15) consecutive days during which a
stay of enforcement of the judgment or order, by reason of a
pending appeal or otherwise, is not in effect; or

 

(e)

the
Borrower (i) becomes insolvent or generally not able to pay its
debts as they become due, (ii) admits in writing its inability to
pay its debts generally or makes a general assignment for the
benefit of its creditors, (iii) institutes or has instituted
against it any proceeding seeking (x) to adjudicate it a bankrupt
or insolvent, (y) liquidation, winding-up, reorganization,
arrangement, adjustment, protection, relief or composition of it or
its debts under any law relating to bankruptcy, insolvency,
reorganization or relief of debtors including any plan of
compromise or arrangement or other corporate proceeding involving
or affecting its creditors, or (z) the entry of an order for relief
or the appointment of a receiver, trustee or other similar official
for it or for any substantial part of its properties and assets,
and in the case of any such proceeding instituted against it (but
not instituted by it), either the proceeding remains undismissed or
unstayed for a period of forty-five (45) days, or any of the
actions sought in such proceeding (including the entry of an order
for relief against it or the appointment of a receiver, trustee,
custodian or other similar official for it or for any substantial
part of its properties and assets) occurs, or (iv) takes any
corporate action to authorize any of the above
actions.

 

 

14

 

 

then the Lender may declare that the Loan, all accrued interest and
fees and all other amounts payable under this Agreement to be
immediately due and payable, without presentment, demand, protest
or further notice of any kind, all of which are expressly waived by
the Borrower.

 

Section 6.2       Remedies
Upon Default.

 

(1)

Upon a declaration that the Loan is immediately
due and payable pursuant to Section
6.1, the Lender may
commence such legal action or proceedings as it, in its sole
discretion, deems expedient, including, the commencement of
enforcement proceedings under the Loan Documents all without any
additional notice, presentation, demand, protest, notice of
dishonour, entering into of possession of any property or assets,
or any other action or notice, all of which are expressly waived by
the Borrower.

 

(2)

The
rights and remedies of the Lender under the Loan Documents are
cumulative and are in addition to, and not in substitution for, any
other rights or remedies. Nothing contained in the Loan Documents
with respect to the indebtedness or liability of the Borrower to
the Lender, nor any act or omission of the Lender with respect to
the Loan Documents or the Security shall in any way prejudice or
affect the rights, remedies and powers of the Lender under the Loan
Documents and the Security.

 

ARTICLE 7

 

MISCELLANEOUS

 

Section 7.1       Amendments,
etc.

 

No
amendment or waiver of any provision of any of the Loan Documents,
nor consent to any departure by the Borrower or any other Person
from such provisions, is effective unless in writing and approved
by the Lender. Any amendment, waiver or consent is effective only
in the specific instance and for the specific purpose for which it
was given.

 

Section 7.2       Waiver.

 

(1)

No
failure on the part of the Lender to exercise, and no delay in
exercising, any right under any of the Loan Documents shall operate
as a waiver of such right; nor shall any single or partial exercise
of any right under any of the Loan Documents preclude any other or
further exercise of such right or the exercise of any other
right.

 

(2)

Except
as otherwise expressly provided in this Agreement, the covenants,
representations and warranties shall continue in full force and
effect. The closing of this transaction shall not prejudice any
right of one party against any other party in respect of anything
done or omitted under this Agreement or in respect of any right to
damages or other remedies.

 

 

15

 

 

Section 7.3       Notices,
etc.

 

Any
notice, direction or other communication to be given under this
Agreement shall, except as otherwise permitted, be in writing and
given by delivering it or sending it by facsimile or other similar
form of recorded communication addressed:

 

(a)

to
the Lender at:

 

33
Kennedy Park Road

Toronto,
Ontario

M6P
3H2

karen.gautam@gmail.com
(with a copy to rajeevuofw@gmail.com)

 

(b)

to
the Borrower at:

 

70
York Street, Suite 1610

Toronto,
Ontario, M5J 1S9

graham@gillainc.com
(with a copy to ashish@gillainc.com)

 

Any such communication shall be deemed to have been validly and
effectively given if (i) personally delivered, on the date of such
delivery if such date is a Business Day and such delivery was made
prior to 4:00 p.m. (Toronto time), otherwise on the next Business
Day, (ii) transmitted by facsimile or similar means of recorded
communication on the Business Day following the date of
transmission. Any party may change its address for service from
time to time by notice given in accordance with the foregoing and
any subsequent notice shall be sent to the party at its changed
address.

 

Section 7.4 
      Indemnity.

 

The
Borrower shall, whether or not the transaction contemplated by this
Agreement is completed, indemnify and hold the Lender and its
officers, directors, employees and agents (each an
“Indemnified Person”) harmless from, and shall pay to
such Indemnified Person on demand any amounts required to
compensate the Indemnified Person for, any cost, expense, claim or
loss suffered by, imposed on, or asserted against, the Indemnified
Person as a result of, or arising out of (i) the preparation,
execution and delivery of, preservation of rights under,
enforcement of, or refinancing, renegotiation or restructuring of,
the Loan Documents and any related amendment, waiver or consent,
(ii) a Default (whether or not constituting a Default or an Event
of Default), and (iii) any proceedings brought by or against the
Indemnified Person, or in which the Indemnified Person otherwise
participates, due to its entering into or being a party to any of
the Loan Documents, or by reason of its exercising or performing,
or causing the exercise or performance of, any right, power or
obligation under any of the Loan Documents, whether or not such
proceedings are directly related to the enforcement of any Loan
Document, except to the extent caused by the gross negligence or
wilful misconduct of the Indemnified Person.

 

 

16

 

 

Section 7.5       Successors
and Assigns.

 

(1)

This
Agreement shall become effective when executed by the Borrower and
the Lender and after that time shall be binding upon and enure to
the benefit of the Borrower and the Lender and their respective
successors and permitted assigns.

 

(2)

The
Borrower shall not have the right to assign its rights or
obligations under this Agreement or any interest in this Agreement
without the prior consent of the Lender, which consent may not be
unreasonably withheld.

 

Section 7.6 
      Right of
Set-off.

 

Upon the occurrence and during the continuance of
any Event of Default, the Lender is authorized at any time and from
time to time, to the fullest extent permitted by law (including
general principles of common-law), to set off and apply any and all
deposits (general or special, time or demand, provisional or final)
at any time held and other indebtedness at any time owing by it to
or for the credit or the account of the Borrower against any and
all of the obligations of the Borrower under any of the Loan
Documents, irrespective of whether or not the Lender has made
demand under any of the Loan Documents and although such
obligations may be unmatured or contingent. If an obligation is
unascertained, the Lender may, in good faith, estimate the
obligation and exercise its right of set-off in respect of the
estimate, subject to providing the Borrower with an accounting when
the obligation is finally determined. The Lender shall promptly
notify the Borrower after any set-off and application is made by
it, provided that the failure to give notice shall not affect the
validity of the set-off and application. The rights of the Lender
under this Section 7.6 are in addition to other rights and remedies
(including all other rights of set-off) which the Lender may
have.

 

Section 7.7       Entire
Agreement

 

This
Agreement, together with the Loan Documents, contain the entire
agreement between the Lender and the Borrower with respect to the
matters hereof and supersedes all prior agreements and
understandings, oral or written, with respect to such
matters.

 

Section 7.8       Governing
Law.

 

This
Agreement shall be governed by and interpreted and enforced in
accordance with the laws of the Province of Ontario and the federal
laws of Canada applicable therein.

 

Section 7.9       Counterparts.

 

This Agreement may be executed in any number of
counterparts and all of such counterparts taken together shall be
deemed to constitute one and the same instrument. Delivery of an
executed counterpart of this Agreement by electronic means,
including, without limitation, by facsimile transmission or by
electronic delivery in portable document format
(“.pdf”)
or tagged image file format (“.tif”),
shall constitute the valid and binding signature of such party with
the same effect as if it were an original signature endorsed on
this Agreement.

 

Section 7.10 Language.

 

The
parties hereto acknowledge that they have required and are
satisfied that this Agreement and all communications to be
delivered pursuant hereto be drawn in the English
language.

 

Section 7.11 Syndication.

 

The
Borrower acknowledges that the Lender is acting for and on behalf
of itself and certain other Persons with respect to the
establishment and maintenance of the Loan and that, except for the
Warrant, the Loan Documents shall be granted in favour of and held
by the Lender for and on behalf of itself and certain other
Persons.

 

 

17

 

 

IN WITNESS WHEREOF
the parties have executed this
Agreement as of the date indicated above.

 

 

	

 

	
GILLA
INC.

	

 

	

 

	

 

	

 

	

 

	
 

	
By:  

	
/s/ 
J. Graham Simmond

	

 

	

 

	

 

	
Authorized Signing Officer	

 

	

 

	

 

	
	

 

	

 

	

 

	 	

 

	

 

	SARASVATI
INVESTMENTS INC.	

 

	

 

	

 

	 	

 

	

 

	

By:

	
/s/
Ashok
Gautam	

 

	

 

	

 

	Authorized Signing Officer	

 

	

 

	

 

	
	

 

 

  

 

18

 

SCHEDULE “A”

Monthly Cash Sweep Report

 

[intentionally left blank]

 

 

19

 

SCHEDULE “B”

E-Liquid Brands

 

[intentionally left blank]

 

 

 

 

 

20

 

 

Exhibit “B”

 

AMENDMENT

 

TO THE

 

LOAN AGREEMENT

 

 

THIS AMENDMENT (this “Amendment”) is entered into on
this 15th
day of July, 2016 (the “Effective Date”) by and between
Gilla Inc. (“Gilla”, the “Company” or the
“Borrower”), and
Sarasvati Investments Inc. (“Sarasvati” or the
“Lender”) to
amend the terms of the Loan Agreement (the “Loan Agreement”), dated January
18, 2016.

 

RECITALS:

 

A. On January 18,
2016, Gilla and Sarasvati entered into the Loan Agreement whereby
Sarasvati made available to Gilla a term loan facility in the
aggregate principal amount of CAD $1,000,000, such Loan Agreement
attached hereto as Exhibit “A”.

 

B. Sarasvati is
prepared to extend to Gilla an additional CAD $600,000 in principal
under the Loan Agreement and to extend the maturity date to July 2,
2018.

 

C. Gilla is prepared
to extend the warrants issued in connection to the Loan Agreement
to December 31, 2018 and issue an additional 300,000 warrants in
connection to this Amendment.

 

D. Gilla and Sarasvati
intend to amend certain terms and conditions of the Term Loan by
entering into this Amendment.

 

NOW, THEREFORE, for and in consideration of the mutual
promises herein contained and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, Gilla and Sarasvati, intending to be legally bound
hereby, agree as follows:

 

1. Recitals and Loan Agreement. The
foregoing recitals are true and correct and, together with the Term
Loan, attached hereto as Exhibit “A”, are incorporated
herein by this reference.

 

2. Loan. Sarasvati acknowledges and agrees
to extend to Gilla an additional CAD $600,000 in principal to
increase the term loan facility up to the aggregate principal
amount of $1,600,000 (the “Loan”).

 

3. Maturity Date. Sarasvati and Gilla
acknowledge and agree to extend the maturity date of the Term Loan
to July 2, 2018.

 

 

21

 

 

4. Warrant
Extensions. Upon execution of this Amendment, Gilla shall
extend the term of the warrants issued on August 1, 2014, and
extended on January 18, 2016 in connection to the Loan Agreement,
to Karen Gautam to December 31, 2018, with all other terms of the
warrants remaining the same. Further, upon execution of this
Amendment, Gilla shall also extend the term of the warrants issued
on January 18, 2016 in connection to the Loan Agreement to Karen
Gautam to December 31, 2018, with all other terms of the warrants
remaining the same. The warrant extensions shall be collectively
referred to as the “Warrant Extensions”.

 

5. Warrants. Upon execution of this
Amendment, Sarasvati or parties designated by Sarasvati shall
receive a total of three hundred thousand (300,000) fully vested
purchase warrants (each a “Warrant” and collectively the
“Warrants”),
each Warrant entitling the holders to purchase one (1) common share
of Gilla, a publicly listed company trading on the OTCQB under the
symbol “GLLA”. The Warrants shall have an exercise
price of twenty United States cents (US $0.20) per share and shall
expire on December 31, 2018. The securities, if exercised and
issued, will be subject to the standard restrictions as required by
the regulators, the stock exchange and the U.S. Securities and
Exchange Commission.

 

6. Entire Agreement. The provisions of this
Amendment along with the unaltered provisions of the Loan
Agreement, Warrant Extensions and the Warrants, incorporated herein
by reference, collectively constitutes the entire agreement (the
“Entire
Agreement”) between the parties with respect to its
subject matter. All prior or contemporaneous oral and written
agreements, memoranda and representations relating to Secured
Promissory Notes are superseded by this Entire
Agreement.

 

7. Amendments. The Entire Agreement may be
amended only by a subsequent writing signed by authorized
representatives of both parties hereto, indicating an intent to
amend the Entire Agreement.

 

8. Counterparts. This Amendment may be
executed by each party upon a separate counterpart, each of which
shall be deemed an original and all of which together shall
constitute one agreement. Facsimile signature pages shall be
acceptable as originals.

 

IN WITNESS WHEREOF, the parties have caused this Agreement
to be signed by their duly authorized representatives as of the day
and year first written above.

 

	

 

	
GILLA
INC.

	

 

	

 

	

 

	

 

	

 

	
 

	
Per:  

	
/s/ 
Ashish
Kapoor

	

 

	

 

	

 

	
Name:
Ashish Kapoor	

 

	

 

	

 

	Title: Chief
Financial Officer	

 

	

 

	

 

	 	

 

	

 

	SARASVATI
INVESTMENTS INC.	

 

	

 

	

 

	 	

 

	

 

	

 

	
/s/
Ashok
Gautam	

 

	

 

	

 

	Name: Ashok
Gautam	

 

	

 

	

 

	Title:
President	

 

 

 

 

 

 

 

22

 

 

Exhibit “A”

 

[exhibit follows]

 

 

 

 

 

 

 

23March
16, 2017

 

 

LETTER
OF INTENT

 

 

 

Dear
Karthik Mani,

 

 

This
exclusive binding Letter of Intent (“LOI”) sets forth the basic terms under which SocialPlay USA, Inc.., a Nevada
corporation will engage in a corporate transaction between itself, SAP Inc., and Karthik Mani (collectively, SPLY, SAP, &
KM shall be sometimes referred to herein as the “Parties” and individually a “Party”). The basic terms
of the proposed transaction are as follows:

 

1.
Acquisition Agreement and Exclusive Option to Purchase 

No
later than March 31, 2017, the Parties shall enter into a definitive Acquisition Agreement with an Exclusive Option for SPLY to
Purchase up to 100% of SAP, as defined herein (“Acquisition Agreement”).

2.
Cash Investment, Share Issuance and Royalty

The
parties agree that the valuation of SAP and its assets, as defined in “Schedule A” attached hereto, for purposes of
this transaction is $1,000,000, of which a cash investment in SAP of $300,000 will result in a 30% equity acquisition by SPLY,
and upon exercise of the Exclusive Option to Purchase, SPLY shall issue common shares valued of up to $700,000 to KM, to acquire
the remaining 70% of SAP. The calculation will be based on the five day trading average price of the SPLY shares on the OTCQB
Marketplace prior to the date of exercise of the Option (example- $700,000 divided by trading price @ $1.00 per share =700,000
shares). Upon purchase of the remaining 70% of SAP, KM shall retain a “Gross Profits” royalty on all future revenue
received by SAP in its normal course of business. The royalty shall be established by the parties under separate agreement prior
to completion of 2.(b)(v) below, and shall be negotiated within the parameters of 3-12%.

		(a)	Cash
                                         Investment: In order to acquire an undivided 30% equity interest in SAP, SPLY shall:

			(i)
                                         Deliver to SAP $50,000 towards the “Total Cash Investment” upon execution
                                         of this LOI.

    	 	 	 

     

    

(ii)
Upon satisfaction by SAP of “Milestone 1” as defined in “Schedule B” attached hereto, deliver to SAP an
additional $100,000 towards the “Total Cash Investment” no later than 15 days from execution of definitive Acquisition
Agreement.

(iii)
Upon satisfaction by SAP of “Milestone 2” as defined in “Schedule C” attached hereto, deliver to SAP an
additional $150,000 towards the “Total Cash Investment” no later than 75 days from execution of definitive Acquisition
Agreement.

Upon
completion of all payments as set forth above, SAP shall immediately issue and/or cause to be issued sufficient shares of its
capital in the name of SPLY equal to 30% of its issued and outstanding stock. All obligations under 2.(a) above must be completed
prior to commencement of 2.(b) below.

(b)Share
Issuance: In order to acquire up to 100% equity interest in SAP, SPLY shall:

(iv)
At its sole option, no later than 150 days from execution of definitive Acquisition Agreement, issue to KM, $200,000 worth of
shares of its common stock, to acquire an additional undivided 19% equity interest in SAP by way of a share exchange with KM.

(v)
At its sole option, upon completion of 2.(b)(iv) above, and no later than 180 days from execution of definitive Acquisition Agreement,
issue to KM, $500,000 worth of shares of its common stock, to acquire the remaining undivided 51% equity interest in SAP by way
of a share exchange with KM.

Upon
completion of 2.(a) and 2.(b) above, SPLY shall have completed the acquisition of 100% of SAP, subject to the execution of a retained
royalty agreement.

(c)
Escrow and Leak-Out:

(i)
Escrow: Shares identified in 2.(b)(iv) & (v) above (collectively, the “Acquisition Shares”) and paid to
KM shall have an escrow provision mutually agreed upon by the Parties. The purpose of the escrow is to ensure an orderly release
of the stock to the market through a leak out provision, as defined in 2(c)(ii), below (“Leak-Out”), and in compliance
with the SEC regulatory restrictions on sale (reportable beneficial ownership and affiliate status) and will only allow for release
once the assets value has been established through proof of concept trial.

(ii)
Leak-Out: Acquisition shares issued to KM shall be subject to Leak Out provisions that will consist of (a) a one year prohibition
on the sale or transfer of the SPLY Shares and (b) a prohibition on the sale of more than 50% of the SPLY Shares in each 90 day
period thereafter (and not more than 33% per month), provided that any SPLY shares that may be sold in a 90 day period that are
not sold may be sold at any time after the end of such 90 day period. In furtherance of enforcing this Leak-Out provision, KM
agrees that all shares issued shall be issued in certificated form with four (4) certificates in equal amounts and SPLY’s
counsel, Laxague Law, Inc. (attention: Joe Laxague), shall keep physical custody of any share certificate(s) and will release
such certificates in accordance with the Leak-Out.

    	 	2	 

     

    

  

3.
Material Breach

Where
either Party fails to meet its obligations pursuant to the Acquisition Agreement in any material way, the non-breaching party
shall notify the breaching party of such breach (“Notice of Breach”) and the breaching party shall then have 30 days
in which to cure the breach (“Cure Period”). Where such beach is not cured within the Cure Period, the non-breaching
Party shall have the sole right to: (i) waive such failure; or (ii) receive an additional 15% royalty originally designated for
the breaching party until a total of $1,500,000 attributable to the additional 15% royalty has been collected by the non-breaching
Party.

4.Conditions
to Closing.

(a)The
obligation of SAP and KM to consummate the transactions described herein shall be subject to the following conditions precedent.
However, SAP and KM retains the exclusive right to waive (in writing) any covenant or warranty found in this Section:

 

(i)The
execution and delivery by SPLY, SAP and KM of the Acquisition Agreement in accordance with the time frame set forth in Article
1 of this Agreement and such other documents, instruments and agreements as shall be reasonably deemed necessary by mutual agreement
of the Parties in order to consummate the transactions contemplated herein in such form as the Parties shall deem appropriate.
The Acquisition Agreement shall contain, in addition to the terms set forth herein, customary representations, warranties, covenants,
conditions, indemnities, escrows and other standard terms and provisions, as agreed to between the Parties.

 

(ii)SAP
and KM shall have conducted and completed to its sole satisfaction a business, legal, tax and financial due diligence review of
SPLY which shall be completed by the day immediately prior to Closing.

 

(iii)Receipt
by SPLY of all necessary regulatory and third party approvals, consents and waivers, including any stockholder and Board of Directors'
required with respect to the transaction.

 

(iv)There
shall not be any material adverse change in the financial condition of SPLY from the date hereof through the date of Closing.

 

(v)Other
than as indicated in Article 1, at Closing, none of the assets underlying the Agreement shall be subject to any lien or encumbrance
of any character whatsoever or any adverse claims by any third parties.

    	 	3	 

     

    

 

(b)The
obligation of SPLY to consummate the transactions described herein shall be subject to the following conditions precedent. However,
SPLY retains the exclusive right to waive (in writing) any covenant or warranty found in this Section:

 

(i)The
execution and delivery of the Acquisition Agreement in accordance with the time frame set forth in Article 1 of this Agreement
and such other documents, instruments and agreements as shall reasonably be deemed necessary by the Parties in order to consummate
the transactions contemplated hereby in such form as the Parties shall approve. The Acquisition Agreement shall contain, in addition
to the terms set forth herein, customary representations, warranties, covenants, conditions, indemnities, escrows and other standard
terms and provisions, as agreed to between the Parties.

 

(ii)Receipt
of all necessary regulatory and third party approvals, consents and waivers, including any stockholder and Board of Directors'
approvals with respect to the transaction. SAP shall have obtained the necessary consents and waivers of stockholders and members
of the Board of Directors with respect to the transaction prior to Closing.

 

(iii)Receipt
of all information from SAP and KM (including that regarding the assets underlying the Acquisition Agreement and, if applicable
the audited financial information regarding those assets, with the cost of such audit and any related expenses to be paid by SPLY)
that SPLY will need to include in the report on Form 8-K to be filed with the US Securities and Exchange Commission.

 

5.Conditions
Subsequent to Closing. Within Four (4) business days of the Acquisition Agreement, SPLY shall complete and file all necessary
reports with the Securities and Exchange Commission including, but not limited to, a Current Report on Form 8-K disclosing all
material terms of the Agreement.

6.Expenses.
Except as may be otherwise set out in the Acquisition Agreement, the Parties shall pay each of their respective legal, accounting
and any other out-of-pocket expenses incurred in connection with this transaction, whether or not the transaction is consummated.
All finder’s fees, if any, shall be the responsibility of the party incurring such fee, but shall in no way change the terms
hereof. Neither Party shall be fiscally responsible to the other in the event that the transaction contemplated herein does not
occur.

7.Confidentiality.
The provisions of the Confidentiality Agreement previously executed by the Parties shall remain in full force and effect.

8.Publicity;
Public Companies. The Parties acknowledge that SPLY is a publicly held company and as such is subject to certain United States
federal and state securities laws concerning the trading of its securities and all parties agree to comply with all such applicable
laws. No Party hereto shall, and each shall cause their respective affiliates not to, issue any press release or otherwise make
any public statement or respond to any press inquiry with respect to this letter or the transactions contemplated hereby without
the prior approval of the other party, which approval will not be unreasonably withheld, except as may be required by law. Notwithstanding,
no press release or public announcement shall be made by either Party until after Closing and then only with written approval
of the Parties.

    	 	4	 

     

    

9.Preparation
of Acquisition Agreement.Upon approval by SAP and KM, as evidenced by the return of this Agreement in its fully executed
form, our counsel in coordination with your counsel shall prepare the Acquisition Agreement which shall contain certain provisions
in accordance with the terms found herein together with such customary terms and conditions as the Parties mutually agree to.

10.Good
Standing.At Closing, each of the Parties shall be in good standing as corporations in their respective jurisdictions of
incorporation and neither shall be in violation of any United States federal or state securities or other local laws governing
either public or private companies.

 

 

11.No
Shop. SPLY, SAP and KM agree that from the date of this Letter of Intent until March 31, 2017, neither party nor any of affiliates,
officers, directors, employees, agents, or advisors thereof shall, directly or indirectly, solicit offers from, negotiate with
or in any manner encourage or consider any proposal of any other person or entity relating to the subject matter herein, in whole
or in part.

12.Miscellaneous.
This letter and the terms herein are open until March 31, 2017. Unless extended by mutual agreement in writing, if the Parties
do not, despite acting in good faith, enter into an Acquisition Agreement by that date, this Letter shall terminate automatically.
This Letter shall be governed by, and construed in accordance with, the laws of the State of Nevada, without giving effect to
the principles of conflicts of laws thereof. This letter may be executed in counterparts, each of which shall be an original,
but all such counterparts shall together constitute one and the same instrument.

Please
indicate your agreement to the foregoing in the space provided below and return it to the undersigned within two days of the date
hereof.

 

Very
truly yours,

 

SocialPlay
USA, Inc.

 

 

By:
/s/ Robert Rosner

Name:
Robert Rosner

Title:
President and CEO

 

 

AGREED
TO AND ACCEPTED AS OF

THE
DATE FIRST ABOVE WRITTEN:

 

Spot
and Pay Inc.

 

 

By:
/s/ Karthik Mani

Name:
Karthik Mani

Title:
President

 

AGREED
TO AND ACCEPTED AS OF

THE
DATE FIRST ABOVE WRITTEN:

 

 

By:
/s/ Karthik Mani

Karthik
Mani

  

    	 	5	 

     

    

Schedule
A 

 

 

Assets
from SAP Spot and Pay application framework

		•	Spot
                                         and Pay Backend Application and frontend including iOS and Android Application

		•	IP
                                         of Spot and Pay 

		•	Source
                                         code, Innovation and any proprietary algorithm/tools used to make Spot and Pay

		•	Servers
                                         and Infrastructure that makes Spot and Pay 

 

Current
Charity (variable pay) and Retail (fixed pay) application

 

    	 	6	 

     

    

Schedule
B

 

 

Milestone
1

		•	Complete
                                         the backend message system from Entity to consumer.

                                            
    Immediate message after pay/donate

                                            
    Weekly scheduled message

		•	OnDemand
                                         message  

		•	Complete
                                         production setup - Commercial grade application setup in Cloud

		•	Get
                                         app into Playstore

		•	Get
                                         app into AppStore

 

    	 	7	 

     

    

Schedule
C

 

  

Milestone
2

		•	Signup
                                         clients (3-5) to Spot & Pay system

 

    	 	8

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00269-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00269-of-00352.parquet"}]]