Document:

fngn-ex104_98.htm

Exhibit 10.4

FINANCIAL ENGINES, INC. 

AMENDED AND RESTATED

2009 STOCK INCENTIVE PLAN

(Approved by Stockholders on May 17, 2016)

 

 

Table of Contents

 

	
 
	
 
	
Page

	
SECTION 1. 
	
ESTABLISHMENT AND PURPOSE.
	
1

	
 
	
 
	
 

	
SECTION 2. 
	
DEFINITIONS.
	
1

	
 
	
 
	
 

	
(a) 
	
“Affiliate”
	
1

	
 
	
 
	
 

	
(b) 
	
“Award”
	
1

	
 
	
 
	
 

	
(c) 
	
“Award Agreement”
	
1

	
 
	
 
	
 

	
(d) 
	
“Board of Directors”
	
1

	
 
	
 
	
 

	
(e) 
	
“Cash-Based Award”
	
2

	
 
	
 
	
 

	
(f) 
	
“Change in Control”
	
2

	
 
	
 
	
 

	
(g) 
	
“Code”
	
3

	
 
	
 
	
 

	
(h) 
	
“Committee”
	
3

	
 
	
 
	
 

	
(i) 
	
“Company”
	
3

	
 
	
 
	
 

	
(j) 
	
“Consultant”
	
3

	
 
	
 
	
 

	
(k) 
	
“Employee” 
	
3

	
 
	
 
	
 

	
(l) 
	
“Exchange Act”
	
3

	
 
	
 
	
 

	
(m) 
	
“Exercise Price”
	
3

	
 
	
 
	
 

	
(n) 
	
“Fair Market Value”
	
3

	
 
	
 
	
 

	
(o) 
	
“ISO”
	
4

	
 
	
 
	
 

	
(p) 
	
“Nonstatutory Option” or “NSO”
	
4

	
 
	
 
	
 

	
(q) 
	
“Option”
	
4

	
 
	
 
	
 

	
(r) 
	
“Outside Director”
	
4

	
 
	
 
	
 

	
(s) 
	
“Parent”
	
4

	
 
	
 
	
 

	
(t) 
	
“Participant”
	
4

	
 
	
 
	
 

	
(u) 
	
“Performance Based Award”
	
4

	
 
	
 
	
 

	
(v) 
	
“Plan”
	
4

	
 
	
 
	
 

	
(w) 
	
“Purchase Price”
	
4

	
 
	
 
	
 

	
(x) 
	
“Restricted Share”
	
4

	
 
	
 
	
 

	
(y) 
	
“SAR”
	
4

	
 
	
 
	
 

	
(z) 
	
“Service”
	
5

	
 
	
 
	
 

Financial Engines, Inc.

Amended and Restated 2009 Stock Incentive Plan

- i -

 

	
(aa) 
	
“Share”
	
5

	
 
	
 
	
 

	
(bb) 
	
“Stock”
	
5

	
 
	
 
	
 

	
(cc) 
	
“Stock Unit”
	
5

	
 
	
 
	
 

	
(dd) 
	
“Stock Unit Agreement”
	
5

	
 
	
 
	
 

	
(ee) 
	
“Subsidiary”
	
5

	
 
	
 
	
 

	
(ff) 
	
“Total and Permanent Disability”
	
5

	
 
	
 
	
 

	
SECTION 3. 
	
ADMINISTRATION.
	
5

	
 
	
 
	
 

	
(a) 
	
Committee Composition
	
5

	
 
	
 
	
 

	
(b) 
	
Committee for Non-Officer Grants
	
5

	
 
	
 
	
 

	
(c) 
	
Committee Procedures
	
6

	
 
	
 
	
 

	
(d) 
	
Committee Responsibilities
	
6

	
 
	
 
	
 

	
(e) 
	
Cancellation and Re-grant of Stock Awards
	
7

	
 
	
 
	
 

	
SECTION 4. 
	
ELIGIBILITY.
	
7

	
 
	
 
	
 

	
(a) 
	
General Rule
	
7

	
 
	
 
	
 

	
(b) 
	
Automatic Grants to Outside Directors
	
8

	
 
	
 
	
 

	
(c) 
	
Ten-Percent Stockholders
	
9

	
 
	
 
	
 

	
(d) 
	
Attribution Rules
	
9

	
 
	
 
	
 

	
(e) 
	
Outstanding Stock
	
9

	
 
	
 
	
 

	
SECTION 5. 
	
STOCK SUBJECT TO PLAN.
	
9

	
 
	
 
	
 

	
(a) 
	
Basic Limitation
	
9

	
 
	
 
	
 

	
(b) 
	
Section 162(m) Award Limitation
	
10

	
 
	
 
	
 

	
(c) 
	
Additional Shares
	
10

	
 
	
 
	
 

	
SECTION 6. 
	
RESTRICTED SHARES.
	
11

	
 
	
 
	
 

	
(a) 
	
Restricted Share Award Agreement
	
11

	
 
	
 
	
 

	
(b) 
	
Payment for Awards
	
11

	
 
	
 
	
 

	
(c) 
	
Vesting
	
11

	
 
	
 
	
 

	
(d) 
	
Voting and Dividend Rights
	
11

	
 
	
 
	
 

	
(e) 
	
Restrictions on Transfer of Shares
	
11

	
 
	
 
	
 

Financial Engines, Inc.

Amended and Restated 2009 Stock Incentive Plan

- ii -

 

	
SECTION 7. 
	
TERMS AND CONDITIONS OF OPTIONS.
	
11

	
 
	
 
	
 

	
(a) 
	
Stock Option Award Agreement
	
11

	
 
	
 
	
 

	
(b) 
	
Number of Shares
	
11

	
 
	
 
	
 

	
(c) 
	
Exercise Price
	
11

	
 
	
 
	
 

	
(d) 
	
Withholding Taxes
	
12

	
 
	
 
	
 

	
(e) 
	
Exercisability and Term
	
12

	
 
	
 
	
 

	
(f) 
	
Exercise of Options
	
12

	
 
	
 
	
 

	
(g) 
	
Effect of Change in Control
	
12

	
 
	
 
	
 

	
(h) 
	
No Stockholder or Dividend Rights
	
12

	
 
	
 
	
 

	
(i) 
	
Modification, Extension and Renewal of Options
	
13

	
 
	
 
	
 

	
(j) 
	
Restrictions on Transfer of Shares
	
13

	
 
	
 
	
 

	
(k) 
	
Buyout Provisions
	
13

	
 
	
 
	
 

	
SECTION 8. 
	
PAYMENT FOR SHARES.
	
13

	
 
	
 
	
 

	
(a) 
	
General Rule
	
13

	
 
	
 
	
 

	
(b) 
	
Surrender of Stock
	
13

	
 
	
 
	
 

	
(c) 
	
Services Rendered
	
13

	
 
	
 
	
 

	
(d) 
	
Cashless Exercise
	
13

	
 
	
 
	
 

	
(e) 
	
Exercise/Pledge
	
13

	
 
	
 
	
 

	
(f) 
	
Net Exercise
	
14

	
 
	
 
	
 

	
(g) 
	
Promissory Note
	
14

	
 
	
 
	
 

	
(h) 
	
Other Forms of Payment
	
14

	
 
	
 
	
 

	
(i) 
	
Limitations under Applicable Law
	
14

	
 
	
 
	
 

	
SECTION 9. 
	
STOCK APPRECIATION RIGHTS.
	
14

	
 
	
 
	
 

	
(a) 
	
SAR Award Agreement
	
14

	
 
	
 
	
 

	
(b) 
	
Number of Shares
	
14

	
 
	
 
	
 

	
(c) 
	
Exercise Price
	
14

	
 
	
 
	
 

	
(d) 
	
Exercisability and Term
	
14

	
 
	
 
	
 

	
(e) 
	
Effect of Change in Control
	
15

	
 
	
 
	
 

	
(f) 
	
Exercise of SARs
	
15

	
 
	
 
	
 

Financial Engines, Inc.

Amended and Restated 2009 Stock Incentive Plan

- iii -

 

	
(g) 
	
Modification or Assumption of SARs
	
15

	
 
	
 
	
 

	
(h) 
	
Voting and Dividend Rights
	
15

	
 
	
 

	
SECTION 10.
	
STOCK UNITS.
	
15

	
 
	
 
	
 

	
(a) 
	
Stock Unit Award Agreement
	
15

	
 
	
 
	
 

	
(b) 
	
Payment for Awards
	
15

	
 
	
 
	
 

	
(c) 
	
Vesting Conditions
	
15

	
 
	
 
	
 

	
(d) 
	
Voting and Dividend Rights
	
16

	
 
	
 
	
 

	
(e) 
	
Form and Time of Settlement of Stock Units
	
16

	
 
	
 
	
 

	
(f) 
	
Death of Participant
	
16

	
 
	
 
	
 

	
(g) 
	
Creditors’ Rights
	
16

	
 
	
 
	
 

	
SECTION 11.
	
CASH-BASED AWARDS.
	
16

	
 
	
 
	
 

	
SECTION 12.
	
ADJUSTMENT OF SHARES.
	
17

	
 
	
 
	
 

	
(a) 
	
Adjustments
	
17

	
 
	
 
	
 

	
(b) 
	
Dissolution or Liquidation
	
17

	
 
	
 
	
 

	
(c) 
	
Reorganizations
	
17

	
 
	
 
	
 

	
(d) 
	
Reservation of Rights
	
18

	
 
	
 
	
 

	
SECTION 13.
	
DEFERRAL OF AWARDS.
	
18

	
 
	
 
	
 

	
(a) 
	
Committee Powers
	
18

	
 
	
 
	
 

	
(b) 
	
General Rules
	
18

	
 
	
 
	
 

	
SECTION 14.
	
AWARDS UNDER OTHER PLANS.
	
19

	
 
	
 
	
 

	
SECTION 15.
	
PAYMENT OF DIRECTOR’S FEES IN SECURITIES.
	
19

	
 
	
 
	
 

	
(a) 
	
Effective Date
	
19

	
 
	
 
	
 

	
(b) 
	
Elections to Receive Awards
	
19

	
 
	
 
	
 

	
(c) 
	
Number and Terms of Awards
	
19

	
 
	
 
	
 

	
SECTION 16.
	
LEGAL AND REGULATORY REQUIREMENTS.
	
19

	
 
	
 
	
 

	
SECTION 17.
	
TAXES.
	
19

	
 
	
 
	
 

	
(a) 
	
Withholding Taxes
	
19

	
 
	
 
	
 

	
(b) 
	
Share Withholding
	
20

	
 
	
 
	
 

	
(c) 
	
Section 409A
	
20

	
 
	
 
	
 

Financial Engines, Inc.

Amended and Restated 2009 Stock Incentive Plan

- iv -

 

	
SECTION 18.
	
OTHER PROVISIONS APPLICABLE TO AWARDS.
	
20

	
 
	
 

	
(a) 
	
Transferability
	
20

	
 
	
 
	
 

	
(b) 
	
Substitution and Assumption of Awards
	
20

	
 
	
 
	
 

	
(c) 
	
Qualifying Performance Criteria
	
21

	
 
	
 
	
 

	
(d) 
	
Recoupment
	
23

	
 
	
 
	
 

	
SECTION 19.
	
NO EMPLOYMENT RIGHTS.
	
23

	
 
	
 
	
 

	
SECTION 20.
	
DURATION AND AMENDMENTS.
	
23

	
 
	
 

	
(a) 
	
Term of the Plan
	
23

	
 
	
 
	
 

	
(b) 
	
Right to Amend or Terminate the Plan
	
23

	
 
	
 
	
 

	
(c) 
	
Effect of Termination
	
23

	
 
	
 
	
 

	
SECTION 21.
	
EXECUTION.
	
24

 

 

 

Financial Engines, Inc.

Amended and Restated 2009 Stock Incentive Plan

- v -

 

FINANCIAL ENGINES, INC.

AMENDED AND RESTATED 

2009 STOCK INCENTIVE PLAN

	
SECTION 1.
	
ESTABLISHMENT AND PURPOSE.

The Plan was adopted by the Board of Directors on November 18, 2009, and became effective on March 16, 2010, immediately prior to the closing of the initial offering of Stock to the public pursuant to a registration statement filed by the Company with the Securities and Exchange Commission (the “Effective Date”). The Plan was amended and restated effective December 31, 2010 to amend the vesting provisions for grants to Outside Directors under Section 4(b), effective December 8, 2011 to further amend the provisions for grants to Outside Directors under Section 4(b), and effective February 14, 2013 to qualify awards under the Plan for the performance-based compensation exemption under Section 162(m) of the Code, and in certain other respects.  The Plan was further amended and restated effective March 18, 2014 to increase the authorized Share limit under the Plan, to amend certain automatic grants to Outside Directors as well as to amend the ratio at which Shares previously subject to Stock Units or Restricted Share Awards again become available for future grants under the Plan.  The Plan was most recently amended and restated effective March 21, 2016 (“Restatement Effective Date”) subject to stockholder approval in order to, among other changes, increase the authorized Share limit under the Plan and impose a limit on grants to Outside Directors.

The purpose of the Plan is to promote the long-term success of the Company and the creation of stockholder value by (a) encouraging Employees, Outside Directors and Consultants to focus on critical long-range objectives, (b) encouraging the attraction and retention of Employees, Outside Directors and Consultants with exceptional qualifications and (c) linking Employees, Outside Directors and Consultants directly to stockholder interests through increased stock ownership. The Plan seeks to achieve this purpose by providing for Awards in the form of restricted shares, stock units, options (which may constitute incentive stock options or nonstatutory stock options) or stock appreciation rights. 

	
SECTION 2.
	
DEFINITIONS.

(a)“Affiliate” shall mean any entity other than a Subsidiary, if the Company and/or one or more Subsidiaries own not less than 50% of such entity.

(b)“Award” shall mean any award of an Option, a SAR, a Restricted Share or a Stock Unit under the Plan.

(c)“Award Agreement” shall mean the agreement between the Company and the recipient of an Award which contains the terms, conditions and restrictions pertaining to such Award.

(d)“Board of Directors” shall mean the Board of Directors of the Company, as constituted from time to time.

1

 

(e)“Cash-Based Award” shall mean an Award that entitles the Participant to receive a cash-denominated payment. 

(f)“Change in Control” shall mean the occurrence of any of the following events: 

	
 
	
(i)
	
A change in the composition of the Board of Directors occurs, as a result of which fewer than one-half of the incumbent directors are directors who either: 

	
 
	
(A)
	
Had been directors of the Company on the “look-back date” (as defined below) (the “original directors”); or 

	
 
	
(B)
	
Were elected, or nominated for election, to the Board of Directors with the affirmative votes of at least a majority of the aggregate of the original directors who were still in office at the time of the election or nomination and the directors whose election or nomination was previously so approved (the “continuing directors”); or 

	
 
	
(ii)
	
Any “person” (as defined below) who by the acquisition or aggregation of securities, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company’s then outstanding securities ordinarily (and apart from rights accruing under special circumstances) having the right to vote at elections of directors (the “Base Capital Stock”); except that any change in the relative beneficial ownership of the Company’s securities by any person resulting solely from a reduction in the aggregate number of outstanding shares of Base Capital Stock, and any decrease thereafter in such person’s ownership of securities, shall be disregarded until such person increases in any manner, directly or indirectly, such person’s beneficial ownership of any securities of the Company; or 

	
 
	
(iii)
	
The consummation of a merger or consolidation of the Company with or into another entity or any other corporate reorganization, if persons who were not stockholders of the Company immediately prior to such merger, consolidation or other reorganization own immediately after such merger, consolidation or other reorganization 50% or more of the voting power of the outstanding securities of each of (A) the continuing or surviving entity and (B) any direct or indirect parent corporation of such continuing or surviving entity; or 

	
 
	
(iv)
	
The sale, transfer or other disposition of all or substantially all of the Company’s assets. 

For purposes of subsection (d)(i) above, the term “look-back” date shall mean the later of (1) the Effective Date or (2) the date 24 months prior to the date of the event that may constitute a Change in Control. 

2

 

For purposes of subsection (d)(ii) above, the term “person” shall have the same meaning as when used in Sections 13(d) and 14(d) of the Exchange Act but shall exclude (1) a trustee or other fiduciary holding securities under an employee benefit plan maintained by the Company or a Parent or Subsidiary and (2) a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of the Stock. 

Any other provision of this Section 2(d) notwithstanding, a transaction shall not constitute a Change in Control if its sole purpose is to change the state of the Company’s incorporation or to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction, and a Change in Control shall not be deemed to occur if the Company files a registration statement with the United States Securities and Exchange Commission for the initial offering of Stock to the public. 

(g)“Code” shall mean the Internal Revenue Code of 1986, as amended. 

(h)“Committee” shall mean the Compensation Committee as designated by the Board of Directors, which is authorized to administer the Plan, as described in Section 3 hereof. 

(i)“Company” shall mean Financial Engines, Inc., a Delaware corporation.

(j)“Consultant” shall mean a consultant or advisor who provides bona fide services to the Company, a Parent, a Subsidiary or an Affiliate as an independent contractor (not including service as a member of the Board of Directors) or a member of the board of directors of a Parent or a Subsidiary, in each case who is not an Employee. 

(k)“Employee” shall mean any individual who is a common-law employee of the Company, a Parent, a Subsidiary or an Affiliate. 

(l)“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended. 

(m)“Exercise Price” shall mean, in the case of an Option, the amount for which one Share may be purchased upon exercise of such Option, as specified in the applicable Stock Option Agreement. “Exercise Price,” in the case of a SAR, shall mean an amount, as specified in the applicable SAR Agreement, which is subtracted from the Fair Market Value of one Share in determining the amount payable upon exercise of such SAR. 

(n)“Fair Market Value” with respect to a Share, shall mean the market price of one Share, determined by the Committee as follows: 

	
 
	
(i)
	
If the Stock was traded over-the-counter on the date in question, then the Fair Market Value shall be equal to the last transaction price quoted for such date by the OTC Bulletin Board or, if not so quoted, shall be equal to the mean between the last reported representative bid and asked prices quoted for such date by the principal automated inter-dealer quotation system on which the Stock is quoted or, if the Stock is not quoted on any such system, by the Pink Quote system; 

3

 

	
 
	
(ii)
	
If the Stock was traded on any established stock exchange (such as the New York Stock Exchange, The Nasdaq Global Market or The Nasdaq Global Select Market) or national market system on the date in question, then the Fair Market Value shall be equal to the closing price reported for such date by the applicable exchange or system; and  

	
 
	
(iii)
	
If none of the foregoing provisions is applicable, then the Fair Market Value shall be determined by the Committee in good faith on such basis as it deems appropriate. 

In all cases, the determination of Fair Market Value by the Committee shall be conclusive and binding on all persons. 

(o)“ISO” shall mean an employee incentive stock option described in Section 422 of the Code. 

(p)“Nonstatutory Option” or “NSO” shall mean an employee stock option that is not an ISO. 

(q)“Option” shall mean an ISO or Nonstatutory Option granted under the Plan and entitling the holder to purchase Shares. 

(r)“Outside Director” shall mean a member of the Board of Directors who is not a common-law employee of, or paid consultant to, the Company, a Parent or a Subsidiary. 

(s)“Parent” shall mean any corporation (other than the Company) in an unbroken chain of corporations ending with the Company, if each of the corporations other than the Company owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. A corporation that attains the status of a Parent on a date after the adoption of the Plan shall be a Parent commencing as of such date. 

(t)“Participant” shall mean a person who holds an Award. 

(u)“Performance Based Award” shall mean any Restricted Share Award, Stock Unit Award or Cash-Based Award granted to a Participant that is intended to qualify as “performance-based compensation” under Section 162(m) of the Code.

(v)“Plan” shall mean this 2009 Stock Incentive Plan of Financial Engines, Inc., as amended from time to time. 

(w)“Purchase Price” shall mean the consideration for which one Share may be acquired under the Plan (other than upon exercise of an Option), as specified by the Committee. 

(x)“Restricted Share” shall mean a Share awarded under the Plan. 

(y)“SAR” shall mean a stock appreciation right granted under the Plan. 

4

 

(z)“Service” shall mean service as an Employee, Consultant or Outside Director, subject to such further limitations as may be set forth in the Plan or the applicable Award Agreement.  Service does not terminate when an Employee goes on a bona fide leave of absence, that was approved by the Company in writing, if the terms of the leave provide for continued Service crediting, or when continued Service crediting is required by applicable law.  However, for purposes of determining whether an Option is entitled to ISO status, an Employee’s employment will be treated as terminating three months after such Employee went on leave, unless such Employee’s right to return to active work is guaranteed by law or by a contract. Service terminates in any event when the approved leave ends, unless such Employee immediately returns to active work.  The Company determines which leaves of absence count toward Service, and when Service terminates for all purposes under the Plan.  

(aa)“Share” shall mean one share of Stock, as adjusted in accordance with Section 12 (if applicable). 

(bb)“Stock” shall mean the Common Stock of the Company. 

(cc)“Stock Unit” shall mean a bookkeeping entry representing the Company’s obligation to deliver one Share (or distribute cash) on a future date in accordance with the provisions of a Stock Unit Award Agreement. 

(dd)“Stock Unit Agreement” shall mean the agreement between the Company and the recipient of a Stock Unit which contains the terms, conditions and restrictions pertaining to such Stock Unit. 

(ee)“Subsidiary” shall mean any corporation, if the Company and/or one or more other Subsidiaries own not less than 50% of the total combined voting power of all classes of outstanding stock of such corporation. A corporation that attains the status of a Subsidiary on a date after the adoption of the Plan shall be considered a Subsidiary commencing as of such date. 

(ff)“Total and Permanent Disability” shall mean any permanent and total disability as defined by Section 22(e)(3) of the Code.

	
SECTION 3.
	
ADMINISTRATION. 

(a)Committee Composition. The Plan shall be administered by the Board or a Committee appointed by the Board. The Committee shall consist of two or more directors of the Company. In addition, to the extent required by the Board, the composition of the Committee shall satisfy (i) such requirements as the Securities and Exchange Commission may establish for administrators acting under plans intended to qualify for exemption under Rule 16b-3 (or its successor) under the Exchange Act; and (ii) such requirements as the Internal Revenue Service may establish for outside directors acting under plans intended to qualify for exemption under Section 162(m)(4)(C) of the Code. 

(b)Committee for Non-Officer Grants. The Board may also appoint one or more separate committees of the Board, each composed of one or more directors of the Company who need not satisfy the requirements of Section 3(a), who may administer the Plan with respect to Employees who are not considered officers or directors of the Company under Section 16 of the 

5

 

Exchange Act, may grant Awards under the Plan to such Employees and may determine all terms of such grants. Within the limitations of the preceding sentence, any reference in the Plan to the Committee shall include such committee or committees appointed pursuant to the preceding sentence. To the extent permitted by applicable laws, the Board of Directors may also authorize one or more officers of the Company to designate Employees, other than officers under Section 16 of the Exchange Act, to receive Awards and/or to determine the number of such Awards to be received by such persons; provided, however, that the Board of Directors shall specify the total number of Awards that such officers may so award.  

(c)Committee Procedures. The Board of Directors shall designate one of the members of the Committee as chairman. The Committee may hold meetings at such times and places as it shall determine. The acts of a majority of the Committee members present at meetings at which a quorum exists, or acts reduced to or approved in writing (including via email) by all Committee members, shall be valid acts of the Committee. 

(d)Committee Responsibilities. Subject to the provisions of the Plan, the Committee shall have full authority and discretion to take the following actions: 

	
 
	
(i)
	
To interpret the Plan and to apply its provisions; 

	
 
	
(ii)
	
To adopt, amend or rescind rules, procedures and forms relating to the Plan;

	
 
	
(iii)
	
To adopt, amend or terminate sub-plans established for the purpose of satisfying applicable foreign laws including qualifying for preferred tax treatment under applicable foreign tax laws;

	
 
	
(iv)
	
To authorize any person to execute, on behalf of the Company, any instrument required to carry out the purposes of the Plan; 

	
 
	
(v)
	
To determine when Awards are to be granted under the Plan; 

	
 
	
(vi)
	
To select the Participants to whom Awards are to be granted; 

	
 
	
(vii)
	
To determine the type of Award and number of Shares or amount of cash to be made subject to each Award; 

	
 
	
(viii)
	
To prescribe the terms and conditions of each Award, including (without limitation) the Exercise Price and Purchase Price, and the vesting or duration of the Award (including accelerating the vesting of Awards, either at the time of the Award or thereafter, without the consent of the Participant), to determine whether an Option is to be classified as an ISO or as a Nonstatutory Option, and to specify the provisions of the agreement relating to such Award; 

	
 
	
(ix)
	
To amend any outstanding Award Agreement, subject to applicable legal restrictions and to the consent of the Participant if the Participant’s rights or obligations would be materially impaired; 

6

 

	
 
	
(x)
	
To prescribe the consideration for the grant of each Award or other right under the Plan and to determine the sufficiency of such consideration;  

	
 
	
(xi)
	
To determine the disposition of each Award or other right under the Plan in the event of a Participant’s divorce or dissolution of marriage; 

	
 
	
(xii)
	
To determine whether Awards under the Plan will be granted in replacement of other grants under an incentive or other compensation plan of an acquired business; 

	
 
	
(xiii)
	
To correct any defect, supply any omission, or reconcile any inconsistency in the Plan or any Award Agreement; 

	
 
	
(xiv)
	
To establish or verify the extent of satisfaction of any performance goals or other conditions applicable to the grant, issuance, exercisability, vesting and/or ability to retain any Award; and 

	
 
	
(xv)
	
To take any other actions deemed necessary or advisable for the administration of the Plan. 

Subject to the requirements of applicable law, the Committee may designate persons other than members of the Committee to carry out its responsibilities and may prescribe such conditions and limitations as it may deem appropriate, except that the Committee may not delegate its authority with regard to the selection for participation of or the granting of Awards or other rights under the Plan to persons subject to Section 16 of the Exchange Act. All decisions, interpretations and other actions of the Committee shall be final and binding on all Participants and all persons deriving their rights from a Participant. No member of the Committee shall be liable for any action that he has taken or has failed to take in good faith with respect to the Plan or any Award under the Plan. 

(e)Cancellation and Re-grant of Stock Awards.  Notwithstanding any contrary provision of the Plan, neither the Board nor any Committee, nor their designees, shall have the authority to: (i) amend the terms of outstanding Options or SARs to reduce the Exercise Price thereof, or (ii) cancel outstanding Options or SARs with an Exercise Price above the current Fair Market Value per Share in exchange for another Option, SAR or other Award or for cash, unless the stockholders of the Company have previously approved such an action or such action relates to an adjustment pursuant to Section 12.

	
SECTION 4.
	
ELIGIBILITY.

(a)General Rule. Only common-law employees of the Company, a Parent or a Subsidiary shall be eligible for the grant of ISOs. Only Employees, Consultants and Outside Directors shall be eligible for the grant of Restricted Shares, Stock Units, Nonstatutory Options or SARs. 

7

 

(b)Automatic Grants to Outside Directors.  

	
 
	
(i)
	
Each Outside Director who first joins the Board of Directors on or after December 8, 2011, and who was not previously an Employee, shall receive a Nonstatutory Option, subject to approval of the Plan by the Company’s stockholders, to purchase 25,000 Shares (subject to adjustment under Section 12) on the date of his or her election to the Board of Directors.  The Shares subject to each Option granted under this Section 4(b)(i) shall vest and become exercisable on substantially the same terms and conditions as Options granted to employees at the time of grant under this Section 4(b)(i), subject to the Committee’s discretion. As of December 8, 2011, that vesting is as follows:  Twenty-five percent (25%) of the Shares subject to each Option granted under this Section 4(b)(i) shall vest and become exercisable on the first anniversary of the date of grant. The balance of the Shares subject to such Option (i.e. the remaining seventy-five percent (75%)) shall vest and become exercisable monthly over a 3-year period beginning on the day which is one month after the first anniversary of the date of grant, at a monthly rate of 2.0833% of the total number of Shares subject to such Option. Notwithstanding the foregoing, each such Option shall become vested if a Change in Control occurs with respect to the Company during the Outside Director’s Service.  

	
 
	
(ii)
	
On the first business day following the conclusion of each regular annual meeting of the Company’s stockholders, commencing with the annual meeting occurring after March 18, 2014, each Outside Director who was not elected to the Board for the first time at such meeting and who will continue serving as a member of the Board of Directors thereafter shall receive Stock Units with respect to a number of Shares equal to the quotient of (1) $200,000 divided by (2) the Fair Market Value of a Share on the date of grant, rounded up to the nearest whole Share, provided that such Outside Director has served on the Board of Directors for at least six months. The Stock Units granted under this Section 4(b)(ii) shall vest in equal annual installments linked to the date of the Company’s annual meeting of stockholders, which vesting will occur over the following periods of Service measured from the grant date:  for grants prior to the Restatement Effective Date, over four (4) years of Service; for grants after the Restatement Effective Date and during 2016, over three (3) years of Service; for grants during 2017, over two (2) years of Service; and for grants during and after 2018, over one (1) year of Service.  Notwithstanding the foregoing, each Stock Unit granted under this Section 4(b)(ii) shall become vested if a Change in Control occurs with respect to the Company during the Outside Director’s Service.

	
 
	
(iii)
	
The Exercise Price of all Nonstatutory Options granted to an Outside Director under this Section 4(b) shall be equal to 100% of the Fair Market Value of a Share on the date of grant, payable in one of the forms described in Section 8(a), (b) or (d). 

8

 

	
 
	
(iv)
	
All Nonstatutory Options granted to an Outside Director under this Section 4(b) shall terminate on the earlier of (A) the day before the tenth anniversary of the date of grant of such Options or (B) the date twelve months after the termination of such Outside Director’s Service for any reason; provided, however, that any such Options that are not vested upon the termination of the Outside Director’s Service as a member of the Board of Directors for any reason shall terminate immediately and may not be exercised.  

	
 
	
(v)
	
The grant date fair value of all Awards (as determined in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, or any successor thereto) granted under the Plan to any Outside Director as compensation for services as an Outside Director during any twelve (12)-month period may not exceed $500,000, provided that any automatic Nonstatutory Option granted to a new Outside Director pursuant to Section 4(b)(i) and any Award granted to an Outside Director in lieu of a cash retainer pursuant to Section 15(b) will be excluded from such limit. 

(c)Ten-Percent Stockholders. An Employee who owns more than 10% of the total combined voting power of all classes of outstanding stock of the Company, a Parent or Subsidiary shall not be eligible for the grant of an ISO unless such grant satisfies the requirements of Section 422(c)(5) of the Code. 

(d)Attribution Rules. For purposes of Section 4(c) above, in determining stock ownership, an Employee shall be deemed to own the stock owned, directly or indirectly, by or for such Employee’s brothers, sisters, spouse, ancestors and lineal descendants. Stock owned, directly or indirectly, by or for a corporation, partnership, estate or trust shall be deemed to be owned proportionately by or for its stockholders, partners or beneficiaries. 

(e)Outstanding Stock. For purposes of Section 4(c) above, “outstanding stock” shall include all stock actually issued and outstanding immediately after the grant. “Outstanding stock” shall not include shares authorized for issuance under outstanding options held by the Employee or by any other person. 

	
SECTION 5.
	
STOCK SUBJECT TO PLAN. 

(a)Basic Limitation. Shares offered under the Plan shall be authorized but unissued Shares or treasury Shares. The aggregate number of Shares authorized for issuance as Awards under the Plan shall not exceed 13,500,000 Shares, plus (x) any Shares subject to outstanding options under the Company’s 1998 Stock Plan (the “Predecessor Plan”) on the effective date of this Plan that are subsequently forfeited or terminated for any reason before being exercised, such number of additional Shares not to exceed an aggregate of 2,000,000 Shares, and (y) an annual increase on the first day of each fiscal year beginning in 2010 and continuing only through the fiscal year beginning in 2013, in an amount equal to the lesser of (i) 2,000,000 Shares, (ii) 4% of the outstanding Shares on the last day of the immediately preceding year or (iii) an amount determined by the Board (the “Absolute Share Limit”).  Any Shares granted in connection with Options and SARs shall be counted against the Absolute Share Limit as one (1) 

9

 

Share for every one (1) Option or SAR awarded.  Any Shares granted in connection with Stock Unit or Restricted Share Awards granted on or after February 14, 2013 but before March 18, 2014 shall be counted against this limit as 1.72 Shares for every one (1) Share granted in connection with such Award.  Any Shares granted in connection with Stock Unit or Restricted Share Awards granted on or after March 18, 2014 but before the Restatement Effective Date shall be counted against this limit as 1.8 Shares for every one (1) Share granted in connection with such Award.  Any Shares granted in connection with Stock Unit or Restricted Share Awards granted on or after the Restatement Effective Date shall be counted against this limit as 1.9 Shares for every one (1) Share granted in connection with such Award.  The limitations of this Section 5(a) shall be subject to adjustment pursuant to Section 12.  The number of Shares that are subject to Awards outstanding at any time under the Plan shall not exceed the number of Shares which then remain available for issuance under the Plan. The Company, during the term of the Plan, shall at all times reserve and keep available sufficient Shares to satisfy the requirements of the Plan.  

(b)Section 162(m) Award Limitation. Notwithstanding any contrary provisions of the Plan, and subject to the provisions of Section 12, no Participant may receive Options or SARs under the Plan in any calendar year that relate to an aggregate of more than 500,000 Shares, and no more than two times this amount in the first year of employment. 

(c)Additional Shares. If Restricted Shares or Shares issued upon the exercise of Options are forfeited, then such Shares shall again become available for Awards under the Plan. If Stock Units, Options or SARs are forfeited or terminate for any reason before being exercised or settled, or an Award is settled in cash without the delivery of Shares to the holder, then any Shares subject to the Award shall again become available for Awards under the Plan.  Any Shares that again become available for future grants pursuant to this Section 5(c) shall be added back as one (1) Share if such Shares were subject to Options or SARs, and as either 1.72 Shares if such Shares were subject to other Stock Unit or Restricted Share Awards granted on or after February 14, 2013 but before March 18, 2014, or as 1.8 Shares if such Shares were subject to other Stock Unit or Restricted Share Awards granted on or after March 18, 2014 but before the Restatement Effective Date, or as 1.9 Shares if such Shares were subject to other Stock Unit or Restricted Share Awards granted on or after the Restatement Effective Date.  Notwithstanding anything to the contrary contained herein, Shares subject to an Award under the Plan shall not again be made available for issuance or delivery under the Plan if such Shares are (a) Shares tendered or withheld by the Company in payment of the Exercise Price of an Option, or (b) Shares delivered or withheld by the Company to satisfy any tax withholding obligation, and the full number of SARs granted that are to be settled by the issuance of Shares shall be counted against the number of Shares available for award under the Plan, regardless of the number of Shares actually issued upon settlement of such SAR.  Notwithstanding the foregoing. the number of Shares that may be delivered in the aggregate pursuant to the exercise of ISOs granted under the Plan shall not exceed the Absolute Share Limit plus, to the extent allowable under Section 422 of the Code and the Treasury Regulations promulgated thereunder, any Shares that become available for issuance under the Plan pursuant to this Section 5(c).

10

 

	
SECTION 6.
	
RESTRICTED SHARES.  

(a)Restricted Share Award Agreement. Each grant of Restricted Shares under the Plan shall be evidenced by a Restricted Share Award Agreement between the Participant and the Company. Such Restricted Shares shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various Restricted Share Award Agreements entered into under the Plan need not be identical. 

(b)Payment for Awards.  Restricted Shares may be sold or awarded under the Plan for such consideration as the Committee may determine, including (without limitation) cash, cash equivalents, full-recourse promissory notes, past services and future services. 

(c)Vesting. Each Award of Restricted Shares may or may not be subject to vesting. Vesting shall occur, in full or in installments, upon satisfaction of the conditions specified in the Restricted Share Award Agreement. A Restricted Share Award Agreement may provide for accelerated vesting in the event of the Participant’s death, disability or retirement or other events. The Committee may determine, at the time of granting Restricted Shares or thereafter, that all or part of such Restricted Shares shall become vested in the event that a Change in Control occurs with respect to the Company. 

(d)Voting and Dividend Rights. The holders of Restricted Shares awarded under the Plan shall have the same voting, dividend and other rights as the Company’s other stockholders. A Restricted Share Award Agreement, however, may require that the holders of Restricted Shares invest any cash dividends received in additional Restricted Shares. Such additional Restricted Shares shall be subject to the same conditions and restrictions as the Award with respect to which the dividends were paid. 

(e)Restrictions on Transfer of Shares. Restricted Shares shall be subject to such rights of repurchase, rights of first refusal or other restrictions as the Committee may determine. Such restrictions shall be set forth in the applicable Restricted Share Award Agreement and shall apply in addition to any general restrictions that may apply to all holders of Shares. 

	
SECTION 7.
	
TERMS AND CONDITIONS OF OPTIONS. 

(a)Stock Option Award Agreement. Each grant of an Option under the Plan shall be evidenced by a Stock Option Award Agreement between the Participant and the Company. Such Option shall be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and conditions which are not inconsistent with the Plan and which the Committee deems appropriate for inclusion in a Stock Option Award Agreement. The Stock Option Award Agreement shall specify whether the Option is an ISO or an NSO. The provisions of the various Stock Option Award Agreements entered into under the Plan need not be identical. 

(b)Number of Shares. Each Stock Option Award Agreement shall specify the number of Shares that are subject to the Option and shall provide for the adjustment of such number in accordance with Section 12. 

(c)Exercise Price. Each Stock Option Award Agreement shall specify the Exercise Price. The Exercise Price of an ISO shall not be less than 100% of the Fair Market Value of a 

11

 

Share on the date of grant, except as otherwise provided in 4(c), and the Exercise Price of an NSO shall not be less 100% of the Fair Market Value of a Share on the date of grant.  Notwithstanding the foregoing, Options may be granted with an Exercise Price of less than 100% of the Fair Market Value per Share on the date of grant pursuant to a transaction described in, and in a manner consistent with, Section 424(a) of the Code.  Subject to the foregoing in this Section 7(c), the Exercise Price under any Option shall be determined by the Committee in its sole discretion. The Exercise Price shall be payable in one of the forms described in Section 8.  

(d)Withholding Taxes. As a condition to the exercise of an Option, the Participant shall make such arrangements as the Committee may require for the satisfaction of any federal, state, local or foreign withholding tax obligations that may arise in connection with such exercise. The Participant shall also make such arrangements as the Committee may require for the satisfaction of any federal, state, local or foreign withholding tax obligations that may arise in connection with the disposition of Shares acquired by exercising an Option. 

(e)Exercisability and Term. Each Stock Option Award Agreement shall specify the date when all or any installment of the Option is to become exercisable. The Stock Option Award Agreement shall also specify the term of the Option; provided that the term of an Option shall in no event exceed 10 years from the date of grant (five years for ISOs granted to Employees described in Section 4(c)). A Stock Option Award Agreement may provide for accelerated exercisability in the event of the Participant’s death, disability, or retirement or other events and may provide for expiration prior to the end of its term in the event of the termination of the Participant’s Service. Options may be awarded in combination with SARs, and such an Award may provide that the Options will not be exercisable unless the related SARs are forfeited. Subject to the foregoing in this Section 7(e), the Committee at its sole discretion shall determine when all or any installment of an Option is to become exercisable and when an Option is to expire. 

(f)Exercise of Options. Each Stock Option Award Agreement shall set forth the extent to which the Participant shall have the right to exercise the Option following termination of the Participant’s Service with the Company and its Subsidiaries, and the right to exercise the Option of any executors or administrators of the Participant’s estate or any person who has acquired such Option(s) directly from the Participant by bequest or inheritance. Such provisions shall be determined in the sole discretion of the Committee, need not be uniform among all Options issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination of Service. 

(g)Effect of Change in Control. The Committee may determine, at the time of granting an Option or thereafter, that such Option shall become exercisable as to all or part of the Shares subject to such Option in the event that a Change in Control occurs with respect to the Company. 

(h)No Stockholder or Dividend Rights. A Participant, or a transferee of a Participant, shall have no rights as a stockholder (including dividend rights) with respect to any Shares covered by his Option until the date of the issuance of such Shares. No adjustments shall be made, except as provided in Section 12.  No dividend equivalents shall be payable with respect to Options.

12

 

(i)Modification, Extension and Renewal of Options. Within the limitations of the Plan, including Section 3(e) (which limits the cancellation and re-grant of stock awards without stockholder approval), the Committee may modify, extend or renew outstanding options. The foregoing notwithstanding, no modification of an Option shall, without the consent of the Participant, materially impair his or her rights or obligations under such Option.  

(j)Restrictions on Transfer of Shares. Any Shares issued upon exercise of an Option shall be subject to such special forfeiture conditions, rights of repurchase, rights of first refusal and other transfer restrictions as the Committee may determine. Such restrictions shall be set forth in the applicable Stock Option Award Agreement and shall apply in addition to any general restrictions that may apply to all holders of Shares. 

(k)Buyout Provisions. Subject to Section 3(e), the Committee may at any time (a) offer to buy out for a payment in cash or cash equivalents an Option previously granted or (b) authorize a Participant to elect to cash out an Option previously granted, in either case at such time and based upon such terms and conditions as the Committee shall establish. 

	
SECTION 8.
	
PAYMENT FOR SHARES. 

(a)General Rule. The entire Exercise Price or Purchase Price of Shares issued under the Plan shall be payable in lawful money of the United States of America at the time when such Shares are purchased, except as provided in Section 8(b) through Section 8(h) below. 

(b)Surrender of Stock. To the extent that a Stock Option Award Agreement so provides, payment may be made all or in part by surrendering, or attesting to the ownership of, Shares which have already been owned by the Participant or his representative. Such Shares shall be valued at their Fair Market Value on the date when the new Shares are purchased under the Plan. The Participant shall not surrender, or attest to the ownership of, Shares in payment of the Exercise Price if such action would cause the Company to recognize compensation expense (or additional compensation expense) with respect to the Option for financial reporting purposes. 

(c)Services Rendered. At the discretion of the Committee, Shares may be awarded under the Plan in consideration of services rendered to the Company or a Subsidiary. If Shares are awarded without the payment of a Purchase Price in cash, the Committee shall make a determination (at the time of the Award) of the value of the services rendered by the Participant and the sufficiency of the consideration to meet the requirements of Section 6(b). 

(d)Cashless Exercise. To the extent that a Stock Option Award Agreement so provides, payment may be made all or in part by delivery (on a form prescribed by the Committee) of an irrevocable direction to a securities broker to sell Shares and to deliver all or part of the sale proceeds to the Company in payment of the aggregate Exercise Price. 

(e)Exercise/Pledge. To the extent that a Stock Option Award Agreement so provides, payment may be made all or in part by delivery (on a form prescribed by the Committee) of an irrevocable direction to a securities broker or lender to pledge Shares, as security for a loan, and to deliver all or part of the loan proceeds to the Company in payment of the aggregate Exercise Price. 

13

 

(f)Net Exercise. To the extent that a Stock Option Award Agreement so provides, by a “net exercise” arrangement pursuant to which the number of Shares issuable upon exercise of the Option shall be reduced by the largest whole number of Shares having an aggregate Fair Market Value that does not exceed the aggregate exercise price (plus tax withholdings, if applicable) and any remaining balance of the aggregate exercise price (and/or applicable tax withholdings) not satisfied by such reduction in the number of whole Shares to be issued shall be paid by the Participant in cash other form of payment permitted under the Stock Option Award Agreement. 

(g)Promissory Note. To the extent that a Stock Option Award Agreement or Restricted Share Award Agreement so provides, payment may be made all or in part by delivering (on a form prescribed by the Company) a full-recourse promissory note. 

(h)Other Forms of Payment. To the extent that a Stock Option Award Agreement or Restricted Share Award Agreement so provides, payment may be made in any other form that is consistent with applicable laws, regulations and rules. 

(i)Limitations under Applicable Law. Notwithstanding anything herein or in a Stock Option Award Agreement or Restricted Share Award Agreement to the contrary, payment may not be made in any form that is unlawful, as determined by the Committee in its sole discretion. 

	
SECTION 9.
	
STOCK APPRECIATION RIGHTS. 

(a)SAR Award Agreement. Each grant of a SAR under the Plan shall be evidenced by a SAR Award Agreement between the Participant and the Company. Such SAR shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various SAR Award Agreements entered into under the Plan need not be identical.

(b)Number of Shares. Each SAR Award Agreement shall specify the number of Shares to which the SAR pertains and shall provide for the adjustment of such number in accordance with Section 12. 

(c)Exercise Price. Each SAR Award Agreement shall specify the Exercise Price.  The Exercise Price of a SAR shall not be less than 100% of the Fair Market Value of a Share on the date of grant.  Notwithstanding the foregoing, SARs may be granted with an Exercise Price of less than 100% of the Fair Market Value per Share on the date of grant pursuant to a transaction described in, and in a manner consistent with, Section 424(a) of the Code.  Subject to the foregoing in this Section 9(c), the Exercise Price under any SAR shall be determined by the Committee in its sole discretion.

(d)Exercisability and Term. Each SAR Award Agreement shall specify the date when all or any installment of the SAR is to become exercisable. The SAR Award Agreement shall also specify the term of the SAR; provided that the term of a SAR shall in no event exceed 10 years from the date of grant.  A SAR Award Agreement may provide for accelerated exercisability in the event of the Participant’s death, disability or retirement or other events and may provide for expiration prior to the end of its term in the event of the termination of the Participant’s service.  SARs may be awarded in combination with Options, and such an Award 

14

 

may provide that the SARs will not be exercisable unless the related Options are forfeited. A SAR may be included in an ISO only at the time of grant but may be included in an NSO at the time of grant or thereafter. A SAR granted under the Plan may provide that it will be exercisable only in the event of a Change in Control.  

(e)Effect of Change in Control. The Committee may determine, at the time of granting a SAR or thereafter, that such SAR shall become fully exercisable as to all Common Shares subject to such SAR in the event that a Change in Control occurs with respect to the Company. 

(f)Exercise of SARs. Upon exercise of a SAR, the Participant (or any person having the right to exercise the SAR after his or her death) shall receive from the Company (a) Shares, (b) cash or (c) a combination of Shares and cash, as the Committee shall determine. The amount of cash and/or the Fair Market Value of Shares received upon exercise of SARs shall, in the aggregate, be equal to the amount by which the Fair Market Value (on the date of surrender) of the Shares subject to the SARs exceeds the Exercise Price. 

(g)Modification or Assumption of SARs. Within the limitations of the Plan, including Section 3(e), the Committee may modify, extend or assume outstanding SARs or may accept the cancellation of outstanding SARs (whether granted by the Company or by another issuer) in return for the grant of new SARs for the same or a different number of shares and at the same or a different exercise price. The foregoing notwithstanding, no modification of a SAR shall, without the consent of the holder, materially impair his or her rights or obligations under such SAR.

(h)Voting and Dividend Rights. The holders of SARs shall have no rights as a stockholder (including dividend rights) with respect to any Shares covered by his SAR unless and until the date of the issuance of Shares in settlement of such SAR. No adjustments shall be made, except as provided in Section 12.  No dividend equivalents shall be payable with respect to SARs.

	
SECTION 10.
	
STOCK UNITS. 

(a)Stock Unit Award Agreement. Each grant of Stock Units under the Plan shall be evidenced by a Stock Unit Award Agreement between the Participant and the Company. Such Stock Units shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various Stock Unit Award Agreements entered into under the Plan need not be identical. 

(b)Payment for Awards. To the extent that an Award is granted in the form of Stock Units, no cash consideration shall be required of the Award recipients. 

(c)Vesting Conditions. Each Award of Stock Units may or may not be subject to vesting. Vesting shall occur, in full or in installments, upon satisfaction of the conditions specified in the Stock Unit Award Agreement. A Stock Unit Award Agreement may provide for accelerated vesting in the event of the Participant’s death, disability or retirement or other events. The Committee may determine, at the time of granting Stock Units or thereafter, that all or part 

15

 

of such Stock Units shall become vested in the event that a Change in Control occurs with respect to the Company.  

(d)Voting and Dividend Rights. The holders of Stock Units shall have no voting rights. Prior to settlement or forfeiture, any Stock Unit awarded under the Plan may, at the Committee’s discretion, carry with it a right to dividend equivalents. Such right entitles the holder to be credited with an amount equal to all cash dividends paid on one Share while the Stock Unit is outstanding. Dividend equivalents may be converted into additional Stock Units. Settlement of dividend equivalents may be made in the form of cash, in the form of Shares, or in a combination of both. Prior to distribution, any dividend equivalents which are not paid shall be subject to the same conditions and restrictions (including without limitation, any forfeiture conditions) as the Stock Units to which they attach. 

(e)Form and Time of Settlement of Stock Units. Settlement of vested Stock Units may be made in the form of (a) cash, (b) Shares or (c) any combination of both, as determined by the Committee. The actual number of Stock Units eligible for settlement may be larger or smaller than the number included in the original Award, based on predetermined performance factors. Methods of converting Stock Units into cash may include (without limitation) a method based on the average Fair Market Value of Shares over a series of trading days. A Stock Unit Award Agreement may provide that vested Stock Units may be settled in a lump sum or in installments. A Stock Unit Award Agreement may provide that the distribution may occur or commence when all vesting conditions applicable to the Stock Units have been satisfied or have lapsed, or it may be deferred to any later date, subject to compliance with Section 409A of the Code.  The amount of a deferred distribution may be increased by an interest factor or by dividend equivalents. Until an Award of Stock Units is settled, the number of such Stock Units shall be subject to adjustment pursuant to Section 12. 

(f)Death of Participant. Any Stock Units Award that becomes payable after the Participant’s death shall be distributed to the Participant’s beneficiary or beneficiaries. Each Participant of a Stock Units Award under the Plan shall designate one or more beneficiaries for this purpose by filing the prescribed form with the Company. A beneficiary designation may be changed by filing the prescribed form with the Company at any time before the Participant’s death. If no beneficiary was designated or if no designated beneficiary survives the Participant, then any Stock Unit Award that becomes payable after the Participant’s death shall be distributed to the Participant’s estate. 

(g)Creditors’ Rights. A holder of Stock Units shall have no rights other than those of a general creditor of the Company. Stock Units represent an unfunded and unsecured obligation of the Company, subject to the terms and conditions of the applicable Stock Unit Award Agreement. 

	
SECTION 11.
	
CASH-BASED AWARDS

The Committee may, in its sole discretion, grant Cash-Based Awards to any Participant in such number or amount and upon such terms, and subject to such conditions, as the Committee shall determine at the time of grant and specify in an applicable Award Agreement.  The Committee shall determine the maximum duration of the Cash-Based Award, the amount of 

16

 

cash which may be payable pursuant to the Cash-Based Award, the conditions upon which the Cash-Based Award shall become vested or payable, and such other provisions as the Committee shall determine.  Each Cash-Based Award shall specify a cash-denominated payment amount, formula or payment ranges as determined by the Committee.  Payment, if any, with respect to a Cash-Based Award shall be made in accordance with the terms of the Award and may be made in cash or in shares of Stock, as the Committee determines.

	
SECTION 12.
	
ADJUSTMENT OF SHARES. 

(a)Adjustments. In the event of a subdivision of the outstanding Stock, a declaration of a dividend payable in Shares, a declaration of a dividend payable in a form other than Shares in an amount that has a material effect on the price of Shares, a combination or consolidation of the outstanding Stock (by reclassification or otherwise) into a lesser number of Shares, a recapitalization, a spin-off or a similar occurrence, the Committee shall make appropriate and equitable adjustments in: 

	
 
	
(i)
	
The number of Shares available for future Awards under Section 5; 

	
 
	
(ii)
	
The limitations set forth in Sections 5(a) and (b) and Section 18(c)(v); 

	
 
	
(iii)
	
The number of NSOs to be granted to Outside Directors under Section 4(b);

	
 
	
(iv)
	
The number of Shares covered by each outstanding Award; and

	
 
	
(v)
	
The Exercise Price under each outstanding Option and SAR. 

(b)Dissolution or Liquidation. To the extent not previously exercised or settled, Options, SARs and Stock Units shall terminate immediately prior to the dissolution or liquidation of the Company. 

(c)Reorganizations. In the event that the Company is a party to a merger or other reorganization, outstanding Awards shall be subject to the agreement of merger or reorganization. Subject to compliance with Section 409A of the Code, such agreement shall provide for: 

	
 
	
(i)
	
The continuation of the outstanding Awards by the Company, if the Company is a surviving corporation; 

	
 
	
(ii)
	
The assumption of the outstanding Awards by the surviving corporation or its parent or subsidiary; 

	
 
	
(iii)
	
The substitution by the surviving corporation or its parent or subsidiary of its own awards for the outstanding Awards; 

	
 
	
(iv)
	
Full exercisability or vesting and accelerated expiration of the outstanding Awards; or 

17

 

	
 
	
(v)
	
Settlement of the intrinsic value of the outstanding Awards in cash or cash equivalents followed by cancellation of such Awards.    

Any acceleration of payment of an amount that is subject to Section 409A of the Code will be delayed, if necessary, until the earliest time that such payment would be permissible under Section 409A without triggering any additional taxes applicable under Section 409A.

(d)Reservation of Rights. Except as provided in this Section 12, a Participant shall have no rights by reason of any subdivision or consolidation of shares of stock of any class, the payment of any dividend or any other increase or decrease in the number of shares of stock of any class.  Any issue by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number or Exercise Price of Shares subject to an Award. The grant of an Award pursuant to the Plan shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure, to merge or consolidate or to dissolve, liquidate, sell or transfer all or any part of its business or assets.  In the event of any change affecting the Shares or the Exercise Price of Shares subject to an Award, including a merger or other reorganization, for reasons of administrative convenience, the Company in its sole discretion may refuse to permit the exercise of any Award during a period of up to thirty (30) days prior to the occurrence of such event.

	
SECTION 13.
	
DEFERRAL OF AWARDS. 

(a)Committee Powers. Subject to compliance with Section 409A of the Code, the Committee (in its sole discretion) may permit or require a Participant to: 

	
 
	
(i)
	
Have cash that otherwise would be paid to such Participant as a result of the exercise of a SAR or the settlement of Stock Units credited to a deferred compensation account established for such Participant by the Committee as an entry on the Company’s books; 

	
 
	
(ii)
	
Have Shares that otherwise would be delivered to such Participant as a result of the exercise of an Option or SAR converted into an equal number of Stock Units; or 

	
 
	
(iii)
	
Have Shares that otherwise would be delivered to such Participant as a result of the exercise of an Option or SAR or the settlement of Stock Units converted into amounts credited to a deferred compensation account established for such Participant by the Committee as an entry on the Company’s books. Such amounts shall be determined by reference to the Fair Market Value of such Shares as of the date when they otherwise would have been delivered to such Participant. 

(b)General Rules. A deferred compensation account established under this Section 13 may be credited with interest or other forms of investment return, as determined by the Committee. A Participant for whom such an account is established shall have no rights other than those of a general creditor of the Company. Such an account shall represent an unfunded and unsecured obligation of the Company and shall be subject to the terms and conditions of the 

18

 

applicable agreement between such Participant and the Company. If the deferral or conversion of Awards is permitted or required, the Committee (in its sole discretion) may establish rules, procedures and forms pertaining to such Awards, including (without limitation) the settlement of deferred compensation accounts established under this Section 13.  

	
SECTION 14.
	
AWARDS UNDER OTHER PLANS. 

The Company may grant awards under other plans or programs. Such awards may be settled in the form of Shares issued under this Plan. Such Shares shall be treated for all purposes under the Plan like Shares issued in settlement of Stock Units and shall, when issued, reduce the number of Shares available under Section 5. 

	
SECTION 15.
	
PAYMENT OF DIRECTOR’S FEES IN SECURITIES. 

(a)Effective Date. No provision of this Section 15 shall be effective unless and until the Board has determined to implement such provision. 

(b)Elections to Receive Awards. An Outside Director may elect to receive his or her annual retainer payments and/or meeting fees from the Company in the form of cash, NSOs, SARs, Restricted Shares or Stock Units, or a combination thereof, as determined by the Board. Such Awards shall be issued under the Plan. An election under this Section 15 shall be filed with the Company on the prescribed form. 

(c)Number and Terms of Awards. The number of NSOs, SARs, Restricted Shares or Stock Units to be granted to Outside Directors in lieu of annual retainers and meeting fees that would otherwise be paid in cash shall be calculated in a manner determined by the Board. The terms of such Awards shall also be determined by the Board. 

	
SECTION 16.
	
LEGAL AND REGULATORY REQUIREMENTS. 

Shares shall not be issued under the Plan unless the issuance and delivery of such Shares complies with (or is exempt from) all applicable requirements of law, including (without limitation) the Securities Act of 1933, as amended, the rules and regulations promulgated thereunder, state securities laws and regulations and the regulations of any stock exchange on which the Company’s securities may then be listed, and the Company has obtained the approval or favorable ruling from any governmental agency which the Company determines is necessary or advisable. The Company shall not be liable to a Participant or other persons as to: (a) the non-issuance or sale of Shares as to which the Company has not obtained from any regulatory body having jurisdiction the authority deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares under the Plan; and (b) any tax consequences expected, but not realized, by any Participant or other person due to the receipt, exercise or settlement of any Award granted under the Plan. 

	
SECTION 17.
	
TAXES. 

(a)Withholding Taxes. To the extent required by applicable federal, state, local or foreign law, a Participant or his or her successor shall make arrangements satisfactory to the Company for the satisfaction of any withholding tax obligations that arise in connection with the 

19

 

Plan. The Company shall not be required to issue any Shares or make any cash payment under the Plan until such obligations are satisfied.  

(b)Share Withholding.  The Committee may permit a Participant to satisfy all or part of his or her withholding or income tax obligations by having the Company withhold all or a portion of any Shares that otherwise would be issued to him or her or by surrendering all or a portion of any Shares that he or she previously acquired. Such Shares shall be valued at their Fair Market Value on the date when taxes otherwise would be withheld in cash. In no event may a Participant have Shares withheld that would otherwise be issued to him or her in excess of the number necessary to satisfy the minimum legally required tax withholding, except to the extent such additional withholding does not result in adverse accounting treatment to the Company. 

(c)Section 409A. Each Award that provides for “nonqualified deferred compensation” within the meaning of Section 409A of the Code shall be subject to such additional rules and requirements as specified by the Committee from time to time in order to comply with Section 409A.  If any amount under such an Award is payable upon a “separation from service” (within the meaning of Section 409A) to a Participant who is then considered a “specified employee” (within the meaning of Section 409A), then no such payment shall be made prior to the date that is the earlier of (i) six months and one day after the Participant’s separation from service, or (ii) the Participant’s death, but only to the extent such delay is necessary to prevent such payment from being subject to interest, penalties and/or additional tax imposed pursuant to Section 409A.  In addition, the settlement of any such Award may not be accelerated except to the extent permitted by Section 409A.

	
SECTION 18.
	
OTHER PROVISIONS APPLICABLE TO AWARDS. 

(a)Transferability. Unless the agreement evidencing an Award (or an amendment thereto authorized by the Committee) expressly provides otherwise, no Award granted under this Plan, nor any interest in such Award, may be sold, assigned, conveyed, gifted, pledged, hypothecated or otherwise transferred in any manner (prior to the vesting and lapse of any and all restrictions applicable to Shares issued under such Award), other than by will or the laws of descent and distribution; provided, however, that an ISO may be transferred or assigned only to the extent consistent with Section 422 of the Code. Any purported assignment, transfer or encumbrance in violation of this Section 18(a) shall be void and unenforceable against the Company. 

(b)Substitution and Assumption of Awards. The Committee may make Awards under the Plan by assumption, substitution or replacement of stock options, stock appreciation rights, stock units or similar awards granted by another entity (including a Parent or Subsidiary), if such assumption, substitution or replacement is in connection with an asset acquisition, stock acquisition, merger, consolidation or similar transaction involving the Company (and/or its Parent or Subsidiary) and such other entity (and/or its affiliate).  Notwithstanding any provision of the Plan (other than the maximum number of Shares that may be issued under the Plan), the terms of such assumed, substituted or replaced Awards shall be as the Committee, in its discretion, determines is appropriate.

20

 

(c)Qualifying Performance Criteria. The number of Shares or other benefits granted, issued, retainable and/or vested under an Award may be made subject to the attainment of performance goals.  The Committee may utilize any performance criteria selected by it in its sole discretion to establish performance goals; provided, however, that in the case of any Performance Based Award, the following conditions shall apply: 

	
 
	
(i)
	
The amount potentially available under a Performance Based Award shall be subject to the attainment of pre-established, objective performance goals relating to a specified performance period based on one or more of the following performance criteria: (a) cash flow, (b) earnings per share, (c) adjusted earnings per share (adjusted net income divided by the weighted average of dilutive common share equivalents outstanding), (d) earnings before interest, taxes, depreciation and amortization (“EBITDA”), (e) adjusted EBITDA (net income before interest, taxes, depreciation, and amortization (internal use software, direct response advertising, and commissions), and non-cash stock-based compensation expense, (f) EBITDA margin (EBITDA/total revenue), (g) adjusted EBITDA margin (adjusted EBITDA/total revenue) (h) income or net income, (i) adjusted net income (net income before non-cash stock-based compensation expense, net of tax and other specified items), (j) return on equity, (k) total stockholder return, (l) share price performance, (m) return on capital, (n) return on assets or net assets, (o) revenue, (p) operating income or net operating income, (q) operating profit or net operating profit, (r) operating margin or profit margin, (s) return on operating revenue, (t) return on invested capital, (u) market segment shares, (v) costs, (w) expenses, (x) regulatory body approval (including without limitation for commercialization of a product), (y) implementation or completion of critical projects, including acquisition integration, (z) management fee run rate (“MFRR”) (annualized fees which would be generated from managed or advised assets or from financial planning services over the following twelve months or other specified period, including those generated from enrollees into the professional management program, but excluding platform fees, set up fees and consulting fees), (aa) market adjusted MFRR, (bb) new MFRR, (cc) net new MFRR (new MFRR net of voluntary cancellations), (dd) assets under management, (ee) asset retention rates, (ff) sales or other contract revenue, (gg) number of media impressions, (hh) customer satisfaction, (ii) economic value added measurements, (jj) sales pipeline, (kk) employee turnover, (ll) cancellation amounts or rates or (mm) assets under contract (“Qualifying Performance Criteria”), any of which may be measured either individually, alternatively or in any combination, applied to either the individual, the Company as a whole or to a business unit or subsidiary of the Company, either individually, alternatively or in any combination, and measured either annually or cumulatively over a period of years, or on the basis of any other specified period, on an absolute basis or relative to a pre-established target, to previous years’ results or to a designated 

21

 

	
 
		
comparison group or index, and subject to specified adjustments, in each case as specified by the Committee in the Award; 

	
 
	
(ii)
	
Unless specified otherwise by the Committee at the time the performance goals are established or otherwise within the time prescribed by Section 162(m) of the Code, the Committee shall appropriately adjust the method of evaluating performance under a Qualifying Performance Criteria for a performance period as follows: (i) to exclude asset write-downs, (ii) to exclude litigation or claim judgments or settlements, (iii) to exclude the effect of changes in tax law, accounting principles or other such laws or provisions affecting reported results, (iv) to exclude accruals for reorganization and restructuring programs, (v) to exclude any extraordinary nonrecurring items as determined under generally accepted accounting principles and/or described in managements’ discussion and analysis of financial condition and results of operations appearing in the Company’s annual report to stockholders for the applicable year, (vi) to exclude the dilutive and/or accretive effects of acquisitions or joint ventures, (vii) to assume that any business divested by the Company achieved performance objectives at targeted levels during the balance of a performance period following such divestiture, (viii) to exclude the effect of any change in the outstanding shares of common stock of the Company by reason of any stock dividend or split, stock repurchase, reorganization, recapitalization, merger, consolidation, spin-off, combination or exchange of shares or other similar corporate change, or any distributions to common stockholders other than regular cash dividends, (ix) to exclude the effects of stock based compensation; and (x) to exclude costs incurred in connection with potential acquisitions or divestitures that are required to be expensed under generally accepted accounting principles, in each case in compliance with Section 162(m);

	
 
	
(iii)
	
 The Committee shall establish the applicable performance goals in writing and an objective method for determining the Award earned by a Participant if the goals are attained, while the outcome is substantially uncertain and not later than the 90th day of the performance period (but in no event after 25% of the period of service with respect to which the performance goals relate has elapsed), and shall determine and certify in writing, for each Participant, the extent to which the performance goals have been met prior to payment or vesting of the Award; and

	
 
	
(iv)
	
The Committee may not in any event increase the amount of compensation payable under the Plan upon the attainment of the pre-established performance goals to a Participant who is a “covered employee” within the meaning of Section 162(m) of the Code. 

	
 
	
(v)
	
The maximum aggregate number of Shares that may be subject to Performance Based Awards granted to a Participant in any calendar year is 500,000 Shares (subject to adjustment under Section 12), and no more 

22

 

	
 
		
than two times this amount in the first year of employment, and the maximum aggregate amount of cash that may be payable to a Participant under Performance Based Awards granted to a Participant in any calendar year that are Cash-Based Awards is $5,000,000. 

(d)Recoupment. Notwithstanding any other provision of the Plan or any Award granted under the Plan, any recoupment or “clawback” policies adopted by the Committee pursuant to Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act or other applicable law shall apply to Awards granted under the Plan and any Shares that may be issued pursuant to such Awards to the extent the Compensation Committee provides at the time the policy is adopted.

	
SECTION 19.
	
NO EMPLOYMENT RIGHTS. 

No provision of the Plan, nor any Award granted under the Plan, shall be construed to give any person any right to become, to be treated as, or to remain an Employee or Consultant. The Company and its Subsidiaries reserve the right to terminate any person’s Service at any time and for any reason, with or without notice. 

	
SECTION 20.
	
DURATION AND AMENDMENTS. 

(a)Term of the Plan. The Plan, as set forth herein, shall terminate automatically on March 20, 2026, and may be terminated on any earlier date pursuant to Subsection (b) below. 

(b)Right to Amend or Terminate the Plan. The Board of Directors may amend or terminate the Plan at any time and from time to time. Rights and obligations under any Award granted before amendment of the Plan shall not be materially impaired by such amendment, except with consent of the Participant. An amendment of the Plan shall be subject to the approval of the Company’s stockholders only to the extent required by applicable laws, regulations or rules. 

(c)Effect of Termination. No Awards shall be granted under the Plan after the termination thereof. The termination of the Plan shall not affect Awards previously granted under the Plan. 

[Remainder of this page intentionally left blank]

 

 

23

 

	
SECTION 21.
	
EXECUTION.  

To record the adoption of the Amended and Restated Plan by the Board of Directors, the Company has caused its authorized officer to execute the same. 

 

		
	
FINANCIAL ENGINES, INC.

	
 

	
 

	
 

	
By
	
/s/ Raymond J. Sims

	
 

	
Name
	
Raymond J. Sims

	
 

	
Title
	
Chief Financial Officer

 

24EXECUTION
VERSION

 

 

 

ASSET
PURCHASE AGREEMENT

 

BY
AND AMONG

 

VPR
Brands, LP,

 

Kevin
Frija, 

 

And

 

Vapor
Corp.

 

July
29, 2016

 

 

 

    	 		 

    	 	 	 

    

 

Table
of Contents

 

	Section
    1.	Definitions	1
	 	 	 
	Section
    2.	Sale
    and Purchase	4
	 	 	 
	Section
    3.	Consideration
    and Other Agreements	4
	 	 	 
	Section
    4.	Closing;
    Execution and Delivery of Closing Documents	5
	 	 	 
	Section
    5.	Prorations;
    Costs	7
	 	 	 
	Section
    6.	Representation
    and Warranties of Seller	7
	 	 	 
	Section
    7.	Representation
    and Warranties of VPRB	9
	 	 	 
	Section
    8.	Representation
    and Warranties of Mr. Frija	10
	 	 	 
	Section
    9.	Management
    of the Assets Before Closing Date	11
	 	 	 
	Section
    10.	Additional
    Agreements.	11
	 	 	 
	Section
    11.	Inspection	13
	 	 	 
	Section
    12.	Buyers’
    Conditions Precedent to Closing	14
	 	 	 
	Section
    13.	Seller’s
    Conditions Precedent to Closing	15
	 	 	 
	Section
    14.	Survival
    and Indemnification; Default Limitations	15
	 	 	 
	Section
    15.	Termination.	18
	 	 	 
	Section
    16.	Confidentiality.	19
	 	 	 
	Section
    17.	Miscellaneous	19
	 	 	 
	Exhibits	 	 
	 	 	 
	Exhibit
    A-1	Wholesale
    Operations Assets	 
	Exhibit
    A-2	Wholesale
    Inventory	 
	Exhibit
    A-3	Assumed
    Liabilities	 
	Exhibit
    B	Acquisition
    Note	 
	Exhibit
    C	VPRB
    Loan Note	 
	Exhibit
    D	Security
    Agreement	 
	Exhibit
    E	Bill
    of Sale	 
	Exhibit
    F	Assignment
    and Assumption Agreement	 
	Exhibit
    G	Accounts
    Receivable	 
	Exhibit
    H	Persons
    Subject to Non-Solicit	 

 

    	 		 

    	 	 	 

    

 

ASSET
PURCHASE AGREEMENT

 

Dated
as of July 29, 2016

 

This
Asset Purchase Agreement (the “Agreement”) is made as of the date first set forth above (the “Effective Date”),
by and among (i) VPR Brands, LP, a Delaware limited partnership (together with any of its subsidiaries in existence or created
hereafter, “VPRB”), Kevin Frija (“Mr. Frija”; together with VPRB, collectively referred to herein as “Buyers”
and individually referred to herein as a “Buyer”) and Vapor Corp., a Delaware corporation (“Vapor” or
“Seller”). 

 

RECITALS

 

WHEREAS,
VPRB desire to acquire from Vapor, and Vapor desires to transfer to VPRB, the Assets (as defined below), pursuant to the terms
and conditions hereinafter set forth; and

 

WHEREAS,
Vapor desires to acquire from Mr. Frija, and Mr. Frija desires to transfer to Vapor, the Vapor Shares (as defined below), pursuant
to the terms and conditions hereinafter set forth.

 

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

 

Section
1. Definitions.

 

In
addition to the defined terms as set forth herein, the following terms used in this Agreement shall have the meanings given below,
which shall be equally applicable to both the singular and plural form.

 

(i)
“Affiliate” means any corporation, partnership, limited liability company, limited liability partnership, trust or
other entity which directly or indirectly controls, is controlled by or is under common control with the Buyers.

 

(ii)
“Applicable Law” means collectively any and all national, federal, state, provincial and local laws, statutes, regulations,
rules, codes and ordinances applicable to the Assets.

 

(iii)
“Authority” means any governmental or quasi-governmental body, whether administrative, executive, judicial, legislative,
police, regulatory, taxing or other authority, or any combination thereof, including any international, federal, state, territorial,
county, municipal or other government or governmental or quasi-governmental agency, arbitrator, authority, board, body, branch,
bureau, or comparable agency or Entity, commission, corporation, court, department, instrumentality, mediator, panel, system or
other political unit or subdivision or other Entity of any of the foregoing, whether domestic or foreign.

 

    	 		 

    	 	 	 

    

 

(iv)
“Claim” means any claim, damage, loss, liability, obligation, demand, defense, judgment, suit, proceeding, disbursement
or expense, including reasonable attorneys’ fees or costs (including those related to appeals).

 

(v)
“Closing Date” means 4:00 p.m. Eastern time, on the third (3rd) business day following the satisfaction
or, in Buyers’ sole discretion, waiver, of the conditions precedent set forth in Section 12, or such other date as the parties
may agree; provided, that such date shall in no event be later than the Termination Date.

 

(vi)
“Entity” means any corporation, firm, unincorporated organization, association, partnership, limited liability company,
trust (inter vivos or testamentary), estate of a deceased, insane or incompetent individual, business trust, joint stock company,
joint venture or other organization, entity or business, whether acting in an individual, fiduciary or other capacity, or any
Authority.

 

(vii)
“GAAP” means generally accepted United States accounting principles, applied on a consistent basis.

 

(viii)
“Governmental Authority” means any agency or branch of the governments of any of the United States of America, any
foreign country, and/or any state, county, town or other municipality in which any of the Assets or Accounts Receivable are located
and any entity exercising executive, legislative, judicial, regulatory or administrative functions over or pertaining to any of
the forgoing.

 

(ix)
“Legal Requirements” means any law, constitution, statute, ordinance, code, order, rule or regulation of any Governmental
Authority which pertains to the Assets, the Accounts Receivable or any of the parties hereto.

 

(x)
“Liabilities” means, with respect to any specified assets, property, or Person, any and all debts (including interest
thereon and any prepayment penalties applicable thereto), damages, liabilities, claims, demands and obligations, whether fixed,
contingent or absolute, matured or unmatured, liquidated or unliquidated, accrued or not accrued, known or unknown, whenever or
however arising (including, without limitation, whether arising out of any contract or tort based on negligence or strict liability)
and whether or not the same would be required by GAAP to be reflected in financial statements or disclosed in the notes thereto.

 

(xi)
“Lien” means any: mortgage; lien (statutory or other) or encumbrance; or other security agreement, arrangement or
interest; hypothecation, pledge or other deposit arrangement; assignment; charge; levy; executory seizure; attachment; garnishment;
encumbrance (including any unallocated title reservations or any other title matters which impairs marketability of title); conditional
sale, title retention or other similar agreement, arrangement, device or restriction; preemptive or similar right; any financing
lease involving substantially the same economic effect as any of the foregoing; the filing of any financing statement under the
Uniform Commercial Code or comparable Applicable Law of any jurisdiction; restriction on sale, transfer, assignment, disposition
or other alienation; or any option, equity, claim or right of or obligation to, any other Person, of whatever kind and character.

 

    	 	2	 

    	 	 	 

    

 

(xii)
“Material Adverse Effect” means, when used in connection with Seller, on the one hand, or VPRB, on the other, any
(i) change, (ii) effect, (iii) event, (iv) occurrence, (v) state of facts, or (vi) development which, individually or in the aggregate,
have resulted in, or could reasonably be expected to result in, any change or effect, that (A) is materially adverse to the Assets
or the Accounts Receivable, taken as a whole, or VPRB, taken as a whole, (B) prevents or has a material adverse effect on the
ability of Seller, on the one hand, or VPRB on the other, to consummate the Transactions or (C) is materially adverse to the business
operations, financial condition, assets or liabilities of VPRB; provided, that for purposes of analyzing whether any change, effect,
event, occurrence, state of facts or development constitutes a “Material Adverse Effect” under this definition, the
parties agree that none of the following shall be deemed, either alone or in combination, to constitute, and none of the following
shall be taken into account in determining whether there has been or will be, a Material Adverse Effect: (a) any change relating
to the United States’ or foreign economy or financial, credit or securities markets in general, so long as the effects do
not uniquely relate to (x) the Assets or the Accounts Receivable, (y) the Seller, or (z) VPRB, as applicable, (b) any adverse
change, effect, event, occurrence, state of facts or development reasonably attributable to conditions affecting the industries
in which Seller or VPRB participate, so long as the effects do not uniquely relate to Seller or VPRB, as applicable, (c) any change
in GAAP or the accounting rules and regulations of the Securities and Exchange Commission, so long as the effects do not uniquely
relate to (x) the Assets or the Accounts Receivable, (y) the Seller, or (z) VPRB, as applicable.

 

(xiii)
“Order” means any award, decision, injunction, judgment, order, ruling, subpoena, or verdict entered, issued, made,
or rendered by any court, administrative agency, or other Governmental Authority or by any arbitrator.

 

(xiv)
“Person” means any natural individual or any Entity.

 

(xv)
“Proceeding” means any action, arbitration, audit, hearing, investigation, litigation, claim, demand or suit (whether
civil, criminal, administrative, investigative, or informal) commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Authority, arbitrator or other person, firm or entity.

 

(xvi)
“Tax” or “Taxes” means, with respect to any Person, all taxes (domestic or foreign), including any income
(net, gross or other including recapture of any tax items such as investment tax credits), alternative or add-on minimum tax,
gross income, gross receipts, gains, sales, use, leasing, lease, user, ad valorem, transfer, recording, franchise, profits, property
(real or personal, tangible or intangible), fuel, license, withholding on amounts paid to or by such Person, payroll, employment,
unemployment, social security, excise, severance, stamp, occupation, premium, environmental or windfall profit tax, custom, duty
or other tax, or other like assessment or charge of any kind whatsoever, together with any interest, levies, assessments, charges,
penalties, additions to tax or additional amount imposed by any Authority.

 

(xvii)
“Termination Date” means July 28, 2016.

 

(xviii)
“Transactions” means the transactions among the parties hereto as set forth herein.

 

    	 	3	 

    	 	 	 

    

 

Section
2. Sale and Purchase.

 

(A)
Subject to the terms and conditions hereof,

 

(i)
VPRB hereby agrees to purchase and accept from Vapor, and Vapor hereby agrees to sell, convey and assign to VPRB:

 

(a)
the assets comprising Vapor’s Fort Lauderdale wholesale operations as set forth on Exhibit A-1 (“Wholesale Operations
Assets”), free and clear of any Liens; and

 

(b)
the current inventory of Vapor located at Vapor’s facilities at 3001 Griffin Road, Dania Beach, Florida 33312 (the “Facility”)
as set forth on Exhibit A-2, which inventory has a current estimated value of $258,743 (the “Wholesale Inventory”
and, together with the Wholesale Operations Assets, the “Assets”), free and clear of any Liens.

 

(ii)
Mr. Frija hereby agrees to purchase and accept from Vapor, and Vapor hereby agrees to sell, convey and assign to Mr. Frija the
right to receive, subject to Section 10(A), up to $95,800 upon collection by Vapor from the Accounts Receivables (as defined in
Section 6(h) hereof) retained by Vapor in exchange for all shares of common stock of Vapor currently owned by Mr. Frija, which
currently total approximately 1,405,910,203 shares, and any other securities of Vapor owned by Mr. Frija (the “Vapor Shares”),
free and clear of all liens and encumbrances.

 

(B)
Relationship. Mr. Frija and VPRB acknowledge that they are related parties, and that Mr. Frija will benefit from the purchase
of the Assets by VPRB, and therefore Mr. Frija agrees to enter into transactions with Vapor as set forth herein relating to the
purchase of the Assets by VPRB under Section 2(A)(i), if necessary.

 

Section
3. Consideration and Other Agreements.

 

(A)
Purchase Price. In return for the Assets, at the Closing:

 

(i)
VPRB shall assume the liabilities of Vapor set forth on Exhibit A-3 (the “Assumed Liabilities”);

 

(ii)
Mr. Frija shall transfer the Vapor Shares to Vapor; and

 

(iii)
VPRB and Vapor shall enter into a promissory note in form and substance as attached hereto as Exhibit B (the “Acquisition
Note”), pursuant to which VPRB shall pay to Vapor the amount of $370,000 (subject to adjustment pursuant to Section 5(A);
with the Acquisition Note having a 1 year term, with the first payment to be due and payable as of the 91st day after
Closing and on the same day of each month thereafter until such note is satisfied, and which shall bear an interest rate of 4.5%
per annum (subject to any default interest provision), and which payment thereunder shall be $10,000 per month with a balloon
payment of the remainder of principal and interest on the first anniversary of the Closing.

 

    	 	4	 

    	 	 	 

    

 

(B)
Vapor Shares. Transfer of the Vapor Shares shall be made by Mr. Frija by instruction letter at Closing to Vapor’s
transfer agent (the “Transfer Instructions”).

 

(C)
VPRB Loan Note. At the Closing, as part of the consideration for the acquisition of the Assets by VPRB, Vapor Corp. shall
loan to VPRB the sum of $500,000, which shall be evidenced by a promissory note in form and substance as attached hereto as Exhibit
C (the “VPRB Loan Note”) in the amount of $500,000, at an interest rate of the prime rate plus 2% (which rate shall
be reset at each anniversary of the Closing and be subject to any default interest provision), and which shall be payable as follows:
(i) 36 monthly payments of $14,000, with such payments deferred and commencing on the 181st day after Closing, with
subsequent installments payable on the same day of each month thereafter and (ii) in the 37th month, a balloon payment
for all remaining accrued interest and principal.

 

(D)
Security. The parties agree that the Acquisition Note and the VPRB Loan Note (each, a “Note”) shall be governed
by a security agreement in form and substance as attached hereto as Exhibit D (the “Security Agreement”) which shall
provide that the Acquisition Note and the VPRB Loan Note are secured by all of the assets of VPRB and its subsidiaries.

 

Section
4. Closing; Execution and Delivery of Closing Documents.

 

(A)
Closing. The closing of the transaction contemplated hereby (the “Closing”) shall be held on the Closing
Date by mail, or at the offices of Buyers or their counsel or at such other location as mutually agreed to by the parties. At
the Closing, Seller shall execute and deliver, or cause to be executed and delivered, the documents and items set forth in Section
5.B. (unless such execution and delivery is waived in writing by Buyers, in Buyers’ sole discretion), Buyers shall execute
and deliver, or cause to be executed and delivered, the documents and items set forth in Section 5(C) (unless such execution and
delivery is waived in writing by Seller, in Seller’s sole discretion) and each of the parties shall execute and deliver
such other documents and take such actions as either party or its counsel may reasonably require for the purpose of consummating
the transactions contemplated by this Agreement. All actions taken at the Closing shall be deemed to have been taken simultaneously
as of the Closing Date.

 

(B)
Vapor Deliverables. At the Closing, Vapor shall deliver or cause to be delivered to:

 

(i)
VPRB the following documents and things, with such documents being duly executed, notarized or acknowledged where appropriate:

 

(a)
A bill of sale for the Assets, in form and substance as attached hereto as Exhibit E (the “Bill of Sale”) duly executed
by Vapor, together with such other documents transferring and conveying the Assets to VPRB as VPRB’s counsel may reasonably
require for the effective transfer and conveyance of the Assets;

 

(b)
$500,000 by wire transfer to an account as designated by VPRB, which amount (i) will be released by counsel for Vapor, Cozen O’Connor,
upon evidence that the Vapor Shares have been transferred and (ii) shall be repaid pursuant to the VPRB Loan Note;

 

    	 	5	 

    	 	 	 

    

 

(c)
The Security Agreement duly executed by Vapor;

 

(d)
An assignment and assumption agreement between Vapor and VPRB pursuant to which VPRB shall assume the Assumed Liabilities, in
form and substance as attached hereto as Exhibit F (the “Assignment and Assumption Agreement”), duly executed by Vapor;
and

 

(e)
a certification of non-foreign status in a form satisfactory to VPRB for purposes of complying with the requirements of section
1445 of the Internal Revenue Code of 1986, as amended, and any other applicable state or local law withholding certificates that
VPRB may advise Vapor it believes are applicable and forms of which VPRB provides to Vapor; and

 

(ii)
VPRB and Mr. Frija, the following documents and things, with such documents being duly executed, notarized or acknowledged where
appropriate:

 

(a)
a copy of this Asset Purchase Agreement executed by Vapor;

 

(b)
a certificate of Vapor certifying to VPRB and Mr. Frija that all representations and warranties of Vapor contained herein are
true and correct as of the Closing Date and that Vapor has duly performed and complied with all agreements and conditions required
by this Agreement to be performed and complied with by Vapor prior to or as of the date of the Closing;

 

(c)
any and all consents or approvals required to be obtained by Vapor for the consummation of the transactions set forth herein;

 

(d)
a good standing certificate for Vapor; and

 

(e)
such other documents as VPRB and Mr. Frija may reasonably request in order to consummate the transactions contemplated herein.

 

(C)
Mr. Frija and VPRB Deliverables. At the Closing:

 

(i)
Mr. Frija shall deliver or cause to be delivered the Vapor Shares to Vapor. Transfer of the Vapor Shares shall be made by Mr.
Frija by delivery of the Transfer Instructions at Closing to Vapor’s transfer agent (the “Transfer Agent”);
and

 

(ii)
VPRB shall deliver or cause to be delivered to Vapor the following documents and things, with such documents being duly executed,
notarized or acknowledged where appropriate:

 

(a)
The Acquisition Note and the VPRB Loan Note, each duly executed by VPRB;

 

(b)
The Security Agreement duly executed by VPRB;

 

(c)
the Assignment and Assumption Agreement, duly executed by VPRB; and

 

(d)
a good standing certificate for VPRB; and

 

    	 	6	 

    	 	 	 

    

 

(iii)
VPRB and Mr. Frija shall deliver or cause to be delivered to Vapor the following documents and things, with such documents being
duly executed, notarized or acknowledged where appropriate:

 

(a)
a copy of this Asset Purchase Agreement executed by VPRB and Mr. Frija;

 

(b)
a certificate of VPRB and Mr. Frija certifying to Vapor that all representations and warranties of VPRB and Mr. Frija contained
herein are true and correct as of the Closing Date and that VPRB and Mr. Frija have duly performed and complied with all agreements
and conditions required by this Agreement to be performed and complied with by VPRB and Mr. Frija prior to or as of the date of
the Closing; and

 

(c)
such other documents as Vapor may reasonably request in order to consummate the transactions contemplated herein.

 

Section
5. Prorations; Costs.

 

(A)
Prorations. In the event that there are any, all costs, Taxes, utility charges, ground rents and other items of income
or expense related to the Assets or the Accounts Receivable, such amounts will be prorated as of the Closing Date such that Vapor
shall be entitled to the benefit of, and be responsible for, all income and expenses accruing up to and including the Closing
Date and VPRB shall be entitled to the benefit of, and be responsible for, all income and expenses accruing after the Closing
Date. A reasonable estimate of such prorations shall be set forth on a closing statement mutually agreed upon no later than the
second (2nd) day prior to the Closing (“Closing Statement”) and the amount of the Acquisition Note
shall be adjusted accordingly to take such expenses into account.

 

(B)
Costs. Vapor shall bear the costs of recordations, together with any sales, deed, stamp, intangibles or transfer Taxes
arising with respect to the transfer of the Assets or the Vapor Shares.

 

Section
6. Representation and Warranties of Seller.

 

Seller
represents and warrants the following to Buyers as of the Effective Date and as of the Closing:

 

(A)
Organization; Power and Authority; Authorization and Validity. Seller is a corporation, duly organized, validly existing
and in good standing under the laws of the State of Delaware. Seller has all necessary power and authority to execute, deliver
and perform its obligations under this Agreement and the closing documents and to complete the transactions provided for herein.
Neither the execution, and delivery nor the performance of this Agreement or any of the closing documents, with or without notice,
the passage of time, or both, (i) will constitute or result in a violation or breach by Seller of any judgment, order, writ, injunction,
or decree issued against or imposed on Seller, or (ii) will result in a violation of any legal requirement or private covenant
to which Seller is a party. Any and all consents to Seller’s execution, delivery or performance of this Agreement required
from any person, including any and all directors, shareholders, partners and lenders of Seller, have been obtained in writing.
No other third party has any ownership or other rights with respect to any of the Assets.

 

    	 	7	 

    	 	 	 

    

 

(B)
Enforceability. This Agreement constitutes the legal, valid, and binding obligation of Seller, enforceable against Seller
in accordance with its terms except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance and other similar laws of general application affecting enforcement of creditors’ rights generally and (ii) the
availability of the remedy of specific performance or injunctive or other forms of equitable relief may be subject to equitable
defenses and would be subject to the discretion of the court before which any proceeding therefor may be brought. Upon the execution
and delivery by Seller of this Agreement and the closing documents as required by Section 4(B), this Agreement and such closing
documents will constitute the legal, valid, and binding obligations of Seller, as applicable, enforceable against it in accordance
with their respective terms.

 

(C)
No Commitments or Litigation. None of the Assets is bound or affected by any, (i) mortgage, deed of trust, loan or other
security agreement that will not be satisfied at Closing; (ii) contract to purchase or sell; (iii) noncompetition or similar restrictive
covenant; (iv) option or right of first refusal; or (v) any other agreement or commitment outside the ordinary course of business
(all of the foregoing collectively referred to herein as “Commitments”). There is no litigation nor are there any
proceedings (whether regulatory or otherwise) affecting any of the Assets which have not been disclosed to Buyers in a writing
dated the date hereof.

 

(D)
No Oral Agreements. No oral agreements pertaining to the Assets exist between Seller and any other party.

 

(E)
No Violation; Restrictions. Neither the execution and performance of this Agreement or the agreements contemplated hereby,
nor the consummation of the transactions contemplated hereby or applicable to the Assets thereby will violate Applicable Law.
Seller has complied in all respects with all Applicable Laws where the failure to so comply could either result in a liability
of Buyers or adversely affect the Assets or the operation thereof.

 

(F)
Commissions. Seller has not incurred any obligation for finder’s, broker’s, or agent’s fee in connection
with the transaction contemplated hereby.

 

(G)
Financial. There is no fact known to Seller that would reasonably be expected to have a material adverse effect on the
Assets or its operations, that has not been disclosed herein, or in a report, financial statement, exhibit, schedule, disclosure
letter or other writing attached hereto.

 

(H)
Accounts Receivable. The accounts receivable of Seller which are less than ninety (90) days in arrears as of the date here
total $244,735 and are as set forth on Exhibit G (the “Accounts Receivable”).

 

    	 	8	 

    	 	 	 

    

 

Section
7. Representation and Warranties of VPRB.

 

VPRB
represents and warrants the following to Seller as of the Effective Date and as of the Closing:

 

(A)
Organization; Power and Authority; Authorization and Validity. VPRB is a limited partnership, duly formed, validly existing
and in good standing under the laws of the State of Delaware. VPRB will be duly bound by the actions of the legal entities executing
and delivering this Agreement and the closing documents on its behalf, and the individuals executing and delivering said documents
on its behalf have all necessary power and authority to do so. VPRB has all necessary power and authority to execute, deliver
and perform its respective obligations under this Agreement and the closing documents and to complete the transactions provided
for herein. Neither the execution and delivery nor the performance of this Agreement or any of the closing documents, with or
without notice, the passage of time, or both, (i) will constitute or result in a violation or breach by VPRB of any judgment,
order, writ, injunction, or decree issued against or imposed on VPRB, (ii) will result in a violation of any legal requirement
or private covenant to which VPRB is a party, or (iii) will give any person any right to accelerate any debts of VPRB. Any and
all consents to VPRB’s execution, delivery or performance of this Agreement required from any person, including any and
all directors, members, partners and lenders of VPRB, have been obtained in writing.

 

(B)
Enforceability. This Agreement constitutes the legal, valid, and binding obligation of VPRB, enforceable against VPRB in
accordance with its terms except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance
and other similar laws of general application affecting enforcement of creditors’ rights generally and (ii) the availability
of the remedy of specific performance or injunctive or other forms of equitable relief may be subject to equitable defenses and
would be subject to the discretion of the court before which any proceeding therefor may be brought. Upon the execution and delivery
by VPRB of this Agreement and the closing document as required by Section 4(C), this Agreement and such closing documents will
constitute the legal, valid, and binding obligations of VPRB, as applicable, enforceable against it in accordance with their respective
terms.

 

(C)
Commissions. VPRB has not incurred any obligation for any finder’s, broker’s, or agent’s fee in connection
with the transaction contemplated hereby.

 

(D)
Financial. There is no fact known to VPRB that would reasonably be expected to have a Material Adverse Effect on its assets
or operations, that has not been disclosed herein, or in a report, financial statement, exhibit, schedule, disclosure letter or
other writing attached hereto. There are no agreements or arrangements between VPRB and any other Person creating, incurring,
assuming or guaranteeing (or that may create, incur, assume or guarantee) indebtedness or under which a Lien has been imposed
on any of the assets of VPRB, in either case tangible or intangible, or any letter of credit arrangements, or any guarantee thereof.

 

(E)
Commitments or Litigation. None of the assets of VPRB is bound or affected by any, (i) mortgage, deed of trust, loan or
other security agreement; (ii) contract to purchase or sell; (iii) option or right of first refusal; or (v) any other agreement
or commitment outside the ordinary course of business.

 

    	 	9	 

    	 	 	 

    

 

Section
8. Representation and Warranties of Mr. Frija.

 

Mr.
Frija represents and warrants the following to Seller as of the Effective Date and as of the Closing:

 

(A)
Organization; Power and Authority; Authorization and Validity. Mr. Frija is an individual resident of the State of Florida.
Mr. Frija has all necessary power and authority to execute, deliver and perform its respective obligations under this Agreement
and the closing documents and to complete the transactions provided for herein. Neither the execution and delivery nor the performance
of this Agreement or any of the closing documents, with or without notice, the passage of time, or both, (i) will constitute or
result in a violation or breach by Mr. Frija of any judgment, order, writ, injunction, or decree issued against or imposed on
Mr. Frija, (ii) will result in a violation of any legal requirement or private covenant to which Mr. Frija is a party, or (iii)
will give any person any right to accelerate any debts of Mr. Frija. Any and all consents to Mr. Frija’s execution, delivery
or performance of this Agreement required from any person, including any and all partners and lenders of Mr. Frija, have been
obtained in writing.

 

(B)
Enforceability. This Agreement constitutes the legal, valid, and binding obligation of Mr. Frija, enforceable against Mr.
Frija in accordance with its terms except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance and other similar laws of general application affecting enforcement of creditors’ rights generally and (ii) the
availability of the remedy of specific performance or injunctive or other forms of equitable relief may be subject to equitable
defenses and would be subject to the discretion of the court before which any proceeding therefor may be brought. Upon the execution
and delivery by Mr. Frija of this Agreement and the closing document as required by Section 4(C), this Agreement and such closing
documents will constitute the legal, valid, and binding obligations of Mr. Frija, as applicable, enforceable against him in accordance
with their respective terms.

 

(C)
Commissions. Mr. Frija has not incurred any obligation for any finder’s, broker’s, or agent’s fee in
connection with the transaction contemplated hereby.

 

(D)
Title to Vapor Shares. Mr. Frija is, and on the Closing Date will be, the record and beneficial owner and holder of, and
have, and on the Closing Date will have, good and valid title to, the Vapor Shares, free and clear of all Liens and Mr. Frija
has not granted any option or right to purchase or vote any of the Vapor Shares other than to Seller pursuant to this Agreement.
The consummation of the transactions herein will transfer to Seller record or beneficial ownership of the Vapor Shares, free and
clear of all Liens created by Mr. Frija. Other than the Vapor Shares, neither Mr. Frija or VPRB nor any of their Affiliates owns
any capital stock or other securities of Vapor.

 

(E)
No Oral Agreements. No oral agreements pertaining to the Vapor Shares exist between or among Mr. Frija, VPRB and any other
party.

 

    	 	10	 

    	 	 	 

    

 

Section
9. Management of the Assets Before Closing Date.

 

During
the period between the Effective Date and the Closing, except as otherwise permitted or required by this Agreement, Vapor shall
(i) conduct the operations of the Assets only in the ordinary and usual course of business consistent with past and current practices;
and shall not make any material changes to the Assets or their operation without the prior consent of VPRB; (ii) promptly notify
VPRB of material changes or adverse conditions with respect to the Assets or their operation; (iii) maintain casualty and liability
insurance amounts and coverages as customarily maintained; (iv) not solicit or authorize any person to solicit, directly or indirectly,
nor encourage or provide any information in response to, any inquiry or proposal for the sale or financing of all or any part
of the Assets, nor enter into negotiations for any such proposal; (v) remedy, at the sole expense of Vapor, all Liens or other
impairments to the marketability of title to the Assets; and (vii) not enter into any other transaction that would reasonably
be expected to adversely affect the Assets.

 

Section
10. Additional Agreements.

 

(A)
Accounts Receivable. Following the Closing, Vapor shall continue to own the Accounts Receivable, provided, however, that
Vapor shall, following the Closing, use its commercially reasonable efforts consistent with standard industry practice to collect
the Accounts Receivable, and any and all amounts so collected (i) up to $150,000 (net of any refunds) in the aggregate shall be
credited against payment of the Acquisition Note; and (ii) in excess of $150,000 (up to $95,800) will be transferred to Mr. Frija
promptly after receipt by Vapor as payment for the Vapor Shares from Mr. Frija.

 

(B)
Premises. Following the Closing, Vapor will continue to pay all costs for the lease of Vapor’s premises located at
3001 Griffin Road, Dania Beach, FL 33312 (the “Premises”) for a period of sixty days following the Closing, and will
then vacate the Premises, and shall remove any furniture or fixtures which are not included in the Assets. Notwithstanding the
forgoing, Vapor shall have the option to remain at the Premises beyond the period as set forth above, and if Vapor exercises such
option, VPRB and Vapor will then split equally the rent and utility and maintenance expenses of the Premises until such time as
Vapor vacates the Premises. Vapor shall maintain its current levels of property and liability insurance for the Premises until
it vacates the Premises.

 

(C)
Insurance. Following the Closing, until both the Acquisition Note and the VPRB Loan Note are repaid, VPRB shall maintain
customary liability and property insurance for Assets and VPRB’s other assets which are subject to the Security Agreement.

 

(D)
Assistance. Following the Closing, Vapor shall provide reasonable assistance in transitioning the Assets to VPRB post-Closing,
including assisting with inventory management services and employee transitions, at no additional cost to VPRB.

 

(E)
Share Ownership. Following the Closing, neither VPRB, Mr. Frija nor any of its agents, employees, officers, directors (collectively
“VPRB Agents”), nor any person or entity acting pursuant to the instruction of a VPRB Agent, directly or indirectly,
shall, without the express written approval of Vapor, (i) for a period of six months from the Closing, acquire any ownership interest
in any capital stock or warrants of Vapor and (ii) at any time following the six month period following the Closing, acquire a
beneficial ownership interest in Vapor exceeding 4.99% of the total issued and outstanding shares of Vapor.

 

(F)
Non-Solicitation by VPRB. VPRB agrees that, following the Closing, VPRB will not, during the period that begins on the
Closing Date and ends one (1) year immediately following the Closing, directly or indirectly, either as principal, agent, employee,
employer, stockholder, copartner or in any other individual or representative capacity whatsoever, whether for VPRB’s own
benefit or for the benefit of any other individual or entity, solicit, induce, enter into any agreement with, or attempt to influence
any individual listed on Exhibit H to terminate their relationship with Vapor or hire or engage or enter into any employer-employee
relationship with such person.

 

    	 	11	 

    	 	 	 

    

 

(G)
Additional Indebtedness of VPRB. So long as either Note is outstanding and not paid in full, VPRB shall not, and VPRB shall
not permit any of its subsidiaries to, directly or indirectly, incur or guarantee, assume or suffer to exist any indebtedness
that would rank senior or pari passu to either Note.

 

(H)
Covenant Note to Compete.

 

(i)
Vapor hereby acknowledges that: (1) the agreements and covenants it is providing in this Section 10(H) are reasonable and necessary
to VPRB’s protection of its legitimate interests in the transaction contemplated by this Agreement; (2) Vapor has certain
knowledge of the business operations that may be required to ensure the effective and successful conduct of the business of VPRB,
and has access to trade secrets and confidential business methods, plans and practices considered confidential by VPRB, this information
has commercial value in the business in which VPRB will be engaged after the consummation of the transaction contemplated by this
Agreement, VPRB may be irreparably damaged and its substantial investment in the transactions contemplated by this Agreement materially
impaired if Vapor was to enter into an activity competing or interfering with the business of VPRB in violation of the terms of
this Section 10(H); and (3) the scope and length of the term of this covenant set forth in this Section 10(H) and the geographical
restrictions contained therein are fair and reasonable and not the result of overreaching, duress or coercion of any kind and
the full, uninhibited and faithful observance of each of the agreements and covenants contained in this Section 10(H) will not
cause such Vapor any undue hardship, financial or otherwise, and enforcement of each of the covenants contained in this Section
10(H) will not impair Vapor’s ability to conduct its operations.

 

(ii)
Vapor covenants and agrees that it will not, at any time during the period of time beginning on the Closing Date and ending on
the date that is three (3) years after such Closing Date, compete with VPRB in the wholesale distribution of the brands of electronic
cigarette products that comprise the Assets. As used in this Section 10(H), to “compete” shall mean to, directly or
indirectly, own, manage, operate, join, control, be employed by, or become a director, officer, employee, agent, broker, consultant,
representative or shareholder of a corporation or an owner of an interest in or an employee, agent, broker, consultant, representative
or partner of a partnership or in any other capacity whatsoever of any other form of business association, sole proprietorship
or partnership, or otherwise be connected in any manner with the ownership, management, or operation of any business substantially
similar to that carried on by Vapor with the Assets of the date hereof.

 

(iii)
Vapor acknowledges that VPRB may be irreparably damaged (and damages at law would be an inadequate remedy) if this Section 10(H)
is not specifically enforced. Therefore, in the event of a breach or threatened breach by Vapor of any provision of this Section
10(H), then VPRB shall be entitled, in addition to all other rights or remedies which may be available at law or in equity, to
seek an injunction restraining such breach, without being required to show any actual damage or to post an injunction bond, or
to a decree for specific performance of the provisions of this Section 10(H). The terms of this Section 10(H) shall survive the
Closing for the periods indicated herein; provided, however, the terms of this Section 10(H) shall terminate if an Event of Default
(as defined in the Notes) occurs pursuant to either Note and such Event of Default continues for a period of 90 calendar days.

 

    	 	12	 

    	 	 	 

    

 

Section
11. Inspection

 

(A)
Duration. For a period from the date hereof to July 28, 2016 (the “Inspection Period”), Buyers shall have the
right to conduct a due diligence investigation of Assets and the Accounts Receivable.

 

(B)
Cooperation and Access. During the Inspection Period or the earlier termination of this Agreement, at its own cost, Buyers
and their Representatives will have continued access to Seller’s offices and its facilities, operating locations, records
and personnel to make inspections, examinations, evaluations, studies, tests, and surveys, of any kind or nature, which Buyers
desire as to the operations of Seller and the Assets and the Accounts Receivable. Seller shall cooperate with Buyers’ activities
under this Section 11.

 

(C)
Inspection and Review. Seller shall permit Buyers and their authorized representatives access to, and make available to
Buyers for inspection, all of the assets and operations of Seller, and the business premises of Seller and its employees, and
furnish all books, records, documents, corresponding engineering and environmental reports, contracts, property and sales tax
records and information with respect to the Assets and the Accounts Receivable. Buyers shall have the right to contact all third
parties as Buyers reasonably determine to be advisable in connection with Buyers’ inspection of the Assets and the Accounts
Receivable. Seller acknowledges that, prior to or following the Closing Date, Buyers may be required to conduct audits of Seller’s
business and any business or assets it has acquired or is reasonably likely to acquire in order to satisfy the requirements of
Buyers’ lender(s). Seller agrees to cooperate with Buyers and to provide to Buyers, from time to time, at no out-of-pocket
cost to the Buyers and upon reasonable advance written notice from Buyers, access to all financial and other information pertaining
to the Assets and the Accounts Receivable, which information is relevant and reasonably necessary, in the opinion of Buyers’
or their Affiliates’ outside, third party accountants (“Accountants”) to enable Buyers or their Affiliates and
their Accountants to prepare financial statements in compliance with any and all applicable laws, rules and regulations.

 

(D)
Reliance. Notwithstanding any investigation by Buyers, or any information obtained by Buyers or their representatives,
Buyers shall be entitled to rely upon the representations, warranties and indemnities of Seller contained in this Agreement or
upon any other agreement, document or other instrument delivered in contemplation of or pursuant hereto, and upon the representations
of Seller at Closing as to compliance with or performance of any covenants made by it herein or therein and as to the satisfaction
of any conditions precedent to the obligations of Buyers hereunder.

 

    	 	13	 

    	 	 	 

    

 

(E)
Termination. (i) At any time prior to the expiration of the Inspection Period, in the event that Buyers determine, in their
sole discretion, that their due diligence review of the Assets and the Accounts Receivable are not satisfactory to Buyers, Buyers
shall have the right to terminate this Agreement upon notice to Seller, at which point all of Buyers’ obligations hereunder
shall cease.

 

(ii)
If the condition to Closing set forth in Section 13(E) is not satisfied prior to 5:30 p.m. eastern on August 1, 2017, the Seller
shall have the right to terminate this Agreement without any additional liability to any party hereto (notwithstanding any other
provision herein).

 

Section
12. Buyers’ Conditions Precedent to Closing

 

Buyers’
obligations to complete the Closing are expressly contingent upon fulfillment of such of the following terms and conditions (collectively,
the “Buyers’ Conditions Precedent”) as have not been waived in writing by Buyers in Buyers’ sole discretion:

 

(A)
Performance of Covenants and Accuracy of Representations. All of Seller’s representations and warranties in this
Agreement (considered collectively), and each of these representations and warranties (considered individually) must have been
accurate in all material respects as of the Effective Date and must also be accurate in all material respects as of the Closing
Date as if made on the Closing Date, without giving effect to any materiality qualifiers contained in the representations and
warranties, and Seller’s covenants, duties and obligations in this Agreement required to be performed on or prior to the
Closing Date must have been fully and completely performed in all material respects as of the Closing.

 

(B)
No Legal Action Against Contemplated Transactions. Since the Effective Date, there must not have been commenced or threatened
any Proceeding (a) involving any challenge to, or seeking damages or other relief in connection with, any of the contemplated
Transactions, or (b) that is likely to have the effect of preventing, delaying, making illegal, or otherwise interfering with
any of the Transactions in a material and substantial manner.

 

(C)
No Claim Regarding Assets or Accounts Receivable. There must not have been made or threatened any Claims by any Person
other than VPRB and Mr. Frija asserting that such Person (a) is the holder or the beneficial owner of, or has the right to acquire
or to obtain beneficial ownership of, any Assets or the Accounts Receivable or (b) is entitled to all or any portion of the consideration
payable by VPRB or Mr. Frija hereunder.

 

(D)
Title to Assets and Accounts Receivable. Seller shall have good title to the Assets and the Accounts Receivable free and
clear of all Liens, and Buyers shall obtain such title upon the consummation of the Transactions.

 

(E)
Execution and Delivery of Documents. Seller shall have executed and delivered to Buyers any and all documents and instruments
contemplated by this Agreement and such document as reasonably requested by Buyers in order to consummate the Transactions.

 

(F)
No Material Adverse Effect. No fact or circumstance shall exist as it relates to Seller that could result in a Material
Adverse Effect on the Assets or the Accounts Receivable or the Buyers if the Transactions are consummated.

 

    	 	14	 

    	 	 	 

    

 

(G)
No Material Adverse Change. The physical, including environmental, conditions of or relating to the Assets shall
not have materially and adversely changed since the Inspection Period expiration date.

 

(H)
Termination. Buyers shall not have terminated this Agreement pursuant to Section 11(E).

 

Section
13. Seller’s Conditions Precedent to Closing

 

Seller’s
obligation to complete the Closing are expressly contingent upon fulfillment of such of the following terms and conditions (collectively,
the “Seller’s Conditions Precedent”) as have not been waived in writing by Seller in its sole discretion:

 

(A)
Performance of Covenants and Accuracy of Representations. All of Buyers’ representations and warranties in this Agreement
(considered collectively), and each of these representations and warranties (considered individually), must have been accurate
in all material respects as of the Effective Date, and must be accurate in all material respects as of the Closing Date as if
made on the Closing Date (without giving effect to any materiality qualifiers contained in the representations and warranties),
and all of Buyers’ duties, obligations and covenants in this Agreement required to be performed on or prior to the Closing
Date must have been fully and completely performed in all material respects as of the Closing Date.

 

(B)
Execution and Delivery of Documents. Buyers shall have executed and delivered to Seller any and all documents and instruments
contemplated by this Agreement and such document as reasonably requested by Seller in order to consummate the Transactions.

 

(C)
No Material Adverse Effect. No fact or circumstance shall exist as it relates to

 

Buyer
that could result in a Material Adverse Effect.

 

(D)
Third Party Approvals. VPRB shall have obtained all third party approvals from all Governmental Authorities or other Persons
required by such Governmental Authorities or other persons in order to consummate the contemplated Transactions and to own and
operate the Assets following the Closing in the form and manner as contemplated by VPRB.

 

(E)
Transfer Instructions. The Transfer Instructions of Mr. Frija shall have been delivered to, and accepted by, the Transfer
Agent of Vapor.

 

Section
14. Survival and Indemnification; Default Limitations

 

(A)
Survival. All representations and warranties in this Agreement and any other certificate or document delivered pursuant
to this Agreement will survive the Closing for a period of thirty-six (36) months, except for the representations and warranties
given pursuant to Section 6(A), Section 6(B), Section 7(A), Section 7(B), Section 8(A) and Section 8(B), which shall survive the
Closing until the expiration of the applicable statute of limitations. Any Claim for indemnification under this Section 14 shall
be made during the applicable survival period. In order to enforce a claim against the indemnitor under this Section 14,
the indemnified party shall provide written notice to the indemnitor on or before the last day of the survival period of any alleged
breach and, to the extent that such breach is susceptible to cure, shall allow the indemnitor thirty (30) days within which to
cure such breach, or, if such breach cannot reasonably be cured within thirty (30) days, an additional reasonable time period,
so long as such cure has been commenced within thirty (30) days after notice and is being diligently pursued and such cure is
completed within an additional sixty (60) days after the end of such 30-day cure period.

 

    	 	15	 

    	 	 	 

    

 

(B)
Indemnification by Seller. Seller will indemnify and hold harmless VPRB and Mr. Frija and their Representatives (collectively,
the “Buyer Indemnified Persons”) for, and will pay to such Buyer Indemnified Persons the amount of, any loss, Liability,
Claim, damage, expense (including costs of investigation and defense and reasonable attorneys’ fees), but excluding any
lost profits, special, consequential or punitive damages (collectively, “Damages”), arising, directly or indirectly,
from or in connection with (a) any breach of any representation or warranty made by Seller in this Agreement or any other certificate
or document delivered by Seller pursuant to this Agreement, (b) any breach by Seller of any covenant or obligation of Seller in
this Agreement, and (c) any Claim by any Person for brokerage or finder’s fees or commissions or similar payments based
upon any agreement or understanding alleged to have been made by any such Person with Seller (or any Person acting on their behalf)
in connection with any of the contemplated Transactions. 

 

(C)
Indemnification by Buyers.

 

(i)
VPRB. VPRB will indemnify and hold harmless Seller and each of its Representatives (collectively, the “Seller Indemnified
Persons”) for, and will pay to such Seller Indemnified Persons the amount of, any Damages arising, directly or indirectly,
from or in connection with (a) any breach of any representation or warranty made by VPRB in this Agreement or in any certificate
delivered by VPRB pursuant to this Agreement, (b) any breach by VPRB of any of its covenants or obligations in this Agreement,
and (c) any Claim by any Person for brokerage or finder’s fees or commissions or similar payments based upon any agreement
or understanding alleged to have been made by such Person with VPRB (or any Person acting on its behalf) in connection with any
of the contemplated Transactions.

 

(ii)
Mr. Frija. Mr. Frija will indemnify and hold harmless Seller Indemnified Persons for, and will pay to such Seller Indemnified
Persons the amount of, any Damages arising, directly or indirectly, from or in connection with (a) any breach of any representation
or warranty made by Mr. Frija in this Agreement or in any certificate delivered by Mr. Frija pursuant to this Agreement, (b) any
breach by Mr. Frija of any of its covenants or obligations in this Agreement, and (c) any Claim by any Person for brokerage or
finder’s fees or commissions or similar payments based upon any agreement or understanding alleged to have been made by
such Person with Mr. Frija (or any Person acting on its behalf) in connection with any of the contemplated Transactions.

 

    	 	16	 

    	 	 	 

    

 

(D)
Procedure for Indemnification for Third Party Claims. Promptly after receipt by a person entitled to indemnity under Section
14(B) or Section 14(D) of notice of the assertion of a third party claim, such indemnified person shall give notice to the Person
obligated to indemnify under such Section of the assertion of such third party claim, provided that the indemnified person shall
not be subject to any liability for a delay in the delivery of such notice if such delay does not compromise or prejudice any
right of the indemnitor. The indemnitor may undertake the defense thereof if (i) the indemnitor provides written notice to such
indemnified person that the indemnitor intends to undertake such defense and will indemnify the indemnified person against all
Damages resulting from or relating to such third-party claim and determined to be owing by the indemnitor pursuant to this Section
14(D), (ii) the indemnitor provides such indemnified person with evidence acceptable to such indemnified person that the indemnitor
will have the financial resources to defend against the third-party claim and fulfill its indemnification obligations hereunder,
(iii) the third-party claim involves only money damages and does not seek an injunction or other equitable relief, (iv) an adverse
judgment with respect to the third-party claim is not, in the good faith judgment of such indemnified person, likely to establish
a precedent adverse to the continuing business interests of such indemnified person and (v) the defense of the third-party claim
is conducted actively and diligently by legal counsel reasonably acceptable to such indemnified person and can be conducted without
prejudice to the indemnified person. The indemnified person may, by counsel of its choice, participate in such proceedings, negotiations
or defense at its own expense. The indemnified person shall furnish to the indemnitor in reasonable detail such information as
the indemnified person may have with respect to such claim, including all records and similar materials that are reasonably required
in the defense of such third-party claim. In the event that within thirty (30) days after notice of any such third-party claim,
the conditions set forth in clauses (i) through (v) above are not satisfied, each indemnified person will (upon further written
notice to the indemnitor) have the right to undertake the defense of such claim, subject to any claims the indemnified persons
may thereafter have under this Section 14(D) and the indemnitor may elect to participate in such proceedings, negotiations or
defense at any time at its own expense. No indemnified or indemnifying person may settle any claim for which indemnification is
sought hereunder without the prior written consent of the other party, which shall not be unreasonably withheld, conditioned or
delayed. Nothing contained in this Section 14(D) shall be deemed to extend the deadline by which a claim can be made under Section
14 hereof.

 

(E)
Tax Treatment of Indemnity Payments. Vapor, VPRB and Mr. Frija agree to treat any indemnity payment made pursuant to this
Agreement as an adjustment to the consideration paid hereunder for all Tax purposes, unless otherwise required by applicable Legal
Requirements.

 

(F)
Sole Remedy. From and after the Closing, the provisions of this Section 14 shall be the sole and exclusive remedy of each
party for (i) any breach of a party’s representations or warranties contained in this Agreement, (ii) any breach of a party’s
covenants or other agreements contained in this Agreement, or (iii) any other matters relating to this Agreement or the Transactions,
other than claims for fraud; provided that nothing herein shall be construed or interpreted as limiting or impairing the rights
or remedies that the parties hereto may have hereunder to seek injunctive relief or specific performance. Vapor, VPRB, Mr. Frija
and their respective Representatives are the only Persons entitled to exercise any remedy provided by this Section 14.

 

(G)
Default. If any party commits a breach of any of their obligations under this Agreement, the other parties hereto shall
be entitled to bring an action for specific performance or to assert a claim for Damages either before or after the Closing or
to bring a claim for a combination of specific performance and Damages.

 

    	 	17	 

    	 	 	 

    

 

(H)
Indemnifications and Damages Limitation. NO PARTY HERETO SHALL BE ENTITLED TO RECOVER FROM THE OTHER PARTY, AND EACH PARTY
HEREBY WAIVES ANY CLAIM TO, LOST PROFITS, SPECIAL, CONSEQUENTIAL, INCIDENTAL OR PUNITIVE DAMAGES IN CONNECTION WITH, OR ON ACCOUNT
OF, ANY BREACH HEREUNDER. ABSENT FRAUD OR WILLFUL MISCONDUCT, THE LIABILITY PURSUANT TO THIS AGREEMENT FOR DAMAGES OF EITHER SELLER,
ON ONE HAND, AND VPRB AND MR. FRIJA, ON THE OTHER HAND, SHALL NOT EXCEED (1) WITH RESPECT TO THE SELLER, THE AMOUNTS RECEIVED
IN REPAYMENT FOR THE NOTES AND (2) WITH RESPECT TO MR. FRIJA AND VPRB, AN AMOUNT NOT TO EXCEED $870,000.

 

Section
15. Termination.

 

(A)
Termination Events. By notice given prior to or at the Closing, subject to Section 15(B), this Agreement may be terminated
as follows: (i) by Buyers or Seller pursuant to Section 11(E); (ii) by Buyers if Seller has materially breached its obligations
under and pursuant to this Agreement, and such breach has not been waived by Buyers; (iii) by Seller if a material breach of any
provision of this Agreement has been committed by Buyers and such breach has not been waived by Seller; (iv) by Buyers if any
condition in Section 12 has not been satisfied as of the date that is ten (10) days after the end of the Inspection Period or
if satisfaction of such a condition by such date is or becomes impossible (other than through the failure of Buyers to comply
with their obligations under this Agreement), and Buyers have not waived such condition on or before such date; (v) by Seller
if any condition in Section 13 has not been satisfied as of the date that is ten (10) days after the end of the Inspection Periods
or if satisfaction of such a condition by such date is or becomes impossible (other than through the failure of Seller to comply
with its obligations under this Agreement), and Seller has not waived such condition on or before such date; (vi) by mutual consent
of VPRB, Mr. Frija and Vapor; (vii) by Buyers if the Closing has not occurred on or before the Closing Date other than through
the fault of Buyers, or such later date as the parties may agree upon; or (viii) by Seller if the Closing has not occurred on
or before the Closing Date other than through the fault of Seller, or such later date as the parties may agree upon.

 

(B)
Effect of Termination. Each party’s right of termination under Section 15 is in addition to any other rights it may
have under this Agreement or otherwise, and the exercise of such right of termination will not be an election of remedies. If
this Agreement is terminated pursuant to Section 15, all obligations of the parties under this Agreement will terminate, except
that Section 14, this Section 15(B) and Section 17 will survive such termination, provided, however, that, if this Agreement is
terminated because of a breach of this Agreement by the nonterminating party or because one or more of the conditions to the terminating
party’s obligations under this Agreement is not satisfied as a result of the party’s failure to comply with its obligations
under this Agreement, the terminating party’s right to pursue all legal remedies will survive such termination unimpaired.

 

    	 	18	 

    	 	 	 

    

 

Section
16. Confidentiality.

 

Without
the prior written consent of the other parties hereto, no party hereto shall, and shall not permit any of its representatives
to, disclose to any person other than their respective officers, directors and advisors on a need to know basis (i) the fact that
discussions or negotiations are taking place concerning the transactions contemplated hereby, or (ii) this Agreement or any of
the terms, conditions or other facts with respect to this Agreement or the transactions contemplated hereby, including the status
thereof, except to the extent that such disclosing party has, prior to any such disclosure, determined in good faith, after consultation
with counsel, that such disclosure is required by Applicable Law.

 

Section
17. Miscellaneous

 

(A)
Expenses. Each of the parties to this Agreement will pay their own respective attorneys’ fees and costs incurred
in connection with the negotiation of this Agreement and consummation of the Closing.

 

(B)
Brokers. VPRB and Mr. Frija, on the one hand, and Vapor, on the other hand, represents and warrants to the other that it/they
have not entered into an agreement with any agent, broker or finder in connection with the transaction contemplated by this Agreement.

 

(C)
Interpretation. The singular includes the plural and the plural includes the singular. The word “or” is not
exclusive and the word “including” is not limiting. References to a law include any rule or regulation issued under
the law and any amendment to the law, rule or regulation. Unless otherwise indicated, references to a Section or Exhibit mean
a Section or Exhibit contained in or attached to this Agreement. The caption headings in this Agreement are for convenience and
reference only and do not define, modify or describe the scope or intent of any of the terms of this Agreement. This Agreement
will be interpreted and enforced in accordance with its provisions and without the aid of any custom or rule of law requiring
or suggesting construction against the party drafting or causing the drafting of the provisions in question.

 

(D)
Notices. All notices, demands or communications required or permitted under this Agreement will be in writing and delivered
by hand or mailed by certified mail, return receipt requested, postage and registration or certification charges prepaid, or by
nationally recognized overnight courier service, as set forth below, or by email with return receipt requested and received, to
the addresses as set forth below. Notices delivered personally, by overnight express delivery service or by local courier service
shall be deemed given as of actual receipt, mailed notices shall be deemed given three (3) Business Days after mailing, and notices
sent by email shall be deemed given when a return receipt has been received.

 

    	 	19	 

    	 	 	 

    

 

If
to Buyers (VPRB or Mr. Frija):

 

VPR
Brands, LP

Attn:
Kevin Frija

4401
N.W. 167st

Miami,
FL 33055

Email:
kevin.frija@vprbrands.com

 

With
a copy, which shall not constitute notice, to:

 

Legal
& Compliance LLC

Attn:
Laura Anthony, Esq.

330
Clematis Street, Suite 217

West
Palm Beach, FL 33401

Email:
LAnthony@LegalAndCompliance.com

 

If
to Seller (Vapor):

 

Vapor
Corp.

Attn:
Jeffrey Holman

3001
Griffin Road

Dania
Beach, FL 33312

Email:
jholman@vpco.com

 

With
a copy, which shall not constitute notice, to:

 

Cozen
O’Connor

Attn:
Martin T. Schrier

Southeast
Financial Center

200
South Biscayne Blvd.

Suite
4410

Miami,
FL 33131

Email:
MSchrier@cozen.com

 

(E)
Enforcement Costs. If any Proceeding is brought for the enforcement of this Agreement, or because of an alleged dispute,
breach, default or misrepresentation in connection with any provision of this Agreement, the successful or prevailing party or
parties shall be entitled to recover from the unsuccessful party(s) reasonable attorneys’ fees, court costs and all expenses
even if not taxable as court costs (including, without limitation, all such fees, taxes, costs and expenses incident to arbitration,
appellate, bankruptcy and post-judgment proceedings), incurred in that Proceeding, in addition to any other relief to which such
party or parties may be entitled. Attorneys’ fees shall include, without limitation, paralegal fees, investigative fees,
administrative costs, and all other charges billed by the attorney to the prevailing party(s). The terms of this Section 17(E)
shall survive the Closing.

 

(F)
Assignment. No party hereto may assign this Agreement without the prior written consent of the other parties hereto.

 

(G)
Governing Law. The interpretation and construction of this Agreement will be governed by and construed and enforced in
accordance with the internal laws of the State of Florida without regard to the choice or conflict of laws provisions thereof.

 

    	 	20	 

    	 	 	 

    

 

(H)
Jurisdiction and Venue. Any civil action or legal proceeding arising out of or relating to this Agreement shall be brought
solely in the state and federal courts within the State of Florida, Palm Beach County and any courts to which an appeal
may be taken or other review sought from such courts. Each party consents to the jurisdiction of each such court in any such civil
action or legal proceeding and waives any objection to the laying of venue of any such civil action or legal proceeding in such
court. To the extent allowed by applicable law, service of any court paper may be effected on such party by mail, as provided
in this Agreement, or in such other manner as may be provided under applicable laws, rules of procedure or local rules. TO THE
FULLEST EXTENT PERMITTED BY LAW, THE PARTIES HERETO WAIVE THE RIGHT TO TRIAL BY JURY.

 

(I)
Integration and Interpretation. This Agreement constitutes the entire agreement of the parties with respect to the subject
matter herein. All prior understandings and agreements among the parties with respect to the subject matter of this Agreement
are merged in this Agreement. No party shall rely upon any prior statement, covenant or representation made by any other party
which is not embodied in this Agreement. All parties have participated in the negotiation, review and drafting of this Agreement
and no provision of this Agreement shall be construed more strictly against any party. For purposes of this Agreement, (A) the
words “include” and “including” shall be deemed to be followed by the words “without limitation”;
(B) references to an agreement or document means such agreement or document as amended, supplemented or modified from time to
time; and (C) references to “hereof,” “herein” or similar terms are intended to refer to this Agreement
as a whole and not to a particular section.

 

(J)
Amendments. No purported amendment to or waiver of any term of this Agreement will be binding upon any party, or have any
other force or effect in any respect, unless the same is in writing and signed by (a) in the case of a waiver, the party to be
charged or (b) in the case of an amendment, VPRB, Vapor and Mr. Frija.

 

(K)
Binding Effect. This Agreement will be binding upon, and will inure to the benefit of, Vapor, VPRB and Mr. Frija, and each
of their respective heirs, executors, administrators, legal representatives, successors and permitted assigns.

 

(L)
Further Assurances. Each party will, from time to time, execute, acknowledge and deliver such further instruments, and
perform such additional acts, as the other parties may reasonably request in order to effectuate the intent of this Agreement,
provided that the requested party shall have no obligation to undertake any action requiring the expenditure of “out of
pocket” costs (unless otherwise required by this Agreement) unless the requesting party agrees to pay such costs if reasonably
incurred. This Section 17(L) will survive for a period of three (3) years following the Closing.

 

(M)
Third Parties. Nothing in this Agreement, whether express or implied, is intended to confer any rights or remedies to any
Persons other than Vapor, VPRB and Mr. Frija and their respective successors and permitted assigns.

 

(N)
Severability. If any provision of this Agreement or any other agreement entered into pursuant hereto is contrary to, prohibited
by or deemed invalid under applicable law or regulation, such provision shall be inapplicable and deemed omitted to the extent
so contrary, prohibited or invalid, but the remainder hereof shall not be invalidated thereby and shall be given full force and
effect so far as possible; provided that if the part deemed inapplicable and/or omitted results in a material imbalance, inequity
or unfairness in terms of the intended benefits of the bargain, the parties will in good faith restructure the Agreement to achieve
the original intention or if such is not possible, treat the Agreement as terminated with a return of any consideration received
or benefit provided to the extent practicable prior to such termination. If any provision of this Agreement may be construed in
two or more ways, one of which would render the provision invalid or otherwise voidable or unenforceable and another of which
would render the provision valid and enforceable, such provision shall have the meaning which renders it valid and enforceable.
The terms of this Section will survive the Closing.

 

    	 	21	 

    	 	 	 

    

 

(O)
Time of Essence. Time is of the essence in the performance of this Agreement.

 

(P)
Signer’s Warranty. Each individual executing this Agreement on behalf of an entity represents and warrants to the
other party or parties to this Agreement that (a) such individual has been duly and validly authorized to execute and deliver
this Agreement and any and all other documents contemplated by this Agreement on behalf of such entity, (b) this Agreement and
the documents executed by such individual on behalf of such entity under this Agreement are and will be duly authorized, executed,
and delivered on behalf of such entity and are and will be legal, valid, and binding obligations of such entity.

 

(Q)
Counterparts; Facsimile Delivery. This Agreement may be executed in two or more counterparts, each of which will be deemed
an original, but all of which together will constitute one and the same instrument. Delivery of an executed signature page of
this Agreement by electronic transmission or electronic data file shall be effective as delivery of a manually executed counterpart
hereof.

 

[Signatures
appear on following pages]

 

    	 	22	 

    	 	 	 

    

 

In witness whereof, the parties have executed this Agreement
as of the date first set forth above:

 

	 	VPR
    BRANDS, LP
	 	VPR
    Brands, LP
	 	 	 
	 	By:	/s/
    Kevin Frija
	 	 	Kevin
    Frija, CEO
	 	 	 
	 	VAPOR
    CORP.
	 	VAPOR
    CORP.
	 	 	 
	 	By:	/s/
    Jeffrey Holman
	 	 	Jeffrey
    Holman, CEO
	 	 	 
	 	Kevin
    Frija
	 	 	 
	 	By:	/s/
    Kevin Frija
	 	 	Kevin
    Frija

 

    	 	23	 

    	 	 	 

    

 

Exhibit
A-1

 

Wholesale
Operations Assets

 

	●	Goodwill
    related to the wholesale business
	●	Client
    lists
	●	Client
    accounts
	●	Rights
    to all Krave, Vaporin, Honey Stix and VaporX brands
	●	Rights
    to all customers
	●	Rights
    to certain trademarks: Krave, Vaporin, Honey Stix and VaporX
	●	The
    following websites: vaporx.com, kraveit.com and vaporin.com
	●	Certain
    furniture and fixtures located at the Dania Beach, Florida facility
	●	Office
    furniture located at the Dania Beach, Florida facility
	●	Certain
    warehouse racks and equipment located at the Dania Beach, Florida facility
	●	Deposits
    of approximately $56,857.59 for inventory to be purchased

 

    	 		 

    	 	 	 

    

 

Exhibit
A-2

 

Wholesale
Inventory

 

 

 

    	 		 

    	 	 	 

    

 

 

 

    	2 

    	 

    

 

 

 

    	3 

    	 

    

 

 

 

    	4 

    	 

    

 

 

 

    	5 

    	 

    

 

 

 

    	6 

    	 

    

  

 

    	7 

    	 

    

 

 

 

    	8 

    	 

    

 

Exhibit
                                         A-3

Assumed
Liabilities

 

	●	Customs
    contract
	●	Lease
    for Facility (month to month)
	●	Utilities
    for Facility
	●	Comcast
	●	Website
    hosting
	●	ADT
	●	FedEx
	●	Garbage
    service
	●	Building
    security
	●	After
    hours phone services

 

    	 		 

    	 	 	 

    

 

Exhibit
B

Acquisition
Note

 

    	 		 

    	 	 	 

    

 

Exhibit
C

VPRB
Loan Note

 

    	 		 

    	 	 	 

    

 

Exhibit
D

Security
Agreement

 

    	 		 

    	 	 	 

    

 

Exhibit
E

Bill
of Sale

 

BILL
OF SALE AND ASSIGNMENT

Dated
as of July 29, 2016

 

This
BILL OF SALE AND ASSIGNMENT (the “Bill of Sale”), dated as of the date first set forth above, is from Vapor Corp.,
a Delaware corporation (“Seller”), to VPR Brands, LP, a Delaware limited partnership (“Buyer”).

 

NOW,
THEREFORE, pursuant to the terms of the Asset Purchase Agreement dated as of the date hereof between Kevin Frija, Seller and Buyer
(the “Purchase Agreement”) and in consideration of the payment of amounts as set forth in the Purchase Agreement,
and such other good and valuable consideration, the receipt and sufficiency of which are hereby conclusively acknowledged, the
parties hereto hereby agree as follows. Capitalized terms used but not defined herein have the meaning given them in the Purchase
Agreement.

 

1.
The Seller hereby sells, grants, conveys, assigns, transfers and delivers to Buyer all of Seller’s right, title, and interest
in and to the Assets as set forth on Exhibit A, free and clear of all liens, mortgages, pledges, options, claims, security interests,
conditional sales contracts, title defects, encumbrances, charges and other restrictions of every kind (collectively, the “Liens”).
Such sale, transfer, conveyance and assignment shall be effective on the date hereof (the “Effective Date”).

 

2.
Buyer hereby absolutely accepts and assumes to be solely liable and responsible for the liabilities associated with the ownership
after the Closing Date of the Assets. Except as set forth above or as set forth in other agreements entered into in connection
with the Purchase Agreement and the transactions contemplated therein, Buyer is not assuming any liabilities or obligations of
Seller whatsoever, and the Seller shall continue to be fully responsible for those liabilities and obligations.

 

3.
The Seller covenants and agrees that in the event that (i) the Assets and other rights covered in this Bill of Sale cannot be
transferred or assigned by it without the consent of or notice to a third party and in respect of which any necessary consent
or notice has not as of the date hereof been given or obtained, or (ii) the Assets or rights are non-assignable by their nature
and will not pass by this Bill of Sale, the beneficial interest in and to the same will in any event pass to the Buyer, as the
case may be; and the Seller covenants and agrees (in each case without any obligation on the part of the Seller to incur any out-of-pocket
expenses) (a) to hold, and hereby declares that it holds, such property, Assets or rights in trust for, and for the benefit of,
the Buyer, (b) to cooperate with the Buyer in the Buyer’s efforts to obtain and to secure such consent and give such notice
as may be required to effect a valid transfer or transfers of such Assets or rights, (c) to cooperate with the Buyer in any reasonable
interim arrangement to secure for the Buyer the practical benefits of such Assets pending the receipt of the necessary consent
or approval, and (d) to make or complete such transfer or transfers as soon as reasonably possible.

 

4.
The Seller further agrees (without any obligation on the part of the Seller to incur any out-of-pocket expenses) that it will
at any time and from time to time, at the request of the Buyer, execute and deliver to the Buyer any and all other and further
instruments and perform any and all further acts reasonably necessary to vest in the Buyer the right, title and interest in or
to any of the Assets which this instrument purports to transfer to the Buyer.

 

5.
Any individual, partnership, corporation or other entity may rely, without further inquiry, upon the powers and rights herein
granted to the Buyer and upon any notarization, certification, verification or affidavit by any notary public of any state relating
to the authorization, execution and delivery of this Bill of Sale or to the authenticity of any copy, conformed or otherwise,
hereof.

 

    	 		 

    	 	 	 

    

 

6.
All of the terms and provisions of this Bill of Sale will be binding upon the Seller and its successors and assigns and will inure
to the benefit of the Buyer and its successors and assigns.

 

7.
This Agreement shall be governed by the laws of the State of Florida, without regard to conflicts of law principles thereunder.

 

8.
This Bill of Sale is being delivered in connection with the Closing under the Purchase Agreement and is made subject to the provisions
of the Purchase Agreement. In the event of any conflict or inconsistency between this Bill of Sale and the Purchase Agreement,
the Purchase Agreement shall be the controlling document.

 

9.
This Bill of Sale may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument. Delivery of an executed signature page of this Bill of Sale by electronic transmission
or electronic data file shall be effective as delivery of a manually executed counterpart hereof.

 

[Signatures
appear on following pages]

 

    	 	2	 

    	 	 	 

    

 

In witness whereof, the parties have executed this Bill of Sale as of the date first set forth above:

 

	 	VPR
    BRANDS, LP
	 	VPR
    Brands, LP
	 	 	 
	 	By:	/s/
    Kevin Frija
	 	 	Kevin
    Frija, CEO
	 	 	 
	 	VAPOR
    CORP.
	 	VAPOR
    CORP.
	 	 	 
	 	By:	/s/
    Jeff Holman
	 	 	Jeffrey
    Holman, CEO

 

    	 	3	 

    	 	 	 

    

 

Exhibit
F

Assignment
and Assumption Agreement

 

    	 		 

    	 	 	 

    

 

Exhibit
G

Accounts
Receivable

 

As
of July 28, 2016, the accounts receivable of Vapor attributable to its Fort Lauderdale wholesale operations which are less than
ninety (90) days in arrears is $244,735:

 

As
of July 28, 2016:

 

Current:
$53,110

1-30
Days: $109,932

31-60
Days: $57,542

60-90
Days: $24,150

 

See
attached.

 

    	 	2	 

    	 	 	 

    

 

 

 

    	 		 

    	 	 	 

    

 

Exhibit
H

Persons
Subject to Non-Solicit

 

	Receiving/Picking
    and Packing:	Armstrong
    Whalen
	Shipping/Store
    Transfers:	Sue
    Diaz
	Customer
    Service/Reception:	Franck
    Tavernier
	Purchasing/Wholesale
    Sales:	Austin
    Willcutts
	HR:	Tina
    Pettie
	Accounting:	 
	 	CFO:	Gina
    Hicks
	 	Finance
    Manager:	David
    Guzman
	 	Book
    Keeper:	Beth
    Keating
	 	Finance
    Consultant:	Bob
    Swayman
	 	 Finance:	Angela
    Vaccaro
	IT
    Consultant:	Jonathon
    Halpern (outside office)
	Special
    Projects:	Larry
    Markx (outside office)
	VP
    Retail Operations (Vape):	Kevan
    Flemming (outside office)
	VP
    Retail Operations (Grocery):	Heather
    Creighton (outside office)

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