Document:

SEC Exhibit

Exhibit 10.4
AGREEMENT

This AGREEMENT (this "Agreement"), is entered into between Abercrombie & Fitch Management Co., a Delaware corporation (the "Company"), and Kristin Scott (the "Executive") as of the execution date by the Company below (the "Effective Date").

WHEREAS, the Company and the Executive desire to enter into this Agreement to set forth the terms under which the Executive may be entitled to severance benefits from the Company during the Term of this Agreement. 

NOW, THEREFORE, in consideration of the mutual covenants contained herein, the Company and the Executive hereby agree as follows:

1.    Term of Agreement; Termination of Employment

(a) Term. The term of this Agreement shall be from the Effective Date and for a period of two years thereafter (the “Original Term”); provided, that, if a Change in Control (as defined below) occurs during the Original Term, the term of this Agreement shall extend until the later of the Original Term or the expiration of the one-year period following such Change in Control (together with the Original Term, the “Term”). 

(b) At-Will Nature of Employment. The Executive acknowledges and agrees that the Executive's employment with the Company is and shall remain "at-will" and the Executive's employment with the Company may be terminated at any time and for any reason (or no reason) by the Company, with or without notice, or the Executive, subject to the terms of this Agreement. During the period of the Executive's employment with the Company, the Executive shall perform such duties and fulfill such responsibilities as reasonably requested by the Company from time to time commensurate with the Executive's position with the Company.

(c) Termination of Employment by the Company. During the Term, the Company may terminate the Executive's employment at any time with or without Cause (as defined below) pursuant to the Notice of Termination provision below. 

(d) Termination of Employment by the Executive. During the Term, the Executive may terminate employment with the Company with or without Good Reason (as defined below) by delivering to the Company, not less than thirty (30) days prior to the Termination Date, a written notice of termination; provided, that, if such termination of employment is by the Executive with Good Reason, such notice shall state in reasonable detail the facts and circumstances that constitute Good Reason. This provision does not change the at-will nature of Executive's employment, and the Company may end Executive's employment, pursuant to Executive's notice, prior to the expiration of the thirty (30) days' notice.  

 (e) Notice of Termination. Any termination of the Executive's employment by the Company or by the Executive shall be communicated by a written Notice of Termination addressed to the Executive or the Company, as applicable. A “Notice of Termination” shall mean a notice stating that the Executive's employment with the Company has been or will be terminated and the specific provisions of this Section 1 under which such termination is being effected.

(f)  Termination Date.  Subject to Section 4(a) hereof, “Termination Date” as used in this Agreement shall mean in the case of the Executive's death or Disability (as defined below), the date of death or Disability, or in all other cases of termination by the Company or the Executive, the date specified in writing by the Company or the Executive as the Termination Date in accordance with Section 1(e).

2.    Compensation Upon Certain Terminations by the Company.

(a) Termination Without Cause, or for Good Reason. If the Executive's employment is terminated during the Term (i) by the Company without Cause (other than as a result of the Executive’s death or Disability), or (ii) by the Executive for Good Reason, in each case, other than during the one-year period following a Change of Control, the Company shall (a) pay to the Executive any portion of Executive’s accrued but unpaid base salary earned through the Termination Date; (b) reimburse the Executive for any and all amounts advanced in connection with Executive’s employment with the Company for reasonable and necessary expenses incurred by Executive through the Termination Date in accordance with the Company’s policies and procedures on reimbursement of expenses; (c) pay to the Executive any earned vacation pay not theretofore used or paid in accordance with the Company’s policy for payment of earned and unused vacation time; and (d) provide to the Executive all other accrued but unpaid payments and benefits to which Executive may be entitled under the terms of any applicable compensation arrangement or benefit plan or program of the Company (excluding any severance plan or policy of the Company) (collectively, the "Accrued Compensation").  

In addition, provided that the Executive executes a release of claims in a form acceptable to the Company (a “Release”), returns such Release to the Company by no later than the applicable deadline set forth in such Release (the “Release Deadline”) and does not revoke such Release prior to the expiration of the applicable revocation period (the date on which such Release becomes effective, the “Release Effective Date”), then subject to the further provisions of Sections 3, 4, and 6 below, the Company shall have the following obligations with respect to the Executive (or the Executive’s estate, if applicable):

		
	(1)
	The Company will continue to pay the Executive’s Base Salary (as defined below) during the period beginning on the Executive’s Termination Date and continuing for eighteen months thereafter (“Salary Continuation”).  This Salary Continuation payment shall be paid in bi-weekly installments, consistent with the Company’s payroll practices.  Subject to Section 4(c) hereof, the first such payment shall be made on the first payroll date following the Release Effective Date, such payment to include all payments that would have otherwise been payable between the Termination Date and the date of such payment.

		
	(2)
	The Company will pay to the Executive, at such time as those executives who are actively employed with the Company would receive payments under the Company’s short-term cash bonus plan in which the Executive was eligible to participate immediately prior to the Termination Date (but in no event later than the 15th day of the third month of the fiscal year following the fiscal year in which the Termination Date occurred), a pro-rated amount of the Executive’s bonus under such plan, based on the  actual performance during the applicable period, determined in accordance with the terms of the Plan and subject to the approval of the Compensation and Organization Committee of the Board of Directors. The pro-rated amount shall be calculated using a fraction where the numerator is the number of days from the beginning of the applicable bonus period through the Termination Date and the denominator is the total number of days in the applicable bonus period.  

		
	(3)
	Subject to the Executive's timely election of continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"), during the period in which Salary Continuation is in effect, the Company shall reimburse the Executive for 100% of the monthly premium costs of COBRA coverage, less applicable withholding taxes on such reimbursement; provided, however, that the Company's obligation to provide such benefits shall cease upon the earlier of (i) the Executive's becoming eligible for such benefits as the result of employment with another employer and (ii) the expiration of the Executive's right to continue such medical and dental benefits under applicable law (such as COBRA); provided, further, that notwithstanding the foregoing, the Company shall not be obligated to provide the continuation coverage contemplated by this Section 2(a)(3) if it would result in the imposition of excise taxes on the Company for failure to comply with the nondiscrimination requirements of the Patient Protection and Affordable Care Act of 2010, as amended, and the Health Care and Education Reconciliation Act of 2010, as amended (to the extent applicable).

(b) Termination for Cause, without Good Reason, or Death. If the Executive's employment is terminated during the Term by the Company for Cause, by the Executive without Good Reason or by reason of the Executive's death, the Company shall provide the Executive (or the Executive’s estate, if applicable) with only the Accrued Compensation.

(c) Termination due to Disability. If the Executive's employment is terminated by the Company by reason of the Executive's Disability, the Company shall have the following obligations with respect to the Executive (or the Executive’s estate, if applicable):  (i) the Company shall provide the Executive with the Accrued Compensation; and (ii) the Executive shall be entitled to receive any disability benefits available under the Company's Long-Term Disability Plan (if any). For purposes of this Agreement, “Disability” means a physical or mental infirmity which impairs the Executive's ability to substantially perform the Executive's duties with the Company or its subsidiaries for a period of at least six (6) months in any twelve (12)-month calendar period as determined in accordance with the Company's long-term disability plan or, in the absence of such plan, as determined by the Company's Board of Directors (the “Board”).

(d) Change of Control.  If the Executive’s employment is terminated during the Term (i) by the Company other than for Cause, or due to the Executive’s death or Disability or (ii) by the Executive for Good Reason, in each case, during the one-year period following a Change of Control, then, subject to the Executive executing a Release, returning such Release to the Company by no later than the Release Deadline, and not revoking such Release prior to the expiration of the applicable revocation period, and subject to the further provisions of Sections 2(j), 3, 4 and 6 below, the Company shall have the following obligations with respect to the Executive (or the Executive’s estate, if applicable):

		
	(1)
	The Company will pay Executive, in one lump sum payment, an amount equal to eighteen months of the Executive's Base Salary in effect on the Termination Date, payable in a lump sum on the sixtieth (60th) day following the Termination Date 

		
	(2)
	The Company will pay Executive a lump sum payment, less taxes and withholdings, of an amount equal to the Executive's Target Bonus, payable in a lump sum on the sixtieth (60th) day following the Termination Date. 

(3)   Subject to the Executive's timely election of continuation coverage under COBRA for a period of eighteen months following the Termination Date, the Company shall reimburse the Executive for 100% of the monthly premium costs of COBRA coverage, less applicable withholding taxes on such reimbursement; provided, however, that the Company's obligation to provide such benefits shall cease upon the earlier of (i) the Executive's becoming eligible for such benefits as the result of employment with another employer and (ii) the expiration of the Executive's right to continue such medical and dental benefits under applicable law (such as COBRA); provided, further, that notwithstanding the foregoing, the Company shall not be obligated to provide the continuation coverage contemplated by this Section 2(d)(3) if it would result in the imposition of excise taxes on the Company for failure to comply with the nondiscrimination requirements of the Patient Protection and Affordable Care Act of 2010, as amended, and the Health Care and Education Reconciliation Act of 2010, as amended (to the extent applicable).

(e)     Definitions.

		
	(1)
	Base Salary. For the purpose of this Agreement, “Base Salary” shall mean the Executive’s annual rate of base salary as in effect on the applicable date; provided, however, that if the Executive’s employment with the Company is being terminated by the Executive for Good Reason as a result of a reduction in the Executive’s Base Salary, then “Base Salary” shall, for purposes of the definition of “Good Reason” and Section 3 of this Agreement, constitute the Executive’s Base Salary as in effect prior to such reduction.

		
	(2)
	Cause. For purposes of this Agreement, "Cause" shall mean: (i) the Executive’s conviction of, or entrance of a plea of guilty or nolo contendere to, a felony under federal or state law; (ii) fraudulent conduct by the Executive in connection with the business affairs of the Company; (iii) the Executive’s willful refusal to materially perform the Executive’s duties hereunder; (iv) the Executive’s willful misconduct which has, or would have if generally known, a materially adverse effect on the business or reputation of the company; (v) the Executive’s material breach of a covenant, representation, warranty or obligation of the Executive to the Company, or (vi) the Executive’s prior employer threatens to, seeks to, or does enforce any restriction, covenant or limitation Executive entered with it that would prohibit or restrict Executive’s employment with the Company.  With respect to the circumstances in subsections (iii), (iv), and (v), above, such circumstances will only constitute “Cause” once the Company has provided the Executive written notice and the Executive has failed to cure such issue within 30 days, but this opportunity to cure shall not apply (and Executive may be terminated for Cause immediately) if such issue is not curable.  No act or failure to act on the Executive’s part shall be considered “willful” unless done, or omitted to be done, by the Executive in bad faith and without reasonable belief that the Executive’s action or omission was in the best interest of the Company.

		
	(3)
	Change of Control. For purposes of this Agreement, "Change of Control" shall have the same meaning as such term is defined in the Amended and Restated A&F Long-Term Incentive Plan as in effect on the date of this Agreement; provided, however, that for purposes of this Agreement, such definition shall only apply to the extent that the event that constitutes such a “Change of Control” also constitutes a “change in ownership or control” as such term is defined in Section 409A of the United States Internal Revenue Code of 1986, as amended (the “Code”), and the regulations and guidance issued thereunder (“Section 409A of the Code”). 

		
	(4)
	Good Reason. For purposes of this Agreement, “Good Reason” shall mean, without the Executive’s written consent: (i) a reduction in the Executive’s Base Salary or Target Bonus as in effect from time to time; (ii) the Company materially reduces (including as a result of any co-sharing of responsibilities arrangement) the Executive’s authority, responsibilities, or duties, (iii) the Company requires the Executive to be based at a location in excess of 50 miles from the location of its principal executive office as of the date of this Agreement; (iv) the Company fails to obtain the written assumption of its obligations to the Executive under this Agreement by a successor no later than the consummation of a Change in Control; (v) a material breach by the Company of its obligations to the Executive under this Agreement; or (vi) on or following a Change in Control, as defined above, a material adverse change in the Executive’s reporting structure; which in each of the circumstances described above, is not remedied by the Company within 30 days of receipt of written notice by the Executive to the Company; so long as the Executive provides such written notice to the Company no later than 90 days following the first date the event giving rise to a claim of Good Reason exists; 

		
	(5)
	Target Bonus. “Target Bonus” shall mean the percentage of the Executive’s Base Salary equal to the Executive’s short-term cash bonus opportunity under the terms of the applicable short-term cash bonus program in which the Executive is entitled to participate in respect of the fiscal year of the Company in which the Termination Date occurs (if any); provided, however, that if the Executive’s employment with the Company is terminated by the Executive for Good Reason as a result of a reduction in the Executive’s Target Bonus, then “Target Bonus” shall mean the Executive’s Target Bonus as in effect immediately prior to such reduction.

(f) Mitigation. The Executive shall not be required to mitigate the amount of any payment provided for in this Section 2 by seeking other employment or otherwise and no such payment or benefit shall be eliminated, offset or reduced by the amount of any compensation provided to the Executive in any subsequent employment, except as provided in Section 2(a)(3) or Section 2(d)(3).

(g) Resignation from Office.  The Executive's termination of employment with the Company for any reason shall be deemed to automatically remove the Executive, without further action, from any and all offices held by the Executive with the Company or its affiliates. The Executive shall execute such additional documents as requested by the Company from time to time to evidence the foregoing.

(h) Exclusivity. This Agreement is intended to provide severance payments and/or benefits only under the circumstances expressly enumerated under Section 2 hereof. Unless otherwise determined by the Company in its sole discretion, in the event of a termination of the Executive's employment with the Company for any reason (or no reason) or at any time other than as expressly contemplated by Section 2 hereof, the Executive shall not be entitled to receive any severance payments and/or benefits or other further compensation from the Company hereunder whatsoever, except for the Accrued Compensation and any other rights or benefits to which the Executive is otherwise entitled pursuant to the requirements of applicable law. Except as otherwise expressly provided in this Section 2, all of the Executive's rights to salary, bonuses, fringe benefits and other compensation hereunder (if any) which accrue or become payable after the Termination Date will cease upon the Termination Date.

 (i) Set-Off. The Executive agrees that, to the extent permitted by applicable law, the Company may deduct from and set-off against any amounts otherwise payable to the Executive under this Agreement such amounts as may be owed by the Executive to the Company.  The Executive shall remain liable for any part of the Executive’s payment obligation not satisfied through such deduction and setoff.

(j) Exclusive Remedies.  The Executive agrees and acknowledges that the payments and benefits set forth in this Section 2 shall be the only payments and benefits to which the Executive is entitled from the Company in connection with the termination of the Executive’s employment with the Company, and that neither the Company nor its subsidiaries shall have any liability to the Executive or the Executive’s estate, whether under this Agreement or otherwise, in connection with the termination of the Executive’s employment.

3.    Limitations on Certain Payments. Notwithstanding any provision of this Agreement to the contrary, if any amount or benefit to be paid or provided under this Agreement or otherwise would be an “excess parachute payment,” within the meaning of Section 280G of the Code, or any successor provision thereto, but for the application of this sentence, then the payments and benefits identified in the last sentence of this Section 3 to be paid or provided will be reduced to the minimum extent necessary (but in no event to less than zero) so that no portion of any such payment or benefit, as so reduced, constitutes an excess parachute payment; provided, however, that the foregoing reduction will be made only if and to the extent that such reduction would result in an increase in the aggregate payment and benefits to be provided to the Executive, determined on an after-tax basis (taking into account the excise tax imposed pursuant to Section 4999 of the Code, or any successor provision thereto, any tax imposed by any comparable provision of state law, and any applicable federal, state and local income and employment taxes).  Whether requested by the Executive or the Company, the determination of whether any reduction in such payments or benefits to be provided under this Agreement or otherwise is required pursuant to the preceding sentence will be made at the expense of the Company by a certified accounting firm that is independent from the Company.  In the event that any payment or benefit intended to be provided under this Agreement or otherwise is required to be reduced pursuant to this Section 3, the Company will reduce the Executive’s payments and/or benefits, to the extent required, in the following order: (a) the payments due under Section 2(d)(3) (beginning with the payment farthest out in time that would otherwise be paid); (b) the payments due under Section 2(d)(1) (beginning with the payment farthest out in time that would otherwise be paid); (c) the payment due under Section 2(d)(2).  The assessment of whether or not such payments or benefits constitute or would include excess parachute payments shall take into account a reasonable compensation analysis of the value of services provided or to be provided by the Executive, including any agreement by the Executive (if applicable) to refrain from performing services pursuant to a covenant not to compete or similar covenant applicable to you that may then be in effect.

4.    Section 409A of the Code; Withholding.  

		
	(a)
	This Agreement is intended to avoid the imposition of taxes and/or penalties under Section 409A of the Code.  The parties agree that this Agreement shall at all times be interpreted, construed and operated in a manner to avoid the imposition of taxes and/or penalties under with Section 409A of the Code.  All references to a termination of employment and separation from service shall mean “separation from service” as defined in Section 409A of the Code, and the date of such “separation from service” shall be referred to as the “Termination Date”.

		
	(b)
	All reimbursements provided under this Agreement shall comply with Section 409A of the Code and shall be subject to the following requirement:  (i) the amount of expenses eligible for reimbursement, during the Executive’s taxable year may not affect the expenses eligible for reimbursement to be provided in another taxable year; and (ii) the reimbursement of an eligible expense must be made by December 31 following the taxable year in which the expense was incurred.  The right to reimbursement is not subject to liquidation or exchange for another benefit.

		
	(c)
	Notwithstanding anything in this Agreement to the contrary, for purposes of the period specified in this Agreement relating to the timing of the Executive’s execution of the Release as a condition of the Company’s obligation to provide any severance payments or benefits, if such period would begin in one taxable year and end in a second taxable year, any payment otherwise due to the Executive upon execution of the Release shall be made in the second taxable year and without regard to when the Release was executed or became irrevocable.

		
	(d)
	If the Executive is a “specified employee” (as defined under Section 409A of the Code) on the Executive’s Termination Date, to the extent that any amount payable under this Agreement constitutes “non-qualified deferred compensation” under Section 409A of the Code (and is not otherwise excepted from Section 409A of the Code coverage by virtue of being considered “separation pay” or a “short term deferral” or otherwise) and is payable to Executive based upon a separation from service, such amount shall not be paid until the first day following the six (6) month anniversary of the Executive’s Termination Date.  

		
	(e)
	To the maximum extent permitted under Section 409A of the Code, the payments and benefits under this Agreement are intended to meet the requirements of the short-term deferral exemption under Section 409A of the Code and the “separation pay exception” under Treasury Regulation §1.409A-1(b)(9)(iii).  Any right to a series of installment payments shall be treated as a right to a series of separate payments for purposes of Section 409A of the Code.    

		
	(f)
	All amounts due and payable under this Agreement shall be paid less all amounts required to be withheld by law, including all applicable federal, state and local withholding taxes and deductions.

5.    Indemnification.  The Company shall indemnify, defend, and hold the Executive harmless to the maximum extent permitted by law and the Company by-laws against all judgments, fines, amounts paid in settlement and all reasonable expenses, including attorneys’ fees incurred by the Executive, in connection with the defense of or as a result of any action or proceeding (or any appeal from any action or proceeding) in which the Executive is made or is threatened to be made a party by reason of the fact that the Executive is or was an officer or director of the Company. Subject to the terms of the Company’s director and officer indemnification policies then in effect, the Company acknowledges that the Executive will be covered and insured up to the full limits provided by all directors’ and officers’ insurance which the Company then maintains to indemnify its directors and officers.

6.    Executive Covenants.

		
	(a)
	For the purposes of this Section 6, the term “Company” shall include Abercrombie & Fitch Management Co. and all of its subsidiaries, parent companies and affiliates thereof

		
	(b)
	Non-Disclosure and Non-Use. The Executive shall not, during the Term and at all times thereafter, without the written authorization of the Chief Executive Officer (“CEO”) of the Company or such other executive governing body as may exist in lieu of the CEO, (hereinafter referred to as the “Executive Approval”), use (except for the benefit of the Company) any Confidential and Trade Secret Information relating to the Company. The Executive shall hold in strictest confidence and shall not, without the Executive Approval, disclose to anyone, other than directors, officers, employees and counsel of the Company in furtherance of the business of the Company, any Confidential and Trade Secret Information relating to the Company. For purposes of this Agreement, “Confidential and Trade Secret Information” includes: the general or specific nature of any concept in development, the business plan or development schedule of any concept, vendor, merchant or customer lists or other processes, know-how, designs, formulas, methods, software, improvements, technology, new products, marketing and selling plans, business plans, development schedules, budgets and unpublished financial statements, licenses, prices and costs, suppliers, and 

information regarding the skills, compensation or duties of employees, independent contractors or consultants of the Company and any other information about the Company that is proprietary or confidential. Notwithstanding the foregoing, nothing herein shall prevent the Executive from disclosing Confidential and Trade Secret Information to the extent required by law or by any court or regulatory authority having actual or apparent authority to require such disclosure or in connection with any litigation or arbitration involving this Agreement.

The restrictions set forth in this Section 6(b) shall not apply to information that is or becomes generally available to the public or known within the Company’s trade or industry (other than as a result of its wrongful disclosure by the Executive), or information received on a non-confidential basis from sources other than the Company who are not in violation of a confidentiality agreement with the Company. 

The Executive further represents and agrees that, during the Term and at all times thereafter, the Executive is obligated to comply with the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding trading shares and/or exercising options related to the Company's stock. The Executive acknowledges that the Company has not provided opinions or legal advice regarding the Executive’s obligations in this respect and that it is the Executive's responsibility to seek independent legal advice with respect to any stock or option transaction.   

		
	(c)
	Non-Disparagement and Cooperation. Neither the Executive nor any officer, director of the Company, nor any other spokesperson authorized as a spokesperson by any officer or director of the Company, shall, during the Term or at any time thereafter, intentionally state or otherwise publish anything about the other party which would adversely affect the reputation, image or business relationships and goodwill of the other party in the market and community at large. During the Term and at all times thereafter, the Executive shall fully cooperate with the Company in defense of legal claims asserted against the Company and other matters requiring the testimony or input and knowledge of the Executive. If at any time the Executive should be required to cooperate with the Company pursuant to this Section 6(c), the Company agrees to promptly reimburse the Executive for reasonable documented costs and expenses incurred as a result thereof. The Executive agrees that, during the Term and at all times thereafter, the Executive will not speak or communicate with any party or representative of any party, who is known to the Executive to be either adverse to the Company in litigation or administrative proceedings or to have threatened to commence litigation or administrative proceedings against the Company, with respect to the pending or threatened legal action, unless the Executive receives the written consent of the Company to do so, or is otherwise compelled by law to do so, and then only after advance notice to the Company.  Nothing herein shall prevent the Executive from pursuing any claim in connection with enforcing or defending the Executive’s rights or obligations under this Agreement. 

		
	(d) 
	Non-Competition. For the period of Executive’s employment with the Company and its subsidiaries and for twelve months following Executive’s Termination Date with the Company and its subsidiaries for any reason (the “Non-Competition Period”), Executive shall not, directly or indirectly, without the Executive Approval, own, manage, operate, join, control, be employed by, consult with or participate in the ownership, management, operation or control of, or be connected with (as a stockholder, partner, or otherwise), any entity listed on Appendix A attached to this Agreement, or any of their current or future divisions, subsidiaries or affiliates (whether majority or minority owned), even if said division, subsidiary or affiliate becomes unrelated to the entity on Appendix A at some future date, or any other entity engaged in a business that is competitive with the Company in any part of the world in which the Company conducts business or is actively preparing or considering conducting business (“Competing Entity”); provided, however, that the “beneficial ownership” by the Executive, either individually or by a “group” in which the Executive is a member (as such terms are used in Rule 13d of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), of less than 2% of the voting stock of any publicly held corporation shall not be a violation of this Section 6(d). The Executive acknowledges and agrees that any consideration that the Executive received in respect of any non-competition covenant in favor of the Company or its subsidiaries entered into prior to the date hereof shall be incorporated herein as consideration for the promises set forth in this Section 6(d) and that the provisions contained in this Section 6(d) shall supersede any prior non-competition covenants between the Executive and the Company or its subsidiaries.

		
	(e) 
	Non-Solicitation. For the period of Executive’s employment with the Company and its subsidiaries and for twenty-four months following Executive’s Termination Date with the Company and its subsidiaries for any reason (“Non-Solicitation Period”), the Executive shall not, either directly or indirectly, alone or in conjunction with another party, interfere with or harm, or attempt to interfere with or harm, the relationship of the Company with any person who at any time was a customer or supplier of the Company or otherwise had a business relationship with the Company. During the Non-Solicitation Period, the Executive shall not hire, solicit for hire, aid in or facilitate the hire, or cause to be hired, either as an employee, contractor or consultant, any person who is currently employed, or was employed at any time during the six-month period prior thereto, as an employee, contractor or consultant of the Company. The 

Executive acknowledges and agrees that any consideration that the Executive received for in respect of any non-solicitation covenant in favor of the Company or its subsidiaries entered into prior to the date hereof shall be incorporated herein as consideration for the promises set forth in this Section 6(e) and that the provisions contained in this Section 6(e) shall supersede any prior non-solicitation covenants between the Executive and the Company or its subsidiaries.

		
	(f)
	Confidentiality of this Agreement. The Executive agrees that, during the Term and at all times thereafter, the Executive shall not speak about, write about, or otherwise publicize or disclose to any third party the terms of this Agreement or any fact concerning its negotiation, execution or implementation, except with (i) an attorney, accountant, or other advisor engaged by the Executive; (ii) the Internal Revenue Service or other governmental agency upon proper request; or (iii) the Executive’s immediate family; provided, that all such persons agree in advance to keep said information confidential and not to disclose it to others.  Notwithstanding the foregoing, the Executive shall have the duty to disclose to any employer or prospective employer the fact that the Executive is bound by the Executive Covenants contained in Sections 6(b), (d), and (e) of this Agreement, but remains prohibited from disclosing other terms of this Agreement consistent with this Section 6(f).

		
	(g)
	Remedies. The Executive agrees that any breach of the terms of this Section 6 would result in irreparable injury and damage to the Company for which the Company would have no adequate remedy at law; the Executive therefore also agrees that in the event of said breach or any threat of breach, the Company shall be entitled to an immediate injunction and restraining order to prevent such breach and/or threatened breach and/or continued breach by the Executive and/or any and all persons and/or entities acting for and/or with the Executive, without having to prove damages. The terms of this Section 6(g) shall not prevent the Company from pursuing any other available remedies for any breach or threatened breach hereof, including but not limited to the recovery of damages from the Executive. The Executive and the Company further agree that the confidentiality provisions and the covenants not to compete and solicit contained in this Section 6 are reasonable and that the Company would not have entered into this Agreement but for the inclusion of such covenants herein. The parties agree that the prevailing party shall be entitled to all costs and expenses, including reasonable attorneys' fees and costs, in addition to any other remedies to which either may be entitled at law or in equity in connection with the enforcement of the covenants set forth in this Section 6. Should a court with jurisdiction determine, however, that all or any portion of the covenants set forth in this Section 6 is unreasonable, either in period of time, geographical area, or otherwise, the parties hereto agree that such covenants or portion thereof should be interpreted and enforced to the maximum extent that such court deems reasonable. In the event of any violation of the provisions of this Section 6, the Executive acknowledges and agrees that the post-termination restrictions contained in this Section 6 shall be extended by a period of time equal to the period of such violation, it being the intention of the parties hereto that the running of the applicable post-termination of employment restriction period shall be tolled during any period of such violation. In the event of a material violation by the Executive of this Section 6, any severance being paid to the Executive pursuant to Section 2 of this Agreement or otherwise shall immediately cease, and the aggregate gross amount of any severance previously paid to the Executive shall be immediately repaid to the Company.

 (h)   The provisions of this Section 6 shall survive any termination of this Agreement and any termination of the Executive’s employment, and the existence of any claim or cause of action by the Executive against the Company, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of the covenants and agreements of this Section 6.

7.    Successors and Assigns.

		
	(a)
	This Agreement shall be binding upon and shall inure to the benefit of the Company, its successors and assigns, and the Company shall require any successor or assign to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession or assignment had taken place. The term “the Company” as used herein shall include any such successors and assigns to the Company's business and/or assets. The term “successors and assigns” as used herein shall mean a corporation or other entity acquiring or otherwise succeeding to, directly or indirectly, all or substantially all the assets and business of the Company (including this Agreement) whether by operation of law or otherwise.

		
	(b)
	Neither this Agreement nor any right or interest hereunder shall be assignable or

transferable by the Executive, the Executive's beneficiaries or legal representatives, except by will or by the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal personal representative.

8.    Arbitration. Except with respect to the remedies set forth in Section 6(g) hereof, any controversy or claim between the Company or any of its affiliates and the Executive arising out of or relating to this Agreement or its termination shall be settled and determined by a single arbitrator whose award shall be accepted as final and binding upon the parties. The American Arbitration Association, under its Employment Arbitration Rules, shall administer the binding arbitration. The arbitration shall take place in Columbus, Ohio. The Company and the Executive each waive any right to a jury trial or to a petition for stay in any action or proceeding of any kind arising out of or relating to this Agreement or its termination and agree that the arbitrator shall have the authority to award costs and attorney fees to the prevailing party.

9.    Effect on Prior Agreements. Except as otherwise set forth herein, this Agreement supersedes all provisions in prior agreements, either express or implied, between the parties hereto, with respect to post-termination payments and/or benefits; provided, that, this Agreement shall not supersede the Company’s 2005, 2007 or 2016 Long-Term Incentive Plans (or any other applicable equity plan) or any applicable award agreements evidencing equity-based incentive awards thereunder (the “Equity Documents”), and any rights of the Executive with respect to equity-based incentive awards hereunder shall be in addition to, and not in lieu of, any rights pursuant to the Equity Documents.  

10.    Notice. For the purposes of this Agreement, notices and all other communications provided for in this Agreement (including the Notice of Termination) shall be in writing and shall be deemed to have been duly given when personally delivered or sent by registered or certified mail, return receipt requested, postage prepaid, or upon receipt if overnight delivery service or facsimile is used, addressed as follows:

To the Executive:
To Executive's last home address as listed in the books and records of the Company.

To the Company:
Abercrombie & Fitch Management Co.
6301 Fitch Path
New Albany, Ohio 43054
Attn: General Counsel

11.    Miscellaneous. No provision of this Agreement may be modified, waived, or discharged unless such waiver, modification, or discharge is agreed to in writing and signed by the Executive and the Company. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreement or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement.

12.    Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Ohio without giving effect to the conflict of law principles thereof.

13.    Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof.

[Remainder of page intentionally left blank; signature page follows]

IN WITNESS WHEREOF, the undersigned has hereto set her hand this 15th day of May, 2016.
	
	
	 

	/s/ Kristin Scott

	Kristin Scott

IN WITNESS WHEREOF, the undersigned has hereto set his hand this 20th day of May, 2016.
	
	
	 

	/s/ Arthur C. Martinez

	Arthur C. Martinez

	Executive Chairman of the Board of Directors

	Abercrombie & Fitch Co.

IN WITNESS WHEREOF, the undersigned has hereto set his hand this 20th day of May, 2016.
	
	
	 

	/s/ Michael E. Greenlees

	Michael E. Greenlees

	Chair of the Compensation and Organization Committee of the Board of Directors

	Abercrombie & Fitch Co.

Appendix A

(all current and future (as described in Section 6(d) of the Agreement) subsidiaries, divisions and affiliates of the entities below)

	
		
	American Eagle Outfitters, Inc.
	Gap, Inc.

	J. Crew Group, Inc.
	Pacific Sunwear of California, Inc. 

	Urban Outfitters, Inc.
	Aeropostale, Inc. 

	Polo Ralph Lauren Corporation
	Jack Wills, Ltd.

	SuperGroup, Plc.
	Levi Strauss & Co.

	L Brands (formerly known as Limited Brands, including, without limitation, Victoria’s Secret, Pink, Bath & Body Works, La Senza and Henri Bendel)
	Express, Inc.EXHIBIT 10.1

 

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

 

	Principal Amount: $30,000	Issue Date: April 14, 2016

 

10% CONVERTIBLE DEBENTURE

 

FOR VALUE RECEIVED,
Apptigo International, Inc., a Nevada corporation (hereinafter called the “Borrower”), hereby promises to pay
to the order of The Vantage Group Ltd. or registered assigns (the “Holder”) the sum of $30,000 together with
interest as set forth herein, on October 14, 2016 (the “Maturity Date”), and to pay interest on the initial
principal balance hereof at the rate of ten percent (10%) per annum (the “Interest Rate”), until the same becomes
due and payable, whether at maturity or upon acceleration or by prepayment or otherwise. This Debenture may not be prepaid in whole
or in part except as otherwise explicitly set forth herein. Any amount of principal or interest on this Debenture which is not
paid when due shall bear interest at the rate of fourteen percent (14%) per annum from the due date thereof until the same is paid
(“Default Interest”). Default Interest shall commence accruing on the date that the Debenture is fully paid
and shall be computed on the basis of a 365-day year and the actual number of days elapsed. All payments due hereunder (to the
extent not converted into common stock, $.001 par value per share (the “Common Stock”) in accordance with the
terms hereof) shall be made in lawful money of the United States of America. All payments shall be made at such address as the
Holder shall hereafter give to the Borrower by written notice made in accordance with the provisions of this Debenture. Whenever
any amount expressed to be due by the terms of this Debenture is due on any day which is not a Business Day, the same shall instead
be due on the next succeeding day which is a business day and, in the case of any interest payment date which is not the date on
which this Debenture is paid in full, the extension of the due date thereof shall not be taken into account for purposes of determining
the amount of interest due on such date.

 

This Debenture is free
from all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive rights
or other similar rights of shareholders of the Borrower and will not impose personal liability upon the holder thereof.

 

    	 	1	 

     

    

 

Article
I. CONVERSION RIGHTS

 

1.1             
Conversion Right. The Holder shall have the right from time to time, and at any time commencing on the Issue Date
and ending on the later of: (i) the Maturity Date and (ii) such later date as this Debenture has been paid in full, each in respect
of the remaining outstanding principal amount of this Debenture to convert all or any part of the outstanding and unpaid principal
amount of this Debenture into fully paid and non-assessable shares of Common Stock, as such Common Stock exists on the Issue Date,
or any shares of capital stock or other securities of the Borrower into which such Common Stock shall hereafter be changed or reclassified
(collectively, the “Conversion Shares”) at the conversion price (the “Conversion Price”)
determined as provided herein (a “Conversion”). The number of shares of Common Stock to be issued upon each
conversion of this Debenture shall be determined by dividing the Conversion Amount (as defined below) by the applicable Conversion
Price then in effect on the date specified in the notice of conversion, in the form attached hereto as Exhibit A
(the “Notice of Conversion”), delivered to the Borrower by the Holder in accordance with Section 1.5 below;
provided that the Notice of Conversion is submitted by facsimile or e-mail (or by other means resulting in, or reasonably expected
to result in, notice) to the Borrower before 6:00 p.m., New York, New York time on such conversion date (the “Conversion
Date”). The term “Conversion Amount” means, with respect to any conversion of this Debenture, the sum
of (1) the principal amount of this Debenture to be converted in such conversion plus (2) at the Holder’s option,
accrued and unpaid interest, if any, on such principal amount at the interest rates provided in this Debenture to the Conversion
Date, plus (3) at the Holder’s option, Default Interest, if any, on the amounts referred to in the immediately preceding
clauses (1) and/or (2) plus (4) at the Holder’s option, any amounts owed to the Holder pursuant to Sections 1.4 and
1.5(g) hereof.

 

1.2             
 Holder’s Conversion Limitations. The Company shall not effect any conversion of this Debenture, and the Holder
shall not have the right to convert any portion of this Debenture, to the extent that after giving effect to the conversion set
forth on the applicable Notice of Conversion, the Holder (together with the Holder’s Affiliates, and any Persons acting as
a group together with the Holder or any of the Holder’s Affiliates) would beneficially own in excess of the Beneficial Ownership
Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned
by the Holder and its Affiliates shall include the number of shares of Common Stock issuable upon conversion of this Debenture
with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which are issuable
upon (i) conversion of the remaining, unconverted principal amount of this Debenture beneficially owned by the Holder or any of
its Affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company,
in both cases which are subject to a limitation on conversion or exercise analogous to the limitation contained herein (including,
without limitation, any other Debentures) beneficially owned by the Holder or any of its Affiliates. Except as set forth in the
preceding sentence, for purposes of this Section 1.2, beneficial ownership shall be calculated in accordance with Section 13(d)
of the Exchange Act and the rules and regulations promulgated thereunder. To the extent that the limitation contained in this Section
1.2 applies, the determination of whether this Debenture is convertible (in relation to other securities owned by the Holder together
with any Affiliates) and of which principal amount of this Debenture is convertible shall be in the sole discretion of the Holder,
and the submission of a Notice of Conversion shall be deemed to be the Holder’s determination of whether this Debenture may
be converted (in relation to other securities owned by the Holder together with any Affiliates) and which principal amount of this
Debenture is convertible, in each case subject to the Beneficial Ownership Limitation. To ensure compliance with this restriction,
the Holder will be deemed to represent to the Company each time it delivers a Notice of Conversion that such Notice of Conversion
has not violated the restrictions set forth in this paragraph and the Company shall have no obligation to verify or confirm the
accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in
accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section
1.2, in determining the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of
Common Stock as stated in the most recent of the following: (i) the Company’s most recent periodic or annual report filed
with the Commission, as the case may be, (ii) a more recent public announcement by the Company, or (iii) a more recent written
notice by the Company or the Company’s transfer agent setting forth the number of shares of Common Stock outstanding. Upon
the written or oral request of a Holder, the Company shall within two Trading Days confirm orally and in writing to the Holder
the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined
after giving effect to the conversion or exercise of securities of the Company, including this Debenture, by the Holder or its
Affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial
Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving
effect to the issuance of shares of Common Stock issuable upon conversion of this Debenture held by the Holder. The Holder, upon
not less than 61 days’ prior notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions
of this Section 1.2, provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the
Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon conversion of this Debenture
held by the Holder and the Beneficial Ownership Limitation provisions of this Section 1.2 shall continue to apply. Any such increase
or decrease will not be effective until the 61st day after such notice is delivered to the Company. The Beneficial Ownership Limitation
provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms
of this Section 1.2 to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended
Beneficial Ownership Limitation contained herein or to make changes or supplements necessary or desirable to properly give effect
to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Debenture.

 

    	 	2	 

     

    

 

1.3             
(a) Conversion Price. The Conversion Price shall equal the Variable Conversion Price (as defined herein) (subject
to equitable adjustments for stock splits, stock dividends or rights offerings by the Borrower relating to the Borrower’s
securities or the securities of any subsidiary of the Borrower, combinations, recapitalization, reclassifications, extraordinary
distributions and similar events and issuances of securities at specified lower prices). The “Variable Conversion Price”
shall mean forty percent (40%) of the lowest closing price of the Common Stock as quoted by Bloomberg L.P. for the ten (10) Trading
Days immediately preceding the Conversion Date. Upon and after an Event of Default, the “Variable Conversion Price”
shall mean twenty percent (20%) of the lowest traded price of the Common Stock as quoted by Bloomberg L.P. for the 15 Trading Days
immediately preceding the Conversion Date (the “Valuation Date”). If the trading price cannot be calculated for such
security on such date in the manner provided above, the trading price shall be the fair market value as mutually determined by
the Borrower and the Holder for which the calculation of the trading price is required in order to determine the Conversion Price
of the Debenture.

 

(b) Adjustments.
It is the intention of the Borrower and Holder that the Holder shall generate net proceeds from the sale of the Conversion Shares
equal to the Share Value, where “Share Value” means the portion of the Debenture being converted divided by
the Variable Conversion Price. The Holder shall have the right to sell the Conversion Shares in the applicable trading market for
the Common Stock or otherwise, at any time in accordance with applicable securities laws. At any time the Holder may elect, the
Holder may deliver to the Borrower a reconciliation statement showing the net proceeds actually received by the Holder from the
sale of the Conversion Shares (the “Sale Reconciliation”). If, as of the date of the delivery by Holder of the
Sale Reconciliation, the Holder has not realized net proceeds from the sale of such Conversion Shares equal to at least the Share
Value, as shown on the Sale Reconciliation, then the amount of such shortfall shall be paid in Conversion Shares to the Holder
within three (3) Business Days of the Borrower’s receipt of the Sale Reconciliation. The number of Conversion Shares issuable
to the Holder would be determined by the dollar amount of the shortfall divided by the Variable Conversion Price then in effect.

 

1.4             
Authorized Shares. The Borrower covenants that during the period the conversion right exists, the Borrower will reserve
from its authorized and unissued Common Stock a sufficient number of shares, free from preemptive rights, to provide for the issuance
of Common Stock upon the full conversion of this Debenture. The Borrower is required at all times to have authorized and reserved
five (5) times the number of shares that is actually issuable upon full conversion of this Debenture (based on the Conversion Price
of this Debenture in effect from time to time)(the “Reserved Amount”). The Reserved Amount shall be recalculated
each month and the Company shall notify the Transfer Agent and the Holder in writing by the fifth day of the following month of
the new Reserved Amount. Notwithstanding the foregoing, in no event shall the Reserved Amount be lower than the initial Reserved
Amount, regardless of any prior conversions. The Borrower represents that upon issuance, such shares will be duly and validly issued,
fully paid and non-assessable. In addition, if the Borrower shall issue any securities or make any change to its capital structure
which would change the number of shares of Common Stock into which the Debentures shall be convertible at the then current Conversion
Price, the Borrower shall at the same time make proper provision so that thereafter there shall be a sufficient number of shares
of Common Stock authorized and reserved, free from preemptive rights, for conversion of the outstanding Debenture. The Borrower
(i) acknowledges that it has irrevocably instructed its transfer agent to issue certificates for the Common Stock issuable upon
conversion of this Debenture, and (ii) agrees that its issuance of this Debenture shall constitute full authority to its officers
and agents who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for shares
of Common Stock in accordance with the terms and conditions of this Debenture.

 

If, at any time the Borrower
does not maintain the Reserved Amount or fails to notify the Holder and the Transfer Agent of the new Reserved Amount, it will
be considered an Event of Default under Section 3.2 of this Debenture.

 

    	 	3	 

     

    

 

1.5             
Method of Conversion.

 

(a)   
Mechanics of Conversion. Subject to Section 1.1, this Debenture may be converted by the Holder in whole or in part
at any time from time to time after the Issue Date, by (A) submitting to the Borrower a Notice of Conversion (by facsimile,
e-mail or other reasonable means of communication dispatched on the Conversion Date prior to 6:00 p.m., New York, New York time)
and (B) subject to Section 1.5(b), surrendering this Debenture at the principal office of the Borrower.

 

(b)  
Surrender of Debenture Upon Conversion. Notwithstanding anything to the contrary set forth herein, upon conversion
of this Debenture in accordance with the terms hereof, the Holder shall not be required to physically surrender this Debenture
to the Borrower unless the entire unpaid principal amount of this Debenture is so converted. The Holder and the Borrower shall
maintain records showing the principal amount so converted and the dates of such conversions or shall use such other method, reasonably
satisfactory to the Holder and the Borrower, so as not to require physical surrender of this Debenture upon each such conversion.
In the event of any dispute or discrepancy, such records of the Borrower shall, prima facie, be controlling and determinative
in the absence of manifest error. Notwithstanding the foregoing, if any portion of this Debenture is converted as aforesaid, the
Holder may not transfer this Debenture unless the Holder first physically surrenders this Debenture to the Borrower, whereupon
the Borrower will forthwith issue and deliver upon the order of the Holder a new Debenture of like tenor, registered as the Holder
(upon payment by the Holder of any applicable transfer taxes) may request, representing in the aggregate the remaining unpaid principal
amount of this Debenture. The Holder and any assignee, by acceptance of this Debenture, acknowledge and agree that, by reason of
the provisions of this paragraph, following conversion of a portion of this Debenture, the unpaid and unconverted principal amount
of this Debenture represented by this Debenture may be less than the amount stated on the face hereof.

 

(c)   
Payment of Taxes. The Borrower shall not be required to pay any tax which may be payable in respect of any transfer
involved in the issue and delivery of shares of Common Stock or other securities or property on conversion of this Debenture in
a name other than that of the Holder (or in street name), and the Borrower shall not be required to issue or deliver any such shares
or other securities or property unless and until the person or persons (other than the Holder or the custodian in whose street
name such shares are to be held for the Holder’s account) requesting the issuance thereof shall have paid to the Borrower
the amount of any such tax or shall have established to the satisfaction of the Borrower that such tax has been paid.

 

(d)  
Delivery of Common Stock Upon Conversion. Upon receipt by the Borrower from the Holder of a facsimile transmission
or e-mail (or other reasonable means of communication) of a Notice of Conversion meeting the requirements for conversion as provided
in this Section 1.5, the Borrower shall issue and deliver or cause to be issued and delivered to or upon the order of the Holder
certificates for the Common Stock (or, if the Borrower issues and maintains shares in uncertificated form, comparable notice of
share ownership) issuable upon such conversion within three (3) Business Days after such receipt (the “Deadline”) (and,
solely in the case of conversion of the entire unpaid principal amount hereof, surrender of this Debenture) in accordance with
the terms hereof.

 

    	 	4	 

     

    

 

(e)   
Obligation of Borrower to Deliver Common Stock. Upon receipt by the Borrower of a Notice of Conversion, the Holder
shall be deemed to be the holder of record of the Common Stock issuable upon such conversion, the outstanding principal amount
and the amount of accrued and unpaid interest on this Debenture shall be reduced to reflect such conversion, and, unless the Borrower
defaults on its obligations under this Article I, all rights with respect to the portion of this Debenture being so converted shall
forthwith terminate except the right to receive the Common Stock or other securities, cash or other assets, as herein provided,
on such conversion. If the Holder shall have given a Notice of Conversion as provided herein, the Borrower’s obligation to
issue and deliver the certificates for Common Stock shall be absolute and unconditional, irrespective of the absence of any action
by the Holder to enforce the same, any waiver or consent with respect to any provision thereof, the recovery of any judgment against
any person or any action to enforce the same, any failure or delay in the enforcement of any other obligation of the Borrower to
the holder of record, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the
Holder of any obligation to the Borrower, and irrespective of any other circumstance which might otherwise limit such obligation
of the Borrower to the Holder in connection with such conversion. The Conversion Date specified in the Notice of Conversion shall
be the Conversion Date so long as the Notice of Conversion is received by the Borrower before 6:00 p.m., New York, New York time,
on such date.

 

(f)   
Delivery of Common Stock by Electronic Transfer. In lieu of delivering physical certificates representing the Common
Stock issuable upon conversion, provided the Borrower is participating in the Depository Trust Borrower (“DTC”) Fast
Automated Securities Transfer (“FAST”) program, upon request of the Holder and its compliance with the provisions contained
in Section 1.1 and in this Section 1.5, the Borrower shall use its best efforts to cause its transfer agent to electronically transmit
the Common Stock issuable upon conversion to the Holder by crediting the account of Holder’s Prime Broker with DTC through
its Deposit Withdrawal Agent Commission (“DWAC”) system.

 

(g)  
Failure to Deliver Common Stock Prior to Deadline. Without in any way limiting the Holder’s right to pursue
other remedies, including actual damages and/or equitable relief, the parties agree that if delivery of the Common Stock issuable
upon conversion of this Debenture is not delivered by the Deadline, the Borrower shall pay to the Holder, in cash, as partial liquidated
damages and not as a penalty, for each $1,000 of shares of Common Stock issuable upon such conversion (based on the VWAP of the
Common Stock on the date such shares are submitted to the Transfer Agent) delivered, $10 per trading day (increasing to $20 per
Trading Day five Trading Days after such damages have begun to accrue) for each Trading Day after such shares were to be issued,
until such certificate is delivered. Such cash amount shall be paid to Holder by the fifth day of the month following the month
in which it has accrued or, at the option of the Holder (by written notice to the Borrower by the first day of the month following
the month in which it has accrued), shall be added to the principal amount of this Debenture, in which event interest shall accrue
thereon in accordance with the terms of this Debenture and such additional principal amount shall be convertible into Common Stock
in accordance with the terms of this Debenture. The Borrower agrees that the right to convert is a valuable right to the Holder.
The damages resulting from a failure, attempt to frustrate, interference with such conversion right are difficult if not impossible
to qualify. Accordingly the parties acknowledge that the liquidated damages provision contained in this Section 1.5(g) are justified.

 

    	 	5	 

     

    

 

1.6             
Concerning the Shares. The shares of Common Stock issuable upon conversion of this Debenture may not be sold or transferred
unless (i) such shares are sold pursuant to an effective registration statement under the Act or (ii) the Borrower or its transfer
agent shall have been furnished with an opinion of counsel (which opinion shall be in form, substance and scope customary for opinions
of counsel in comparable transactions) to the effect that the shares to be sold or transferred may be sold or transferred pursuant
to an exemption from such registration or (iii) such shares are sold or transferred pursuant to Rule 144 under the Act (or
a successor rule) (“Rule 144”) or (iv) such shares are transferred to an “affiliate” (as defined
in Rule 144) of the Borrower who agrees to sell or otherwise transfer the shares only in accordance with this Section 1.6 and who
is an accredited investor. Subject to the removal provisions set forth below, until such time as the shares of Common Stock issuable
upon conversion of this Debenture have been registered under the Act or otherwise may be sold pursuant to Rule 144 without any
restriction as to the number of securities as of a particular date that can then be immediately sold and without any requirement
that current public information concerning Borrower be available, each certificate for shares of Common Stock issuable upon conversion
of this Debenture that has not been so included in an effective registration statement or that has not been sold pursuant to an
effective registration statement or an exemption that permits removal of the legend, shall bear a legend substantially in the following
form, as appropriate:

 

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

 

The legend set forth
above shall be removed and the Borrower shall issue to the Holder a new certificate therefore free of any transfer legend if (i)
the Borrower or its transfer agent shall have received an opinion of counsel reasonably satisfactory to Borrower, in form, substance
and scope customary for opinions of counsel in comparable transactions, to the effect that a public sale or transfer of such Common
Stock may be made without registration under the Act, which opinion shall be accepted by the Borrower so that the sale or transfer
is effected or (ii) in the case of the Common Stock issuable upon conversion of this Debenture, such security is registered for
sale by the Holder under an effective registration statement filed under the Act or otherwise may be sold pursuant to Rule 144
without any restriction as to the number of securities as of a particular date that can then be immediately sold. In the event
that the Borrower does not accept the opinion of counsel provided by the Holder with respect to the transfer of Securities pursuant
to an exemption from registration, such as Rule 144 or Regulation S, at the Deadline, it will be considered an Event of Default
pursuant to Section 3.2 of the Debenture.

 

    	 	6	 

     

    

 

1.7             
Effect of Certain Events.

 

(a)   
Effect of Merger, Consolidation, Etc. At the option of the Holder, the sale, conveyance or disposition of all or
substantially all of the assets of the Borrower, the effectuation by the Borrower of a transaction or series of related transactions
in which more than 50% of the voting power of the Borrower is disposed of, or the consolidation, merger or other business combination
of the Borrower with or into any other Person (as defined below) or Persons when the Borrower is not the survivor shall be treated
pursuant to Section 1.7(b) hereof. “Person” shall mean any individual, corporation, limited liability company, partnership,
association, trust or other entity or organization.

 

(b)  
Adjustment Due to Merger, Consolidation, Etc. If, at any time when this Debenture is issued and outstanding and prior
to conversion of all of the Debentures, there shall be any merger, consolidation, exchange of shares, recapitalization, reorganization,
or other similar event, as a result of which shares of Common Stock of the Borrower shall be changed into the same or a different
number of shares of another class or classes of stock or securities of the Borrower or another entity, or in case of any sale or
conveyance of all or substantially all of the assets of the Borrower other than in connection with a plan of complete liquidation
of the Borrower, then the Holder of this Debenture shall thereafter have the right to receive upon conversion of this Debenture,
upon the basis and upon the terms and conditions specified herein and in lieu of the shares of Common Stock immediately theretofore
issuable upon conversion, such stock, securities or assets which the Holder would have been entitled to receive in such transaction
had this Debenture been converted in full immediately prior to such transaction (without regard to any limitations on conversion
set forth herein), and in any such case appropriate provisions shall be made with respect to the rights and interests of the Holder
of this Debenture to the end that the provisions hereof (including, without limitation, provisions for adjustment of the Conversion
Price and of the number of shares issuable upon conversion of the Debenture) shall thereafter be applicable, as nearly as may be
practicable in relation to any securities or assets thereafter deliverable upon the conversion hereof. The Borrower shall not affect
any transaction described in this Section 1.7(b) unless (a) it first gives, to the extent reasonably practicable, thirty (30) days
prior written notice (but in any event at least fifteen (15) days prior written notice) of the record date of the special meeting
of shareholders to approve, or if there is no such record date, the consummation of, such merger, consolidation, exchange of shares,
recapitalization, reorganization or other similar event or sale of assets (during which time the Holder shall be entitled to convert
this Debenture) and (b) in the case of the consolidation, merger or other business combination of the Borrower with or into any
other Person when the Borrower is not the survivor, the resulting successor or acquiring entity (if not the Borrower) assumes by
written instrument the obligations of this Section 1.7(b). The above provisions shall similarly apply to successive consolidations,
mergers, sales, transfers or share exchanges.

 

    	 	7	 

     

    

 

(c)   
Purchase Rights. If, at any time when any Debentures are issued and outstanding, the Borrower issues any convertible
securities or rights to purchase stock, warrants, securities or other property (the “Purchase Rights”) pro rata
to the record holders of any class of Common Stock, then the Holder of this Debenture will be entitled to acquire, upon the terms
applicable to such Purchase Rights, the aggregate Purchase Rights which such Holder could have acquired if such Holder had held
the number of shares of Common Stock acquirable upon complete conversion of this Debenture (without regard to any limitations on
conversion contained herein) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase
Rights or, if no such record is taken, the date as of which the record holders of Common Stock are to be determined for the grant,
issue or sale of such Purchase Rights.

 

(d)  
 Subsequent Equity Sales. If, at any time while this Debenture is outstanding, the Company sells or grants any option
to purchase or reduces the conversion or exercise price of any outstanding securities, grants any right to reduce, or otherwise
disposes of or issues, any Common Stock or Common Stock Equivalents entitling any Person to acquire shares of Common Stock at an
effective price per share that is lower than the then Conversion Price (such lower price, the “Base Conversion Price”
and such issuances, collectively, a “Dilutive Issuance”) then the Conversion Price shall be reduced to equal
the Base Conversion Price. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued. For
purposes of clarity, if the holder of Common Stock or Common Stock Equivalents so issued shall at any time, whether by operation
of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants,
options or rights per share which are issued in connection with such issuance, be entitled to receive shares of Common Stock at
an effective price per share that is lower than the Conversion Price, such issuance shall be deemed to be a Dilutive Issuance.
The Company shall notify the Holder in writing, no later than the Trading Day following the issuance of any Common Stock or Common
Stock Equivalents subject to this Section  indicating therein the applicable issuance price, or applicable reset price, exchange
price, conversion price and other pricing terms (such notice, the “Dilutive Issuance Notice”). For purposes
of clarification, whether or not the Company provides a Dilutive Issuance Notice pursuant to this Section, upon the occurrence
of any Dilutive Issuance, the Holder is entitled to receive a number of Conversion Shares based upon the Base Conversion Price
on or after the date of such Dilutive Issuance, regardless of whether the Holder accurately refers to the Base Conversion Price
in the Notice of Conversion. As used herein, “Common Stock Equivalents” shall mean any securities of the Company or
its subsidiaries which would enable the holder thereof to acquire at any time Common Stock, including without limitations, any
debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exercisable or exchangeable
for, or otherwise entitles the holder thereof to receive Common Stock. This Section shall not apply to an Exempt Issuance.

 

(e)   
Notice of Adjustments. Upon the occurrence of each adjustment or readjustment of the Conversion Price as a result
of the events described in this Section 1.7, the Borrower, at its expense, shall promptly compute such adjustment or readjustment
and prepare and furnish to the Holder a certificate setting forth such adjustment or readjustment and showing in detail the facts
upon which such adjustment or readjustment is based. The Borrower shall, upon the written request at any time of the Holder, furnish
to such Holder a like certificate setting forth (i) such adjustment or readjustment, (ii) the Conversion Price at the time in effect
and (iii) the number of shares of Common Stock and the amount, if any, of other securities or property which at the time would
be received upon conversion of the Debenture.

 

    	 	8	 

     

    

 

1.8             
Reserved.

 

1.9             
Status as Shareholder. Upon submission of a Notice of Conversion by a Holder, (i) the shares covered thereby (other
than the shares, if any, which cannot be issued because their issuance would exceed such Holder’s allocated portion of the
Reserved Amount or Beneficial Ownership Limitation) shall be deemed converted into shares of Common Stock and (ii) the Holder’s
rights as a Holder of such converted portion of this Debenture shall cease and terminate, excepting only the right to receive certificates
for such shares of Common Stock and to any remedies provided herein or otherwise available at law or in equity to such Holder because
of a failure by the Borrower to comply with the terms of this Debenture. Notwithstanding the foregoing, if a Holder has not received
certificates for all shares of Common Stock prior to the tenth (10th) Business Day after the expiration of the Deadline with respect
to a conversion of any portion of this Debenture for any reason, then (unless the Holder otherwise elects to retain its status
as a holder of Common Stock by so notifying the Borrower) the Holder shall regain the rights of a Holder of this Debenture with
respect to such unconverted portions of this Debenture and the Borrower shall, as soon as practicable, return such unconverted
Debenture to the Holder or, if the Debenture has not been surrendered, adjust its records to reflect that such portion of this
Debenture has not been converted.

 

1.10         
Optional Prepayment. At any time during the period beginning on the Issue Date and expiring upon the Maturity Date,
the Borrower shall have the right, exercisable on not less than thirty (30) days prior written notice to the Holder of the Debenture
to prepay the outstanding Debenture (principal and accrued interest), in full, in accordance with this Section 1.10, provided that
no Event of Default shall then exist. Any notice of prepayment hereunder (an “Optional Prepayment Notice”) shall
be delivered to the Holder of the Debenture at its registered addresses and shall state: (1) that the Borrower is exercising its
right to prepay the Debenture, and (2) the date of prepayment which shall be thirty (30 days from the date of the Optional Prepayment
Notice. On the date fixed for prepayment (the “Optional Prepayment Date”), the Borrower shall make payment of
the Optional Prepayment Amount (as defined below) to or upon the order of the Holder as specified by the Holder in writing to the
Borrower at least one (1) Business Day prior to the Optional Prepayment Date. If the Borrower exercises its right to prepay the
Debenture, the Borrower shall make payment to the Holder of an amount in cash (the “Optional Prepayment Amount”)
equal to 150% (the “Multiple”), multiplied by the sum of: (w) the then outstanding principal amount of this
Debenture plus (x) accrued and unpaid interest on the unpaid principal amount of this Debenture to the Optional Prepayment
Date plus (y) if applicable, Default Interest, if any, on the amounts referred to in clauses (w) and (x) plus (z)
any amounts owed to the Holder pursuant to Sections 1.4 and 1.5(g) hereof.

 

    	 	9	 

     

    

 

Article
II.  CERTAIN COVENANTS

 

2.1             
Negative Covenants As long as any portion of this Debenture remains outstanding, unless the holders of all of the
outstanding Debentures shall have otherwise given prior written consent, the Borrower shall not, and shall not permit any of its
subsidiaries (whether or not a subsidiary on the Issue Date) to, directly or indirectly:

 

(a)   
other than indebtedness (i) existing as of the Initial Date, (ii) incurred in the ordinary course of business for trade
expenses (not borrowed money), (iii) indebtedness expressly subordinate to the indebtedness created by the Debentures, or (iv)
incurred in connection with the acquisition, development or in-licensing of assets, technologies or intellectual property (“Permitted
Indebtedness”), enter into, create, incur, assume, guarantee or suffer to exist any indebtedness for borrowed money of
any kind, including, but not limited to, a guarantee, on or with respect to any of its property or assets now owned or hereafter
acquired or any interest therein or any income or profits therefrom.

 

(b)  
other than Permitted Liens (as defined below), enter into, create, incur, assume or suffer to exist any liens, charges or
encumbrances of any kind or nature (“Liens”), on or with respect to any of its property or assets now owned
or hereafter acquired or any interest therein or any income or profits therefrom. “Permitted Lien” means the
individual and collective reference to the following: (a) Liens for taxes, assessments and other governmental charges or levies
not yet due or Liens for taxes, assessments and other governmental charges or levies being contested in good faith and by appropriate
proceedings for which adequate reserves (in the good faith judgment of the management of the Borrower) have been established in
accordance with GAAP; or (b) Liens imposed by law which were incurred in the ordinary course of the Borrower’s business,
such as carriers’, warehousemen’s and mechanics’ Liens, statutory landlords’ Liens, and other similar Liens
arising in the ordinary course of the Borrower’s business, and which (x) do not individually or in the aggregate materially
detract from the value of such property or assets or materially impair the use thereof in the operation of the business of the
Borrower and its consolidated subsidiaries or (y) are being contested in good faith by appropriate proceedings, which proceedings
have the effect of preventing for the foreseeable future the forfeiture or sale of the property or asset subject to such Lien.

 

(c)   
other than to effect stock splits, reverse stock splits or changes in the authorized number of shares, amend its charter
documents, including, without limitation, its certificate of incorporation and bylaws, in any manner that materially and adversely
affects any rights of the Holder;

 

(d)  
repay, repurchase or offer to repay, repurchase or otherwise acquire more than a de minimis number of shares of its
Common Stock or Common Stock equivalents except pursuant to written agreements with employees, directors, officers or consultants
providing for a right or repurchase at the original purchase price of such securities upon cessation of service, cessation of vesting,
employment termination or similar events;

 

(e)   
other than Permitted Indebtedness, repay, repurchase or offer to repay, repurchase or otherwise acquire any indebtedness,
other than the Debentures if on a pro-rata basis, other than (x) regularly scheduled principal and interest payments as such terms
are in effect as of the Issue Date, provided that such payments shall not be permitted if, at such time, or after giving effect
to such payment, any Event of Default exist or occur, (y) Permitted Indebtedness, and (z) ordinary trade debt incurred in the ordinary
course of business.

 

    	 	10	 

     

    

 

(f)   
pay cash dividends or cash distributions on any equity securities of the Borrower;

 

(g)  
sell, lease or otherwise dispose of any portion of its assets outside the ordinary course of business, other than de
minimis sales, unless Borrower offers to prepay the full amount owed under the Debentures in connection with the closing
of any such sale, lease or disposition transaction;

 

(h)  
lend money, give credit or make advances to any person, firm, joint venture or corporation, including, without limitation,
officers, directors, employees, subsidiaries and Affiliates of the Borrower, except loans, credits or advances (a) in existence
or committed on the date hereof and which the Borrower has informed Holder in writing prior to the date hereof, (b) made in the
ordinary course of business or (c) not in excess of $10,000;

 

(i)    
enter into any transaction with any Affiliate of the Borrower which would be required to be disclosed in any public filing
with the Securities and Exchange Commission, unless such transaction is made on an arm’s-length basis and, if required under
Borrower’s governance policies to be approved by the Board of Directors or a committee thereof, is expressly approved by
a majority of the disinterested directors of the Borrower (even if less than a quorum otherwise required for board approval); or

 

(j)    
enter into any agreement with respect to any of the foregoing.

 

2.2             
Affirmative Covenants.

 

(a)    
Use of Proceeds. Borrower hereby covenants and agrees that, upon the closing of this Debenture, it shall immediately make
the following expenditures:

 

	Balance of the Audit fees due to MaloneBailey LLP 	$ 4,000
	RBSM LLP Outstanding Work Product Fees 	$ 7,500
	RBSM LLP 10Q Audit fees	$ 6,000
	Bottom Line for April 2016	$ 3,000
	Sichenzia Ross Friedman Ference LLP legal Fees (April 2016 monthly fees)	$ 5,000
	EDGAR Fees	$ 1,500
	Filing/Transfer Agent Fees	$ 1,700

 

    	 	11	 

     

    

 

Article
III.  EVENTS OF DEFAULT

 

If any of the following events
of default (each, an “Event of Default”) shall occur:

 

3.1             
Failure to Pay Principal or Interest. Any default in the payment of the principal of, interest on or other charges
in respect of this Debenture, free of any claim of subordination, as and when the same shall become due and payable whether upon
the Maturity Date or by acceleration or otherwise, if Borrower does not pay in full the amount that is due and payable within three
(3) Business Days after delivery of a notice of demand therefor from Holder.

 

3.2             
Conversion and the Shares. The Borrower fails to issue shares of Common Stock to the Holder (or announces or threatens
in writing that it will not honor its obligation to do so) upon exercise by the Holder of the conversion rights of the Holder in
accordance with the terms of this Debenture, fails to transfer or cause its transfer agent to transfer (issue) (electronically
or in certificated form) any certificate for shares of Common Stock issued to the Holder upon conversion of or otherwise pursuant
to this Debenture as and when required by this Debenture, the Borrower directs its transfer agent not to transfer or delays, impairs,
and/or hinders its transfer agent in transferring (or issuing) (electronically or in certificated form) any certificate for shares
of Common Stock to be issued to the Holder upon conversion of or otherwise pursuant to this Debenture as and when required by this
Debenture, or fails to remove (or directs its transfer agent not to remove or impairs, delays, and/or hinders its transfer agent
from removing) any restrictive legend (or to withdraw any stop transfer instructions in respect thereof) on any certificate for
any shares of Common Stock issued to the Holder upon conversion of or otherwise pursuant to this Debenture as and when required
by this Debenture (or makes any written announcement, statement or threat that it does not intend to honor the obligations described
in this paragraph) and any such failure shall continue uncured (or any written announcement, statement or threat not to honor its
obligations shall not be rescinded in writing) for three (3) Business Days after the Holder shall have delivered a Notice of Conversion.
It is an obligation of the Borrower to remain current in its obligations to its transfer agent. It shall be an event of default
of this Debenture, if a conversion of this Debenture is delayed, hindered or frustrated beyond the periods of time provided for
in this Debenture, due to a balance owed by the Borrower to its transfer agent. If at the option of the Holder, the Holder advances
any funds to the Borrower’s transfer agent in order to process a conversion, such advanced funds shall be paid by the Borrower
to the Holder within forty eight (48) hours of a demand from the Holder.

 

3.3             
Breach of Covenants. The Borrower breaches any material covenant or other material term or condition contained in
this Debenture, and such breach continues for a period of five (5) days after written notice thereof to the Borrower from the Holder.

 

3.4             
Breach of Representations and Warranties. Any representation or warranty of the Borrower made herein shall be false
or misleading in any material respect when made and the breach of which has (or with the passage of time will have) a material
adverse effect on the rights of the Holder with respect to this Debenture.

 

    	 	12	 

     

    

 

3.5             
Bankruptcy, Receiver or Trustee. The Borrower or any subsidiary of the Borrower shall commence, or there shall be
commenced against the Borrower or any subsidiary of the Borrower under any applicable bankruptcy or insolvency laws as now or hereafter
in effect or any successor thereto, or the Borrower or any subsidiary of the Borrower commences any other proceeding under any
reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to the Borrower or any subsidiary of the Borrower or there is commenced
against the Borrower or any subsidiary of the Borrower any such bankruptcy, insolvency or other proceeding which remains undismissed
for a period of 90 days; or the Borrower or any subsidiary of the Borrower is adjudicated insolvent or bankrupt; or any order of
relief or other order approving any such case or proceeding is entered; or the Borrower or any subsidiary of the Borrower suffers
any appointment of any custodian, private or court appointed receiver or the like for it or any substantial part of its property
which continues undischarged or unstayed for a period of 90 days; or the Borrower or any subsidiary of the Borrower makes a general
assignment for the benefit of creditors; or the Borrower or any subsidiary of the Borrower shall call a meeting of its creditors
with a view to arranging a composition, adjustment or restructuring of its debts; or the Borrower or any subsidiary of the Borrower
shall by any act or failure to act expressly indicate its consent to, approval of or acquiescence in any of the foregoing; or any
corporate or other action is taken by the Borrower or any subsidiary of the Borrower for the purpose of effecting any of the foregoing
(other than actions to dismiss, terminate or resolve any bankruptcy or similar proceeding).

 

3.6             
Indebtedness Default. The Borrower or any subsidiary of the Borrower shall default in any of its obligations under
any other Debenture or any mortgage, credit agreement or other facility, indenture agreement, factoring agreement or other instrument
under which there may be issued, or by which there may be secured or evidenced any indebtedness for borrowed money or money due
under any long term leasing or factoring arrangement of the Borrower or any subsidiary of the Borrower in an amount exceeding $25,000,
whether such indebtedness now exists or shall hereafter be created and such default shall result in such indebtedness becoming
or being declared due and payable prior to the date on which it would otherwise become due and payable, in each of the above instances
where such default would have a Material Adverse Effect on the Company’s ability to pay the Debentures on the Maturity Date.

 

3.7             
Failure to Comply with the Exchange Act. The Borrower shall fail in any material respect to comply with the reporting
requirements of the Exchange Act including but not limited to the filing of Form 8-Ks, 10-Q's and 10-K's; and/or the Borrower shall
cease to be subject to the reporting requirements of the Exchange Act.

 

3.8             
Liquidation.Any dissolution, liquidation, or winding up of Borrower or any substantial portion of its business.

 

3.9             
Cessation of Operations. Any cessation by Borrower of substantially all of its operations, provided, however, that
any disclosure of the Borrower’s ability to continue as a “going concern” shall not be an admission that the
Borrower cannot pay its debts as they become due or of a cessation of operations.

 

    	 	13	 

     

    

 

3.10         
Maintenance of Assets. The failure by Borrower to maintain any material assets which would have a material adverse
effect on Borrower’s ability conduct its overall business (whether now or in the future).

 

3.11         
Replacement
of Transfer Agent. In the event that the Borrower proposes to replace its transfer agent, the Borrower fails to provide, prior
to the effective date of such replacement, a fully executed Irrevocable Transfer Agent instructions in a form attached hereto
as Exhibit B (including but not limited to the provision to irrevocably reserve shares of Common Stock in the Reserved
Amount) signed by the successor transfer agent to Borrower and the Borrower.

 

Article
IV. MISCELLANEOUS

 

4.1             
Failure or Indulgence Not Waiver. No failure or delay on the part of the Holder in the exercise of any power, right
or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other right, power or privileges. All rights and remedies existing
hereunder are cumulative to, and not exclusive of, any rights or remedies otherwise available.

 

4.2             
Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder
shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered
or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid,
or (iv) transmitted by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party
shall have specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder
shall be deemed effective (a) when delivered if delivered by hand delivery during a normal Business Day (or if not on a Business
Day then the next Business Day), (b) one Business day after delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below or (c) on the second Business Day following the date
of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever
shall first occur. The addresses for such communications shall be:

 

If to the Borrower,
to:

 

Apptigo International, Inc.

1801 SW 3rd Avenue, Suite
402

Miami, Florida 33129

 

If to the Holder:

 

The Vantage Group Ltd.

9429 Harding
Avenue, Suite 5

Surfside, Florida
33154

 

    	 	14	 

     

    

 

4.3             
Amendments. This Debenture and any provision hereof may only be amended by an instrument in writing signed by the
Borrower and the Holder. The term “Debenture” and all reference thereto, as used throughout this instrument, shall
mean this instrument as originally executed, or if later amended or supplemented, then as so amended or supplemented.

 

4.4             
Assignability. This Debenture shall be binding upon the Borrower and its successors and assigns, and shall inure
to be the benefit of the Holder and its successors and assigns. Each transferee of this Debenture must be an “accredited
investor” (as defined in Rule 501(a) of the Securities Act). Holder may transfer this Debenture provided that the transferee
agrees in writing with Borrower to be bound by the provisions of this Debenture, and that such transfer complies with any applicable
federal and state securities laws. Notwithstanding anything in this Debenture to the contrary, this Debenture may be pledged as
collateral in connection with a bona fide margin account or other lending arrangement, provided that the pledgee agrees
in writing with Borrower to be bound by the provisions of this Debenture, and that such pledge complies with any applicable federal
and state securities laws.

 

4.5             
Cost of Collection. If default is made in the payment of this Debenture, the Borrower shall pay the Holder hereof
costs of collection, including reasonable attorneys’ fees.

 

4.6             
Governing Law. This Debenture shall be governed by and construed in accordance with the laws of the State of New
York without regard to principles of conflicts of laws. Any action, suit, or proceeding arising out of, based on, or in connection
with this Debenture, any document relating hereto or delivered in connection with the transactions contemplated hereby, any statement,
certificate, or other instrument delivered by or on behalf of, or delivered to, any party hereto or thereto in connection with
the transactions contemplated hereby or thereby, any breach of this Debenture or such other document, or the other transactions
contemplated hereby or thereby may be brought only in the state courts of the State of New York located in New York City, or in
the United States District Court for the Southern District of New York and each party covenants and agrees not to assert, by way
of motion, as a defense, or otherwise, in any such action, suit, or proceeding, any claim that it is not subject personally to
the jurisdiction of such court if it has been duly served with process, that its property is exempt or immune from attachment or
execution, that the action, suit, or proceeding is brought in an inconvenient forum, that the venue of the action, suit, or proceeding
is improper, or that this Debenture or the subject matter hereof may not be enforced in or by such court. In the event that any
provision of this Debenture or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable
statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall
be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under
any law shall not affect the validity or enforceability of any other provision of any agreement. Each party hereby irrevocably
waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this
Debenture by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such
party at the address sin effect for notice under this Debenture and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process
in any other manner permitted by law. The Company and the Holder waive trial by Jury. The prevailing party in any dispute under
this Debenture shall be entitled to recover from the other party its reasonable attorney’s fees and costs.

 

    	 	15	 

     

    

 

4.7             
Certain Amounts. Whenever pursuant to this Debenture the Borrower is required to pay an amount in excess of the outstanding
principal amount (or the portion thereof required to be paid at that time) plus accrued and unpaid interest plus Default Interest,
the Borrower and the Holder agree that the actual damages to the Holder from the receipt of cash payment on this Debenture may
be difficult to determine and the amount to be so paid by the Borrower represents stipulated damages and not a penalty and is intended
to compensate the Holder in part for loss of the opportunity to convert this Debenture and to earn a return from the sale of shares
of Common Stock acquired upon conversion of this Debenture at a price in excess of the price paid for such shares pursuant to this
Debenture. The Borrower and the Holder hereby agree that such amount of stipulated damages is not plainly disproportionate to the
possible loss to the Holder from the receipt of a cash payment without the opportunity to convert this Debenture into shares of
Common Stock.

 

4.8             
Notice of Corporate Events. Except as otherwise provided below, the Holder of this Debenture shall have no rights
as a Holder of Common Stock unless and only to the extent that it converts this Debenture into Common Stock. The Borrower shall
provide the Holder with prior notification of any meeting of the Borrower’s shareholders (and copies of proxy materials and
other information sent to shareholders). In the event of any taking by the Borrower of a record of its shareholders for the purpose
of determining shareholders who are entitled to receive payment of any dividend or other distribution, any right to subscribe for,
purchase or otherwise acquire (including by way of merger, consolidation, reclassification or recapitalization) any share of any
class or any other securities or property, or to receive any other right, or for the purpose of determining shareholders who are
entitled to vote in connection with any proposed sale, lease or conveyance of all or substantially all of the assets of the Borrower
or any proposed liquidation, dissolution or winding up of the Borrower, the Borrower shall mail a notice to the Holder, at least
ten (10) days prior to the record date specified therein (or ten (10) days prior to the consummation of the transaction or event,
whichever is earlier), of the date on which any such record is to be taken for the purpose of such dividend, distribution, right
or other event, and a brief statement regarding the amount and character of such dividend, distribution, right or other event to
the extent known at such time.

 

4.9             
Remedies. The Borrower acknowledges that a breach by it of its obligations hereunder will cause irreparable harm
to the Holder, by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, the Borrower acknowledges
that the remedy at law for a breach of its obligations under this Debenture will be inadequate and agrees, in the event of a breach
or threatened breach by the Borrower of the provisions of this Debenture, that the Holder shall be entitled, in addition to all
other available remedies at law or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions
restraining, preventing or curing any breach of this Debenture and to enforce specifically the terms and provisions thereof, without
the necessity of showing economic loss and without any bond or other security being required.

 

    	 	16	 

     

    

 

4.10         
Severability. If any provision of this Debenture is invalid, illegal or unenforceable, the balance of this Debenture
shall remain in effect, and if any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable
to all other persons and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder shall
violate applicable laws governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal
the maximum permitted rate of interest. The Borrower covenants (to the extent that it may lawfully do so) that it shall not at
any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury
law or other law which would prohibit or forgive the Borrower from paying all or any portion of the principal of or interest on
this Debenture as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants
or the performance of this indenture, and the Borrower (to the extent it may lawfully do so) hereby expressly waives all benefits
or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impeded the execution
of any power herein granted to the Holder, but will suffer and permit the execution of every such as though no such law has been
enacted.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[SIGNATURE PAGES FOLLOW]

 

    	 	17	 

     

    

 

IN WITNESS WHEREOF, Borrower
has caused this Debenture to be signed in its name by its duly authorized officer this April 14, 2016.

 

APPTIGO INTERNATIONAL, INC. 

 

 

 

By: _______________________________

David Steinberg

President

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	18	 

     

    

 

EXHIBIT A

 

CONVERSION NOTICE

 

(To be executed by the Holder in order
to convert the Debenture)

 

TO: 

 

The undersigned
hereby irrevocably elects to convert $________ of the principal amount of Debenture No. ___________ into Shares of Common Stock
of APPTIGO INTERNATIONAL, INC., according to the conditions stated therein, as of the Conversion Date written below.

 

	Conversion Date:	___________________________________
	Amount to be converted:	$__________________________________
	Conversion Price:	$__________________________________
	Number of shares of Common Stock to be issued:	___________________________________
	
        Amount of Note
        Unconverted:
	$__________________________________
	 	___________________________________
	 	 
	Please issue the shares of Common Stock in the following name and to the following address:
	 	 
	Issue to:	
         

         

         

         

         

	Authorized Signature:	___________________________________
	Name:	___________________________________
	Title:	___________________________________
	Broker DTC Participant Code:	___________________________________
	Account Number:	___________________________________

 

    	 	19	 

     

    

 

EXHIBIT B

 

April 14, 2016

 

Interwest Transfer Company, Inc.

1981 Murray Holladay Road, Suite 100

Salt Lake City, UT 84117

Re: Irrevocable Transfer Agent Instructions

 

Ladies and Gentlemen:

 

On April 14, 2016 APPTIGO
INTERNATIONAL, Inc., a Nevada corporation (the “Company”) executed an 10% Convertible Debenture in the amount of $30,000
(the “Note”) with The Vantage Group Ltd. (the “Investor”).

 

You are hereby irrevocably
authorized and instructed to reserve a sufficient number of shares of common stock (“Common Stock”) of the Company
for issuance upon full conversion of the Note in accordance with the terms thereof. The amount of Common Stock so reserved
may be increased, from time to time, by written instructions of the Company and the Investor and will be automatically adjusted
to reflect any forward or reverse stock splits. Once the reserve shares have been issued Interwest Transfer Company, Inc. (“Transfer
Agent”) shall have no further duty or obligation to issue shares until the reserve has been increased by the Company and
the Investor. You are hereby further irrevocably authorized and directed to issue the shares of Common Stock so reserved upon your
receipt from the Investor of a notice of conversion (“Notice of Conversion”) executed by the Investor in accordance
with the terms of the Notice of Conversion without any further actions of the Company. You shall have no duty or obligation to
confirm the accuracy or the information set forth on the Notice of Conversion. Once the Company repays the principal, plus interest,
plus default interest (if any) of any of the Note at the maturity date, upon written (e-mail being acceptable) confirmation by
the Investor or Investor Counsel as well as the Company, you shall have no further obligation to maintain a reserve on behalf of
the Investor or to issue any share of Common Stock to the Investor under the terms of that Note. Upon the request of the Investor,
you shall provide the outstanding number of shares of the Company.

 

The Company must be participating
in the Depository Trust Company (“DTC”) Fast Automated Securities Transfer (“FAST”) program in order for
the shares to be delivered electronically. The shares to be issued are to be registered in the names of the registered holder of
the securities submitted for conversion or exercise.

 

The Company affirms
that it has appropriately resolved to issue all required Common Stock to the investor and hereby requests that your firm act immediately,
without delay and without the need for any action or confirmation by the Company with respect to the issuance of Common Stock pursuant
to any Conversion Notices received from the Investor.

 

The Company and the Investor
intend that these instructions require the placement of a restrictive legend on all applicable share certificates unless the requirements
listed below are met and the Investor provides the Transfer agent with an acceptable legal opinion stating that share certificates
can be issued without a legend. So long as you have previously received confirmation from the Company
(or Investor counsel) that the shares have been registered under the 1933 Act or otherwise may be sold pursuant to Rule 144 without
any restriction and the number of shares to be issued are less than 9.9% of the total issued and outstanding common stock of the
Company, such shares should be transferred, at the option of the holder of the Notes as specified in the Notice of Conversion,
either (i) electronically by crediting the account of a Prime Broker with the Depository Trust Company through its Deposit Withdrawal
Agent Commission system if the Company is a participant or (ii) in certificated form without any legend which would restrict the
transfer of the shares, and you should remove all stop-transfer instructions relating to such shares. Until such time as you are
advised by Investor counsel that the shares have been registered under the 1933 Act or otherwise may be sold pursuant to Rule 144
without any restriction and the number of shares to be issued are less than 9.9% of the total issued and outstanding common stock
of the Company, you are hereby instructed to place the following legends on the certificates:

 

    	 	20	 

     

    

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER SAID ACT, OR AN OPINION OF INVESTOR COUNSEL IN FORM,
SUBSTANCE AND SCOPE CUSTOMARY FOR OPINIONS OF COUNSEL IN COMPARABLE TRANSACTIONS, THAT REGISTRATION IS NOT REQUIRED OR UNLESS SOLD
PURSUANT TO RULE 144 UNDER SAID ACT.

 

The legend set forth above
shall be removed and you are instructed to issue a certificate without such legend to the holder of any shares upon which it is
stamped, if: (a) such shares are registered for sale under an effective registration statement filed under the 1933 Act or otherwise
may be sold pursuant to Rule 144 without any restriction and the number of shares to be issued is less than 9.9% of the total issued
common stock of the Company, (b) such holder provides the Company and the transfer agent with an opinion of counsel, in form, substance
and scope customary for opinions of counsel in comparable transactions (and satisfactory to the transfer agent), to the effect
that a public sale or transfer of such security may be made without registration under the 1933 Act and such sale or transfer is
effected or (c) such holder provides the Company and the transfer agent with reasonable assurances that such shares can be sold
pursuant to Rule 144. Nothing herein shall be construed to require the Transfer Agent to take any action which would violate state
or federal rules, regulations or law. If an instruction herein would require such a violation, such instructions, but not any other
term herein, shall be void and unenforceable.

 

The Company shall indemnify
and defend you and your officers, directors, principals, partners, agents and representatives, and hold each of them harmless from
and against any and all loss, liability, damage, claim or expense (including the reasonable fees and disbursements of its and Transfer
Agent’s attorney) incurred by or asserted against you or any of them arising out of or in connection with the instructions
set forth herein, the performance of your duties hereunder and otherwise in respect hereof, including the costs and expenses of
defending yourself or themselves against any claim or liability hereunder, except that the Company shall not be liable hereunder
as to matters in respect of which it is determined that you have acted with gross negligence or in bad faith. You shall have no
liability to the Company or the Investor in respect to any action taken or any failure to act in respect of this if such action
was taken or omitted to be taken in good faith, and you shall be entitled to rely in this regard on the advice of counsel.

 

The Company agrees that
in the event that the Transfer Agent resigns as the Company’s transfer agent, the Company shall engage a suitable replacement
transfer agent that will agree to serve as transfer agent for the Company and be bound by the terms and conditions of these Irrevocable
Instructions within five (5) business days.

 

The Investor is intended
to be a party to these instructions and are third party beneficiaries hereof, and no amendment or modification to the instructions
set forth herein may be made without the consent of the Investor.

 

Very truly yours,

 

APPTIGO INTERNATIONAL, INC.

 

 

By: ____________________________

David Steinberg

President

 

 

 

Acknowledged and Agreed:

 

INTERWEST TRANSFER COMPANY, INC.

 

By: ____________________________

 

Title: ___________________________

 

    	 	21

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