Document:

Exhibit 10.2

 

 

 

 

 

 

 

COMMON
STOCK PURCHASE AGREEMENT

between

NATURAL PLANT EXTRACT
OF CALIFORNIA, INC.

and

BETTERWORLD VENTURES,
LLC

dated
as of June 5, 2020

 

 

 

    	  

    	 

    

COMMON
STOCK PURCHASE AGREEMENT

This Common Stock Purchase
Agreement (this “Agreement”), dated as of June 5, 2020, is entered into between Natural Plant Extract of California,
Inc., a California corporation (“Company”), and Betterworld Ventures,
LLC, a California limited liability company (“Buyer”). Each of Company and Buyer is a “Party”
and together, the “Parties”. Capitalized terms used in this Agreement have the meanings given to such terms
herein.

 

RECITALS

 

WHEREAS, Company is
engaged in the manufacturing and distribution of various cannabis products (the “Business”)
at the real property located at 11116 Wright Road, Lynwood, CA 90262 (the “Property”) owned by Imperial Diversified
Holdings LLC, a California limited liability company (“IDH”), which is a related party to Company through common
ownership;

WHEREAS, Company
owns a Manufacturing License for Adult and Medicinal Cannabis Products, issued by the State of California Department of Public
Health, and an Adult- Use and Medicinal Distributor License, issued by the State of California Bureau of Cannabis Control, (each
a “License”, and collectively, the “Licenses”);

WHEREAS, the
Property is subject to a mechanic’s lien for certain development work performed by BCC Contracting, Inc. (the “Contractor”)
and its subcontractors, and the Contractor (and its subcontractors) has brought a lawsuit/claims against Company for payment of
such mechanic’s lien, plus interest and penalties (the “Contractor’s Claim”);

WHEREAS, Company
wishes to sell to Buyer, and Buyer wishes to purchase from Company, 566,667 shares of common stock, no par value, in the Company
representing a forty percent (40%) ownership interest in the Company on a fully diluted basis (the “Shares”),
subject to the terms and conditions set forth herein; and

WHEREAS,
concurrent with and as a condition to Buyer’s purchase and Company’s sale of the Shares, the related transactions described
in Article II shall be completed, including

(a) 
sale of the Property by IDH to Valwood Group, LLC, a Buyer related party (“Valwood”), (b) settlement
and release of the Contractor’s Claim and pay-off of any outstanding debt on the Property, (c) an amendment of Company’s
lease to occupy the Property and assignment of said lease to Valwood, and (d) Company engaging Jim Riley as a consultant to help
manage the successful launch of the Business on behalf of Buyer.

NOW, THEREFORE, the Parties hereby agree
as follows:

 

ARTICLE
I PURCHASE AND SALE

 

Section 1.01Purchase
and Sale of Shares. Subject to the terms and conditions set forth herein, at the Closing (as defined in Section 3.01),
Company shall issue and sell to Buyer, and Buyer shall purchase from Company, the Shares, free and clear of any mortgage, pledge,
lien, charge, security interest, claim, option, equitable interest, restriction of any kind (including any restriction on use,
voting, transfer, receipt of income, or exercise of any other ownership attribute), or other encumbrance
(each, an “Encumbrance”), for the consideration specified in Section 1.02.

 

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Section 1.02Purchase
Price of Shares. The aggregate purchase price for the Shares shall be Fifty Thousand Dollars ($50,000.00) (the “Shares
Purchase Price”). Buyer shall pay the Shares Purchase Price to Company at the Closing by check payable to the Company,
by wire transfer to a bank account designated by the Company in accordance with wire transfer instructions provided by Buyer no
later than three (3) Business Days prior to Closing, or by any combination of such methods.

 

ARTICLE II RELATED
TRANSACTIONS

 

Section 2.01Related
Transactions. Company and Buyer shall cause the following transactions to be completed concurrently with and as a condition
to Buyer’s purchase and Company’s sale of the Shares:

 

(a)              
Purchase of Property. IDH will sell to Valwood and Valwood will purchase from IDH the Property for an aggregate
purchase price of $2,150,000.00 (the “Property Sale”), the proceeds of which will be used to (i) settle and
pay off the Contractor’s Claim for a complete release of its mechanic’s lien and all related claims (the “Contractor’s
Claim Release”), and (ii) pay off the first mortgage lienholder on the Property for a complete release of its first lien
(the “Mortgage Release”).

 

(b)             
NPE Lease Amendment. The Property is currently subject to
a lease between IDH and Company, a copy of which has been provided to Buyer and Valwood (the “NPE Lease”). At
the Closing, the NPE Lease will be assigned to Valwood and amended, substantially in the form attached hereto as Exhibit B
(the “NPE Lease Amendment”), to provide, among others, that (i) commencing October 1, 2020, aggregate lease
payments to Valwood will be $11,000.00 per month plus 100% of property expenses (including real estate taxes, building insurance,
and maintenance and utilities), (ii) this amount may be offset by any other lease and expense payments from any other tenant at
the Property, and (iii) Company shall be responsible for this aggregate amount regardless of the status of any other proposed lessor
of any portion of the Property after October 1, 2020.

 

(c)              
Riley Contract. Company and Jim Riley will enter into a consulting contract, substantially in the form attached
hereto as Exhibit C (the “Riley Contract”), pursuant to which Mr. Riley will help manage the successful
launch of the Business on behalf of Buyer. Company will pay Mr. Riley $3,000.00 per month during the term of the engagement which
is expected to continue for at least twelve (12) months.

 

(d)             
Shareholders Agreement. Each of Company, Buyer, Alan Tsai (“Tsai”) and Robert Hymers III (“Hymers”)
will enter into a Shareholders Agreement governing rights and obligations of the parties, substantially in the form attached hereto
as Exhibit D (the “Shareholders Agreement”). Each of Buyer, Tsai and Hymers may be referred to herein
as a “Major Shareholder” and collectively as the “Major Shareholders”.

 

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ARTICLE III
CLOSING; DELIVERIES

 

Section 3.01Closing.
The purchase and sale of the Shares shall take place remotely via the exchange of documents and payment of the Shares Purchase
Price by check payable to the Company, by wire transfer to a bank account designated by the Company, or by any combination of such
methods (the “Closing”; and which date is referred to herein as the “Closing Date”). The
Closing Date shall be a date mutually agreed by Company and Buyer on or about the closing date of the Property Sale.

 

Section 3.02Deliveries.

 

(a)              
At the Closing, Company shall deliver:

 

(i)                
A certificate of the Secretary of Company certifying (i) that attached thereto are true and complete copies of all resolutions
of the board of directors and the shareholders of Company authorizing the execution, delivery, and performance of this Agreement,
and the other agreements, instruments, and documents required or contemplated to be delivered in connection with this Agreement
or at the Closing (collectively, the “Transaction Documents”) and the consummation of the transactions contemplated
hereby and thereby, and that such resolutions are in full force and effect, and (ii) that attached thereto are true and complete
copies of the governing documents of the Company, including any amendments or restatements thereof, and that such governing documents
are in full force and effect.

 

(ii)              
A certificate of status for the Company from the California Secretary of State of a reasonable date (but not more than
60 days prior to the Closing Date).

 

(b)             
Company, and each of the Major Shareholders shall have executed and delivered the Shareholders Agreement.

 

(c)              
The Property Sale shall have closed and each of the Contractor’s Claim Release and the Mortgage Release shall
be in full force and effect.

 

(d)             
Company and IDH shall have delivered the NPE Lease Amendment to Valwood such that Valwood becomes lessor under the NPE
Lease.

 

(e)              
Company’s board of directors shall be increased in size to three (3) and the board shall be comprised of Tsai,
Hymers and Paul Garrett.

 

(f)               
Promptly following the Closing, the Company shall deliver to the Buyer a certificate representing the Shares against
payment of the Shares Purchase Price therefor.

 

Section 3.03Ownership
Disclosures. Parties covenant to take all such necessary steps to obtain all such approvals and as may be required under applicable
cannabis Laws, inclusive of the California Bureau of Cannabis Control, the California Department of Public Health and the California
Department of Food and Agriculture (collectively, “State Licensing Agencies”) and

 

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their respective
requirements, to ensure that each individual with a financial interest in Company as described under 16 CCR 5003(c) obtains approval
as an “Owner” in Company’s License.

Furthermore,
Company shall be obligated to comply with all
applicable state and local laws and regulations and to perform all acts necessary
or advisable to maintain the Company’s License in effect
and in good standing at all times which includes, without limitation, executing any
and all required State Licensing
Agency Amendment Forms and submitting them in
an applicable timeframe for ownership amendment
reporting. Any costs related to this
paragraph will be paid and incurred by the Company.

 

Section 3.04Post-Closing
Stock Issuance Adjustment. On May 26, 2020, Company filed a Certificate of Amendment to its Restated Articles of Incorporation
(the “Amendment”) with the Secretary of State of the State of California (the “Secretary of State”).
The purpose of the Amendment was to increase the authorized shares of Company from 1,000,000 shares of common stock, no par value
per share, to 2,000,000 shares of common stock, no par value per share. Due to the health crisis and workplace closings caused
by the Coronavirus pandemic, the Secretary of State is not processing filings on an
“expedited” or 24-hour turnaround basis until further notice. As a result, Company will not receive back from the Secretary
of State evidence that the filing was accepted and recorded (the “Filing Date”) before the Closing Date. Company
has also requested from the Secretary of State a certificate of status for the Company (the “Good Standing Certificate”),
which is a requirement of Section 3.02(a)(ii) above. Receipt of the Good Standing Certificate faces similar constraints
on delivery prior to Closing and may not arrive prior to Closing. Notwithstanding the foregoing, Company and Buyer agree as follows:

 

(a)              
Company shall make all efforts required to affect the filing of the Amendment with the Secretary of State in the event
changes or corrections are required by the Secretary of State;

 

(b)             
The Shares shall be deemed issued as of the Closing Date; provided that if the evidence of filing comes back from the
Secretary of State indicating a Filing Date later than the Closing Date, the Shares shall automatically be deemed issued on the
Filing Date with Company’s corporate records indicating such Filing Date as the date of issuance of the Shares;

 

(c)              
Upon the Closing of the transactions contemplated hereunder, Buyer shall be treated as an owner of forty percent (40%)
of the outstanding capital stock of Company irrespective of the Filing Date;

 

(d)             
Buyer shall be treated as a Major Shareholder under the Shareholders Agreement effective upon the Closing irrespective
of the Filing Date;

 

		(e)	Paul Garrett shall be appointed to the Board as described in

Section 3.02(e)
above and pursuant to the Shareholders Agreement upon the Closing irrespective of the Filing Date;

 

(f)               
A copy of the Good Standing Certificate shall be delivered to Buyer promptly upon receipt from the Secretary of State;
and Closing.

 

		(g)	All other terms of this Agreement shall be in full force and effect upon the

 

 

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ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF COMPANY

 

Company hereby represents and
warrants to Buyer that, except as set forth on the Disclosure Schedule attached as Exhibit A to this Agreement (the “Disclosure
Schedules”), which exceptions shall be deemed to be part of the representations and warranties made hereunder, the following
representations are true and complete as of the Closing Date, except as otherwise indicated.

 

Section 4.01Organization,
Authority, and Qualification of Company. Company is a corporation duly organized, validly existing, and in good standing under
the Laws (as defined below) of the state of California and has full corporate power and authority to own, operate, or lease the
properties and assets now owned, operated, or leased by it and to carry on its business as it has been and is currently conducted.
Company is duly qualified to transact business and is in good standing in each jurisdiction in which the failure to so qualify
would have a material adverse effect.

 

Section 4.02Capitalization; Valid Issuance.

 

(a)              
The authorized shares of Company consist of 1,000,000 shares of common stock, no par value, of which 850,000 shares
are issued and outstanding. All of such shares have been duly authorized, are validly issued, fully paid and nonassessable, and
are owned of record and beneficially by the shareholders listed on Section 4.02 to the Disclosure Schedule.

 

(b)             
There are no outstanding or authorized options, warrants, convertible securities, stock appreciation, phantom stock,
profit participation, or other rights, agreements, or commitments relating to the shares of stock of Company or obligating Company
to issue or sell any shares of stock of, or any other interest in, Company. There are no voting trusts, shareholder agreements,
proxies, or other agreements in effect with respect to the voting or transfer of any of the outstanding shares.

 

(c)              
The Shares, when issued, sold and delivered in accordance with the terms and for the consideration set forth in this
Agreement, will be validly issued, fully paid and nonassessable and free of restrictions on transfer other than applicable state
and federal securities laws, the Shareholders Agreement, and liens or encumbrances created by or imposed by Buyer. Assuming the
accuracy of the representations of Buyer in Article 5 of this Agreement, the Shares will be issued in compliance with all
applicable federal and state securities laws.

 

(d)             
Assuming the accuracy of the representations made by Buyer in Article 5 of this Agreement, no consent, approval,
order or authorization of, or registration, qualification, designation, declaration or filing with, any federal, state or local
governmental authority is required on the part of Company in connection with the consummation of the transactions contemplated
by this Agreement, except for filings pursuant to applicable federal and state securities
laws, which have been made or will be made in a timely manner.

 

Section 4.03Authorization.
All corporate action has been taken, or will be taken prior to the Closing, on the part of the Board of Directors and shareholders
that is necessary for the authorization, execution and delivery of this Agreement by Company and the performance by

 

 

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Company of the obligations
to be performed by Company as of the date hereof under this Agreement. This Agreement, when executed and delivered by Company,
shall constitute the valid and legally binding obligation of Company, enforceable against Company in accordance with its terms
except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and any other laws
of general application relating to or affecting the enforcement of creditors’ rights generally, or (b) the effect of rules
of law governing the availability of equitable remedies.

 

Section 4.04No
Subsidiaries. Company does not have, or have the right to acquire, an ownership interest in any other individual, corporation,
partnership, joint venture, limited liability company, Governmental Authority, unincorporated organization, trust, association,
or other entity (each, a “Person”).

 

Section 4.05No Conflicts
or Consents. The execution, delivery, and performance by Company of this Agreement, and the consummation of the transactions
contemplated hereby, do not and will not: (a) violate or conflict with any provision of the restated articles of incorporation,
bylaws, or other governing documents of Company; (b) violate or conflict with any provision of any statute, law, ordinance, regulation,
rule, code, treaty, or other requirement of any Governmental Authority (collectively, “Law”) or any order, writ,
judgment, injunction, decree, determination, penalty, or award entered by or with any Governmental Authority (“Governmental
Order”) applicable to Company; (c) require the consent, notice, or filing with or other action by any Person or require
any Permit (as defined below), license, or Governmental Order; (d) violate or conflict with, result in the acceleration of, or
create in any party the right to accelerate, terminate, or modify any contract, lease, deed, mortgage, license, instrument, note,
indenture, joint venture, or any other agreement, commitment, or legally binding arrangement, whether written or oral (collectively,
“Contracts”), to which Company is a party or by which Company is bound or to which any of their respective properties
and assets are subject; or (e) result in the creation or imposition of any Encumbrance on any properties or assets of Company.

 

Section 4.06Material Agreements.
Except for this Agreement, there are no agreements, understandings, instruments, contracts or proposed transactions to which the
Company is a party that involve (a) obligations (contingent or otherwise) of, or payments to, the Company in excess of $25,000,
(b) the license of any Intellectual Property to or from the Company other than licenses with respect to commercially available
software products under standard end-user object code license agreements or standard customer terms of service and privacy policies
for Internet sites, (c) the grant of rights to manufacture, produce, assemble, license, market, or sell its products to any other
person, or that limit the Company’s exclusive right to develop, manufacture, assemble, distribute, market or sell its products,
or (d) indemnification by the Company with respect to infringements of proprietary rights other than standard customer or channel
agreements (each, a “Material Agreement”). The Company is not in material breach of any Material Agreement.
Each Material Agreement is in full force and effect and is enforceable by the Company in accordance with its respective terms,
except as may be limited by (i) applicable bankruptcy, insolvency, reorganization or other laws of general application relating
to or affecting the enforcement of creditors’ rights generally, or (ii) the effect of rules of law governing the availability
of equitable remedies.

 

 

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Section 4.07Title to
Property and Assets. Company owns its properties and assets free and clear of all mortgages, deeds of trust, liens, encumbrances
and security interests except for statutory liens for the payment of current taxes that are not yet delinquent and liens, encumbrances
and security interests which arise in the ordinary course of business and which do not affect material properties and assets of
Company. With respect to the property and assets it leases, Company is in material compliance with each such lease.

 

Section 4.08Intellectual
Property. Company owns or possesses sufficient legal rights to all Intellectual Property (as defined below) that is necessary
to the conduct of Company’s business as now conducted and as presently proposed to be conducted (the “Company
Intellectual Property”) without any violation or infringement (or in the case of third-party patents, patent applications,
trademarks, trademark applications, service marks, or service mark applications, without any violation or infringement known to
Company) of the rights of others. No product or service marketed or sold (or proposed to be marketed or sold) by Company violates
or will violate any license or infringes or will infringe any rights to any patents, patent applications, trademarks, trademark
applications, service marks, trade names, copyrights, trade secrets, licenses, domain names, mask works, information and proprietary
rights and processes (collectively, “Intellectual Property”) of any other party, except that with respect
to third-party patents, patent applications, trademarks, trademark applications, service marks, or service mark applications the
foregoing representation is made to Company’s knowledge only. Other than with respect to commercially available software
products under standard end-user object code license agreements, there is no outstanding option, license, agreement, claim, encumbrance
or shared ownership interest of any kind relating to the Company Intellectual Property, nor is Company bound by or a party to
any options, licenses or agreements of any kind with respect to the Intellectual Property of any other person. Company has not
received any written communications alleging that Company has violated or, by conducting its business, would violate any of the
Intellectual Property of any other person.

 

Section 4.09Litigation;
Governmental Orders. There is no pending action, suit, proceeding, arbitration, mediation, complaint, claim, charge or investigation
before any court, arbitrator, mediator or governmental body or, to Company’s knowledge, currently threatened in writing (a)
against Company or (b) against any consultant, officer, director or key employee of Company arising out of his or her consulting,
employment or board relationship with Company or that could otherwise materially impact Company.

 

Section 4.10Compliance
With Laws; Permits. Company has complied, and is now complying, with all Laws applicable to it or its Business, properties,
or assets. All permits, licenses, franchises, approvals, registrations, certificates, variances, and similar rights obtained, or
required to be obtained, from Governmental Authorities (collectively, “Permits”) that are required for the Company
to conduct its Business, including, without limitation, owning or operating any of the Property, have been obtained and are valid
and in full force and effect.

 

Section 4.11Employee
and Consultant Matters. Each current and former employee, consultant and officer of Company has executed an agreement with
Company regarding confidentiality and proprietary information substantially in the form or forms made available to Buyers or delivered
to the counsel for Buyers. No current or former employee or consultant has excluded any work or invention from his or her assignment
of inventions. To Company’s knowledge, no such employees
or consultants are in violation thereof. To Company’s knowledge, none of its employees is obligated under any judgment, decree,
contract, covenant or agreement that would materially interfere with such employee’s ability to promote the interest of Company
or that would interfere with such employee’s ability to promote the interests of Company or that would conflict with Company’s
Business.

 

 

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Section 4.12Liabilities.
The Company has no liabilities or obligations of any kind, contingent or otherwise, in excess of $25,000 individually or $75,000
in the aggregate.

 

Section 4.13Tax
Matters. Company has filed all tax returns that it was
required to file.

All
such tax returns were correct and complete in all material respects. All taxes owed
by Company have been paid, including, without limitation, all income, withholding, personal property, real property, sales, use
import, duties, or any other federal, state, local or foreign tax of any type whatsoever. Company is not
the beneficiary of any extension of time with which to file any tax return.

 

Section 4.14Notes
and Accounts Receivable. All notes and accounts receivable of Company are reflected properly on its books and records, are
valid receivables which arose in the ordinary course of business from bona fide transactions, subject to no setoffs or counterclaims.

 

Section 4.15Licensure.
The Licenses and Company’s business license
from the City
of Lynwood (collectively, the
“Business Licenses”) are all the licenses necessary to
conduct the Business. No material default under any Business License has occurred. No Actions (as defined herein) are pending or
threatened in writing relating to the
suspension, revocation or modification of any such Business
License. Company’s Business Licenses are in effect and in good
standing, which includes, without limitation, executing, submitting and paying for all required annual fees or renewal fees required
by the city of Lynwood and State Licensing Agencies. Any costs related to this paragraph
will be paid and incurred by Company only. The execution, delivery and performance of this Agreement does not and will not result
in any suspension, revocation, cancellation or invalidation of any License that is
necessary for the conduct of the Business.

 

ARTICLE V REPRESENTATIONS
AND WARRANTIES OF BUYER

 

Buyer represents and warrants
to Company that the following representations are true and complete as of the Closing Date, except as otherwise indicated.

 

Section 5.01Authorization.
Buyer has full power and authority to enter into this Agreement. This Agreement, when executed and delivered by Buyer, will constitute
a valid and legally binding obligation of Buyer, enforceable in accordance with its terms, except (a) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and any other laws of general application relating to
or affecting the enforcement of creditors’ rights generally, or (b) the effect of rules of law governing the availability
of equitable remedies.

 

 

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Section 5.02Purchase
Entirely for Own Account. This Agreement is made with Buyer in reliance upon Buyer’s representation to Company, which
by Buyer’s execution of this Agreement, Buyer hereby confirms, that the Shares to be acquired by Buyer will be acquired for
investment for Buyer’s own account, not as a nominee or agent, and not with a view to the resale or distribution of any part
thereof, and that Buyer has no present intention of selling, granting any participation in, or otherwise distributing the same.
By executing this Agreement, Buyer further represents that Buyer does not presently have any contract, undertaking, agreement or
arrangement with any person to sell, transfer or grant participations to such person or to any third person, with respect to any
of the Shares.

 

Section 5.03Investment
Purpose. Buyer is acquiring the Shares solely for its own account for investment purposes and not with a view to, or for offer
or sale in connection with, any distribution thereof or any other security related thereto within the meaning of the Securities
Act of 1933, as amended (the “Securities Act”). Buyer acknowledges that Company has not registered the offer
and sale of the Shares under the Securities Act or any state securities laws, and that the Shares may not be pledged, transferred,
sold, offered for sale, hypothecated, or otherwise disposed of except pursuant to the registration provisions of the Securities
Act or pursuant to an applicable exemption therefrom and subject to state securities laws and regulations, as applicable.

 

Section 5.04Disclosure
of Information. Buyer has had an opportunity to discuss Company’s business, management, financial affairs and the terms
and conditions of the offering of the Shares with Company’s management. Nothing in this Article 5, including the foregoing
sentence, limits or modifies the representations and warranties of the Company in Article 4 of this Agreement or the right
of Buyers to rely thereon.

 

Section 5.05Restricted
Securities. Buyer understands that the Shares have not been, and will not be, registered under the Securities Act, by reason
of a specific exemption from the registration provisions of the Securities Act which depends upon, among other things, the bona
fide nature of the investment intent and the accuracy of Buyer’s representations as expressed herein. Buyer understands that
the Shares are “restricted securities” under applicable United States federal and state securities laws and that, pursuant
to these laws, Buyer must hold the Shares indefinitely unless they are registered with the Securities and Exchange Commission and
qualified by state authorities or an exemption from such registration and qualification requirements is available. Buyer acknowledges
that Company has no obligation to register or qualify the Shares for resale. Buyer further acknowledges that if an exemption from
registration or qualification is available, it may be conditioned on various requirements including, but not limited to, the time
and manner of sale, the holding period for the Shares, and on requirements relating to Company which are outside of Buyer’s
control, and which Company is under no obligation and may not be able to satisfy.

 

Section 5.06No Public
Market. Buyer understands that no public market now exists for the Shares, and that Company has made no assurances that a public
market will ever exist for the Shares.

 

Section 5.07Legends.
Buyer understands that the Shares may bear any one or more of the following legends: (a) any legend set forth in, or required by,
this Agreement; (b) any legend required by the securities
laws of any state to the extent such laws are applicable to the Shares represented by the certificate so legended; and (c) the
following legend:

 

 

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“THE SHARES REPRESENTED
BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN ACQUIRED FOR INVESTMENT
AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO
TRANSFER MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM REASONABLY
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.”

 

Section 5.08Accredited
and Sophisticated Purchaser. Buyer is an accredited investor as defined in Rule 501(a) of Regulation D promulgated under the
Securities Act. Buyer is an investor in securities of companies in the development stage and acknowledges that Buyer is able to
fend for itself, can bear the economic risk of its investment, and has such knowledge and experience in financial or business matters
that it is capable of evaluating the merits and risks of the investment in the Shares. If other than an individual, Buyer also
represents it has not been organized for the purpose of acquiring the Shares.

 

Section 5.09No General
Solicitation. Neither Buyer nor any of its officers, directors, employees, agents, stockholders or partners has either directly
or indirectly, including through a broker or finder (a) engaged in any general solicitation with respect to the offer and sale
of the Shares, or (b) published any advertisement in connection with the offer and sale of the Shares.

 

ARTICLE VI MISCELLANEOUS

 

Section 6.01Treatment
of Existing Debt. As of the Closing Date, Company has outstanding debt of approximately $1,322,357 pursuant to the instruments,
loans and expense reimbursement obligations described in Nos. 1-9 of Section 4.06 of the Disclosure Schedule (the “Outstanding
Debt”). The Parties wish to
clarify the treatment and payment obligations for the Outstanding Debt as of the Closing Date and thereafter as follows:

 

(a)              
The Outstanding Debt is an obligation of Company and repayment shall be made by Company.

 

(b)             
The Outstanding Debt was incurred prior to the Closing Date and prior to Buyer’s investment in and involvement
with Company.

 

(c)              
At Closing, the Shares acquired by Buyer shall equal forty percent (40%) (the “Buyer Percentage”)
of Company’s outstanding capital stock on a fully diluted basis, taking into account outstanding options, warrants and other
promises of equity issued to any Person (“Fully-Diluted Equity”).

 

 

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(d)             
From time to time the Buyer Percentage shall be adjusted to the extent Buyer acquires additional shares, or shares are
issued to other investors, employees, consultants, partners or shareholders.

 

(e)              
To the extent Company is unable to repay the Outstanding Debt when due and the applicable creditors commence a default
action against Company, Buyer at its option may unilaterally negotiate a settlement and pay off such Outstanding Debt (“Pay-Off
Amount”) and increase its common stock position in Company based on a valuation of Company’s business performed
by an independent third-party appraisal firm experienced in valuations of companies engaged in cannabis manufacturing and distribution1
(the “Valuation”), with the price per share of Company’s capital stock and Buyer’s increased equity
position determined according to the following formulae:

 

Valuation / Fully-Diluted Equity = Price Per Share

 

Pay-Off Amount / Price Per Share = New Shares to
Buyer

 

As
an example, assume Buyer pays off all the Outstanding Debt. If the appraiser returns a valuation of Company’s business at
$6,000,000 and there are 6,000,000 shares outstanding on a fully-diluted based, new shares issued to Buyer would be 1,322,357 based
on the following:

 

$6,000,000 / 6,000,000 = $1.00 per share

 

$1,322,357 / $1.00 = 1,322,357 new shares

 

(f)               
In any fiscal year that Company determines to distribute to shareholders a dividend or other distribution, Company profits
shall be first be calculated without regard to Outstanding Debt payments made by Company in that fiscal year on the Outstanding
Debt (“Net Profits Before Debt”). If there are sufficient Net Profits Before Debt, such dividend or other distribution
shall be made as follows:

 

(i)                
First, the Buyer Percentage of such Net Profits Before Debt approved for distribution shall go to Buyer.

 

(ii)              
Second, the remaining Net Profits approved for distribution shall be reduced by payments for that prior fiscal year
on the Outstanding Debt (“Net Profits After Debt”); and

 

________________

1 Such
independent third-party appraisal firm to be mutually agreed between Company and Buyer. In the event the Parties are unable to
agree on an independent third-party appraiser within fifteen (15) days of first notice, the appraisal issue shall be submitted
to JAMS’ San Diego office for the appointment by JAMS of such independent qualified appraiser to decide, without any right
of appeal and after a hearing and the submission of evidence, the appraisal price.

 

    	11  

    	 

    

(iii)           
Third, any remaining Net Profits After Debt after taking into account subparagraphs (f)(i) and (f)(ii) above shall be
distributed to the other shareholders.

 

As an example, assume:

 

		·	In year 1 Company is profitable and the Board of Directors wishes to declare a cash dividend to
shareholders;

		·	Company has paid $50,000 in Outstanding Debt payments during year 1; and

·        
Company has $100,000 in Net Profits Before Debt. The proposed dividends would be paid as follows:

First, Buyer
would receive $40,000 based on $100,000 Net Profits Before Debt multiplied by the Buyer Percentage (currently 40%);

 

Second, the remaining
$60,000 available would be reduced by the amount of Outstanding Debt payments in year 1 ($50,000) leaving $10,000 as Net Profits
After Debt; and

 

Third, the $10,000
Net Profits After Debt would be distributed to the other shareholders of Company as a cash dividend, pro rata.

 

		(g)	Upon any Sale Event (as defined below) of Company:

 

(i)                
The Shares shall have a liquidation preference that calculates net proceeds to shareholders prior to pay-off of the
Outstanding Debt and distributes to Buyer the Buyer Percentage of such pre-Outstanding Debt net proceeds prior to payments to any
other shareholder; and

 

(ii)              
The other shareholders shall receive the remainder, if any, of the proceeds after taking into account pay-off of the
Outstanding Debt.

 

As an example, assume if in year
5:

 

		·	there was still $500,000 of Outstanding Debt;

		·	The Company was sold for $6,000,000;

		·	The Buyer Percentage is still 40%; and

		·	After paying off all debts and obligations including the Outstanding Debt, there was $4,000,000
available for distribution to the shareholders.

 

The proceeds to shareholders would
be paid as follows:

 

First, Buyer’s
distribution of net proceeds would assume the $500,000 Outstanding Debt did not exist and Buyer would receive $1,800,000 based
on the following:

 

 

    	12  

    	 

    

($4,000,000 + $500,000) * 0.40 = $1,800,000

This amount = 45% of the $4,000,000 actually
available for distribution

 

Second,
the other shareholders would share $2,200,000 based on the following:

 

$4,000,000 - $1,800,000 = $2,200,000

This amount = 55% of the $4,000,000 available
for distribution

 

(h)             
Within forty-five (45) days of closing, Company shall amend its charter to reflect paragraphs (f) and (g) above.

 

(i)                
Within thirty (30) days of Closing, Company shall make good faith efforts to renegotiate the Outstanding Debt to extend
maturity dates, implement reasonable payment schedules, and eliminate references to debt payments being made from a percentage
of net profits.

 

For purposes of this Section 6.01,
“Sale Event” means any of:

 

(a)              
a merger or consolidation in which (i) Company is a constituent party or

(ii) a subsidiary of Company is
a constituent party and Company issues shares of its capital stock pursuant to such merger or consolidation, except any such merger
or consolidation involving Company or a subsidiary in which the shares of capital stock of Company outstanding immediately prior
to such merger or consolidation continue to represent, or are converted into or exchanged for equity securities that represent,
immediately following such merger or consolidation, at least a majority, by voting power, of the equity securities of (1) the surviving
or resulting party or (2) if the surviving or resulting party is a wholly owned subsidiary of another party immediately following
such merger or consolidation, the parent of such surviving or resulting party; provided that, for the purpose of
this definition, all shares of common stock issuable upon exercise of options outstanding immediately prior to such merger or consolidation
or upon conversion of preferred outstanding immediately prior to such merger or consolidation shall be deemed to be outstanding
immediately prior to such merger or consolidation and, if applicable, deemed to be converted or exchanged in such merger or consolidation
on the same terms as the actual outstanding shares of common stock are converted or exchanged; or

 

(b)              
the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions,
by Company or any subsidiary of Company of all or substantially all the assets of Company and its subsidiaries taken as a whole,
or, if substantially all of the assets of Company and its subsidiaries taken as a whole are held by such subsidiary or subsidiaries,
the sale or disposition (whether by merger or otherwise) of one or more subsidiaries of Company, except where such sale, lease,
transfer or other disposition is to Company or one or more wholly owned subsidiaries of Company.

 

Section
6.02 Successors and Assigns. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the
respective successors and assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any
party other than the parties to this Agreement or their respective successors and assigns any rights, remedies, obligations,
or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

 

    	13  

    	 

    

 

Section 6.03Notices.
All notices and other communications given or made pursuant to this Agreement must be in writing and will be deemed to have been
given upon the earlier of actual receipt or: (a) personal delivery to the party to be notified (with verification of receipt),

(b) 
when sent, if sent by facsimile or electronic mail during normal business hours of the recipient, and if not sent during
normal business hours, then on the recipient’s next business day,

(c) 
three days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one
business day after deposit with a nationally recognized overnight courier, freight prepaid, specifying next business day delivery,
with written verification of receipt. All communications must be sent to the respective parties at their address as set forth on
the signature page below, or to such address, facsimile number or electronic mail address as subsequently modified by written notice
given in accordance with this Section 6.03.

 

Section 6.04Further
Assurances. Following the Closing, each of the parties hereto shall, and shall cause their respective affiliates to, execute
and deliver such additional documents and instruments and take such further actions as may be reasonably required to carry out
the provisions hereof and give effect to the transactions contemplated by this Agreement and any other Transaction Documents.

 

Section 6.05Interpretation;
Headings. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation
against the party drafting an instrument or causing any instrument to be drafted. The headings in this Agreement are for reference
only and shall not affect the interpretation of this Agreement.

 

Section 6.06Severability.
If any term or provision of this Agreement is invalid, illegal, or unenforceable in any jurisdiction, such invalidity, illegality,
or unenforceability shall not affect any other term or provision of this Agreement.

 

Section 6.07Entire Agreement.
This Agreement and any other Transaction Documents related to the matters contemplated in this Agreement constitute the sole and
entire agreement of the Parties with respect to the subject matter contained herein and therein, and supersede all prior and contemporaneous
understandings and agreements, both written and oral, with respect to such subject matter. In the event of any inconsistency between
the statements in the body of this Agreement and those in the any other Transaction Documents and the Disclosure Schedules (other
than an exception expressly set forth as such in the Disclosure Schedules), the statements in the body of this Agreement will control
unless the Parties otherwise agree in writing.

 

Section 6.08Successors
and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the Parties hereto and their respective
successors and permitted assigns.

Neither Party may assign
its rights or obligations hereunder without the prior written consent of the other Party, which consent shall not be unreasonably
withheld or delayed. No assignment shall relieve the assigning Party of any of its obligations hereunder.

 

    	14  

    	 

    

Section 6.09Amendment
and Modification; Waiver. This Agreement may only be amended, modified, or supplemented
by an agreement in writing signed by each Party hereto. No waiver by any Party of any of the provisions hereof shall be effective
unless explicitly set forth in writing and signed by the Party so waiving. No failure to exercise, or delay in exercising, any
right or remedy arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial
exercise of any right or remedy hereunder preclude any other or further exercise thereof or the exercise of any other right or
remedy.

 

Section 6.10Governing
Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of California without
giving effect to any choice or conflict of law provision or rule (whether of the State of California or any other jurisdiction).

Each Party hereby irrevocably
and unconditionally submits to the personal jurisdiction of the federal and state courts located in San Diego County, California
for the purpose of any suit, action, or other proceeding arising out of or based upon this Agreement.

 

Section 6.11Attorneys’
Fees. If any action at law or in equity (including arbitration) is necessary to enforce or interpret the terms of this Agreement,
the prevailing party will be entitled to reasonable attorneys’ fees, costs, and necessary disbursements in addition to any
other relief to which the party may be entitled. Each party shall pay all costs and expenses that it incurs with respect to the
negotiation, execution, delivery, and performance of the Agreement.

 

Section 6.12Counterparts;
Facsimile or Electronic Signature. This Agreement may be executed in two or more counterparts, each of which shall be deemed
an original and all of which together shall constitute one instrument. Counterparts may also be delivered via facsimile, electronic
mail (including, PDF or any electronic signature complying with the U.S. federal ESIGN Act of 2000, Uniform Electronic Transactions
Act or other applicable law) or other transmission method and any counterpart so delivered shall be deemed to have been duly and
validly delivered and be valid and effective for all purposes.

 

 

(SIGNATURE
PAGE FOLLOWS)

 

 

    	15  

    	 

    

 

 

 

 

IN
WITNESS WHEREOF, the parties hereto have caused this agreement to be executed as of the date first written above by
their respective officers thereunto duly authorized.

COMPANY:

Natural
Plant Extract of California, Inc.,

a California corporation

 

By:
/s/ Alan Tasi

Name:      Alan
Tsai

Title:          Chief
Executive Officer

Address:
  11116 Wright Rd.

Address:    Lynwood,
CA 90262

 

 

BUYER:

Betterworld
Ventures, LLC,

a
California limited liability company

 

Name:Paul
Garrett, Sole Trustee of the Paul Garrett 1994 Revocable Trust

 

By:
/s/ Paul Garrett

Title:        Manager
and Sole Member

Address:  3594
Via Zara

Address:  Fallbrook,
CA 92028

 

 

ACKNOWLEDGED BY:

 

 

/s/
Alan Tsai

Alan
Tasi, Major Shareholder

 

 

/s/
Robert Hymers III

Robert
Hymers III, Major Shareholder

 

 

[Common Stock Purchase Agreement Signature
Page]

 

 

 

    	16  

    	 

    

Exhibit A

 

Company Disclosure Schedules

 

 

Section 4.02 Existing Shareholders:

 

	Name	Common Stock
	Robert Hymers III	400,000
	Alan Tsai	400,000
	Marijuana Company of America, Inc.	50,000

 

Section 4.04 Subsidiaries:

		·	Company has four 100%-owned subsidiaries, all organized under the laws of the State of California:

		1)	Northern Lights Distribution, LLC

		2)	Blockchain, LLC

		3)	Green Ethos Management, LLC

		4)	Green Ethos Holdings, LLC

 

Section 4.05(c) Notices/Consents:

		·	The addition of a new shareholder in Company requires notice to the following licensing agencies:

		1)	State of California Department of Public Health for Company’s Manufacturing License for
Adult and Medicinal Cannabis Products

		2)	State of California Bureau of Cannabis Control for Company’s Adult-Use and Medicinal Distributor
License

		3)	City of Lynwood under its Development Agreement with Company

 

Section 4.06 Material Agreements:

		·	The following agreements involve obligations in excess of $25,000 individually or

$75,000 in the aggregate:

		1)	Promissory Note from Company issued to Green Rock Investment Fund LLC for

$150,000 dated May 15, 2018.
Maturity date is August 15, 2018. The Note technically is in default, however the lender has not issued a notice of default and
is one of the members of Imperial Diversified Holdings, LLC. The member/lender has complained about amounts owed to it and cash
to be received, if any, from the sale of the Property.

		2)	Outstanding balance of $110,000 on a loan from Santa Barbara Cultivation (Long Canyon) to Northern
Lights Distribution, LLC, a wholly-owned subsidiary of Company. This is a related party loan in that Alan Tsai holds a 5% ownership
interest in the Long Canyon entity. The original loan amount was $150,000. There is no signed note/agreement.

		3)	Outstanding loan from Johnny Wong for $200,000. There is no signed note/agreement.

		4)	Promissory Note from Company issued to Zixuan An and Shucun Xie for $300,000 under a Revolving
Line of Credit Agreement, dated July 12, 2018. Maturity Date

 
 

    	A-1  

    	 

    

December 31, 2020.
This can be repaid from a 10% profit share through the Maturity Date.

		5)	Promissory Notes from Company issued to Chau Tai Huang and Tzu Li Pai for an aggregate of $289,500,
dated May 14, 2018 and July 12, 2018. Maturity Date December 31, 2020. This can be repaid from a 10% profit share through the Maturity
Date.

		6)	Promissory Note from Company issued to Eric Liu for $60,000 under a Revolving
Line of Credit Agreement, dated July 12, 2018. Maturity Date December 31, 2020. This can be repaid from 10% profit share through
the Maturity Date.

		7)	Reimbursements owed to Robert Hymers for an aggregate of $81,690.

		8)	Reimbursements owed to Edward Manolos for an aggregate of 62,500.

		9)	Reimbursements owed to Alan Tsai for an aggregate of $68,667.

		10)	Reference is made to Nos. 1 and 2 under Section 4.07 below and Company’s agreement with
BCC Contracting, Inc.

Notwithstanding this
Section 4.06 disclosure, the amounts due under Nos. 1-9 shall be handled in accordance with Section 6.01 of the Agreement.

 

		·	Company has entered into the following agreement to manufacture Company’s products:

1) Management agreement
with Abstrx Tech, Inc., a California corporation, and Green Ethos Management, LLC, a California limited liability company and wholly-owned
subsidiary of Company, dated February 27, 2018, to manage the manufacturing operations for a 25% profit share based on kilograms
of production each month.

 

Section 4.07 Title to Property
and Assets:

		·	The Property leased by Company is subject to the following mechanics’ and tax liens:

		1)	A Claim of Mechanic's Lien by BCC Contracting, Inc., in the amount of $379,829.96, and any other
amounts due thereunder;

		2)	A Claim of Mechanic's Lien by BCC Contracting, Inc., in the amount of $981,441.22, and any other
amounts due thereunder;

		3)	A Claim of Mechanic's Lien by McDuff/Daniels, Inc., in the amount of $43,040.00, and any other
amounts due thereunder;

		4)	A Claim of Mechanic's Lien by Sunwest Electric, Inc., in the amount of $159,085.28, and any other
amounts due thereunder;

		5)	A Claim of Mechanic's Lien by S and J Interiors Inc, in the amount of $25,849.30, and any other
amounts due thereunder;

		6)	A Claim of Mechanic's Lien by Pennco Construction Group. Inc., in the amount of

$7,095.12, and any other amounts
due thereunder;

		7)	A Claim of Mechanic's Lien by P.V.& C. Plumbing And Piping Inc., in the amount of

$26,264.79, and any other
amounts due thereunder;

		8)	A Claim of Mechanic's Lien by Ferguson Enterprises, LLC., in the amount of

$6,541.41, and any other
amounts due thereunder;

		9)	A Claim of Mechanic's Lien by Foundation Building Materials, LLC, in the amount of $2,467.14,
and any other amounts due thereunder;

		10)	A Claim of Mechanic's Lien by Sierra Insulation Contractors II LLC, in the amount of $2,842.00,
and any other amounts due thereunder;

 
 

    	A-2  

    	 

    

		11)	General and Special City and/or County taxes, including any personal property taxes and any assessments
collected with taxes, for the fiscal year 2019 - 2020:

		o	1st Installment: $11,004.58 Delinquent

o
Penalty: $1,100.45

		o	2nd Installment: $11,004.58 Delinquent

o
Penalty: $1,110.45

 

Section 4.09 Litigation:

		·	Reference is made to Nos. 1, 2 and 4 above under Section 4.07 with respect to related litigation
against Company filed by each of BCC Contracting, Inc. and Sunwest Electric, Inc.

 

Section 4.10 Compliance with
Laws:

		·	Under U.S. Federal law, the manufacturer and distribution of Cannabis and many Cannabis derivative
products are a Schedule-1 illegal drug.

 

Section 4.11 Employee and Consultant
Matters:

		·	There are no confidentiality and proprietary information agreements with employees and consultants.
Company intends to enter into such agreements prior to commencing operations at the manufacturing plant.

 

Section 4.12 Liabilities:

		·	Reference is made to Sections 4.06 and 4.07 above.

 

 

 

    	A-3  

    	 

    

Exhibit B

 

NPE Lease Amendment

 

 

ASSIGNMENT AND AMENDMENT
TO COMMERCIAL LEASE AGREEMENT

 

This Assignment and Amendment
to Commercial Lease Agreement (“Amendment”) is entered into as of June 5, 2020 (“Effective Date”)
by and between Imperial Diversified Holdings, LLC, a California limited liability company (“Assignor”) , Valwood
Group, LLC, a Delaware limited liability company (“Assignee”) and
Natural Plant Extract of California, Inc., a California corporation (“Tenant”). Assignee, Assignor and Tenant
are hereinafter collectively referred to as the “Parties.”

 

RECITALS

 

WHEREAS,
Assignor and Tenant, are parties to that certain Commercial Lease Agreement dated April 11, 2018 attached hereto as Exhibit A (the
“Lease”) for the property commonly known as 11116 Wright Rd., Los Angeles, California 90262 (the “Premises”);

 

WHEREAS,
Assignor now desires to assign all of its rights, title and interest in and to the Lease to Assignee (“Assignment”)
effective as of the Effective Date; and

 

WHEREAS,
Assignee desires to accept the assignment of the Lease and assume Assignor’s obligations thereunder.

 

WHEREAS, concurrently
upon the Assignment, the Parties wish to enter into this Amendment to amend and restate new Lease terms between Assignee and Tenant.

 

NOW
THEREFORE, in consideration of the covenants and agreements contained herein, the adequacy of which is hereby acknowledged
by the Parties, the Parties hereby agree as follows:

 

1.     
As of the Effective Date, Assignor assigns, transfers and sets over to Assignee, its successors and assigns, forever, all
rights, title and interests of Assignor in, to and under the Lease, including any security deposit, prepaid rent and other funds
paid to Assignor as Landlord under the Lease by Tenant.

 

2.     
As of the Effective Date, Assignee accepts the assignment of Assignor’s rights, title and interest in, to and under
the Lease upon the terms and conditions herein set forth and hereby assumes and agrees to keep, perform, observe and be bound by
all of the terms, covenants, conditions and provisions contained in the Lease on the part of Assignor under the Lease.

 

3.     
Assignor and Assignee represent for the benefit of the other, as applicable, that (i) Assignee has the ability to assume
all of Assignor’s obligations under the terms of the Lease, (ii) Assignor has not previously assigned the Lease or any financial
interests in the Lease to any other party, (iii) the Premises have been delivered to Assignor and Assignor has accepted the same
in its “AS-IS” condition as of the Effective Date, and (iv) all improvements required to be completed by

 

    	B-1  

    	 

    

Assignor
under the Lease, if any, have been completed and no sums are due to Assignor including any tenant improvement allowance. All representations
and certifications set forth in this Assignment will survive the Effective Date. Upon performance of the entirety of its obligations
set forth hereunder, this Amendment will relieve Assignor of its obligations and liabilities under the Lease.

		4.	Section 1.02 shall be amended to provide the following information for the Landlord:

                                                                                                 

                                                                                                Address: 3594 Via Zara, Fallbrook, CA 92028
 Primary Contact: Paul Garrett

                                                                                Telephone: (951) 255-2221

5.     
Section 2.01 of the Lease shall be amended to revise the minimum monthly rent (“Minimum Rent”) as follows:

 

a.      
Commencing October 1, 2020, the amount of Minimum Rent Tenant shall pay shall be the amount of $11,000 per month plus 100%
of all expenses on the Premises (including real estate taxes, building insurance, and maintenance and utilities).

 

b.     
Tenant’s monthly rent and expense obligations pursuant to Section 2.01, as amended, shall be offset by any payments
received by Assignee from any other tenant subject to a written lease at the Premises.

 

6.     
Section. 2.02 of the Lease (Security Deposit) shall be amended by deleting the text of such section and inserting
“Reserved”. In connection with this Section 6, Assignor and Tenant represent that notwithstanding the current language
of Section 2.02 of the Lease, no security deposit was every paid by Tenant or received by Assignor.

 

7.     
Article 18 of the Lease (Right of First Refusal to Purchase) shall be amended by deleting
such Article in its entirety.

 

8.     
This Amendment is binding upon and inures to the benefit of Assignor, Assignee, Tenant and their respective successors and
assigns.

 

9.     
This Amendment may be executed in multiple counterparts, each of which shall constitute one and the same instrument. Each
party is entitled to rely upon an electronically delivered counterpart of this Amendment executed by the other party with the same
force and effect as if such electronic copy were an ink-signed original signed by the party sending such electronic copy and delivered
to the other party. For purposes of this Paragraph 7, all references to the term “electronic copy” are deemed to include
a document forwarded by telecopy transmission or a document forwarded by electronic mail as a Portable Document Format (Adobe Acrobat)
(also known as a PDF) attachment to such electronic mail.

 

10. 
This Amendment shall be governed by and construed in accordance with the internal laws of the State of California without
giving effect to any choice or conflict of law provision or rule (whether of the State of California or any other jurisdiction).
Each Party hereby irrevocably and unconditionally submits to the personal jurisdiction of the federal and state courts located
in

 

    	B-2  

    	 

    

San Diego County, California
for the purpose of any suit, action, or other proceeding arising out of or based upon this Agreement.

 

11. 
No provisions of this Amendment will be amended or modified by any party hereto except by an instrument signed by all Parties
hereto.

 

12. 
If any one or more of the provisions contained in this Amendment shall be invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired
thereby.

 

 

[Signatures
on Following Page]

 

 

    	B-3  

    	 

    

IN WITNESS WHEREOF,
the Parties hereto have executed this Assignment as of the date first written above.

 

ASSIGNOR:

 

IMPERIAL DIVERSIFIED HOLDINGS, LLC

a California limited liability
company

 

By:  /s/ Alan
Tsai

Name:
Alan Tsai

 Its: Manager 

 

By:  /s/
Robert Hymers III

Name:
Robert Hymers III

 Its: Manager 

 

 

ASSIGNEE:

 

VALWOOD GROUP,
LLC

a Delaware limited liability
company

 

By: RCI Valwood, LLC,

a Delaware limited
liability company

Its: Manager

 

By: Redhawk Communities,
Inc., a California corporation

Its: Manager

 

By: /s/ Paul Garret

Paul Garrett

Its:
President

 

 

TENANT:

 

NATURAL PLANT EXTRACT OF
CALIFORNIA, INC.

a California corporation

 

By: Name:
Alan Tsai

 Its: Chief Executive Officer

 

 

 

    	B-4  

    	 

    

Exhibit C Riley
Contract [attached]

 

 

    	 

    	 

    

CONSULTING AGREEMENT

 

This
Agreement is made and entered into as of June 1, 2020 (“Effective Date”) by and between Natural Plant Extract of California,
Inc. (“Company”), having a principal place of business at 11116 Wright
Rd., Lynwood, CA 90262, and Jim Riley (“Consultant”), having a principal
residence at 58 Morning View Way, Kalispell MT 59901.

 

1.                  
Engagement of Services. Company may issue Project Assignments to Consultant in the form attached to this Agreement
as Exhibit A (Project Assignment). A Project
Assignment will become binding when both parties have signed it and once signed, Consultant will be obligated to provide the services
and to deliver the materials and deliverables as specified in each Project Assignment. The terms of this Agreement will govern
all Project Assignments and services undertaken by Consultant for Company. Consultant represents, warrants and covenants that
Consultant will perform the services under this Agreement in a timely, professional
and workmanlike manner and that all materials and deliverables provided to Company will comply with (i) the requirements set forth
in the Project Assignment, (ii) the documentation and specifications for those materials and deliverables, (iii) any samples or
documents provided by Consultant to Company. In accordance with Company’s objectives, Consultant will determine the method,
details and means of performing the services required by this Agreement. Company shall have no right to, and shall not, control
the manner or determine the method of performing Consultant’s services.

 

2.                  
Compensation; Timing. Company will pay Consultant the fee set forth in each Project Assignment for the services
provided as specified in that Project Assignment. If provided for in the Project Assignment, Company will reimburse Consultant’s
documented, out-of-pocket expenses no later than thirty (30) days after Company’s receipt of Consultant’s invoice,
except that reimbursement for expenses may be delayed until that time when Consultant furnishes adequate supporting documentation
for the authorized expenses as Company may reasonably request. Upon termination of this Agreement for any reason, Consultant will
be (a)     paid fees on the basis stated in the Project Assignment(s)
and (b) reimbursed only for expenses that are properly incurred prior to termination of this Agreement and which are either expressly
identified in a Project Assignment or approved in advance in writing by an authorized Company manager.

 

3.                  
IndependentContractor Relationship. Consultant’s relationship with Company is that of an independent
contractor, and nothing in this Agreement is intended to, or shall be construed to, create a partnership,
agency, joint venture,employmentorsimilar relationship. Consultant will not be entitled to any of the benefits that
Company may make available to its employees, including, but not limited to, group health or life insurance, profit-sharing or retirement
benefits. Consultant is not authorized to make any representation, contract or commitment on behalf of Company unless specifically
requested or authorized in writing to do so by a Company manager. Consultant is solely
responsible for, and will file, on a timely basis, all tax returns and payments required
to be filed with, or made to, any federal, state or local tax authority with respect to the performance of services and receipt
of fees under this Agreement. Consultant is solely responsible for, and must maintain adequate records of, expenses incurred in
the course of performing services under this Agreement. No part of Consultant’s compensation will be subject to withholding
by Company for the payment of any social security, federal, state or any other employee payroll taxes. Company will regularly report
amounts paid to Consultant by filing Form 1099-MISC with the Internal Revenue Service as required by law.

 

4.                  
Disclosure and Assignment of Work Resulting from Project Assignments.

 

4.1              
“Innovations”and “Company Innovations” Definitions. In this Agreement, “Innovations”
means all discoveries, designs, developments, improvements, inventions (whether or not protectable under patent laws), works of
authorship, information fixed in any tangible medium of expression (whether or not protectable under copyright laws), trade secrets,
know-how, ideas (whether or not protectable under trade secret laws), mask works, trademarks, service marks, trade names

 

    	1  

    	 

    

and
trade dress. “Company Innovations” means Innovations that Consultant, solely or jointly with others, creates, derives,
conceives, develops, makes or reduces to practice under a Project Assignment.

 

4.2              
Disclosure and Assignment of Company Innovations. Consultant agrees to maintain adequate and current records of all
Company Innovations, which records shall be and remain the property of Company. Consultant agrees to promptly disclose and describe
to Company all Company Innovations. Consultant represents, warrants and covenants that all Company Innovations shall be free and
clear of any liens and encumbrances. Consultant hereby does and will irrevocably assign to Company or Company’s designee
all of Consultant’s right, title and interest in and to any and all Company Innovations and all associated records, such
assignment to occur with respect to each Company Innovation at the time the Company Innovation is first conceived, made, derived,
developed, written or created, and regardless of when the Company Innovation is first conceived, made, derived, developed, written
or created. To the extent any of the rights, title and interest in and to Company Innovations cannot be assigned by Consultant
to Company, Consultant hereby grants to Company an exclusive, royalty-free, transferable, irrevocable, worldwide, fully paid-up
license (with rights to sublicense through multiple tiers of sublicensees) to fully use, practice and exploit those non-assignable
rights, title and interest, including, but not limited to, the right to make, use, sell, offer for sale, import, have made, and
have sold, the Company Innovations. To the extent any of the rights, title and interest in and to the Company Innovations can neither
be assigned nor licensed by Consultant to Company, Consultant hereby irrevocably waives and agrees never to assert the non-assignable
and non-licensable rights, title and interest against Company, any of Company’s successors in interest, or any of Company’s
customers. If any Company Innovations include any work of authorship that qualifies as a “work
made for hire” as defined in subclause (2) under Section 101 of the Copyright Law of the United States (Title 17 of the United
States Code, as may be amended from time to time), Company and Consultant agree that Company owns such work of authorship as
a work made for hire under such section.

 

4.3              
Assistance. Consultant agrees to perform, during and after the term of this Agreement, all acts that Company deems
necessary or desirable to permit and assist Company, at its expense, in obtaining, perfecting and enforcing the full benefits,
enjoyment, rights and title throughout the world in the Company Innovations as provided to Company under this Agreement. If Company
is unable for any reason to secure Consultant’s signature to any document required to file, prosecute, register or memorialize
the assignment of any rights under any Company Innovations as provided under this Agreement, Consultant hereby irrevocably designates
and appoints Company and Company’s duly authorized officers and agents as Consultant’s agents and attorneys-in-fact
to act for and on Consultant’s behalf and instead of Consultant to take all lawfully permitted acts to further the filing,
prosecution, registration, memorialization of assignment, issuance and enforcement of rights in, to and under the Company Innovations,
all with the same legal force and effect
as if executed by Consultant. The foregoing is deemed a power coupled with an interest and is irrevocable.

 

4.4              
Consultant Out-of-Scope Innovations. If Consultant incorporates or permits to be incorporated any Innovations relating
in any way, at the time of conception, reduction to practice, creation, derivation, development or making of the Innovation, to
Company’s business or actual or demonstrably anticipated research or development but which were conceived, reduced to practice,
created, derived, developed or made by Consultant (solely or jointly) either unrelated to Consultant’s work for Company under
this Agreement or prior to the Effective Date (collectively, the “Out-of-Scope Innovations”) into any of the Company
Innovations, then Consultant hereby grants to Company and Company’s designees a royalty-free,
transferable, irrevocable, worldwide, fully paid-up license (with rights to sublicense through multiple tiers of sublicensees)
to fully use, practice and exploit all patent, copyright, moral right, mask work, trade secret and other intellectual property
rights relating to the Out-of-Scope Innovations. Notwithstanding the foregoing, Consultant agrees that Consultant shall not incorporate,
or permit to be incorporated, any Innovations conceived, reduced to practice, created, derived, developed or made by others or
any Out-of- Scope Innovations into any Company Innovations without Company’s prior written consent.

 

4.5              
Assignment by Employees of Consultant. Consultant covenants, represents and warrants that each of Consultant’s
employees who

 

    	2  

    	 

    

perform
services under this Agreement has or will have a written agreement with Consultant
that provides Consultant with all necessary rights to fulfill its obligations under this Agreement, including but not limited to
the obligations of this Section 4.

 

		5.	Confidentiality.

 

5.1              
Definition of Confidential Information. “Confidential Information” means (a) any technical and non-technical
information related to the Company’s business and current, future and proposed products and services of Company, including
for example and without limitation, Company Innovations, Company Property (as defined in Section 6 (Ownership
and Return of Confidential Information and Company Property)), and Company’s information concerning research, development,
design details and specifications, financial information, procurement requirements, engineering and manufacturing information,
customer lists, business forecasts, sales information, marketing plans and business plans, in each case whether or not marked as
“confidential” or “proprietary” and (b) any information that Company has received from others that may
be made known to Consultant and that Company is obligated to treat as confidential or proprietary, whether or not marked as “confidential”
or “proprietary”.

 

5.2               Nondisclosure
and Nonuse Obligations. Except as permitted in this Section, Consultant will not (i) use any Confidential Information or
(ii) disseminate or in any way disclose the Confidential Information to any person, firm, business or governmental agency or
department. Consultant may use the Confidential Information solely to perform Project Assignment(s) for the benefit of
Company. Consultant shall treat all Confidential Information with the same degree of care as Consultant accords to
Consultant’s own confidential information, but in no case shall Consultant use less than reasonable care. If Consultant
is not an individual, Consultant shall disclose Confidential Information only to those of Consultant’s employees who
have a need to know the information as necessary for Consultant to perform this
Agreement. Consultant certifies that each of its employees will have agreed, either as a condition
of employment or in order to obtain the Confidential Information, to be bound by terms and conditions at least as protective
as those terms and conditions applicable to Consultant under this agreement. Consultant shall immediately give notice to
Company of any unauthorized use or disclosure of the Confidential Information. Consultant shall assist Company in remedying
any the unauthorized use or disclosureoftheConfidential Information. Consultant agrees not to communicate any
information to Company in violation of the proprietary rights of any third party.

 

5.3              
Exclusionsfrom Nondisclosure and Nonuse Obligations. Consultant’s obligations under Section 5.2
do not apply to any Confidential Information that Consultant can demonstrate (a) was in the public domain at or subsequent to the
time the Confidential Information was communicated to Consultant by Company through no fault of Consultant; (b) was rightfully
in Consultant’s possession free of any obligation of confidence at or subsequent to the time the Confidential Information
was communicated to Consultant by Company; or (c) was independently developed by employees of Consultant without use of, or reference
to, any Confidential Information communicated to Consultant by Company. A disclosure
of any Confidential Information by Consultant (a) in response to a valid order by
a court or other governmental body or (b) as otherwise required by law will not be considered
to be a breach of this Agreement or a waiver
of confidentiality for other purposes; provided, however, that Consultant provides prompt prior written notice thereof to Company
to enable Company to seek a protective order or otherwise prevent the disclosure.

 

6.                  
Ownership and Return of Confidential Information and Company Property. All Confidential Information and any materials
and items (including, without limitation, software, equipment, tools, artwork, documents, drawings, papers, diskettes, tapes, models,
apparatus, sketches, designs and lists) that Company furnishes to Consultant by Company, whether delivered to Consultant by Company
or made by Consultant in the performance of services under this Agreement and whether or not they contain or disclose Confidential
Information (collectively, the “Company Property”), are the sole and exclusive property of Company or Company’s
suppliers or customers. Consultant agrees to keep all Company Property at Consultant’s premises unless otherwise permitted
in writing by Company. Within five (5) days after any request by Company, Consultant shall destroy or deliver to Company, at Company’s
option, (a) all Company Property and

 

    	3  

    	 

    

(b) 
all materials and items in Consultant’s possession or control that contain or disclose any Confidential Information.
Consultant will provide Company a written certification of Consultant’s compliance
with Consultant’s obligations under this Section.

 

7.                  
Indemnification. Consultant will indemnify and hold harmless Company from and against any and all third party claims,
suits, actions, demands and proceedings against Company and all losses, costs and liabilities related thereto arising out of or
related to (i) an allegation that any item, material and other deliverable delivered by Consultant under this Agreement infringes
any intellectual property rights or publicity rights of a third party or (ii) any
negligence by Consultant or any other act or omission of Consultant, including without limitation any breach of this Agreement
by Consultant.

 

8.                  
Observance of Company Rules. At all times while on Company’s premises, Consultant will observe Company’s
rules and regulations with respect to conduct, health, safety and protection of persons and property.

 

9.                  
No Conflict of Interest. During the term of this Agreement, Consultant will not accept work, enter into a
contract or accept an obligation inconsistent or incompatible with Consultant’s obligations,
or the scope of services to be rendered for Company, under this Agreement. Consultant warrants that, to the best of Consultant’s
knowledge, there is no other existing contract or duty on Consultant’s part that conflicts with or is inconsistent with this
Agreement. Consultant agrees to indemnify and hold harmless Company from any and all losses and liabilities incurred or suffered
by Company by reason of the alleged breach by Consultant of any services agreement between Consultant and any third party.

 

		10.	Term and Termination.

 

10.1           
Term. This Agreement is effective as of the Effective Date set forth above and will terminate on unless terminated earlier
as set forth below.

 

10.2           
Terminationby Company. Except during the term of a Project
Assignment, Company may terminate this Agreement without cause at any time, with termination effective fifteen (15) days after
Company’s delivery to Consultant of written notice of termination. Company also may terminate this Agreement (a) immediately
upon Consultant’s breach of Section 4 (Disclosure and Assignment of Work Resulting from Project Assignments), 5 (Confidentiality)
or 11 (Noninterference with Business) or (b) immediately for a breach by Consultant if Consultant’s breach of any other
provision under this Agreement or obligation under a Project Assignment is not cured within ten (10) days after the date of Company’s
written notice of breach. Company may terminate a Project Assignment at any time upon three (3) days’ prior written notice
to Consultant and, in that event, Company will pay Consultant for services properly
performed prior to the date of termination.

 

10.3           
Terminationby Consultant. Except during the term of a Project
Assignment, Consultant may terminate this Agreement without cause at any time, with termination effective fifteen (15) days after
Consultant’s delivery to Company of written notice of termination. Consultant also may terminate this Agreement immediately
for a material breach by Company if Company’s material breach of any provision
of this Agreement is not cured within ten

(10) 
days after the date of Consultant’s written notice of breach.

 

10.4           
Effect of Expiration or Termination. Upon expiration or termination of this Agreement, Company shall pay Consultant
for services properly performed under this Agreement as set forth in each then pending Project Assignment. The definitions contained
in this Agreement and the rights and obligations contained in this Section and Sections 4 (Disclosure
and Assignment of Work Resulting from Project Assignments), 5 (Confidentiality),
6 (Ownership and Return of Confidential Information and Company Property), 7 (Indemnification),
12 (Noninterference with Business) and 13 (General Provisions) will survive any termination or expiration of this Agreement.

 

11.              
Defend Trade Secrets Act. Pursuant to the Defend Trade Secrets Act of 2016, if Consultant is an individual, Consultant
acknowledges that he/she shall not have criminal or civil liability under any Federal or State trade secret law for the disclosure
of a trade secret that (A) is made (i) in confidence to a Federal,
State, or local government

 

    	4  

    	 

    

official,
either directly or indirectly, or to an attorney and (ii) solely for the purpose of reporting or investigating a suspected
violation of law; or (B) is made in a complaint or other document filed in
a lawsuit or other proceeding, if such filing is made under seal. In addition, if Consultant
files a lawsuit for retaliation by the Company for reporting a suspected
violation of law, Consultant may disclose the trade secret to Consultant’s attorney and may use the trade secret information
in the court proceeding, if Consultant (X) files any document containing the trade secret under seal and (Y) does not disclose
the trade secret, except pursuant to court order.

 

12.              
Noninterferencewith Business. During this Agreement, and for a period
of two (2) years immediately following the termination or expiration of this Agreement, Consultant agrees not to solicit or induce
any employee or independent contractor involved in the performance of this Agreement, or any client of Company with which Consultant
had contact in the performance of this Agreement, to terminate or breach an employment, contractual or other relationship with
Company, or otherwise reduce the extent of its business relationship with Company.

 

		13.	General Provisions.

 

13.1           
Successorsand Assigns. Consultant shall not assign its rights or delegate any performance under this Agreement
without the prior written consent of Company. For the avoidance of doubt, Consultant may not subcontract performance of any services
under this Agreement to any other contractor or consultant without Company’s prior written consent. All assignments of rights
by Consultant are prohibited under this paragraph, whether they are voluntary or involuntary, by merger, consolidation, dissolution,
operation of law, or any other manner. For purposes of this paragraph, (i) a “change
of control” is deemed an assignment of rights; and (ii) “merger” refers to any merger in which Consultant participates,
regardless of whether it is the surviving or disappearing entity. Any purported assignment of rights or delegation of performance
in violation of this paragraph is void. This Agreement will be for the benefit of Company’s successors and assigns, and will
be binding on Consultant’s permitted assignees.

 

		13.2	Injunctive Relief

Consultant’s obligations
under this Agreement are of a unique character
that gives them particular value; Consultant’s breach of any of these obligations will cause irreparable and continuing
damage to Company for which money damages are insufficient, and Company is entitled to injunctive relief, a decree
for specific performance, and all other relief as may be proper (including money damages if appropriate), without the need to
post a bond.

 

13.3           
Notices. Any notice required or permitted by this Agreement shall be in writing and shall be delivered as follows,
with notice deemed given as indicated: (a) by personal delivery, when actually delivered; (b) by overnight courier, upon written
verification of receipt; (c) by facsimile transmission, upon acknowledgment of receipt
of electronic transmission; or (d) by certified or registered mail, return receipt requested, upon verification of receipt. Notice
shall be sent to the addresses set forth above or to such other address as either party may provide in writing.

 

13.4           
GoverningLaw; Forum. The laws of the United States of America and the State of California govern all matters
arising out of or relating to this Agreement without giving effect to any conflict of law principles. Each of the parties irrevocably
consents to the exclusive personal jurisdiction of the federal and state courts located in Los Angeles County, California, as applicable,
for any matter arising out of or relating to this Agreement, except that in actions seeking to enforce any order or any judgment
of the federal or state courts located in Los Angeles County, California, personal jurisdiction will be non- exclusive. Additionally,
notwithstanding anything in the foregoing to the contrary, a claim for equitable relief
arising out of or related to this Agreement may be brought in any court of competent jurisdiction. If a proceeding
is commenced to resolve any dispute that arises between the parties with respect to the matters covered by this Agreement, the
prevailing party in that proceeding is entitled to receive its reasonable attorneys’ fees, expert witness fees and out-of-pocket
costs, in addition to any other relief to which that prevailing party may be entitled.

 

13.5           
Severability. If a court of law holds any provision of this Agreement
to be illegal, invalid or unenforceable, (a) that provision shall be modified so as to make it legal, invalid and enforceable and
to achieve an economic effect that is as near as possible to that provided by the original

 

    	5  

    	 

    

provision
and (b) the legality, validity and enforceability of the remaining provisions of this Agreement shall not be affected.

 

13.6           
Waiver; Modification. If Company waives any term, provision or Consultant’s breach of this Agreement, such
waiver shall not be effective unless it is in writing and signed by Company. No waiver by a party
of a breach of this Agreement shall constitute a waiver
of any other or

subsequent
breach by Consultant. This Agreement may be modified only by mutual written agreement of authorized representatives of the parties.

 

13.7           
Entire Agreement. This Agreement constitutes the final and exclusive agreement between the parties relating to this
subject matter and supersedes all agreements, whether prior or contemporaneous, written or oral, concerning such subject matter.

 

 

 

[Remainder
of Page Blank – Signature Page Follows]

 

 

 

    	6  

    	 

    

IN WITNESS
WHEREOF, the parties have executed this Agreement as of the date first written above.

 

 

 

	“Company”	 	“Consultant”
	 	 	 
	NATURAL PLANT
EXTRACT OF CALIFORNIA, INC.	 	JIM RILEY
	 	 	 
	By: /s/ Robert Hymers III	 	/s/ Jim Riley
	Name: Robert Hymers III

        Title: CFO
	 	 

 

 

 

 

 

    	7  

    	 

    

Exhibit
A

 

PROJECT
ASSIGNMENT

 

Scope of work:
Business Consultant/Advisory Board Member

 

Timeline:
Immediate Team: Jim Riley

Goal:
To offer a wide range of services to Natural Plant Extract of California (NPE)
as a business consultant and/or advisory board member. The short-term objective would
be to attack any immediate needs established by the leadership of the company. The long-term goal would be to integrate my value
into the company and support the goals of the established team for an undetermined amount of time.

 

Observation:
It is my immediate observation that your business model is positioned for success. However, I believe
that I can add value through my vast experience in marketing, corporate structure,
cash flow projections, and network connections to name a few. I have
already begun to integrate with the key players in your business and have conducted extensive financial research with your team.

 

Timeline/Potential
Scope of tasks

 

		·	Determine initial fit for a
working relationship – completed

		·	Review key relationships and contacts
– extract relevance to the
success of the relationship

		·	Download immediate needs from Alan

		·	Establish timelines to complete task

		·	Assign scheduled meeting times or calls

		·	Capital raise -
near completion

		·	Data collection

		·	Site visits

 

Jim Riley to
provide:

 

		·	Availability for meetings when required

		·	Unlimited text and emails

		·	Phone calls as needed

		·	Maintain a
home office in Southern California to secure business objectives

		·	Access to all resources and key contacts

 

NPE to provide:

 

		·	Each month
starting on 6/1/20 billed at $3,000 in payment (commencement
of pay is contingent on closing of common stock
financing from Betterworld Ventures, LLC)

		·	Opportunity
for an increase in revenue and shares in the company, as values increase in work performed and the company value.

		·	Fees to be paid in advance of service on
the 1st of each month

		·	Open access
to key team members, operating procedures, and any other
key elements of information to succeed in core
objectives

		·	Product Samples as needed

		·	Daily person of contact and email to maintain
work flow – Alan Tsai

		·	Access to all team members, legal, marketing

 

    	8  

    	 

    

Expenses.
Company will reimburse Consultant for expenses incurred in connection with this Project Assignment that are authorized in advance
in writing and upon receipt of proper documentation of those expenses from Consultant.

 

NOTE:
This Project Assignment is governed by the terms of a Consulting Agreement
in effect between Company and Consultant. Any term in this Project Assignment that is inconsistent
with that agreement is invalid.

 

IN
WITNESS WHEREOF, the parties are signing this Project Assignment as of the later date below.

	“Company”	 	“Consultant”
	 	 	 
	NATURAL PLANT
EXTRACT OF CALIFORNIA, INC.	 	JIM RILEY
	 	 	 
	By: /s/ Robert Hymers III	 	/s/ Jim Riley
	Name: Robert Hymers III

        Title: CFO
	 	 
	 	 	 
	 	 	 
	Date:		 Date:

 

 

 

 

 

    	9  

    	 

    

Exhibit D
Shareholders Agreement [attached]

 

 

 

    	  

    	 

    

 

 

 

 

SHAREHOLDERS AGREEMENT

among

NATURAL PLANT EXTRACT
OF CALIFORNIA, INC.

and

EACH PERSON IDENTIFIED
ON SCHEDULE A

dated
as of June 5, 2020

 

 

    	  

    	 

    

Shareholders
Agreement

This Shareholders Agreement
(this “Agreement”), dated as of June 5, 2020 (the “Effective Date”), is entered into among
Natural Plant Extract of California, Inc., a California Company (the “Company”),
each Person identified on Schedule A hereto as a Major Shareholder (each, a “Major Shareholder” and collectively,
the “Major Shareholders”), each Person identified on Schedule A hereto as a Shareholder, and each other Person
who after the date hereof acquires Shares of the Company and becomes a party to this Agreement by executing a Joinder Agreement
(such Persons, collectively with the Major Shareholders, the “Shareholders”).

RECITALS

 

WHEREAS, the Company has authorized
2,000,000 Shares;

WHEREAS, as of the
date hereof, each Major Shareholder owns the number and percentage of the issued and outstanding Shares set forth opposite the
Shareholder’s name on Schedule A hereto; and

WHEREAS, the Major
Shareholders and the other parties hereto deem it in their best interests and in the best interests of the Company to set forth
in this Agreement their respective rights and obligations in connection with their investment in the Company.

NOW, THEREFORE, the Parties hereby agree
as follows:

 

ARTICLE I DEFINITIONS

 

Capitalized terms used
herein and not otherwise defined shall have the meanings specified or referenced in this Article I.

 

“Acceptance Notice” has the
meaning set forth in Section 4.01(c).

 

“Affiliate”
means with respect to any Person, any other Person who, directly or indirectly (including through one or more intermediaries),
controls, is controlled by, or is under common control with, such Person. For purposes of this definition, “control,”
when used with respect to any specified Person, shall mean the power, direct or indirect, to direct or cause the direction of the
management and policies of such Person, whether through ownership of voting securities or partnership or other ownership interests,
by contract or otherwise; and the terms “controlling” and “controlled” shall have correlative meanings.

 

“Agreement” has
the meaning set forth in the preamble.

 

“Applicable Law”
means all applicable provisions of: (a) constitutions, treaties, statutes, laws (including the common law), rules, regulations,
decrees, ordinances, codes, proclamations, declarations, or orders of any Governmental Authority; (b) any consents or approvals
of any Governmental Authority; and (c) any orders, decisions, advisory or interpretative opinions, injunctions, judgments, awards,
decrees of, or agreements with, any Governmental Authority.

 

    	1  

    	 

    

“Articles of Incorporation”
means the restated articles of incorporation of the Company, as filed on March 21, 2019 with the Secretary of State of the State
of California, and as amended, modified, supplemented, or restated from time to time in accordance with the terms of this Agreement.

 

“Board” has the
meaning set forth in Section 2.01(a).

 

“Business”
means the manufacture and distribution of various cannabis products.

 

“Business Day”
means a day other than a Saturday, Sunday, or other day on which commercial banks in the State of California are authorized or
required to close.

 

“By-Laws”
means the by-laws of the Company, as amended, modified, supplemented, or restated from time to time in accordance with the terms
of this Agreement.

 

“Company”
has the meaning set forth in the preamble.

 

“Confidential Information” has the
meaning set forth in Section 5.04(a).

 

“CGCL”
means the California General Company Law, as amended from time to time and including any successor legislation thereto and any
regulations promulgated thereunder.

 

“Director” has
the meaning set forth in Section 2.01(a).

 

“Effective Date” has the meaning
set forth in the preamble.

 

“Excluded Securities”
means any Shares or other equity securities issued in connection with: (a) a grant to any existing or prospective consultants,
employees, officers, or Directors pursuant to any stock option, employee stock purchase, or similar equity-based plans or other
compensation agreement; (b) the exercise or conversion of options to purchase Shares, or Shares issued to any existing or prospective
consultants, employees, officers, or Directors pursuant to any stock option, employee stock purchase, or similar equity-based plans
or any other compensation agreement; (c) any acquisition by the Company of the shares of stock, assets, properties, or business
of any Person; (d) any merger, consolidation, or other business combination involving the Company; (e) a share split, share dividend,
or any similar recapitalization; or (f) any issuance of Financing Equity where such Financing Equity, together with all then outstanding
Financing Equity, is not equal to, and is not convertible into, an aggregate of more than five percent (5%) of the outstanding
Shares on a fully diluted basis at the time of the issuance of such Financing Equity, in each case, approved in accordance with
the terms of this Agreement.

 

“Exercise Period” has the meaning
set forth in Section 4.01(c).

 

“Exercising Shareholder” has
the meaning set forth in Section 4.01(d).

 

“Family
Member” means with respect to any Shareholder that is a natural person, such Shareholder’s Spouse, parent, sibling,
descendant (including adoptive relationships and stepchildren), and the Spouses of each such natural persons.

 

    	2  

    	 

    

“Financing
Equity” means any Shares, warrants, or other similar rights to purchase Shares issued to lenders or other institutional
investors (excluding the Shareholders) in any arm’s length transaction providing debt financing to the Company.

“Fiscal
Year” means, for financial accounting purposes, January 1 to December 31. “Government Approval” means
any authorization, consent, approval, waiver,

exception, variance, order,
exemption, publication, filing, declaration, concession, grant,

franchise, agreement,
permission, permit, or license of, from, or with any Governmental Authority, the giving of notice to, or registration with, any
Governmental Authority, or any other action in respect of any Governmental Authority.

 

“Governmental
Authority” means any federal, state, local, or foreign government or political subdivision thereof, or any agency or
instrumentality of such government or political subdivision, or any self-regulated organization or other non-governmental regulatory
authority or quasi-governmental authority (to the extent that the rules, regulations, or orders of such organization or authority
have the force of law), or any arbitrator, court, or tribunal of competent jurisdiction.

“Governing Documents”
means the Articles of Incorporation and the By-Laws. “Initial Public Offering” means any offering of Shares
pursuant to a registration

statement filed in accordance
with the Securities Act.

 

“Major Shareholders” has
the meaning set forth in the preamble. “Issuance Notice” has the meaning set forth in Section 4.01(b).

“Joinder Agreement” means the
joinder agreement in form and substance of Exhibit A

attached hereto.

 

“Lien”
means any lien, claim, charge, mortgage, pledge, security interest, option, preferential arrangement, right of first offer, encumbrance,
or other restriction or limitation of any nature whatsoever.

 

“Marital Relationship”
means a civil union, domestic partnership, marriage, or any other similar relationship that is legally recognized in any jurisdiction.

 

“New Securities” has the meaning
set forth in Section 4.01(a).

 

“Non-Exercising Shareholder”
has the meaning set forth in Section 4.01(d).

 

“Offered Shares” has the meaning
set forth in Section 3.02(a).

 

“Offering Shareholder” has the
meaning set forth in Section 3.02(a).

 

“Offering Shareholder Notice”
has the meaning set forth in Section 3.02(b).

 

“Over-Allotment Exercise Period”
has the meaning set forth in Section 4.01(d).

 

    	3  

    	 

    

“Over-Allotment New Securities”
has the meaning set forth in Section 4.01(d).

 

“Over-Allotment Notice” has
the meaning set forth in Section 4.01(d).

 

“Permitted Transferee”
means with respect to any Shareholder that is an entity, any Affiliate of such Shareholder, and with respect to any Shareholder
who is an individual: (a) such Shareholder’s Family Member; (b) a trust under which the distribution of Shares may be made
only to such Shareholder and/or any Family Member of such Shareholder; (c) a charitable remainder trust, the income from which
will be paid to such Shareholder during his or her life;

(d) 
a Company, partnership, or limited liability company, the Shareholders, partners, or members of which are only such Shareholder
and/or Family Members of such Shareholder; or (e) such Shareholder’s executors, administrators, testamentary trustees, legatees,
distributees, or beneficiaries by will or by the laws of intestate succession.

 

“Person”
means an individual, Company, partnership, joint venture, limited liability company, Governmental Authority, unincorporated organization,
trust, association, or other entity.

 

“Preemptive Pro Rata Portion” has
the meaning set forth in Section 4.01(c).

 

“Proposed Sale” has the meaning
set forth in Section 5.02.

 

“Prospective Purchaser” has
the meaning set forth in Section 4.01(b).

 

“Purchasing Shareholder”
has the meaning set forth in Section 3.02(d).

 

“Representative”
means, with respect to any Person, any and all directors, managers, members, partners, officers, employees, consultants, financial
advisors, counsel, accountants, and other agents of such Person.

 

“ROFR Notice” has
the meaning set forth in Section 3.02(d).

 

“ROFR Notice Period” has the
meaning set forth in Section 3.02(d).

 

“Sale Event” means any of:

 

(a)              
a merger or consolidation in which (i) the Company is a constituent party or (ii) a subsidiary of the Company is a constituent
party and the Company issues shares of its capital stock pursuant to such merger or consolidation, except any such merger or consolidation
involving the Company or a subsidiary in which the shares of capital stock of the Company outstanding immediately prior to such
merger or consolidation continue to represent, or are converted into or exchanged for equity securities that represent, immediately
following such merger or consolidation, at least a majority, by voting power, of the equity securities of (1) the surviving or
resulting party or (2) if the surviving or resulting party is a wholly owned subsidiary of another party immediately following
such merger or consolidation, the parent of such surviving or resulting party; provided that, for the purpose of
this definition, all shares of common stock issuable upon exercise of options outstanding immediately prior to such merger or consolidation
or upon conversion of preferred outstanding immediately prior to such merger

 

    	4  

    	 

    

or consolidation shall be
deemed to be outstanding immediately prior to such merger or consolidation and, if applicable, deemed to be converted or exchanged
in such merger or consolidation on the same terms as the actual outstanding shares of common stock are converted or exchanged;
or

 

(b)              
the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions,
by the Company or any subsidiary of the Company of all or substantially all the assets of the Company and its subsidiaries taken
as a whole, or, if substantially all of the assets of the Company and its subsidiaries taken as a whole are held by such subsidiary
or subsidiaries, the sale or disposition (whether by merger or otherwise) of one or more subsidiaries of the Company, except where
such sale, lease, transfer or other disposition is to the Company or one or more wholly owned subsidiaries of the Company.

 

“Securities Act”
means the Securities Act of 1933, as amended, or any successor federal statute, and the rules and regulations thereunder, which
shall be in effect at the time.

 

“Shares”
means shares of common stock, no par value, of the Company and any securities issued in respect thereof, or in substitution therefor,
in connection with any share split, dividend, or combination, or any reclassification, recapitalization, merger, consolidation,
exchange, or similar reorganization.

 

“Spousal Consent”
has the meaning set forth in Section 9.17.

 

“Spouse”
means a spouse, a party to a civil union, a domestic partner, a same-sex spouse or partner, or any individual in a Marital Relationship
with a Shareholder.

 

“Shareholders” has the meaning set
forth in the preamble.

 

“Subsidiary”
means with respect to any Person, any other Person of which a majority of the outstanding shares or other equity interests having
the power to vote for directors or comparable managers are owned, directly or indirectly, by the first Person.

 

“Supermajority Approval”
means with respect to any matter that must be approved by the Shareholders pursuant to this Agreement: (a) the affirmative vote
(including by way of written consent) of at least 66 2/3% of the issued and outstanding Shares; or (b) the approval of the Board,
including the directors then in office representing the Major Shareholders pursuant to Section 2.01.

 

“Third Party
Purchaser” means any Person who, immediately prior to the contemplated transaction: (a) does not, directly or indirectly,
own or have the right to acquire any outstanding Shares; or (b) is not a Permitted Transferee of any Person who, directly or indirectly,
owns or has the right to acquire any Shares.

 

“Transfer”
means to, directly or indirectly, sell, transfer, assign, gift, pledge, encumber, hypothecate, or similarly dispose of, either
voluntarily or involuntarily, by operation of law or otherwise, or to enter into any contract, option, or other arrangement or
understanding with respect to the sale, transfer, assignment, gift, pledge, encumbrance, hypothecation, or similar

 

    	5  

    	 

    

disposition of, any Shares
owned by a Person or any interest (including a beneficial interest) in any Shares owned by a Person. “Transfer” when
used as a noun shall have a correlative meaning.

 

“Voting Agreement Matter” has the
meaning set forth in Section 5.01.

 

“Waived ROFR Transfer Period”
has the meaning set forth in Section 3.02(f).

 

ARTICLE II

MANAGEMENT AND OPERATION
OF THE COMPANY

 

Section 2.01Board of Directors.

 

(a)              
Subject to Section 2.02, the Shareholders agree that the business and affairs of the Company shall be managed through
a board of directors (the “Board”) consisting of at least three (3) members (each, a “Director”).
When electing Directors to serve on the Board, each Major Shareholder shall have the right to designate one (1) Director, who shall
initially be those individuals identified on Schedule B hereto, and
each Director shall hold office until the next annual Shareholders’ meeting at which such Director’s successor is designated
by the Major Shareholder that designated such Director as set forth in this Section 2.01(a).

 

(b)              
Each Shareholder shall vote all Shares over which such Shareholder has voting control and shall take all other necessary
or desirable actions within such Shareholder’s control (including in its capacity as Shareholder, director, member of a board
committee, or officer of the Company, or otherwise, and whether at a regular or special meeting of the Shareholders or by written
consent in lieu of a meeting) to elect to the Board any individual designated by a Major Shareholder pursuant to Section 2.01(a).

 

(c)              
Each Major Shareholder shall have the right at any time to remove (with or without cause) any Director designated by such
Major Shareholder for election to the Board and each other Shareholder shall vote all Shares over which such Shareholder has voting
control and shall take all other necessary or desirable actions within such Shareholder’s control (including in its capacity
as Shareholder, director, member of a board committee, or officer of the Company, or otherwise, and whether at a regular or special
meeting of the Shareholders or by written consent in lieu of a meeting) to remove from the Board any individual designated by such
Major Shareholder that such Major Shareholder desires to remove pursuant to this Section 2.01(c). Except as provided in
the preceding sentence, unless a Major Shareholder otherwise consents in writing, no other Shareholder shall take any action to
cause the removal of any Directors designated by such Major Shareholder.

 

(d)              
In the event a vacancy is created on the Board at any time and for any reason (whether as a result of death, disability,
retirement, resignation, or removal pursuant to Section 2.01(c)), the Major Shareholder that designated such Director shall
have the right to designate a different individual to replace such Director and each other Shareholder shall vote all Shares over
which such Shareholder has voting control and shall take all other necessary or desirable actions within such Shareholder’s
control

 

    	6  

    	 

    

(including in its capacity
as Shareholder, director, member of a board committee, or officer of the Company, or otherwise, and whether at a regular or special
meeting of the Shareholders or by written consent in lieu of a meeting) to elect to the Board such individual designated by such
Major Shareholder.

 

Section 2.02Voting
Arrangements. In addition to any vote or consent of the Board or the Shareholders of the Company required by Applicable Law,
including the CGCL, without Supermajority Approval the Company shall not, and shall not enter into any commitment to:

 

(a)              
amend, modify, or restate the Articles of Incorporation to increase or decrease by authorized Shares or create any new class
of series of capital stock of the Company;

 

(b)              
make any material change to the nature of the Business conducted by the Company;

 

(c)              
declare or pay any dividend or otherwise make a distribution to holders of the Shares;

 

(d)              
(i) subject to Section 4.01, issue or sell Shares or other equity securities of the Company to any Person; or (ii)
enter into or effect any transaction or series of related transactions involving the repurchase, redemption, or other acquisition
of Shares from any Person, in each case, other than any Excluded Securities approved in accordance with the terms of this Agreement
or as otherwise contemplated by the terms of this Agreement;

 

(e)              
increase or decrease the number of directors of the Company other than in compliance
with this Agreement;

 

(f)               
enter into or effect any transaction or series of related transactions involving the sale, lease, license, exchange, or
other disposition (including by merger, consolidation, sale of shares of stock, or sale of assets) by the Company of all or substantially
of its assets;

 

(g)              
wind up, dissolve, liquidate, or terminate the Company or initiate a bankruptcy proceeding involving the Company.

 

Section 2.03Board
Observer Rights. As long as Betterworld Ventures, LLC (“BWV”) continues to be a Major Shareholder, the Company
shall invite a representative of BWV to attend all meetings of the Board in a nonvoting observer capacity and, in this respect,
shall give such representative copies of all notices, minutes, consents, and other materials that it provides to its Directors;
provided, however, that such representative shall agree to hold in confidence and trust and to act in a fiduciary manner with respect
to all information so provided; and provided further, that the Company reserves the right to withhold any information and to exclude
such representative from any meeting or portion thereof if access to such information or attendance at such meeting could adversely
affect the attorney-client privilege between the Company and its counsel or result in disclosure of trade secrets or a conflict
of interest. This

 

 

    	7  

    	 

    

nonvoting observer shall
be in addition to BWV’s right to appoint a director pursuant to Section 2.01.

 

ARTICLE III

TRANSFER OF INTERESTS

 

Section 3.01General Restrictions on Transfer.

 

(a)              
Except as permitted pursuant to Section 3.01(b) or in accordance with the procedures described in Section 3.02,
each Shareholder agrees that such Shareholder will not, directly or indirectly, voluntarily
or involuntarily, Transfer any of its Shares.

 

(b)              
The provisions of Section 3.01(a) and Section 3.02 shall
not apply to any of the following Transfers by any Shareholder of any of its Shares:

 

(i)                
to a Permitted Transferee; or

 

(ii)              
pursuant to a merger, consolidation, or other business combination of the Company with a Third-Party Purchaser that has
been approved in compliance with Section 2.02(f) or Section 2.02(g).

 

(c)              
In addition to any legends required by Applicable Law, each certificate representing the Shares of the Company now owned
or that may hereafter be acquired by the Shareholders shall bear a legend substantially in the following form:

 

“THE SHARES REPRESENTED
BY THIS CERTIFICATE ARE SUBJECT TO A SHAREHOLDERS AGREEMENT AMONG THE COMPANY AND
ITS SHAREHOLDERS, A COPY OF WHICH IS ON FILE
AT THE PRINCIPAL EXECUTIVE OFFICE OF THE COMPANY. NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION, OR OTHER DISPOSITION OF
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE MADE EXCEPT IN ACCORDANCE WITH THE
PROVISIONS OF SUCH SHAREHOLDERS AGREEMENT.

THE SHARES REPRESENTED BY
THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY OTHER APPLICABLE
SECURITIES LAWS AND MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED
OR OTHERWISE DISPOSED EXCEPT (A) PURSUANT TO A REGISTRATION STATEMENT EFFECTIVE UNDER
SUCH ACT AND LAWS, OR (B) PURSUANT TO AN EXEMPTION FROM REGISTRATION THEREUNDER.”

(d)              
Prior notice shall be given to the Company by a Shareholder of any Transfer of Shares, including Transfers to a Permitted
Transferee. Prior to consummation of any Transfer by any Shareholder of any of its Shares, including a Transfer to a Permitted
Transferee or a Third Party Purchaser, such Shareholder shall cause: (i) any transferee who is not already a party to this Agreement
to execute and deliver to the Company a Joinder Agreement in which such transferee agrees to be bound by the terms

 

 

    	8  

    	 

    

and conditions of this Agreement;
and (ii) if the transferee is an individual, any Spouse of such transferee to execute and deliver to the Company a Spousal Consent.
Upon any Transfer of Shares by any Shareholder, in accordance with this Section 3.01(d) and the other terms of this Agreement,
the transferee thereof shall be substituted for, and shall assume all the rights and obligations under this Agreement of, the transferor
thereof.

 

(e)              
Notwithstanding any other provision of this Agreement, each Shareholder agrees that it will not, directly or indirectly,
Transfer any of its Shares: (i) except as permitted under the Securities Act and other applicable federal or state securities laws,
and then, if requested by the Company, only upon delivery to the Company of an opinion of counsel in form and substance satisfactory
to the Company to the effect that such Transfer may be effected without registration under the Securities Act; (ii) if it would
cause the Company or any of its Subsidiaries to be required to register as an investment company under the Investment Company Act
of 1940, as amended; or (iii) if it would cause the assets of the Company or any of its Subsidiaries to be deemed plan assets as
defined under the Employee Retirement Income Security Act of 1974 or its accompanying regulations or result in any “prohibited
transaction” thereunder involving the Company. In any event, the Board may refuse the Transfer to any Person if such Transfer
would have a material adverse effect on the Company as a result of any regulatory or other restrictions imposed by any Governmental
Authority.

 

(f)               
Any Transfer or attempted Transfer of any Shares in violation of this Agreement shall be null and void, no such Transfer
shall be recorded on the Company’s books, and the purported transferee in any such Transfer shall not be treated (and the
purported transferor shall continue be treated) as the owner of such Shares for all purposes of this Agreement and the Governing
Documents of the Company.

 

(g)              
This Agreement shall cover all of the Shares now owned or hereafter acquired by the Shareholders while this Agreement remains
in effect.

 

Section 3.02Right of First Refusal.

 

(a)              
If at any time a Shareholder (such Shareholder, an “Offering Shareholder”) receives a bona fide offer
from any Third Party Purchaser to purchase all or any portion of the Shares (the “Offered Shares”) owned by
the Offering Shareholder and the Offering Shareholder desires to Transfer the Offered Shares (other than Transfers that are permitted
by Section 3.01(b)), then the Offering Shareholder must first make an offering of the Offered Shares to each other Shareholder
in accordance with the provisions of this Section 3.02.

 

(b)              
The Offering Shareholder shall, within five (5) Business Days of receipt of the offer from the Third-Party Purchaser, give
written notice (the “Offering Shareholder Notice”) to the Company and the other Shareholders stating that it
has received a bona fide offer from a Third-Party Purchaser and specifying:

 

(i)                
the number of Offered Shares to be Transferred by the Offering Shareholder;

 

    	9  

    	 

    

		(ii)	the name of the Third-Party Purchaser;

 

(iii)           
the per share purchase price and the other material terms and conditions of
the Transfer, including a description of any non-cash consideration in sufficient
detail to permit the valuation thereof; and

 

(iv)            
the proposed date, time, and location of the closing of the Transfer, which shall
not be less than sixty (60) days from the date of the Offering
Shareholder Notice.

 

The Offering
Shareholder Notice shall constitute the Offering Shareholder’s offer
to Transfer the Offered Shares to the other Shareholders,
which offer shall be irrevocable until the end of
the ROFR Notice Period.

 

(c)              
By delivering the Offering Shareholder Notice, the Offering
Shareholder represents and warrants to the Company and to each other Shareholder
that: (i) the Offering Shareholder has full right, title, and interest in and to the
Offered Shares; (ii) the Offering Shareholder
has all the necessary power and authority and has taken all necessary action to Transfer such
Offered Shares as contemplated by this Section 3.02; and (iii)
the Offered Shares are free and clear
of any and all Liens other than those arising as a result of or under the terms of
this Agreement.

 

(d)              
Upon receipt of the Offering Shareholder
Notice, each Shareholder shall have ten (10) Business Days
(the “ROFR Notice Period”) to elect to purchase all (but not less
than all) of the Offered Shares by delivering a written
notice (a “ROFR Notice”) to the Offering
Shareholder and the Company stating that it offers to purchase such
Offered Shares on the terms specified in the Offering
Shareholder Notice. Any ROFR Notice shall be binding upon delivery and irrevocable by the applicable Shareholder.
If more than one Shareholder delivers a ROFR Notice,
each such Shareholder (the “Purchasing
Shareholder”) shall be allocated its pro-rata portion of the Offered Shares,
which shall be based on the proportion of the number of Shares such Purchasing Shareholder
owns relative to the total number of Shares all of the Purchasing
Shareholders own.

 

(e)              
Each Shareholder that does not deliver a ROFR Notice
during the ROFR Notice Period shall be deemed to have waived
all of such Shareholder’s rights to purchase the Offered
Shares under this Section 3.02, and the Offering
Shareholder shall thereafter, subject to the rights of any Purchasing
Shareholder, be free to sell the Offered Shares
to the Third Party Purchaser in the Offering
Shareholder Notice without any further obligation to such Shareholder pursuant
to this Section 3.02.

 

(f)               
If no Shareholder delivers a ROFR Notice
in accordance with Section Section
3.02(d), the Offering Shareholder
may, during the sixty (60) day period immediately following the expiration of the
ROFR Notice Period, which period may be extended for a reasonable time not to exceed
thirty (30) days, to the extent reasonably necessary to obtain any required Government Approvals
(the “Waived ROFR Transfer Period”)
(and subject to the requirements of Section
3.01(d)), Transfer all of the Offered

 

    	10  

    	 

    

Shares to the Third Party
Purchaser on terms and conditions no more favorable to the Third Party Purchaser than those set forth in the Offering Shareholder
Notice. If the Offering Shareholder does not Transfer the Offered Shares within such period or, if applicable, within the Waived
ROFR Transfer Period, the rights provided hereunder shall be deemed to be revived and the Offered Shares shall not be Transferred
to the Third- Party Purchaser unless the Offering Shareholder sends a new Offering Shareholder Notice in accordance with, and otherwise
complies with, this Section 302.

 

(g)              
Each Shareholder shall take all actions as may be reasonably necessary to consummate the Transfer contemplated by this Section
3.02, including entering into agreements and delivering certificates and instruments and consents as may be deemed necessary
or appropriate.

 

(h)              
The Offering Shareholder and any Purchasing Shareholder shall consummate a Transfer pursuant to the ROFR Notice within thirty
(30) days of delivery of the ROFR Notice. At the closing of any Transfer pursuant to this Section 3.02, the Offering Shareholder
shall deliver to the Purchasing Shareholders a certificate or certificates representing the Offered Shares to be sold (if any),
accompanied by stock powers and all necessary stock transfer taxes paid and stamps affixed, if necessary, against receipt of the
purchase price therefor from such Purchasing Shareholders by certified or official bank check or by wire transfer of immediately
available funds.

 

ARTICLE IV PREEMPTIVE
RIGHTS

 

Section 4.01Preemptive Rights.

 

(a)              
The Company hereby grants to each Shareholder the right to purchase its pro rata portion of any new Shares (other than any
Excluded Securities) (the “New Securities”) that the Company
may from time to time propose to issue or sell to any party.

 

(b)              
The Company shall give written notice (an “Issuance Notice”) of any proposed issuance or sale described
in Section 4.01(a) to the Shareholders within five (5) Business Days following any action of the Board where any such issuance
or sale is approved. The Issuance Notice shall, if applicable, identify any prospective purchaser (a “Prospective Purchaser”)
seeking to purchase New Securities and set forth the material terms and conditions of the proposed issuance, including:

 

(i)                
the number and description of New Securities proposed to be issued and the percentage of the outstanding Shares, on a fully
diluted basis, that such issuance would represent;

 

(ii)              
any material rights and obligations afforded the holders of such New Securities;

 

    	11  

    	 

    

(iii)           
the proposed issuance date, which shall be at least twenty (20) days from the date of the Issuance Notice; and

 

		(iv)	the proposed purchase price per share.

 

(c)              
Each Shareholder shall for a period of ten (10) days following the receipt of an Issuance Notice (the “Exercise
Period”) have the right to elect irrevocably to purchase, at the purchase price set forth in the Issuance Notice, the
amount of New Securities equal to the product of: (i) the total number of New Securities to be issued by the Company on the issuance
date; and (ii) a fraction determined by dividing (A) the number of Shares owned by such Shareholder immediately prior to such issuance
by (B) the total number of Shares outstanding on such date immediately prior to such issuance (the “Preemptive Pro Rata
Portion”) by delivering a written notice to the Company (an “Acceptance Notice”). Such Shareholder’s
election to purchase New Securities shall be binding and irrevocable. The failure of a Shareholder to deliver an Acceptance Notice
by the end of the Exercise Period shall constitute a waiver of its rights under this

Section 4.01
with respect to the purchase of such New Securities, but shall not affect its rights with respect to any future issuances or sales
of New Securities.

 

(d)              
No later than five (5) days following the expiration of the Exercise Period, the Company shall notify each Shareholder in
writing of the number of New Securities that each Shareholder has agreed to purchase (including, for the avoidance of doubt, where
such number is zero) (the “Over-Allotment Notice”). Each Shareholder exercising its right to purchase its Preemptive
Pro Rata Portion of the New Securities in full (an “Exercising Shareholder”) shall have a right of over-allotment
such that if any other Shareholder fails to exercise its right under this Section 4.01 to purchase its Preemptive Pro Rata
Portion of the New Securities (each, a “Non-Exercising Shareholder”), such Exercising Shareholder may purchase
all or any portion of such Non-Exercising Shareholder’s allotment (the “Over-Allotment New Securities”)
by giving written notice to the Company setting forth the number of Over-Allotment
New Securities that such Exercising Shareholder is willing to purchase within five (5) days of receipt of the Over-Allotment Notice
(the “Over-Allotment Exercise Period”). Such Exercising Shareholder’s election to purchase Over-Allotment
New Securities shall be binding and irrevocable. If more than one Exercising Shareholder elects to exercise its right of over-allotment,
each Exercising Shareholder shall have the right to purchase the number of Over-Allotment New Securities it elected to purchase
in its written notice; provided, that if the Over-Allotment New Securities are over-subscribed, each Exercising Shareholder
shall purchase its pro rata portion of the available Over-Allotment New Securities based upon the relative Preemptive Pro Rata
Portions of the Exercising Shareholders.

 

(e)              
The Company shall be free to complete the proposed issuance or sale of New Securities described in the Issuance Notice with
respect to any New Securities not elected to be purchased pursuant to Section 4.01(c) and Section 4.01(d) above in
accordance with the terms and conditions set forth in the Issuance Notice (except that the amount of New Securities to be issued
or sold by the Company may be reduced), provided, such issuance or sale is closed within sixty (60) days after the expiration
of the

 

    	12  

    	 

    

Over-Allotment Exercise Period;
subject, however, to the extension of such sixty (60) day period for a reasonable time not to exceed thirty (30) days to
the extent reasonably necessary to obtain any necessary Government Approvals or other required consents.

Concurrent with any closing of
such proposed issuance or sale of New Securities, the Company shall cause: (i) each proposed holder of such New Securities to execute
and deliver to the Company a Joinder Agreement; and (ii) if such proposed holder is an individual, any Spouse of such proposed
holder to execute and deliver to the Company a Spousal Consent. In the event the Company has not sold such New Securities within
such time period, the Company shall not thereafter issue or sell any New Securities without first again offering such securities
to the Shareholders in accordance with the procedures set forth in this Section 4.01.

 

(f)               
The closing of any purchase by any Shareholder shall be consummated concurrently with the consummation of the issuance or
sale described in the Issuance Notice. Upon the issuance or sale of any New Securities in accordance with this Section 4.01,
the Company shall deliver share certificates (if any) evidencing the New Securities, which New Securities shall be issued free
and clear of any Liens (other than those arising hereunder and those attributable to the actions of the purchasers thereof), and
the Company shall so represent and warrant to the purchasers thereof, and further represent and warrant to such purchasers that
such New Securities shall be, upon issuance thereof to the Exercising Shareholders and after payment therefor, duly authorized,
validly issued, fully paid, and non-assessable. Each Exercising Shareholder shall deliver to the Company the purchase price for
the New Securities purchased by it by certified or bank check or wire transfer of immediately available funds. Each party to the
purchase and sale of New Securities shall take all such other actions as may be reasonably necessary to consummate the purchase
and sale, including entering into such additional agreements as may be necessary or appropriate.

 

ARTICLE V

DRAG ALONG RIGHT; MARKET
STAND-OFF; CONFIDENTIALITY

 

Section 5.01Drag Along
Right. If a Sale Event of the Company (a “Voting Agreement Matter”)
is approved by Supermajority Approval, then each Shareholder shall vote (in person, by proxy or by action by written consent, as
applicable) all shares of capital stock of the Company now or hereafter directly or indirectly owned of record or beneficially
by such Shareholder in favor of, and adopt, such Voting Agreement Matter and to execute and deliver all related documentation and
take such other action in support of the Voting Agreement Matter as may reasonably be requested by the Company to carry out the
terms and provision of this Section 5.01, including executing and delivering instruments of conveyance and transfer or amendment,
and any purchase agreement, merger agreement, indemnity agreement, escrow agreement, consent, waiver, governmental filing, share
certificates duly endorsed for transfer (free and clear of impermissible liens, claims and encumbrances) and any similar or related
documents. The obligation of any party to take the actions required by this Section 5.01 will not apply to a Sale Event
if the other party involved in such Sale Event is an affiliate or shareholder of the Company holding more than ten percent (10%)
of the voting power of the Company.

 

    	13  

    	 

    

Section 5.02Exceptions
to Drag Along Right. Notwithstanding the foregoing, a Shareholder need not comply with Section
5.01 above in connection with any proposed Sale Event of the Company (the “Proposed
Sale”) unless:

 

(a)              
any representations and warranties to be made by the Shareholder solely as a Shareholder in connection with the Proposed
Sale are limited to representations and warranties related to authority, ownership and the ability to convey title to such Shares,
including representations and warranties that (i) the Shareholder holds all right, title and interest in and to the Shares the
Shareholder purports to hold, free and clear of all liens and encumbrances, (ii) the obligations of the Shareholder in connection
with the transaction have been duly authorized, if applicable, (iii) the documents to be entered into by the Shareholder have been
duly executed by the Shareholder and delivered to the acquirer and are enforceable against the Shareholder in accordance with their
respective terms and, (iv) neither the execution and delivery of documents to be entered into in connection with the transaction,
nor the performance of the Shareholder’s obligations thereunder, will cause a breach or violation of the terms of any agreement,
law, or judgment, order, or decree of any court or governmental agency;

 

(b)              
the Shareholder will not be liable for the inaccuracy of any representation or warranty made by any other Person in connection
with the Proposed Sale, other than the Company (except to the extent that funds may be paid out of an escrow established to cover
breach of representations, warranties, and covenants of the Company as well as breach by any Shareholder of any identical representations,
warranties and covenants provided by all Shareholders);

 

(c)              
the liability for indemnification, if any, of the Shareholder in the Proposed Sale
and for the inaccuracy of any representations and warranties made by the Company or its Shareholders in connection with such Proposed
Sale, is several and not joint with any other Person (except to the extent that funds may be paid out of an escrow established
to cover breach of representations, warranties and covenants of the Company as well as breach by any Shareholder of any identical
representations, warranties, and covenants provided by all Shareholders), and is pro rata in proportion to, and does not exceed,
the amount of consideration paid to such Shareholder in connection with such Proposed Sale;

 

(d)              
liability will be limited to the Shareholder's applicable share (determined based on the respective proceeds payable to
each Shareholder) of a negotiated aggregate indemnification amount that applies equally to all Shareholders but that in no event
exceeds the amount of consideration otherwise payable to the Shareholder in connection with the Proposed Sale, except with respect
to claims related to fraud by the Shareholder, the liability for which need not be limited as to the Shareholder; and

 

(e)              
upon the consummation of the Proposed Sale, each holder of each class or series of the Company’s capital stock will
receive the same form of consideration for their shares of such class or series as is received by other holders in respect of their
shares of such same class or series of stock.

 

    	14  

    	 

    

Section 5.03Market
Stand-Off Agreement. To the extent requested by the Company or an underwriter of securities of the Company, each Shareholder
shall not sell or otherwise transfer or dispose of any Shares or other shares of stock of the Company then owned by such Shareholder
(other than to donees or partners of the Shareholder who agree to be similarly bound) for up to 180 days following the effective
date of any registration statement of the Company filed under the Securities Act. For purposes of this Section
5.03, “Company” includes any wholly-owned subsidiary of the Company into which the Company merges or consolidates.
The Company may place restrictive legends on the certificates representing the shares subject to this Section 5.03 and may
impose stop transfer instructions with respect to the Shares and such other shares of stock of each Shareholder (and the shares
or securities of every other person subject to the foregoing restriction) until the end of such period. Each Shareholder shall
enter into any agreement reasonably required by the underwriters to implement the foregoing within any reasonable timeframe so
requested.

 

Section 5.04Confidentiality.

 

(a)              
Each Shareholder acknowledges that during the term of this Agreement, it will have access to and become acquainted with
trade secrets, proprietary information, and confidential information belonging to the Company and its Affiliates that are not generally
known to the public, including, but not limited to, information concerning business plans, financial statements, and other information
provided pursuant to this Agreement, operating practices and methods, expansion plans, strategic plans, marketing plans, contracts,
customer lists, or other business documents that the Company treats as confidential, in any format whatsoever (including oral,
written, electronic, or any other form or medium) (collectively, “Confidential Information”). In addition, each
Shareholder acknowledges that: (i) the Company has invested, and continues to invest, substantial time, expense, and specialized
knowledge in developing its Confidential Information; (ii) the Confidential Information provides the Company with a competitive
advantage over others in the marketplace; and (iii) the Company would be irreparably harmed if the Confidential Information were
disclosed to Competitors or made available to the public. Without limiting the applicability of any other agreement to which any
Shareholder is subject, each Shareholder shall, and shall cause its Representatives to, keep confidential and not, directly or
indirectly, disclose or use (other than solely for the purposes of such Shareholder monitoring and analyzing its investment in
the Company) at any time, including, without limitation, use for personal, commercial, or proprietary advantage or profit, either
during its association with the Company or thereafter, any Confidential Information of which such Shareholder is or becomes aware.
Each Shareholder in possession of Confidential Information shall, and shall cause its Representatives to, take all appropriate
steps to safeguard such information and to protect it against disclosure, misuse, espionage, loss, and theft.

 

(b)              
Nothing contained in Section 5.04(a) shall prevent any Shareholder from disclosing Confidential Information: (i)
upon the order of any court or administrative agency; (ii) upon the request or demand of any regulatory agency or authority having
jurisdiction over such Shareholder; (iii) to the extent compelled by legal process or required or requested pursuant to subpoena,
interrogatories, or other discovery requests; (iv) to the extent necessary in connection with the exercise of any remedy hereunder;
(v)

 

    	15  

    	 

    

to other Shareholders; (vi)
to such Shareholder’s Representatives who, in the reasonable judgment of such Shareholder, need to know such Confidential
Information and are under a similar duty of confidentiality to the Shareholder; or (vii) to any potential Permitted Transferee
in connection with a proposed Transfer of Shares from such Shareholder, as long as such potential Permitted Transferee agrees in
writing to be bound by the provisions of this Section 5.04 as if a Shareholder before receiving such Confidential Information;
provided, that in the case of clause (i), (ii), or (iii), such Shareholder shall notify the Company and other Shareholders
of the proposed disclosure as far in advance of such disclosure as practicable (but in no event make any such disclosure before
notifying the Company and other Shareholders) and use reasonable efforts to cooperate with the Company to ensure that any Confidential
Information so disclosed is accorded confidential treatment satisfactory to the Company, when and if available.

 

(c)              
The restrictions of Section 5.04(a) shall not apply to Confidential Information that: (i) is or becomes generally
available to the public other than as a result of a disclosure by a Shareholder or any of its Representatives in violation of this
Agreement; (ii) is or has been independently developed or conceived by such Shareholder without use of Confidential Information;
or (iii) becomes available to such Shareholder or any of its Representatives on a non-confidential basis from a source other than
the Company, the other Shareholders, or any of their respective Representatives, provided, that such source is not known
by the receiving Shareholder to be bound by a confidentiality agreement regarding the Company.

 

(d) The obligations of each Shareholder under this Section 5.04 shall survive (i)
the termination, dissolution, liquidation, and winding up of the Company; and (ii) such Shareholder’s Transfer of
its Shares.

 

ARTICLE VI INFORMATION
RIGHTS

 

Section 6.01Financial
Statements. In addition to, and without limiting any rights that a Shareholder may have with respect to inspection of the books
and records of the Company under Applicable Laws, including the CGCL, the Company shall furnish to each Shareholder, the following
information:

 

(a)              
The Company shall furnish to each Major Shareholder when available (i) annual unaudited financial statements for each fiscal
year of the Company, including an unaudited balance sheet as of the end of such fiscal year and an unaudited income or profit and
loss statement, all prepared in accordance with generally accepted accounting principles and practices; and (ii) quarterly unaudited
financial statements for each fiscal quarter of the Company (except the last quarter of the Company’s fiscal year), including
an unaudited balance sheet as of the end of such fiscal quarter and an unaudited income or profit and loss statement, all prepared
in accordance with generally accepted accounting principles and practices, subject to changes resulting from normal year-end audit
adjustments. If the Company has audited records of any of the foregoing, it shall provide those in lieu of the unaudited versions.

 

    	16  

    	 

    

(b)              
To the extent the Company is required by Applicable Law or pursuant to the terms of any outstanding indebtedness of the
Company to prepare such reports, any annual reports, quarterly reports, and other periodic reports (without exhibits) prepared
by the Company as soon as available.

 

Section 6.02Inspection
Rights. The Company shall permit each Major Shareholder to visit and inspect the Company’s properties, to examine its
books of account and records and to discuss the Company’s affairs, finances and accounts with its officers, all at such reasonable
times as may be requested by such Major Shareholder.

 

ARTICLE VII 
REPRESENTATIONS
AND WARRANTIES

 

Section 7.01Representations
and Warranties. Each Shareholder, severally and not jointly, represents and warrants to the Company and each other Shareholder
that:

 

(a)              
For each such Shareholder that is not an individual, such Shareholder is duly organized, validly existing, and in good standing
under the laws of its state of formation.

 

(b)              
Such Shareholder has full capacity and, for each such Shareholder that is not an individual, corporate power and authority
to execute and deliver this Agreement, to perform its obligations hereunder, and to consummate the transactions contemplated hereby.
For each such Shareholder that is not an individual, the execution and delivery of this Agreement, the performance of its obligations
hereunder, and the consummation of the transactions contemplated hereby have been duly authorized by all requisite action of such
Shareholder. Such Shareholder has duly executed and delivered this Agreement.

 

(c)              
This Agreement constitutes the legal, valid, and binding obligation of such Shareholder, enforceable against such Shareholder
in accordance with its terms except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (whether enforcement
is sought by proceedings in equity or at law). The execution, delivery, and performance of this Agreement and the consummation
of the transactions contemplated hereby require no action by, or in respect of, or filing with, any Governmental Authority.

 

(d)              
The execution, delivery, and performance by such Shareholder of this Agreement and the consummation of the transactions
contemplated hereby do not: (i) conflict with or result in any violation or breach of any provision of any of the governing documents
of such Shareholder; (ii) conflict with or result in any violation or breach of any provision of any Applicable Law; or (iii) require
any consent or other action by any Person under any provision of any material agreement or other instrument to which the Shareholder
is a party.

 

(e)              
Except for this Agreement, such Shareholder has not entered into or agreed to be bound by any other agreements or arrangements
of any kind with any other

 

    	17  

    	 

    

party with respect to the
Shares, including agreements or arrangements with respect to the acquisition or disposition of the Shares or any interest therein
or the voting of the Shares (whether or not such agreements and arrangements are with the Company or any other Shareholder).

 

(f)               
Subject to the other provisions of this Agreement, the representations and warranties contained herein shall survive the
date of this Agreement and shall remain in full force and effect for the full period of all applicable statutes of limitations
(giving effect to any waiver, mitigation, or extension thereof).

 

ARTICLE VIII
TERM AND TERMINATION

 

Section 8.01Termination. This Agreement shall
terminate upon the earliest of:

 

(a)              
the consummation of an Initial Public Offering;

 

		(b)	the consummation of a Sale Event;

 

(c)              
the consummation of a merger or other business combination involving the Company whereby the Shares become listed or admitted
to trading on the Nasdaq Stock Market, the New York Stock Exchange, or another national securities exchange;

 

		(d)	the date on which none of the Shareholders holds any Shares;

 

		(e)	the termination, dissolution, liquidation, or winding up of the Company; or

 

		(f)	the agreement of the Shareholders constituting Supermajority Approval.

 

Section 8.02Effect of Termination.

 

(a)              
The termination of this Agreement shall terminate all further rights and obligations of the Shareholders under this Agreement
except that such termination shall not effect:

 

(i)                
the existence of the Company;

 

(ii)              
the obligation of any party to this Agreement to pay any amounts arising on or prior to the date of termination, or as a
result of or in connection with such termination;

 

(iii)           
the rights which any Shareholder may have by operation of law as a Shareholder of the Company; or

 

(iv)            
the rights contained herein which by their terms are intended to survive termination of this Agreement.

 

    	18  

    	 

    

(b)              
The following provisions shall survive the termination of this Agreement: Section 5.04, this Section 8.02,
and Article IX.

 

ARTICLE IX
MISCELLANEOUS

 

Section 9.01Expenses.
Except as otherwise expressly provided herein, all costs and expenses, including fees and disbursements of counsel, financial advisors,
and accountants, incurred in connection with the preparation and execution of this Agreement, or any amendment or waiver hereof,
and the transactions contemplated hereby shall be paid by the party incurring such costs and expenses.

 

Section 9.02Further
Assurances. In connection with this Agreement and the transactions contemplated hereby, the Company and each Shareholder hereby
agrees, at the request of the Company or any other Shareholder, to execute and deliver such additional documents, certificates,
instruments, conveyances, and assurances and to take such further actions as may be required to carry out the provisions hereof
and give effect to the transactions contemplated hereby.

 

Section 9.03Release
of Liability. Except as otherwise provided herein, in the event any Shareholder Transfers all the Shares held by such Shareholder
in compliance with the provisions of this Agreement without retaining any interest therein, then such Shareholder shall cease to
be a party to this Agreement and shall be relieved and have no further liability arising hereunder for events occurring from and
after the date of such Transfer.

 

Section 9.04Notices.

 

(a)              
All notices and other communications given or made pursuant to this Agreement must be in writing and will be deemed to have
been given upon the earlier of actual receipt or: (i) personal delivery to the party to be notified (with verification of receipt),
(ii) when sent, if sent by facsimile or electronic mail during normal business hours of the recipient, and if not sent during normal
business hours, then on the recipient’s next business day, (iii) three days after having been sent by registered or certified
mail, return receipt requested, postage prepaid, or (iv) one business day after deposit with a nationally recognized overnight
courier, freight prepaid, specifying next business day delivery, with written verification of receipt.

 

(b)              
Such communications in Section 9.04(a) must be sent to the respective parties at the following addresses (or at such
other address for a party as shall be specified in a notice given in accordance with this Section
9.04):

 

(i)                
if to the Company, at its principal office address;

 

(ii)                 if
to a Shareholder, at the address set forth on Schedule A attached hereto;

 

 

    	19  

    	 

    

(iii)           
if to a Permitted Transferee of Shares or any other Shareholder other than the Major
Shareholders (A) at the address set forth on the respective Joinder Agreement executed by such party; or (B) if an address is neither
set forth on such Joinder Agreement nor provided to the Company in a notice given in accordance with this Section 9.04,
at such party’s last known address; and

 

(iv)            
if to the Spouse of a Shareholder: (A) if applicable, in care of the Spouse’s
attorney of record at the attorney’s address; or (B) if the Spouse is unrepresented, at the Spouse’s last known address.

 

Section 9.05Titles
and Subtitles. The titles and subtitles used in this Agreement are for convenience
only and are not to be considered in construing or interpreting this Agreement.

 

Section 9.06Severability.
In case any one or more of the provisions contained in this Agreement is for any reason held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement, and such
invalid, illegal, or unenforceable provision shall be reformed and construed so that it will be valid, legal, and enforceable to
the maximum extent permitted by law.

 

Section 9.07Entire Agreement.
This Agreement and the Governing Documents constitute the sole and entire agreement of the parties with respect to the subject
matter contained herein and therein, and supersede all prior and contemporaneous understandings and agreements, both written and
oral, with respect to such subject matter. In the event of any inconsistency or conflict between this Agreement and any Governing
Document, the Shareholders and the Company shall, to the extent permitted by Applicable Law, amend such Governing Document to comply
with the terms of this Agreement.

 

Section 9.08Successors
and Assigns; Assignment. Subject to the rights and restrictions on Transfers set forth in this Agreement, this Agreement is
binding upon and inures to the benefit of the parties hereto and their respective heirs, executors, administrators, legal representatives,
successors, and permitted assigns. This Agreement may not be assigned by any Shareholder except as permitted in this Agreement
(or as otherwise consented to in writing by all the other Shareholders prior to the assignment) and any such assignment in violation
of this Agreement shall be null and void.

 

Section 9.09No Third-Party
Beneficiaries. This Agreement is for the sole benefit of the parties hereto and their respective heirs, executors, administrators,
legal representatives, successors, and permitted assigns and nothing herein, express or implied, is intended to or shall confer
upon any other Person or entity any legal or equitable right, benefit, or remedy of any nature whatsoever under or by reason of
this Agreement.

 

Section 9.10Amendment
and Modification. This Agreement may only be amended, modified, or supplemented
by an instrument in writing executed by the Company and the Shareholders constituting Supermajority Approval. Any such written
amendment, modification, or supplement will be binding upon the Company and each Shareholder.

 

Section 9.11Waiver.
No waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by
the party so waiving. No waiver by

 

    	20  

    	 

    

any party shall operate or
be construed as a waiver in respect of any failure, breach, or default not expressly identified by such written waiver, whether
of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising,
any right, remedy, power, or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall
any single or partial exercise of any right, remedy, power, or privilege hereunder preclude any other or further exercise thereof
or the exercise of any other right, remedy, power, or privilege.

 

Section 9.12Governing
Law. This Agreement, including all Exhibits and Schedules hereto, and all matters arising out of or relating to this Agreement,
shall be governed by and construed in accordance with the internal laws of the State of California without giving effect to any
choice or conflict of law provision or rule (whether of the State of California or any other jurisdiction).

 

Section 9.13Submission
to Jurisdiction. Each party (a) hereby irrevocably and unconditionally submits to the personal jurisdiction of the federal
and state courts located in San Diego County, California for the purpose of any suit, action, or other proceeding arising out of
or based upon this Agreement.

 

Section 9.14Equitable
Remedies. Each party hereto acknowledges that a breach or threatened breach by such party of any of its obligations under this
Agreement would give rise to irreparable harm to the other parties, for which monetary damages would not be an adequate remedy,
and hereby agrees that in the event of a breach or a threatened breach by such party of any such obligations, each of the other
parties hereto shall, in addition to any and all other rights and remedies that may be available to them in respect of such breach,
be entitled to equitable relief, including a temporary restraining order, an injunction, specific performance, and any other relief
that may be available from a court of competent jurisdiction (without any requirement to post bond).

 

Section 9.15Remedies
Cumulative. The rights and remedies under this Agreement are cumulative and are in addition to and not in substitution for
any other rights and remedies available at law or in equity or otherwise.

 

Section 9.16Counterparts.
This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed
to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, email, or other means of electronic transmission
shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

 

    	21  

    	 

    

Section 9.17Spousal
Consent. Each Shareholder who has a Spouse on the date of this Agreement shall cause such Shareholder’s Spouse to execute
and deliver to the Company a consent in the form of Exhibit B hereto (a “Spousal
Consent”), pursuant to which the Spouse acknowledges that he or she has read and understood the Agreement and agrees
to be bound by its terms and conditions. If any Shareholder should marry or engage in a Marital Relationship following the date
of this Agreement, such Shareholder shall cause his or her Spouse to execute and deliver to the Company a Spousal Consent within
thirty (30) days thereof.

 

[SIGNATURE PAGE
FOLLOWS]

 

 

 

    	22  

    	 

    

IN WITNESS
WHEREOF, the parties hereto have executed this Shareholders Agreement as
of the Effective Date.

The Company:

 

 

Natural Plant Extract
of California, Inc., a California corporation

 

 

By:   /s/ Alan
Tsai

Alan Tsai, Chief Executive Officer

 

 

    	23  

    	 

    

IN WITNESS WHEREOF,
the parties hereto have executed this Shareholders Agreement as of the Effective Date.

 

 

The Major Shareholders:

 

 

Betterworld Ventures, LLC, a
California limited liability company

Name:
Paul Garrett, Sole Trustee of the Paul Garrett 1994 Revocable Trust

 

By:   /s/
Paul Garrett   

Title: Manager and Sole
Member

 

 

/s/ Alan Tsai   

Alan Tsai

 

 

 

/s/ Robert Hymers III

Robert Hymers III

 

 

    	24  

    	 

    

IN WITNESS WHEREOF,
the parties hereto have executed this Shareholders Agreement as of the Effective Date.

 

 

The Shareholders:

 

 

Marijuana Company of America,
Inc., a Utah corporation

 

 

By:

Name:

Title:

 

 

 

 

    	25  

    	 

    

SCHEDULE A
SHAREHOLDERS

 

 

 

	Name	MS
    / S1	Shares	Address
	Alan Tsai	MS	400,000	
        1100
        Wilshire Blvd., Apt. 2808

        Los Angeles,
        CA 90017

	Robert Hymers III	MS	400,000	520 S. Grand Ave., Ste. 320 Los Angeles, CA 90071
	Betterworld Ventures, LLC	MS	566,667	3594 Via Zara Fallbrook, CA 92028
	Marijuana Company of America, Inc.	S	50,000	1340 West Valley Parkway, Ste. 205 Escondido, CA 92029
	 	 	 	 
	 	 	 	 

 

 

 

 

 

 

 

 

1 Major
Shareholder or Shareholder

 

 

    	  

    	 

    

SCHEDULE B
DIRECTORS

 

 

 

	Director Nominee	Major Shareholder
	Alan Tsai	Alan Tsai
	Robert Hymers III	Robert Hymers III
	Paul Garrett	Betterworld Ventures, LLC

 
 
 

    	  

    	 

    

EXHIBIT A

 

FORM OF JOINDER AGREEMENT

 

 

JOINDER AGREEMENT

 

Reference is hereby made
to the Shareholders Agreement, dated June 5, 2020, (as amended from time to time, the “Shareholders Agreement”),
by and among Alan Tsai, Robert Hymers III, Betterworld Ventures, LLC, Marijuana Company of America, Inc. and Natural Plant Extract
of California, Inc., a California corporation (the “Company”).
Pursuant to and in accordance with Sections 3.01(d) and 4.01(e) of the Shareholders Agreement, the undersigned hereby
agrees that upon the execution of this Joinder Agreement, it shall become a party to the Shareholders Agreement and shall be fully
bound by, and subject to, all of the covenants, terms and conditions of the Shareholders Agreement as though an original party
thereto and shall be deemed to be a Shareholder of the Company for all purposes thereof.

 

Capitalized terms used
herein without definition shall have the meanings ascribed thereto in the Shareholders Agreement.

 

IN WITNESS WHEREOF, the
parties hereto have executed this Agreement as of [DATE].

 

[TRANSFEREE
STOCKHOLDER]

 

By: ________________________

 

Name:

Title:

 

 

 

    	  

    	 

    

EXHIBIT B

 

FORM OF SPOUSAL CONSENT

 

 

CONSENT
OF SPOUSE/DOMESTIC PARTNER

I, [SIGNING SPOUSE OR
DOMESTIC PARTNER NAME], spouse/domestic partner of [SHAREHOLDER OR MEMBER SPOUSE OR DOMESTIC PARTNER NAME],
acknowledge

that I have read the Shareholders
Agreement, dated as of June 5, 2020, by and among Natural Plant Extract of California, Inc., a company organized under the laws
of the State of California (the “Company”) and Alan Tsai, Robert
Hymers III, Betterworld Ventures, LLC, and Marijuana Company of America, Inc. and to which this Consent of Spouse/Domestic Partner
(“Consent”) is attached as Exhibit B (as the same may be amended
or amended and restated from time to time, the “Agreement”), and that I understand the contents of the Agreement.
I am aware that my spouse/domestic partner is a party to the Agreement and the Agreement contains provisions regarding the voting
and transfer of Shares (as defined in the Agreement) of the Company which my spouse/domestic partner may own, including any interest
I might have therein.

I hereby consent to the execution
by my spouse/domestic partner of the Agreement and agree that I and any interest, including any community property interest, that
I may have in any Shares of the Company subject to the Agreement shall be irrevocably bound by the Agreement, including any restrictions
on the transfer or other disposition of any Shares, valuation methods or agreed values for the Shares, or voting or other obligations
as set forth in the Agreement. I hereby irrevocably appoint my spouse/domestic partner as my attorney-in-fact and agent with respect
to the exercise of any rights and obligations under the Agreement.

I agree that, in the event
of divorce or the dissolution of my marriage/partnership to my present spouse/domestic partner or other legal division of property,
I will transfer and sell, at the fair market value, to my spouse/domestic partner any and all interest I have or may acquire in
the Company, and I further agree that a court may award such entire interest to my spouse/domestic partner as part of any such
legal division of property. The foregoing agreement is not intended as a waiver of any community property or other ownership interest
I may have in the Shares of the Company, but only as an agreement to accept other property or assets of substantially equivalent
value as part of any property settlement agreement or other legal division of property upon divorce or the dissolution of my marriage/partnership.

I agree not to bequeath
my interest, if any, in the Shares of the Corporation, by will, trust, or any other
testamentary disposition to any person other than my current spouse/domestic partner.

Further, the residuary
clause in my will shall not include my interest, if any, in the Shares of the Company.

I agree not to pledge or encumber
any interest I may have in the Shares of the Company.

This Consent shall be binding
on my executors, administrators, heirs, and assigns. I agree to execute and deliver such documents as may be necessary to carry
out the intent of the Agreement and this Consent.

I am aware that the
legal, financial, and related matters contained in the Agreement are complex and that I am free to seek independent professional
guidance or counsel with respect to this

 

 

    	1  

    	 

    

Consent. I have either sought
such guidance or counsel or determined after reviewing the Agreement carefully that I will waive such right. I am under no disability
or impairment that affects my decision to sign this Consent and I knowingly and voluntarily intend to be legally bound by this
Consent. I am satisfied with the terms of this Consent and I understand and have received full disclosure of all the rights that
I am agreeing to waive.

I hereby
agree that my spouse/domestic partner may join in any future amendment, waiver, consent, or modification of the Agreement without
any further signature, acknowledgment, agreement, or consent on my part or notice to me.

Dated to be effective on [DATE].

 

________________________________

[SIGNING SPOUSE
OR DOMESTIC PARTNER NAME]

 

 

 

    	2  

    	 

    

 

 

 

ACKNOWLEDGMENT TO CONSENT OF SPOUSE/DOMESTIC
PARTNER

	A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
	 
	STATE OF CALIFORNIA	 
	COUNTY OF [COUNTY NAME]	ss.
	 	 

On [DATE] before me,
[NAME OF NOTARY PUBLIC OR OTHER OFFICER AND TITLE,

IF ANY], personally appeared
[NAME OF PERSON SIGNING SPOUSAL CONSENT], who proved to me on the basis of satisfactory
evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that [he/she] executed the same
in [his/her] authorized capacity, and that by [his/her] signature on the instrument the person, or the entity upon behalf of which
the person acted, executed the instrument.

I certify under
PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph
is true and correct.

WITNESS my hand and official
seal.

 

______________________________

Signature of [Notary
Public] [NOTARY PUBLIC NAME]

[Seal]]

 

 

 

    	320200828 Ex 10.1 Credit Agreement

		

			Exhibit 10.1

		

		
			CREDIT AGREEMENT
		

		
			﻿
		

		
			THIS CREDIT AGREEMENT (this "Agreement") is entered into as of August 28, 2020, by and between FLEXSTEEL INDUSTRIES, INC., a Minnesota corporation ("Borrower"), and DUBUQUE BANK AND TRUST COMPANY ("Bank").
		

		
			﻿
		

		
			RECITALS
		

		
			﻿
		

		
			Borrower has requested that Bank extend credit to Borrower as described below, and Bank has agreed to provide such credit to Borrower on the terms and conditions contained herein.
		

		
			﻿
		

		
			NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Bank and Borrower hereby agree as follows:
		

		
			﻿
		

		
			ARTICLE I
		

		
			CREDIT TERMS
		

		
			﻿
		

		
			SECTION 1.LINE OF CREDIT.
		

		
			﻿
		

		
			(a)Line of Credit.  Subject to the terms and conditions of this Agreement, Bank hereby agrees to make advances to Borrower from time to time up to and including August 28, 2022, not to exceed at any time the aggregate principal amount of Twenty-Five Million and 00/100 Dollars ($25,000,000.00) ("Line of Credit"), the proceeds of which shall be used for working capital for ongoing operations of the Borrower.  Borrower's obligation to repay advances under the Line of Credit shall be evidenced by a promissory note dated as of August 28, 2020 ("Line of Credit Note"), all terms of which are incorporated herein by this reference.
		

		
			﻿
		

		
			(b)Limitation on Borrowings.  Outstanding borrowings under the Line of Credit, to a maximum of the principal amount not at any time to exceed an aggregate of Ten Million and 00/100s Dollars ($10,000,000.00) (“Borrowing Base Limit”).  Once the outstanding borrowings exceed the Borrowing Base Limit, the maximum amount of the Line of Credit shall not at any time exceed an aggregate of:  (i) eighty percent (80.00%) of Borrower's Eligible Accounts Receivable, and (ii) fifty percent (50%) of the value of Borrower's Eligible Finished Goods, less undrawn amounts of outstanding letters of credit issued by Bank or any affiliate thereof (“Borrowing Base”).  The language in subsection (ii) hereof shall be considered Eligible Finished Goods Reliance.  Eligible Finished Goods Reliance shall at no time exceed more than fifty percent (50%) of the Borrowing Base; provided, however, the Eligible Finished Goods Reliance between June 1 and September 30 of each year shall at no time exceed sixty percent (60%) of the Borrowing Base.  
		

		
			﻿
		

		
			Notwithstanding the language set out in this Section 1(b), the Line of Credit, even if it exceeds the Borrowing Base Limit, will not be subject to the Borrowing Base if the FCCR set out in Section 4.9(a) is for two consecutive quarters met or exceeded.
		

		
			﻿
		

		

		

		 

 

		﻿
		

		
			As used herein, "Eligible Accounts Receivable" shall consist solely of trade accounts, accounts receivable, other receivables or other rights to payment for goods sold or services rendered owing to Borrower, created in the ordinary course of Borrower's business, upon which Borrower's right to receive payment is absolute and not contingent upon the fulfillment of any condition whatsoever, and in which Bank has a perfected security interest of first priority, and shall not include:
		

		
			﻿
		

		
			(i)any account which is more than ninety (90) days past due;
		

		
			﻿
		

		
			(ii)that portion of any account for which there exists any right of setoff, defense or discount (except regular discounts allowed in the ordinary course of business to promote prompt payment) or for which any defense or counterclaim has been asserted;
		

		
			﻿
		

		
			(iii)any account which represents an obligation of any state or municipal government or of the United States government or any political subdivision thereof;
		

		
			﻿
		

		
			(iv)any account which represents an obligation of an account debtor located in a foreign country, except to the extent any such account, in Bank's determination, is supported by a letter of credit or insured under a policy of foreign credit insurance, in each case in form, substance and issued by a party acceptable to Bank;
		

		
			﻿
		

		
			(v)any account which arises from the sale or lease to or performance of services for, or represents an obligation of, an employee, affiliate, partner, member, parent or subsidiary of Borrower;
		

		
			﻿
		

		
			(vi)that portion of any account, which represents interim or progress billings or retention rights on the part of the account debtor;
		

		
			﻿
		

		
			(vii)any account which represents an obligation of any account debtor when twenty-five percent (25%) or more of Borrower's accounts from such account debtor are not eligible pursuant to (i) above;
		

		
			﻿
		

		
			(viii)that portion of any account from an account debtor which represents the amount by which Borrower's total accounts from said account debtor exceeds twenty-five percent (25%) of Borrower's total accounts;
		

		
			﻿
		

		
			(ix)any account which represents an obligation of an account debtor that is subject to a bankruptcy, insolvency or receivership proceedings; and
		

		
			﻿
		

		
			(x)any account deemed ineligible by the Borrower’s internal or external auditors.
		

		
			
		

		
			“Eligible Finished Goods” shall mean, at any time, all of Borrower’s “Finished Goods,” except:  (a) Finished Goods which are not owned by Borrower free and clear of all 
		
		
 

		

			2

		

		

			 

		

 

		security interests, liens, encumbrances and claims of third parties (other than Bank), (b) Finished Goods that are located outside of the United States, and (c) Finished Goods which have been deemed to be obsolete, unsaleable, damaged, defective or unfit for further processing by Borrower’s internal or external auditors or are not located at Borrower’s locations unless appropriate third-party lien waivers are received.  Finished Goods does not include raw materials, work-in-process, parts or supplies.    

		
		
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			(c)Letter of Credit Subfeature. As a subfeature under the Line of Credit, Bank agrees from time to time during the term thereof to issue or cause an affiliate to issue letters of credit for the account of Borrower as requested (each, a "Letter of Credit" and collectively, "Letters of Credit"); provided however, that the aggregate undrawn amount of all outstanding Letters of Credit shall not at any time exceed Two Million Five Hundred Thousand and 00/100 Dollars ($2,500,000.00).  The form and substance of each Letter of Credit shall be subject to approval by Bank, in its sole discretion.  Each Letter of Credit shall be issued for a term not to exceed the maturity date of the Line of Credit.  The undrawn amount of all Letters of Credit shall be reserved under the Line of Credit and shall not be available for borrowings thereunder.  Each Letter of Credit shall be subject to the additional terms and conditions of the Letter of Credit agreements, applications and any related documents required by Bank in connection with the issuance thereof.  Each drawing paid under a Letter of Credit shall be deemed an advance under the Line of Credit and shall be repaid by Borrower in accordance with the terms and conditions of this Agreement applicable to such advances; provided however, that if advances under the Line of Credit are not available, for any reason, at the time any drawing is paid, then Borrower shall immediately pay to Bank the full amount drawn, together with interest thereon from the date such drawing is paid to the date such amount is fully repaid by Borrower, at the rate of interest applicable to advances under the Line of Credit.  In such event Borrower agrees that Bank, in its sole discretion, may debit any account maintained by Borrower with Bank for the amount of any such drawing. 
		

		
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			(d)Borrowing and Repayment.  Borrower may from time to time during the term of the Line of Credit borrow, partially or wholly repay its outstanding borrowings, and reborrow, subject to all of the limitations, terms and conditions contained herein or in the Line of Credit Note; provided however, that the total outstanding borrowings under the Line of Credit shall not at any time exceed the maximum principal amount available thereunder, as set forth above.  
		

		
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			SECTION 1.1.INTEREST/FEES.
		

		
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			 (a) Interest.    The outstanding principal balance of the Line of Credit shall bear interest, and the amount of each drawing paid under any Letter of Credit shall bear interest from the date such drawing is paid to the date such amount is fully repaid by Borrower, at the rate of interest set forth in each promissory note or other instrument or document executed in connection therewith.
		

		
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		(b)Computation and Payment.  Interest shall be computed on the basis of a 360-day year, actual days elapsed.  Interest shall be payable at the times and place set forth in each promissory note or other instrument or document required hereby.
		

		
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			(c)Commitment Fee.  Borrower shall pay to Bank a non-refundable commitment fee for the Line of Credit equal to Twenty-Five Thousand and 00/100 Dollars ($25,000.00), which fee shall be due and payable in full on the date of the Line of Credit Note.    
		

		
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			(d)Unused Commitment Fee.  Borrower shall pay to Bank a fee equal to 0.125% per annum (computed on the basis of a 360-day year, actual days elapsed) on the average daily unused amount of the Line of Credit, which fee shall be calculated on a daily basis by Bank and shall be due and payable by Borrower in arrears within ten (10) days after each billing is sent by Bank.    
		

		
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			(e)Letter of Credit Fees.  Borrower shall pay to Bank (i) fees upon the issuance of each Letter of Credit equal to one and one-half percent (1.50%) per annum (computed on the basis of a 360-day year, actual days elapsed) of the face amount thereof, and (ii) fees upon the payment or negotiation of each drawing under any Letter of Credit and fees upon the occurrence of any other activity with respect to any Letter of Credit (including without limitation, the transfer, amendment or cancellation of any Letter of Credit) determined in accordance with Bank's standard fees and charges then in effect for such activity.  See fee schedule in effect as of the date of this Agreement attached hereto as Exhibit A.    
		

		
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			SECTION 1.2.COLLECTION OF PAYMENTS.  Borrower agrees to promptly set up an ACH transfer so that interest and fees due under the Line of Credit Note can be automatically sent to the Bank.  
		

		
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			SECTION 1.3.COLLATERAL.    As security for all indebtedness of Borrower to Bank subject hereto,  Borrower hereby grants to Bank security interests of first priority lien in all Borrower's personal property.  The foregoing shall be evidenced by and subject to the terms of such security agreements, financing statements, and other documents as Bank shall reasonably require, all in form and substance reasonably satisfactory to Bank.  Borrower shall reimburse Bank immediately upon demand for all reasonable costs and expenses incurred by Bank in connection with any of the foregoing security, including without limitation, filing and recording fees and costs of appraisals and audits.  Bank agrees not to require a security interest in the Borrower’s real property, provided Borrower agrees not to mortgage, pledge, grant or permit to exist a security interest or lien upon any of Borrower’s real property.  Said pledge is in addition to the restriction set out in Section 5.9.
		

		
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			SECTION 1.4.  RIGHT OF SETOFF.  To the extent permitted by applicable law, Bank reserves a right to setoff in all Borrower’s account with Bank (whether checking, savings, or some other account).  This includes all accounts Borrower holds jointly with someone else and all accounts Borrower may open in the future.  However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law. Borrower authorizes Bank, to the extent permitted by applicable law and to the extent that an Event of Default has occurred (notwithstanding any notice 
		
		
 

		

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		requirements or grace/cure periods under this or other agreements between Borrower and Bank), to charge or setoff all sums owing on the indebtedness against any and all such accounts, and at Bank’s option, to administratively freeze all such accounts to allow Bank to protect Bank’s charge and setoff rights provided in this paragraph. 

		
		
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			SECTION 1.5.  RENEGOTIATION OR TERMINATION OF CREDIT FACILITY.  Notwithstanding anything to the contrary in this Agreement or in any other document executed in connection herewith (including, without limitation, the Line of Credit Note),  upon Borrower’s written request to Bank and to the extent that all of the Triggering Events (as defined below) have occurred, Borrower and Bank shall enter into discussions regarding the renegotiation of the credit facility provided by Bank to Borrower, which discussions shall include, without limitation, the amount of the Line of Credit, Borrowing Base limitations (if any), the applicable interest rate and fees, and collateral (if any) securing Borrower’s obligations to Bank under such renegotiated credit facility.  In the event that Borrower and Bank are unable to mutually agree upon the terms of a renegotiated credit facility within 60 days of the date upon which Borrower provided such written request to renegotiate to Bank, then Borrower shall have the right to terminate the Line of Credit provided under this Agreement by providing written notice of such termination to Bank.  Immediately upon Borrower’s provision of such written notice, and provided that no amounts are then outstanding under the Line of Credit:  (a) this Agreement; the Line of Credit Note; all documents executed in connection herewith; and all terms, provisions, and covenants contained herein or therein, as applicable, shall automatically be deemed to be terminated and of no further force and effect (except to the extent of any provisions that expressly survive termination of this Agreement); (b) Bank shall promptly (and in event within ten (10) business days)  release its interest in any property of Borrower and file or record, as applicable, UCC financing statement termination statements and any other documents or instruments necessary to evidence or accomplish such release; and (c) Borrower shall have the right to seek credit from such other sources as it shall determine in its sole discretion.  For purposes of this Section 1.5, “Triggering Events” shall mean Borrower’s achievement of all of the following:  (i) an aggregate cash and investment account balance that exceeds $20,000,000.00; (ii) four (4) consecutive quarters of positive Adjusted EBITDA (as defined in Section 4.9(a) hereof); and (iii) a trailing 12-month rolling Adjusted EBITDA as a percentage of Net Sales that exceeds three percent (3.0%).  “Net Sales” is as appears on Borrower’s financial statement in accordance with generally accepted accounting principles (“GAAP”).    
		

		
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			ARTICLE II
		

		
			REPRESENTATIONS AND WARRANTIES
		

		
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			Borrower makes the following representations and warranties to Bank, which representations and warranties shall survive the execution of this Agreement and shall continue in full force and effect until the full and final payment, and satisfaction and discharge, of all obligations of Borrower to Bank subject to this Agreement.
		

		
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			SECTION 2.1.LEGAL STATUS.  Borrower is a corporation duly organized and existing and in good standing under the laws of the State of Minnesota, and is qualified or 
		

		 

		

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		licensed to do business (and is in good standing as a foreign corporation, if applicable) in all jurisdictions in which such qualification or licensing is required or in which the failure to so qualify or to be so licensed could have a material adverse effect on Borrower.
		

		
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			SECTION 2.2.AUTHORIZATION AND VALIDITY.  This Agreement and each promissory note, contract, instrument and other document required hereby or at any time hereafter delivered by Borrower to Bank in connection herewith (collectively, the "Loan Documents") have been duly authorized, and upon their execution and delivery in accordance with the provisions hereof will constitute legal, valid and binding agreements and obligations of Borrower, enforceable in accordance with their respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.
		

		
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			SECTION 2.3.NO VIOLATION.  The execution, delivery and performance by Borrower of each of the Loan Documents do not violate in any material respect any provision of any law or regulation applicable to Borrower, or contravene any provision of the Articles of Incorporation or By-Laws of Borrower, or result in any breach of or default under any contract, obligation, indenture or other instrument to which Borrower is a party or by which Borrower may be bound.
		

		
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			SECTION 2.4.LITIGATION.  There are no pending, or to Borrower's knowledge threatened, actions, claims, investigations, suits or proceedings by or before any governmental authority, arbitrator, court or administrative agency which could have a material adverse effect on the financial condition or operation of Borrower other than those disclosed by Borrower to Bank in writing prior to the date hereof or that are otherwise permitted pursuant to the terms of this Agreement.
		

		
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			SECTION 2.5.CORRECTNESS OF FINANCIAL STATEMENT.  The financial statement of Borrower dated June 30, 2020, a true copy of which has been delivered by Borrower to Bank prior to the date hereof, (a) is complete and correct and presents fairly the financial condition of Borrower, (b) discloses all liabilities of Borrower that are required to be reflected or reserved against under generally accepted accounting principles, whether liquidated or unliquidated, fixed or contingent, and (c) has been prepared in accordance with generally accepted accounting principles consistently applied.  Since the date of such financial statement, there has been no material adverse change in the financial condition of Borrower, nor has Borrower mortgaged, pledged, granted a security interest in or otherwise encumbered any of its assets or properties except in favor of Bank or as otherwise permitted by Bank in writing.
		

		
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			SECTION 2.6.INCOME TAX RETURNS.  Borrower has no knowledge of any pending assessments or adjustments of its income tax payable with respect to any year.
		

		
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			SECTION 2.7.NO SUBORDINATION.  There is no agreement, indenture, contract or instrument to which Borrower is a party or by which Borrower may be bound that 
		

		 

		

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		requires the subordination in right of payment of any of Borrower's obligations subject to this Agreement to any other obligation of Borrower.    
		

		
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			SECTION 2.8.PERMITS, FRANCHISES.  Borrower possesses, and will hereafter possess, all permits, consents, approvals, franchises and licenses required and rights to all trademarks, trade names, patents, and fictitious names, if any, necessary to enable it to conduct the business in which it is now engaged in compliance with applicable law.
		

		
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			SECTION 2.9.ERISA.  Borrower is in compliance in all material respects with all applicable provisions of the Employee Retirement Income Security Act of 1974, as amended or recodified from time to time ("ERISA"); Borrower has not violated any provision of any defined employee pension benefit plan (as defined in ERISA) maintained or contributed to by Borrower (each, a "Plan"); no Reportable Event as defined in ERISA has occurred and is continuing with respect to any Plan initiated by Borrower; Borrower has met its minimum funding requirements under ERISA with respect to each Plan; and each Plan will be able to fulfill its benefit obligations as they come due in accordance with the Plan documents and under generally accepted accounting principles.
		

		
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			SECTION 2.10.    OTHER OBLIGATIONS.  Borrower is not in default on any material obligation for borrowed money, any material purchase money obligation or any other material lease, commitment, contract, instrument or obligation that would permit the other party thereto to accelerate such obligation.
		

		
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			SECTION 2.11.    ENVIRONMENTAL MATTERS.  Except as disclosed by Borrower to Bank in writing prior to the date hereof, Borrower is in compliance in all material respects with all applicable federal or state environmental, hazardous waste, health and safety statutes, and any rules or regulations adopted pursuant thereto, which govern or affect any of Borrower's operations and/or properties, including without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Superfund Amendments and Reauthorization Act of 1986, the Federal Resource Conservation and Recovery Act of 1976, and the Federal Toxic Substances Control Act, as any of the same may be amended, modified or supplemented from time to time.  To Borrower’s knowledge, none of the operations of Borrower is the subject of any federal or state investigation evaluating whether any remedial action involving a material expenditure is needed to respond to a release of any toxic or hazardous waste or substance into the environment.  Borrower has no material contingent liability in connection with any release of any toxic or hazardous waste or substance into the environment.
		

		
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			SECTION 2.12.    REAL PROPERTY.  Except as disclosed by Borrower to Bank in writing prior to the date hereof, with respect to any real property owned by Borrower:
		

		
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			(a)All taxes, governmental assessments, insurance premiums, and water, sewer and municipal charges, and rents (if any) which previously became due and owing in respect thereof have been paid as of the date hereof.
		

		
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		(b)There are no mechanics' or similar liens or claims which have been filed for work, labor or material (and no rights are outstanding that under law could give rise to any such lien) which affect all or any interest in any such real property and which are or may be prior to or equal to the lien thereon in favor of Bank. 
		

		
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			(c)There is no pending, or to the best of Borrower's knowledge threatened, proceeding for the total or partial condemnation of all or any portion of any such real property, and all such real property is in good repair and free and clear of any damage that would materially and adversely affect the value thereof as security and/or the intended use thereof.
		

		
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			ARTICLE III
		

		
			CONDITIONS
		

		
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			SECTION 3.1.CONDITIONS OF INITIAL EXTENSION OF CREDIT.  The obligation of Bank to extend any credit contemplated by this Agreement is subject to the fulfillment to Bank's satisfaction of all of the following conditions:
		

		
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			(a)Approval of Bank Counsel.  All legal matters incidental to the extension of credit by Bank shall be reasonably satisfactory to Bank's counsel.
		

		
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			(b)Documentation.  Bank shall have received, in form and substance satisfactory to Bank, each of the following, duly executed:
		

		
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			(i)This Agreement and each promissory note or other instrument or document required hereby.
		

		
			(ii)Security Agreement dated of even date hereto.
		

		
			(iii)Corporate resolution for borrowing.
		

		
			(iv)Certificate of Incumbency.
		

		
			(v)Such other documents as Bank may require under any other Section of this Agreement.
		

		
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			(c)Financial Condition.  There shall have been no material adverse change, as reasonably determined by Bank, in the financial condition or business of Borrower, nor any material decline, as reasonably determined by Bank, in the market value of any collateral required hereunder or a substantial or material portion of the assets of Borrower.
		

		
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			(d)Insurance.  Borrower shall have delivered to Bank evidence of insurance coverage on all Borrower's property, in form, substance, amounts, covering risks and issued by companies satisfactory to Bank, and where required by Bank, with loss payable endorsements in favor of Bank,  provided,  however, that notwithstanding anything to the contrary herein, Bank shall not require Borrower to deliver loss payable endorsements in favor of Bank unless Bank maintains a security interest and/or lien on the specific property covered by such insurance policy(ies).
		

		
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		SECTION 3.2.CONDITIONS OF EACH EXTENSION OF CREDIT.  The obligation of Bank to make each extension of credit requested by Borrower hereunder shall be subject to the fulfillment to Bank's satisfaction of each of the following conditions:
		

		
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			(a)Compliance.  The representations and warranties contained herein and in each of the other Loan Documents shall be true on and as of the date of the signing of this Agreement and on the date of each extension of credit by Bank pursuant hereto, with the same effect as though such representations and warranties had been made on and as of each such date (except to the extent that such representation or warranty is expressly made as of a specified date, in which case it shall be true on and as of such specified date), and on each such date, no Event of Default as defined herein, and no condition, event or act which with the giving of notice or the passage of time or both would constitute such an Event of Default, shall have occurred and be continuing or shall exist.
		

		
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			(b)Documentation.  Bank shall have received all additional documents which may be reasonably required in connection with such extension of credit.
		

		
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			ARTICLE IV
		

		
			AFFIRMATIVE COVENANTS
		

		
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			Borrower covenants that so long as Bank remains committed to extend credit to Borrower pursuant hereto, or any liabilities (whether direct or contingent, liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents remain outstanding, and until payment in full of all obligations of Borrower subject hereto, Borrower shall, unless Bank otherwise consents in writing:
		

		
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			SECTION 4.1.PUNCTUAL PAYMENTS.  Punctually pay all principal, interest, fees or other liabilities due under any of the Loan Documents at the times and place and in the manner specified therein, and immediately upon demand by Bank, the amount by which the outstanding principal balance of any credit subject hereto at any time exceeds any limitation on borrowings applicable thereto.
		

		
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			SECTION 4.2.ACCOUNTING RECORDS.  Maintain adequate books and records in accordance with generally accepted accounting principles consistently applied, and, to the extent that any amount is outstanding on the Line of Credit, permit any representative of Bank, at any reasonable time and upon not less than 48 hours prior notice, to inspect, audit and examine such books and records, to make copies of the same, and to inspect the properties of Borrower.  In the event Bank in good faith has questions regarding the books and records, including but not limited to the records supporting the Borrowing Base, Bank may request an inspection, audit or examination as allowed under this Section 4.2 prior to advancing funds under the Line of Credit.
		

		
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			SECTION 4.3.FINANCIAL STATEMENTS.  Provide to Bank all of the following, in form and detail satisfactory to Bank:
		

		
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		(a)not later than 75 days after and as of the end of each fiscal year, a financial statement of Borrower, audited by a certified public accountant satisfactory to Bank, to include the 10-K, which is the comprehensive report filed annually by Borrower about its financial performance, as is required by the U.S. Securities and Exchange Commission; 
		

		
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			(b)not later than 40 days after and as of the end of each fiscal quarter, a financial statement of Borrower, audited by a certified public accountant satisfactory to Bank, to include the 10-Q, which is the comprehensive report of Borrower’s performance submitted quarterly by Borrower to the U.S. Securities and Exchange Commission);
		

		
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			(c)not later than 30 days after and as of the end of each month, a  Borrowing Base certificate and an aged listing of accounts receivable and accounts payable; provided,  however, that, for any given month, Borrower shall not be obligated to deliver a Borrowing Base certificate pursuant to this subsection (c) if no amount is outstanding on the Line of Credit as of the end of such month.  In such event, said Borrowing Base certificate must be provided to Bank prior to an advance under the Line of Credit;
		

		
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			(d)contemporaneously with each quarterly financial statement of Borrower required hereby, a certificate of the president or chief financial officer of Borrower that said financial statements are accurate and that there exists no Event of Default nor any condition, act or event which with the giving of notice or the passage of time or both would constitute an Event of Default; provided,  however, that, for any given quarter, Borrower shall not be obligated to deliver a certificate pursuant to this subsection (d) if no amount is outstanding on the Line of Credit as of the end of such quarter.  In such event, said certificate must be provided to Bank prior to an advance under the Line of Credit;
		

		
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			(e)from time to time such other information as Bank may reasonably request.
		

		
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			SECTION 4.4.COMPLIANCE.  Preserve and maintain all licenses, permits, governmental approvals, rights, privileges and franchises necessary for the conduct of its business; and comply in all material respects with the provisions of all documents pursuant to which Borrower is organized and/or which govern Borrower's continued existence and with the requirements of all laws, rules, regulations and orders of any governmental authority applicable to Borrower and/or its business.
		

		
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			SECTION 4.5.INSURANCE.  Maintain and keep in force insurance of the types and in amounts customarily carried in lines of business similar to that of Borrower, including but not limited to fire, extended coverage, public liability, flood, property damage and workers' compensation, with all such insurance carried with companies and in amounts satisfactory to Bank, and deliver to Bank from time to time at Bank's request schedules setting forth all insurance then in effect; provided,  however, that Bank shall not request that Borrower provide such schedules more than once in any calendar year, unless an Event of Default has occurred.
		

		
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			SECTION 4.6.FACILITIES.  Keep all properties necessary to Borrower's business in good repair and condition (ordinary wear and tear excepted), and from time to time make 
		

		 

		

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		necessary repairs, renewals and replacements thereto so that such properties shall be preserved and maintained.
		

		
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			SECTION 4.7.TAXES AND OTHER LIABILITIES.  Pay and discharge when due any and all indebtedness, obligations, assessments and taxes, both real or personal, including without limitation federal and state income taxes and state and local property taxes and assessments, except such (a) as Borrower may in good faith contest or as to which a bona fide dispute may arise, and (b) for which Borrower has made provision, to Bank's reasonable satisfaction, for eventual payment thereof in the event Borrower is obligated to make such payment.
		

		
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			SECTION 4.8.LITIGATION.  Promptly give notice in writing to Bank of any litigation pending or threatened against Borrower with a claim in excess of $500,000, unless such claim is covered by insurance.
		

		
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			SECTION 4.9.FINANCIAL CONDITION.  Maintain Borrower's financial condition as follows using generally accepted accounting principles consistently applied and used consistently with prior practices (except to the extent modified by the definitions herein), with compliance determined commencing with Borrower's financial statements for the period ending March 31, 2020:
		

		
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			(a)Fixed Charge Coverage Ratio (“FCCR”) of 1.15x, measured quarterly beginning December 31, 2020. This covenant will be measured on a quarterly build basis beginning with December 31, 2020 and building up to a trailing 12 month FCCR measured at September 30, 2021 and thereafter.  Defined as (Adjusted EBITDA + Rent Expense - Maintenance CapEx - Cash Taxes - Dividends) / (Principal + Cash Interest + Rent Expense). “Adjusted EBITDA” includes the removal of various one-time, irregular, and non-recurring items, which may include but are not limited to (1) one-time gains or losses, (2) litigation expenses, (3) impairment charges, or (4) unusual asset write-downs. All adjustments will be mutually determined as appropriate by Bank and Borrower.  “Maintenance CapEx” is defined as 50% of depreciation for the period analyzed.
		

		
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			(b)Tangible Net Worth of not less than $150 million, to be tested quarterly with receipt of 10-Q and 10-K, with "Tangible Net Worth" defined as Borrower’s total assets excluding all intangible assets (i.e., goodwill, trademarks, patents, copyrights, organizational expenses, and similar intangible items, but including leaseholds and leasehold improvements) less total debt.
		

		
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			(c)Minimum Liquidity of $30 million, to be tested on each of June 30 and September 30 of each year. “Minimum Liquidity” measured shall be Net Borrowing Base Availability less Line of Credit outstanding plus Cash and Cash Equivalents.    
		

		
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			SECTION 4.10.    NOTICE TO BANK.  Promptly (but in no event more than five (5) business days after the occurrence of each such event or matter or Borrower’s knowledge thereof, as applicable) give written notice to Bank in reasonable detail of:  (a) the occurrence of any Event of Default, or any condition, event or act which with the giving of notice or the 
		

		 

		

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		passage of time or both would constitute an Event of Default; (b) any change in the name or the organizational structure of Borrower; (c) the occurrence and nature of any Reportable Event or Prohibited Transaction, each as defined in ERISA, or any funding deficiency with respect to any Plan; or (d) any termination or cancellation of any insurance policy which Borrower is required to maintain, or any uninsured or partially uninsured loss through liability or property damage, or through fire, theft or any other cause affecting Borrower's property in excess of an aggregate of $500,000.
		

		
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			SECTION 4.11.    ENVIROMENTAL REPORTS.  Promptly upon receipt thereof, Borrower will submit to Bank copies of any reports of inspections or examinations conducted by the Department of Natural Resources or the Federal Environmental Protection Agency, or any similar agency, with respect to Borrower’s properties.  Any material violations must be corrected within 90 days (or such longer period as may be reasonably necessary provided that Borrower is diligently pursuing the same).  
		

		
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			SECTION 4.12.    ERISA COMPLIANCE.  Borrower must meet its minimum funding requirements under the Employee Retirement Income Security Act of 1974 (ERISA), as amended, with respect to any employee benefit plan or other class of benefit plan, which the Pension Benefit Guaranty Corporation (PBGC), established under ERISA has elected to insure, in either case, whether now in existence or hereafter instituted by the Borrower.
		

		
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			ARTICLE V
		

		
			NEGATIVE COVENANTS
		

		
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			Borrower further covenants that so long as Bank remains committed to extend credit to Borrower pursuant hereto, or any liabilities (whether direct or contingent, liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents remain outstanding, and until payment in full of all obligations of Borrower subject hereto, Borrower will not without Bank's prior written consent:
		

		
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			SECTION 5.1.USE OF FUNDS.  Use any of the proceeds of any credit extended hereunder except for the purposes stated in Article I hereof.
		

		
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			SECTION 5.2.CAPITAL EXPENDITURES.  Make any additional investment in fixed assets in any fiscal year in excess of an aggregate of $5,000,000.
		

		
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			SECTION 5.3.LEASE EXPENDITURES.  Incur operating lease expense in any fiscal year in excess of an aggregate of $1,000,000.  This restriction set out in this Section 5.3 only applies to lease obligations entered into after the date of this Agreement.
		

		
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			SECTION 5.4.OTHER INDEBTEDNESS.  Create, incur, assume or permit to exist any indebtedness or liabilities resulting from borrowings, loans or advances, whether secured or unsecured, matured or unmatured, liquidated or unliquidated, joint or several, except (a) the liabilities of Borrower to Bank, (b) any other liabilities of Borrower existing as of, and disclosed to Bank prior to, the date hereof (including any renewals or extensions 
		

		 

		

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		thereof after the date hereof), (c) other indebtedness not to exceed $500,000 in the aggregate at any time outstanding, and (d) indebtedness and liabilities in connection with capital expenditures permitted by Section 5.2 hereof.  
		

		
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			SECTION 5.5.MERGER, CONSOLIDATION, TRANSFER OF ASSETS.  Merge into or consolidate with any other entity; make any substantial change in the nature of Borrower's business as conducted as of the date hereof; acquire all or substantially all of the assets of any other entity; nor sell, lease, transfer or otherwise dispose of all or a substantial or material portion of Borrower's assets except in the ordinary course of its business;  provided,  however, that Bank’s consent shall not be required in connection with the merger or consolidation of any of Borrower’s subsidiaries with or into Borrower or with or into any other subsidiary of Borrower, none of which actions shall be deemed to be a violation of this Section 5.5.
		

		
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			SECTION 5.6.GUARANTIES.  Guarantee or become liable in any way as surety, endorser (other than as endorser of negotiable instruments for deposit or collection in the ordinary course of business), accommodation endorser or otherwise for, nor pledge or hypothecate any assets of Borrower as security for, any liabilities or obligations of any other person or entity, except with respect to the liabilities and obligations of Borrower’s subsidiaries guaranteed or endorsed by Borrower in the normal course of business in an amount not to exceed $500,000.
		

		
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			SECTION 5.7.LOANS, ADVANCES, INVESTMENTS.  Make any loans or advances to or investments in any person or entity, except any of the foregoing existing as of, and disclosed to Bank prior to, the date hereof.
		

		
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			SECTION 5.8.DIVIDENDS, DISTRIBUTIONS.  Intentionally Omitted.
		

		
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			SECTION 5.9.PLEDGE OF ASSETS.  Mortgage, pledge, grant or permit to exist a security interest in, or lien upon, other than the security interest and lien of Bank, all or any portion of Borrower's assets now owned or hereafter acquired.
		

		
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			ARTICLE VI
		

		
			EVENTS OF DEFAULT
		

		
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			SECTION 6.1.The occurrence of any of the following shall constitute an "Event of Default" under this Agreement:
		

		
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			(a)Borrower shall fail to pay when due any principal, interest, fees or other amounts payable under any of the Loan Documents, which failure shall continue for three (3) business days.
		

		
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			(b)Any financial statement or certificate furnished to Bank in connection with, or any representation or warranty made by Borrower or any other party under this 
		

		 

		

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		Agreement or any other Loan Document shall prove to be knowingly incorrect, false or misleading in any material respect when furnished or made.
		

		
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			(c)Any default in the performance of or compliance with any obligation, agreement or other provision contained herein or in any other Loan Document (other than those referred to in subsections (a) and (b) above), and with respect to any such default which by its nature can be cured, such default shall continue for a period of thirty (30) days after Bank provides written notice of such default to Borrower.
		

		
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			(d)Any default in the payment or performance of any material obligation, or any defined event of default, under the terms of any contract or instrument (other than any of the Loan Documents) pursuant to which Borrower has incurred any debt or other liability to any person or entity, including Bank, which default has resulted in the acceleration of such debt or liability, or demand for payment or performance.
		

		
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			(e)The entry of a judgment against Borrower in excess of $500,000 that remains unvacated, unbonded, uninsured, or unstayed for a period of thirty (30) days following the date of entry thereof.
		

		
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			(f)Borrower shall become insolvent, or shall suffer or consent to or apply for the appointment of a receiver, trustee, custodian or liquidator of itself or any of its property, or shall generally fail to pay its debts as they become due, or shall make a general assignment for the benefit of creditors; Borrower shall file a voluntary petition in bankruptcy, or seeking reorganization, in order to effect a plan or other arrangement with creditors or any other relief under the Bankruptcy Reform Act, Title 11 of the United States Code, as amended or recodified from time to time ("Bankruptcy Code"), or under any state or federal law granting relief to debtors, whether now or hereafter in effect; or any involuntary petition or proceeding pursuant to the Bankruptcy Code or any other applicable state or federal law relating to bankruptcy, reorganization or other relief for debtors is filed or commenced against Borrower, or Borrower shall file an answer admitting the jurisdiction of the court and the material allegations of any involuntary petition; or Borrower shall be adjudicated a bankrupt, or an order for relief shall be entered against Borrower by any court of competent jurisdiction under the Bankruptcy Code or any other applicable state or federal law relating to bankruptcy, reorganization or other relief for debtors.
		

		
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			(g)There shall exist or occur any event or condition which Bank in good faith believes impairs, or is substantially likely to impair, the prospect of payment or performance by Borrower of its obligations under any of the Loan Documents.
		

		
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			(h)The dissolution or liquidation of Borrower; or Borrower, or any of its directors, stockholders or members, shall take action seeking to effect the dissolution or liquidation of Borrower.
		

		
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			(i)Any change in ownership of an aggregate of twenty-five percent (25%) or more of the common stock of Borrower.  
		

		
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		(j)The sale, transfer, hypothecation, assignment or encumbrance, whether voluntary, involuntary or by operation of law, without Bank's prior written consent, of all or any part of or interest in any assets of the Borrower.
		

		
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			(k)This Agreement or any of the Loan Documents cease to be in full force and effect, including failure of any collateral document to create a valid and perfected security interest or lien at any time and for any reason. 
		

		
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			SECTION 6.2.REMEDIES.  Upon the occurrence of any Event of Default:  (a) all indebtedness of Borrower under each of the Loan Documents, any term thereof to the contrary notwithstanding, shall at Bank's option and without notice become immediately due and payable without presentment, demand, protest or notice of dishonor, all of which are hereby expressly waived by each Borrower; (b) the obligation, if any, of Bank to extend any further credit under any of the Loan Documents shall immediately cease and terminate; and (c) Bank shall have all rights, powers and remedies available under each of the Loan Documents, or accorded by law, including without limitation the right to resort to any or all security for any credit subject hereto and to exercise any or all of the rights of a beneficiary or secured party pursuant to applicable law.  All rights, powers and remedies of Bank may be exercised at any time by Bank and from time to time after the occurrence of an Event of Default, are cumulative and not exclusive, and shall be in addition to any other rights, powers or remedies provided by law or equity.
		

		
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			ARTICLE VII
		

		
			MISCELLANEOUS
		

		
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			SECTION 7.1.    NO WAIVER.  No delay, failure or discontinuance of Bank in exercising any right, power or remedy under any of the Loan Documents shall affect or operate as a waiver of such right, power or remedy; nor shall any single or partial exercise of any such right, power or remedy preclude, waive or otherwise affect any other or further exercise thereof or the exercise of any other right, power or remedy.  Any waiver, permit, consent or approval of any kind by Bank of any breach of or default under any of the Loan Documents must be in writing and shall be effective only to the extent set forth in such writing.
		

		
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			SECTION 7.2.RELATIONSHIP TO OTHER DOCUMENTS.  The warranties, covenants and other obligations of the Borrower (and the rights and remedies of the Bank) that are outlined in this Agreement and the other Loan Documents are intended to supplement each other.  In the event of any inconsistencies in any of the terms in the Loan Documents, all terms will be cumulative so as to give the Bank the most favorable rights set forth in the conflicting documents.
		

		
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			SECTION 7.3.SUCCESSORS, ASSIGNMENT.  This Agreement shall be binding upon and inure to the benefit of the heirs, executors, administrators, legal representatives, successors and assigns of the parties; provided however, that Borrower may not assign or transfer its interest hereunder without Bank's prior written consent.  Bank reserves the right 
		

		 

		

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		to sell, assign, transfer, negotiate or grant participations in all or any part of, or any interest in, Bank's rights and benefits under each of the Loan Documents, but only to the extent that (a) the Line of Credit exceeds the Borrowing Base Limit and (b) the party to which Bank sells, assigns, transfers, negotiates or grants participations is not a competitor of Borrower.  This restriction does not apply to participations or assignment with institutions owned by Heartland Financial USA, Inc.  In connection therewith, Bank may disclose all documents and information which Bank now has or may hereafter acquire relating to any credit subject hereto, Borrower or its business, or any collateral required hereunder.  
		

		
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			SECTION 7.4.INDEMNIFICATION.  Except for harm arising from the Bank’s willful misconduct or gross negligence, the Borrower hereby indemnifies and agrees to defend and hold the Bank harmless from any and all losses, costs, damages, claims and expenses, including taxes and fees of any kind suffered by or asserted against the Bank relating to claims by third parties arising out of the financing provided under the Loan Documents or related to any collateral.  This indemnification and hold harmless provision will survive the termination of the Loan Documents and the satisfaction of the indebtedness due the Bank.
		

		
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			SECTION 7.5.NOTICES.  All notices, requests and demands which any party is required or may desire to give to any other party under any provision of this Agreement must be in writing delivered to each party at the following address:
		

		
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						BORROWER:

					
					
						Flexsteel Industries, Inc.

				
	
					
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						Attn: Derek Schmidt

				
	
					
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						Chief Operating Officer and Chief Financial Officer

				
	
					
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						385 Bell Street

				
	
					
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						Dubuque, IA 52001

				
	
					
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						BANK:

					
					
						Dubuque Bank and Trust Company

				
	
					
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						Attn: Tyson J. Leyendecker

				
	
					
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						1398 Central Avenue

				
	
					
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						Dubuque, IA 52001

				

		
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			or to such other address as any party may designate by written notice to all other parties.  Each such notice, request and demand shall be deemed given or made as follows:  (a) if sent by hand delivery, upon delivery; or (b) if sent by mail, upon the earlier of the date of receipt or three (3) days after deposit in the U.S. mail, first class and postage prepaid.
		

		
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			SECTION 7.6.USA PATRIOT ACT; ANTI-CORRUPTION LAWS, SANCTIONS AND ANTI-TERRORISM LAWS.
		

		
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				 (a)
			Bank hereby notifies Borrower that, pursuant to the requirements of the PATRIOT Act, it may be required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other 
		

		 

		

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			information that will allow the Bank to identify the Borrower in accordance with the PATRIOT Act.

		
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				 (b)
			Borrower represents, warrants, covenants and agrees as follows:

		
			(i)Borrower, each and all entities 50% or more owned, directly or indirectly, by Borrower ("Subsidiaries"), and their respective officers, employees, directors and agents are and at all times will remain in compliance with the following: (A) all laws, rules, and regulations of any jurisdiction applicable to Borrower or its Subsidiaries from time to time concerning or relating to bribery or corruption ("Anti-corruption Laws"), (B) economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by the U.S. government, including those administered by the U.S. Department of Treasury's Office of Foreign Assets Control or successor ("OFAC") or the U.S. Department of State or successor ("Sanctions"), and (C) the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26. 2001)), the Trading with the Enemy Act, as amended, or any of the foreign assets control regulations of the United States Treasury Department (31 C.F.R., Subtitle B, Chapter V) and any enabling legislation or executive order relating thereto or successor statute thereto ("Anti-terrorism Laws"), all as may be amended from time to time.
		

		
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			(ii)The Line of Credit made hereunder complies with, and neither the loan made hereunder nor the use of the proceeds thereof will violate, any Anti-corruption Laws, Sanctions or Anti-terrorism Laws.
		

		
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			(iii)None of Borrower, any Subsidiary or any of their respective directors, officers or employees is (A) listed in any Sanctions- related list of designated persons maintained by OF AC or the U.S. Department of State, (B) operating, organized or resident in a country or territory which is itself the subject or target of any comprehensive Sanctions ("Sanctioned Country"), (C) an agency, political subdivision or instrumentality of the government of a Sanctioned Country, or (D) 50% or more owned, directly or indirectly, by any of the above.
		

		
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			(iv)Borrower shall, and shall cause each Subsidiary to, provide such information and take such actions as are reasonably requested by Bank to assist Bank in maintaining compliance with Anti-corruption Laws, Sanctions, Anti-terrorism Laws and applicable anti-money laundering laws and regulations ("AML Laws"). Without limitation of the foregoing, Borrower represents and warrants that the most recent certification of beneficial ownership of any Borrower which is a "legal entity" within the scope of the ownership certification requirements of the AML Laws is true and correct as of the date of the Agreement; and Borrower agrees to immediately (A) notify Bank in writing of any event that results in any individual becoming or ceasing to be the beneficial owner, directly or indirectly, of 25% or more of any such "legal entity" Borrower; (B) notify Bank of any change in the individual previously identified by Borrower's representative(s) ("Account Opener/Certifier") as the individual who holds a significant responsibility to control, manage or direct any such "legal entity" Borrower; and (C) upon request of Bank, provide in a form acceptable to Bank an updated certification, signed by a representative of any such 
		

		 

		

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		"legal entity" Borrower acting as an Account Opener/Certifier under regulations implemented under the AML Laws, of the beneficial ownership and control of such Borrower.
		

		
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			SECTION 7.7.COMMUNICATION BY CELLULAR PHONE OR OTHER WIRELESS DEVICE.  By providing Bank with a telephone number for a cellular phone or other wireless device, including a number that Borrower later converts to a cellular number, Borrower is expressly consenting to receiving communications - including but not limited to prerecorded or artificial voice message calls, text messages, and calls made by an automatic telephone dialing system - from Bank and Bank’s affiliates and agents at that number. This express consent applies to each such telephone number that Borrower provides to Bank now or in the future and permits such calls for non-marketing purposes. 
		

		
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			SECTION 7.8.  YIELD PROTECTION/CAPITAL ADEQUACY.  If there shall occur any Change in Law which shall have the effect of imposing on Bank (or Bank’s holding company) any increase or expansion of or any new: tax (excluding taxes on its overall income and franchise taxes), charge, fee, assessment or deduction of any kind whatsoever, or reserve, capital adequacy, special deposits or similar requirements against credit extended by, assets of, or deposits with or for the account of Bank or other conditions affecting the extensions of credit under this Agreement; then Borrower shall pay to Bank such additional amount as Bank deems necessary to compensate Bank for any increased cost to Bank attributable to the extension(s) of credit under this Agreement and/or for any reduction in the rate of return on Bank’s capital and/or Bank’s revenue attributable to such extension(s) of credit. “Change in Law” means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any governmental authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any governmental authority; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law,” regardless of the date enacted, adopted or issued. Bank’s determination of the additional amount(s) due under this paragraph shall be binding in the absence of manifest error, and such amount(s) shall be payable within 10 days of demand and, if recurring, as otherwise billed by Bank. Failure or delay on the part of Bank to demand compensation pursuant to this Section shall not constitute a waiver of Bank’s right to demand such compensation.
		

		
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			SECTION 7.9. GOVERNING LAW; JURISDICTION.  This Agreement shall be governed by and construed according to the internal laws of the State of Iowa without regard to conflict of law principles, and the Borrower hereby submits to the jurisdiction of the courts of the State of Iowa.  THE BORROWER HEREBY CONSENTS TO THE 
		

		 

		

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		EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT SITUATED IN DUBUQUE COUNTY, IOWA, AND WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS, WITH REGARD TO ANY ACTIONS, CLAIMS, DISPUTES OR PROCEEDINGS RELATING TO THIS AGREEMENT, THE COLLATERAL, ANY LOAN DOCUMENT, OR ANY TRANSACTIONS ARISING THEREFROM, OR ENFORCEMENT AND/OR INTERPRETATION OF ANY OF THE FOREGOING.  Nothing herein shall affect the Bank’s right to serve process in any manner permitted by law, or limit the Bank’s right to bring proceedings against the Borrower in the competent courts of any other jurisdiction or jurisdictions
		

		
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			SECTION 7.10.  COSTS, EXPENSES AND ATTORNEYS' FEES.  Borrower shall pay to Bank immediately upon demand the full amount of all payments, advances, charges, costs and expenses, including reasonable attorneys' fees (to include outside counsel fees and all allocated costs of Bank's in-house counsel), expended or incurred by Bank in connection with (a) the negotiation and preparation of this Agreement and the other Loan Documents, Bank's continued administration hereof and thereof, and the preparation of any amendments and waivers hereto and thereto, (b) the enforcement of Bank's rights and/or the collection of any amounts which become due to Bank under any of the Loan Documents, and (c) the prosecution or defense of any action in any way related to any of the Loan Documents, including without limitation, any action for declaratory relief, whether incurred at the trial or appellate level, and including any of the foregoing incurred in connection with any bankruptcy proceeding (including without limitation, any adversary proceeding, contested matter or motion brought by Bank or any other person) relating to any Borrower or any other person or entity.  Notwithstanding the foregoing, the amount that Borrower is required to pay in respect of attorneys’ fees incurred by Bank in connection with the negotiation and preparation of this Agreement and the other Loan Documents shall not exceed $20,000.00, regardless of whether such fees relate to outside counsel or the allocated costs of Bank’s in-house counsel.
		

		
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			SECTION 7.11.    ENTIRE AGREEMENT; AMENDMENT.  This Agreement and the other Loan Documents constitute the entire agreement between Borrower and Bank with respect to each credit subject hereto and supersede all prior negotiations, communications, discussions and correspondence concerning the subject matter hereof.  This Agreement may be amended or modified only in writing signed by each party hereto.
		

		
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			SECTION 7.12.    NO THIRD PARTY BENEFICIARIES.  This Agreement is made and entered into for the sole protection and benefit of the parties hereto and their respective permitted successors and assigns, and no other person or entity shall be a third party beneficiary of, or have any direct or indirect cause of action or claim in connection with, this Agreement or any other of the Loan Documents to which it is not a party.
		

		
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			SECTION 7.13.    TIME.  Time is of the essence of each and every provision of this Agreement and each other of the Loan Documents.
		

		
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			SECTION 7.14.    SEVERABILITY OF PROVISIONS.  If any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be 
		

		 

		

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		ineffective only to the extent of such prohibition or invalidity without invalidating the remainder of such provision or any remaining provisions of this Agreement.
		

		
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			SECTION 7.15.    COUNTERPARTS.  This Agreement may be executed in any number of counterparts, each of which when executed and delivered shall be deemed to be an original, and all of which when taken together shall constitute one and the same Agreement.
		

		
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			SECTION 7.16.    WAIVER OF JURY TRIAL.    BORROWER AND BANK HEREBY JOINTLY AND SEVERALLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND TO ANY OF THE LOAN DOCUMENTS, THE OBLIGATIONS HEREUNDER OR THEREUNDER, ANY COLLATERAL SECURING THE OBLIGATIONS, OR ANY TRANSACTION ARISING THEREFROM OR CONNECTED THERETO. BORROWER AND BANK EACH REPRESENTS TO THE OTHER THAT THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY GIVEN.
		

		
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			SECTION 7.17.    ACKNOWLEDGMENT.  Borrower acknowledges receipt of a copy of this Agreement signed by the parties hereto.  Bank may, on behalf of the Borrower, create a microfilm or optical disk or other electronic image of the Agreement and any or all of the Loan Documents.  Bank may store each such electronic image in its electronic form and then destroy the paper original as part of the Bank’s normal business practices, with the electronic image deemed to be an original and of the same legal effect, validity and enforceability as the paper original.
		

		
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			IMPORTANT:  READ BEFORE SIGNING.  THE TERMS OF THIS AGREEMENT SHOULD BE READ CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING ARE ENFORCEABLE.  NO OTHER TERMS OR ORAL PROMISES NOT CONTAINED IN THIS WRITTEN CONTRACT MAY BE LEGALLY ENFORCED.  YOU MAY CHANGE THE TERMS OF THIS AGREEMENT ONLY BY ANOTHER WRITTEN AGREEMENT.  
		

		
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		IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day and year first written above.
		

		
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			BORROWER:BANK:
		

		
			Flexsteel Industries, Inc.Dubuque Bank and Trust Company
		

		
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						By: /s/ Derek P. Schmidt

					
					
						 

					
					
						By:/s/ Tyson J. Leyendecker

				
	
					
						Derek P. Schmidt

					
						Chief Financial Officer &

					
						Chief Operating Officer

					
					
						 

					
					
						Tyson J. Leyendecker

					
						Market President, EVP

				

		
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			Exhibit A
		

		
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			Fee Schedule
		

		
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			22

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