Document:

Exhibit
10.1

 

SECURITIES
PURCHASE AGREEMENT

 

This
SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of July 20, 2020, by and between RESONATE BLENDS,
INC., a Nevada corporation, with headquarters located at 26565 Agoura Road, Suite 200, Calabasas, California 91302 (the “Company”),
and FIRSTFIRE GLOBAL OPPORTUNITIES FUND, LLC, a Delaware limited liability company, with its address at 1040 First Avenue,
Suite 190, New York, NY 10022 (the “Buyer”).

 

WHEREAS:

 

A.
The Company and the Buyer are executing and delivering this Agreement in reliance upon the exemption from securities registration
afforded by Section 4(a)(2) of the Securities Act of 1933, as amended (the “1933 Act”) and Rule 506(b) promulgated
by the United States Securities and Exchange Commission (the “SEC”) under the 1933 Act;

 

B.
Buyer desires to purchase from the Company, and the Company desires to issue and sell to the Buyer, upon the terms and conditions
set forth in this Agreement, a Secured Convertible Promissory Note of the Company, in the aggregate principal amount of $550,000.00
payable in tranches with the initial tranche being $225,000.00 (as the principal amount thereof may be increased pursuant to the
terms thereof, and together with any note(s) issued in replacement thereof or as a dividend thereon or otherwise with respect
thereto in accordance with the terms thereof, in the form attached hereto as Exhibit A, the “Note”), convertible
into shares of common stock, $0.0001 par value per share, of the Company (the “Common Stock”), upon the terms and
subject to the limitations and conditions set forth in such Note;

 

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

 

NOW
THEREFORE, in consideration of the foregoing and of the agreements and covenants herein contained, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and the Buyer hereby agree as
follows:

 

1.
Purchase and Sale of Note.

 

a.
Purchase of Note and Commitment Shares. On the Closing Date (as defined below), the Company shall issue and sell to the
Buyer, and the Buyer agrees to purchase from the Company, the Note, as further provided herein, and additionally, 200,000 Commitment
Shares upon payment of the initial tranche.

 

b.
Form of Payment. On the Closing Date: (i) the Buyer shall pay the purchase price of $200,000.00 (the “Purchase Price”)
for the Note, to be issued and sold to it at the Closing (as defined below), by wire transfer of immediately available funds to
the Company, in accordance with the Company’s written wiring instructions, against delivery of the Note, and (ii) the Company
shall deliver such duly executed Note on behalf of the Company, to the Buyer, against delivery of such Purchase Price.

 

c.
Closing Date. Subject to the satisfaction (or written waiver) of the conditions thereto set forth in Section 6 and Section
7 below, the date and time of the issuance and sale of the Note pursuant to this Agreement (the “Closing Date”) shall
be 4:00 PM, Eastern Time on the date first written above, or such other mutually agreed upon time.

 

d.
Closing. The closing of the transactions contemplated by this Agreement (the “Closing”) shall occur on the
Closing Date at such location as may be agreed to by the parties (including via exchange of electronic signatures).

 

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2.
Buyer’s Representations and Warranties. The Buyer represents and warrants to the Company as of the Closing Date that:

 

a.
Investment Purpose. As of the Closing Date, the Buyer is purchasing the Note and the shares of Common Stock issuable upon
conversion of or otherwise pursuant to the Note and such additional shares of Common Stock, if any, as are issuable on account
of interest on the Note pursuant to this Agreement, such shares of Common Stock being collectively referred to herein as the “Conversion
Shares” and, collectively with the Note, the “Securities”) for its own account and not with a present view towards
the public sale or distribution thereof, except pursuant to sales registered or exempted from registration under the 1933 Act;
provided, however, that by making the representations herein, the Buyer does not agree to hold any of the Securities
for any minimum or other specific term and reserves the right to dispose of the Securities at any time in accordance with or pursuant
to a registration statement or an exemption under the 1933 Act.

 

b.
Accredited Investor Status. The Buyer is an “accredited investor” as that term is defined in Rule 501(a) of
Regulation D (an “Accredited Investor”).

 

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

 

d.
Information. The Buyer and its advisors, if any, have been, and for so long as the Note remains outstanding will continue
to be, furnished with all materials relating to the business, finances and operations of the Company and materials relating to
the offer and sale of the Securities which have been requested by the Buyer or its advisors. The Buyer and its advisors, if any,
have been, and for so long as the Note remains outstanding will continue to be, afforded the opportunity to ask questions of the
Company regarding its business and affairs. Notwithstanding the foregoing, the Company has not disclosed to the Buyer any material
nonpublic information regarding the Company or otherwise and will not disclose such information unless such information is disclosed
to the public prior to or promptly following such disclosure to the Buyer. Neither such inquiries nor any other due diligence
investigation conducted by Buyer or any of its advisors or representatives shall modify, amend or affect Buyer’s right to
rely on the Company’s representations and warranties contained in Section 3 below.

 

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

 

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

 

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

 

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

 

The
legend set forth above shall be removed and the Company shall issue a certificate for the applicable shares of Common Stock without
such legend to the holder of any Security upon which it is stamped or (as requested by such holder) issue the applicable shares
of Common Stock to such holder by electronic delivery by crediting the account of such holder’s broker with The Depository
Trust Company (“DTC”), if, unless otherwise required by applicable state securities laws, (a) such Security
is registered for sale under an effective registration statement filed under the 1933 Act or otherwise may be sold pursuant to
Rule 144, Rule 144A, Regulation S, or other applicable exemption without any restriction as to the number of securities as of
a particular date that can then be immediately sold, or (b) the Company or the Buyer provides the Legal Counsel Opinion (as contemplated
by and in accordance with Section 4(m) hereof) to the effect that a public sale or transfer of such Security may be made without
registration under the 1933 Act, which opinion shall be accepted by the Company so that the sale or transfer is effected. The
Company shall be responsible for the fees of its transfer agent and all DTC fees associated with any such issuance. The Buyer
agrees to sell all Securities, including those represented by a certificate(s) from which the legend has been removed, in compliance
with applicable prospectus delivery requirements, if any. In the event that the Company does not accept the opinion of counsel
provided by the Buyer with respect to the transfer of Securities pursuant to an exemption from registration, such as Rule 144,
Rule 144A, Regulation S, or other applicable exemption at the Deadline (as defined in the Note), it will be considered an Event
of Default pursuant to Section 3.2 of the Note.

 

h.
Authorization; Enforcement. This Agreement has been duly and validly authorized by the Buyer and has been duly executed
and delivered on behalf of the Buyer, and this Agreement constitutes a valid and binding agreement of the Buyer enforceable in
accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors’ rights generally and except as may be limited by the
exercise of judicial discretion in applying principles of equity.

 

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

 

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3.
Representations and Warranties of the Company. The Company represents and warrants to the Buyer as of the Closing Date
that:

 

a.
Organization and Qualification. The Company and each of its Subsidiaries (as defined below), if any, is a corporation duly
organized, validly existing and in good standing under the laws of the jurisdiction in which it is incorporated, with full power
and authority (corporate and other) to own, lease, use and operate its properties and to carry on its business as and where now
owned, leased, used, operated and conducted. Schedule 3(a), if attached hereto, sets forth a list of all of the Subsidiaries of
the Company and the jurisdiction in which each is incorporated. The Company and each of its Subsidiaries is duly qualified as
a foreign corporation to do business and is in good standing in every jurisdiction in which its ownership or use of property or
the nature of the business conducted by it makes such qualification necessary except where the failure to be so qualified or in
good standing would not have a Material Adverse Effect. “Material Adverse Effect” means any material adverse effect
on the business, operations, assets, financial condition or prospects of the Company or its Subsidiaries, if any, taken as a whole,
or on the transactions contemplated hereby or by the agreements or instruments to be entered into in connection herewith. “Subsidiaries”
means any corporation or other organization, whether incorporated or unincorporated, in which the Company owns, directly or indirectly,
any equity or other ownership interest.

 

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

 

c.
Capitalization; Governing Documents. As of July 17, 2020, the authorized capital stock of the Company consists of: 100,000,000
authorized shares of Common Stock, of which 25,456,398 shares were issued and outstanding. All of such outstanding shares of capital
stock of the Company and the Conversion Shares, are, or upon issuance will be, duly authorized, validly issued, fully paid and
non-assessable. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the
shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. As of the
effective date of this Agreement, other than as publicly announced prior to such date and reflected in the SEC filings of the
Company (i) there are no outstanding options, warrants, scrip, rights to subscribe for, puts, calls, rights of first refusal,
agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by
which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company
or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is
obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price
adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders)
that will be triggered by the issuance of any of the Securities. The Company has furnished to the Buyer true and correct copies
of the Company’s Certificate of Incorporation as in effect on the date hereof (“Certificate of Incorporation”),
the Company’s By-laws, as in effect on the date hereof (the “By-laws”), and the terms of all securities convertible
into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto.

 

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

 

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e.
No Broker-Dealer Acknowledgement. Absent a final adjudication from a court of competent jurisdiction stating otherwise,
so long as any amount on this Note, Commitment Shares, or warrant connected herewith is outstanding, the Company shall not to
any person, institution, or entity, state, claim, allege, or in any way assert, that Holder is currently, or ever has been, a
broker-dealer under the Securities Exchange Act of 1934.

 

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

 

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

 

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h.
SEC Documents; Financial Statements. The Company has timely filed all reports, schedules, forms, statements and other documents
required to be filed by it with the SEC pursuant to the reporting requirements of the Securities Exchange Act of 1934, as amended
(the “1934 Act”) (all of the foregoing filed prior to the date hereof and all exhibits included therein and financial
statements and schedules thereto and documents (other than exhibits to such documents) incorporated by reference therein, being
hereinafter referred to herein as the “SEC Documents”). As of their respective dates, the SEC Documents complied in
all material respects with the requirements of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable
to the SEC Documents, and none of the SEC Documents, at the time they were filed with the SEC, contained any untrue statement
of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not misleading. None of the statements made in any such SEC
Documents is, or has been, required to be amended or updated under applicable law (except for such statements as have been amended
or updated in subsequent filings prior the date hereof). As of their respective dates, the financial statements of the Company
included in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto. Such financial statements have been prepared in accordance with United
States generally accepted accounting principles, consistently applied, during the periods involved and fairly present in all material
respects the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments). Except as set forth in the financial statements of the Company included in the SEC Documents,
the Company has no liabilities, contingent or otherwise, other than (i) liabilities incurred in the ordinary course of business
subsequent to September 30, 2019, and (ii) obligations under contracts and commitments incurred in the ordinary course of business
and not required under generally accepted accounting principles to be reflected in such financial statements, which, individually
or in the aggregate, are not material to the financial condition or operating results of the Company. The Company is subject to
the reporting requirements of the 1934 Act. The Company has never been a “shell company” as described in Rule 144(i)(1)(i).

 

i.
Absence of Certain Changes. Since March 31, 2020, there has been no material adverse change and no material adverse development
in the assets, liabilities, business, properties, operations, financial condition, results of operations, prospects or 1934 Act
reporting status of the Company or any of its Subsidiaries.

 

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

 

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

 

l.
No Materially Adverse Contracts, Etc. Neither the Company nor any of its Subsidiaries is subject to any charter, corporate
or other legal restriction, or any judgment, decree, order, rule or regulation which in the judgment of the Company’s officers
has or is expected in the future to have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries is a party
to any contract or agreement which in the judgment of the Company’s officers has or is expected to have a Material Adverse
Effect.

 

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m.
Tax Status. The Company and each of its Subsidiaries has made or filed all federal, state and foreign income and all other
tax returns, reports and declarations required by any jurisdiction to which it is subject (unless and only to the extent that
the Company and each of its Subsidiaries has set aside on its books provisions reasonably adequate for the payment of all unpaid
and unreported taxes) and has paid all taxes and other governmental assessments and charges that are material in amount, shown
or determined to be due on such returns, reports and declarations, except those being contested in good faith and has set aside
on its books provisions reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns,
reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any
jurisdiction, and the officers of the Company know of no basis for any such claim. The Company has not executed a waiver with
respect to the statute of limitations relating to the assessment or collection of any foreign, federal, state or local tax. None
of the Company’s tax returns is presently being audited by any taxing authority.

 

n.
Transactions with Affiliates. Except for arm’s length transactions pursuant to which the Company or any of its Subsidiaries
makes payments in the ordinary course of business upon terms no less favorable than the Company or any of its Subsidiaries could
obtain from third parties and other than the grant of stock options described in the SEC Documents, none of the officers, directors,
or employees of the Company is presently a party to any transaction with the Company or any of its Subsidiaries (other than for
services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing
of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from
any officer, director or such employee or, to the knowledge of the Company, any corporation, partnership, trust or other entity
in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner.

 

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

 

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

 

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

 

r.
No Brokers. Except for its use of Boustead Securities in this transaction, the Company has taken no action which would
give rise to any claim by any person for brokerage commissions, transaction fees or similar payments relating to this Agreement
or the transactions contemplated hereby.

 

s.
Permits; Compliance. The Company and each of its Subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exemptions, consents, certificates, approvals and orders necessary to own, lease and
operate its properties and to carry on its business as it is now being conducted (collectively, the “Company Permits”),
and there is no action pending or, to the knowledge of the Company, threatened regarding suspension or cancellation of any of
the Company Permits. Neither the Company nor any of its Subsidiaries is in conflict with, or in default or violation of, any of
the Company Permits, except for any such conflicts, defaults or violations which, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect. Since March 31, 2020, neither the Company nor any of its Subsidiaries
has received any notification with respect to possible conflicts, defaults or violations of applicable laws, except for notices
relating to possible conflicts, defaults or violations, which conflicts, defaults or violations would not have a Material Adverse
Effect.

 

    	 	7	 

     

    

 

t.
Environmental Matters.

 

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

 

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

 

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

 

u.
Title to Property. The Company and its Subsidiaries have good and marketable title in fee simple to all real property and
good and marketable title to all personal property owned by them which is material to the business of the Company and its Subsidiaries,
in each case free and clear of all liens, encumbrances and defects except such as are described in Schedule 3(u), if attached
hereto, or such as would not have a Material Adverse Effect. Any real property and facilities held under lease by the Company
and its Subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as would not have a
Material Adverse Effect.

 

v.
Insurance. The Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility against
such losses and risks and in such amounts as management of the Company believes to be prudent and customary in the businesses
in which the Company and its Subsidiaries are engaged. Neither the Company nor any such Subsidiary has any reason to believe that
it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that would not have a Material Adverse Effect. Upon written
request the Company will provide to the Buyer true and correct copies of all policies relating to directors’ and officers’
liability coverage, errors and omissions coverage, and commercial general liability coverage.

 

w.
Internal Accounting Controls. The Company and each of its Subsidiaries maintain a system of internal accounting controls
sufficient, in the judgment of the Company’s board of directors, to provide reasonable assurance that (i) transactions are
executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset
accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization
and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.

 

    	 	8	 

     

    

 

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

 

y.
Solvency. The Company (after giving effect to the transactions contemplated by this Agreement) is solvent (i.e.,
its assets have a fair market value in excess of the amount required to pay its probable liabilities on its existing debts as
they become absolute and matured) and currently the Company has no information that would lead it to reasonably conclude that
the Company would not, after giving effect to the transaction contemplated by this Agreement, have the ability to, nor does it
intend to take any action that would impair its ability to, pay its debts from time to time incurred in connection therewith as
such debts mature. The Company’s financial statements for its most recent fiscal year end and interim financial statements
have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business.

 

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

 

aa.
No Off-Balance Sheet Arrangements. There is no transaction, arrangement, or other relationship between the Company or any
of its Subsidiaries and an unconsolidated or other off balance sheet entity that is required to be disclosed by the Company in
its 1934 Act filings and is not so disclosed or that otherwise could be reasonably likely to have a Material Adverse Effect.

 

bb.
No Disqualification Events. None of the Company, any of its predecessors, any affiliated issuer, any director, executive
officer, other officer of the Company participating in the offering hereunder, any beneficial owner of twenty percent (20%) or
more of the Company’s outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as
that term is defined in Rule 405 under the 1933 Act) connected with the Company in any capacity at the time of sale (each, an
“Issuer Covered Person”) is subject to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i)
to (viii) under the 1933 Act (a “Disqualification Event”), except for a Disqualification Event covered by Rule 506(d)(2)
or (d)(3). The Company has exercised reasonable care to determine whether any Issuer Covered Person is subject to a Disqualification
Event.

 

cc.
Manipulation of Price. The Company has not, and to its knowledge no one acting on its behalf has: (i) taken, directly or
indirectly, any action designed to cause or to result, or that could reasonably be expected to cause or result, in the stabilization
or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Securities, (ii) sold,
bid for, purchased, or paid any compensation for soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay
to any person any compensation for soliciting another to purchase any other securities of the Company.

 

dd.
Bank Holding Company Act. Neither the Company nor any of its Subsidiaries is subject to the Bank Holding Company Act of
1956, as amended (the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve System (the “Federal
Reserve”). Neither the Company nor any of its Subsidiaries or affiliates owns or controls, directly or indirectly, five
percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five percent (25%) or more of the total
equity of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither the Company nor any
of its Subsidiaries or affiliates exercises a controlling influence over the management or policies of a bank or any entity that
is subject to the BHCA and to regulation by the Federal Reserve.

 

    	 	9	 

     

    

 

ee.
Illegal or Unauthorized Payments; Political Contributions. Neither the Company nor any of its Subsidiaries nor, to the
Company’s knowledge, any of the officers, directors, employees, agents or other representatives of the Company or any of
its Subsidiaries or any other business entity or enterprise with which the Company or any Subsidiary is or has been affiliated
or associated, has, directly or indirectly, made or authorized any payment, contribution or gift of money, property, or services,
whether or not in contravention of applicable law, (i) as a kickback or bribe to any person or (ii) to any political organization,
or the holder of or any aspirant to any elective or appointive public office except for personal political contributions not involving
the direct or indirect use of funds of the Company or any of its Subsidiaries.

 

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

 

gg.
Opportunity to Consult
with Counsel. The Company represents and acknowledges that it has been provided with the opportunity to discuss and review
the terms of this Agreement with its counsel before signing it and that it is are freely and voluntarily signing this document
in exchange for the benefits provided herein. In light of this, the Company will not contest the validity of this Agreement and
the transactions contemplated hereby. The Company further represents and acknowledges that it has been provided a reasonable period
of time within which to review the terms of this Agreement.

 

4.
ADDITIONAL COVENANTS, AGREEMENTS AND ACKNOWLEDGEMENTS.

 

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

 

b.
Form D; Blue Sky Laws. The Company agrees to file a Form D with respect to the Securities as required under Regulation
D and to provide a copy thereof to the Buyer promptly after such filing. The Company shall, on or before the Closing Date, take
such action as the Company shall reasonably determine is necessary to qualify the Securities for sale to the Buyer at the applicable
closing pursuant to this Agreement under applicable securities or “blue sky” laws of the states of the United States
(or to obtain an exemption from such qualification), and shall provide evidence of any such action so taken to the Buyer on or
prior to the Closing Date.

 

c.
Use of Proceeds. The Company shall use the proceeds to pay the outstanding amount due on the note between the Company and
Power Up Lending due July 21, 2020. Any remaining proceeds shall be used for business development, and not for the repayment of
any indebtedness owed to officers, directors or employees of the Company or their affiliates or in violation or contravention
of any applicable law, rule or regulation.

 

d.
Right of Participation in Subsequent Offerings.

 

i.
From the date first written above until the date which is eighteen (18) calendar months after the date first above written, the
Company will not, (i) directly or indirectly, offer, sell, grant any option to purchase, or otherwise dispose of (or announce
any offer, sale, grant or any option to purchase or other disposition of) any of its or its Subsidiaries’ debt, equity or
equity equivalent securities, including without limitation any debt, preferred shares or other instrument or security that is,
at any time during its life and under any circumstances, convertible into or exchangeable or exercisable for Common Stock (any
such offer, sale, grant, disposition or announcement being referred to as a “Subsequent Placement”) or (ii) enter
into any definitive agreement with regard to the foregoing, in each case unless the Company shall have first complied with this
Section 4(d) and on the same terms as the Boustead PIPE offering. However, Buyer shall not have the automatic right hereunder
to participate in the Boustead PIPE offering as that transaction is understood by the parties.

 

    	 	10	 

     

    

 

ii.
The Company shall deliver to the Buyer an irrevocable written notice (the “Offer Notice”) of any proposed or intended
issuance or sale or exchange (the “Offer”) of the securities being offered (the “Offered Securities”)
in a Subsequent Placement, which Offer Notice shall (w) identify and describe the Offered Securities, (x) describe the price and
other terms upon which they are to be issued, sold or exchanged, and the number or amount of the Offered Securities to be issued,
sold or exchanged, (y) identify the persons or entities (if known) to which or with which the Offered Securities are to be offered,
issued, sold or exchanged and (z) offer to issue and sell to or exchange with the Buyer the greater of (i) at least one hundred
percent (100%) of the Offered Securities (the “Subscription Amount”); or (ii) the principal amount of the Note issued
hereunder.

 

iii.
To accept an Offer, in whole or in part, the Buyer must deliver a written notice to the Company prior to the end of the tenth
(10th) business day after the Buyer’s receipt of the Offer Notice (the “Offer Period”), setting forth
the portion of the Subscription Amount that the Buyer elects to purchase (the “Notice of Acceptance”). The Company
shall have ten (10) business days from the expiration of the Offer Period to complete the Subsequent Placement and in connection
therewith to issue and sell the Subscription Amount to the Buyer but only upon terms and conditions (including, without limitation,
unit prices and interest rates) that are not more favorable to the Buyer or less favorable to the Company than those set forth
in the Offer Notice. Following such ten (10) business day period, the Company shall publicly announce either (A) the consummation
of the Subsequent Placement or (B) the termination of the Subsequent Placement.

 

iv.
Notwithstanding anything to the contrary contained herein, if the Company desires to modify or amend the terms and conditions
of the Offer prior to the expiration of the Offer Period, the Company shall deliver to the Buyer a new Offer Notice and the Offer
Period shall expire on the tenth (10th) business day after the Buyer’s receipt of such new Offer Notice.

 

v.
If by the fifteenth (15th) business day following delivery of the Offer Notice no public disclosure regarding a transaction
with respect to the Offered Securities has been made, and no notice regarding the abandonment of such transaction has been received
by the Buyer, such transaction shall be deemed to have been abandoned and the Buyer shall not be deemed to be in possession of
any material, non-public information with respect to the Company.

 

As
used in this Agreement, the term “business day” shall mean any day other than a Saturday, Sunday or a day on which
commercial banks in the city of New York, New York are authorized or required by law or executive order to remain closed.

 

e.
Usury. To the extent it may lawfully do so, the Company hereby agrees not to insist upon or plead or in any manner whatsoever
claim, and will resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted, now
or at any time hereafter in force, in connection with any action or proceeding that may be brought by the Buyer in order to enforce
any right or remedy under this Agreement, the Note and any document, agreement or instrument contemplated thereby. Notwithstanding
any provision to the contrary contained in this Agreement, the Note and any document, agreement or instrument contemplated thereby,
it is expressly agreed and provided that the total liability of the Company under this Agreement, the Note or any document, agreement
or instrument contemplated thereby for payments which under applicable law are in the nature of interest shall not exceed the
maximum lawful rate authorized under applicable law (the “Maximum Rate”), and, without limiting the foregoing, in
no event shall any rate of interest or default interest, or both of them, when aggregated with any other sums which under applicable
law in the nature of interest that the Company may be obligated to pay under this Agreement, the Note and any document, agreement
or instrument contemplated thereby exceed such Maximum Rate. It is agreed that if the maximum contract rate of interest allowed
by law applicable to this Agreement, the Note and any document, agreement or instrument contemplated thereby is increased or decreased
by statute or any official governmental action subsequent to the date hereof, the new maximum contract rate of interest allowed
by law will be the Maximum Rate applicable to this Agreement, the Note and any document, agreement or instrument contemplated
thereby from the effective date thereof forward, unless such application is precluded by applicable law. If under any circumstances
whatsoever, interest in excess of the Maximum Rate is paid by the Company to the Buyer with respect to indebtedness evidenced
by this Agreement, the Note and any document, agreement or instrument contemplated thereby, such excess shall be applied by the
Buyer to the unpaid principal balance of any such indebtedness or be refunded to the Company, the manner of handling such excess
to be at the Buyer’s election.

 

    	 	11	 

     

    

 

f.
Restriction on Activities. Commencing as of the date first above written, and until the earlier of payment of the Note
in full or full conversion of the Note, the Company shall not, directly or indirectly, without the Buyer’s prior written
consent, which consent shall not be unreasonably withheld: (a) change the nature of its business; (b) sell, divest, acquire, change
the structure of any material assets other than in the ordinary course of business; or (c) solicit any offers for, respond to
any unsolicited offers for, or conduct any negotiations with any other person or entity in respect of any Variable Rate Transaction
(as defined herein), whether a transaction similar to the one contemplated hereby or any other investment.

 

g.
Listing. The Company will, so long as the Buyer owns any of the Securities, maintain the listing and trading of its Common
Stock on the Principal Market or any equivalent replacement exchange or electronic quotation system (including but not limited
to the Pink Sheets electronic quotation system) and will comply in all respects with the Company’s reporting, filing and
other obligations under the bylaws or rules of the Financial Industry Regulatory Authority (“FINRA”) and such exchanges,
as applicable. The Company shall promptly provide to the Buyer copies of any notices it receives from the Principal Market and
any other exchanges or electronic quotation systems on which the Common Stock is then traded regarding the continued eligibility
of the Common Stock for listing on such exchanges and quotation systems.

 

h.
Corporate Existence. The Company will, so long as the Buyer beneficially owns any of the Securities, maintain its corporate
existence and shall not sell all or substantially all of the Company’s assets, except in the event of a merger or consolidation
or sale of all or substantially all of the Company’s assets, where the surviving or successor entity in such transaction
(i) assumes the Company’s obligations hereunder and under the agreements and instruments entered into in connection herewith
and (ii) is a publicly traded corporation whose Common Stock is listed for trading or quotation on the Principal Market, any tier
of the NASDAQ Stock Market, the New York Stock Exchange or the NYSE MKT.

 

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

 

j.
Breach of Covenants. The Company acknowledges and agrees that if the Company breaches any of the covenants set forth in
this Section 4, in addition to any other remedies available to the Buyer pursuant to this Agreement, it will be considered an
Event of Default under Section 3.4 of the Note.

 

k.
Compliance with 1934 Act; Public Information Failures. For so long as the Buyer beneficially owns the Note, or any Conversion
Shares, the Company shall comply with the reporting requirements of the 1934 Act; and the Company shall continue to be subject
to the reporting requirements of the 1934 Act. During the period that the Buyer beneficially owns the Note, if the Company shall
(i) fail for any reason to satisfy the requirements of Rule 144(c)(1), including, without limitation, the failure to satisfy the
current public information requirements under Rule 144(c) or (ii) if the Company has ever been an issuer described in Rule 144(i)(1)(i)
or becomes such an issuer in the future, and the Company shall fail to satisfy any condition set forth in Rule 144(i)(2) (each,
a “Public Information Failure”) then, as partial relief for the damages to the Buyer by reason of any such delay in
or reduction of its ability to sell the Securities (which remedy shall not be exclusive of any other remedies available pursuant
to this Agreement, the Note, or at law or in equity), the Company shall pay to the Buyer an amount in cash equal to three percent
(3%) of the Purchase Price on each of the day of a Public Information Failure and on every thirtieth day (pro-rated for periods
totaling less than thirty days) thereafter until the date such Public Information Failure is cured. The payments to which a holder
shall be entitled pursuant to this Section 4(k) are referred to herein as “Public Information Failure Payments.” Public
Information Failure Payments shall be paid on the earlier of (i) the last day of the calendar month during which such Public Information
Failure Payments are incurred and (iii) the third business day after the event or failure giving rise to the Public Information
Failure Payments is cured. In the event the Company fails to make Public Information Failure Payments in a timely manner, such
Public Information Failure Payments shall bear interest at the rate of eight percent (8%) per month (prorated for partial months)
until paid in full.

 

l.
Acknowledgement Regarding Buyer’s Trading Activity. The Company acknowledges and agrees that during any time while
this Agreement is outstanding, the Buyer may engage in various activities related to the Company’s Common Stock consistent
with being a trader, as that term is commonly recognized. The Company acknowledges that such trading activities do not constitute
a breach of this Agreement or any of the documents executed in connection herewith.

 

    	 	12	 

     

    

 

m.
Disclosure of Transactions and Other Material Information. By 9:00 a.m., New York time, following the date this Agreement
has been fully executed, the Company shall file a Current Report on Form 8-K describing the terms of the transactions contemplated
by this Agreement in the form required by the 1934 Act and attaching this Agreement, the form of Note (the “8-K Filing”).
From and after the filing of the 8-K Filing with the SEC, the Buyer shall not be in possession of any material, nonpublic information
received from the Company, any of its Subsidiaries or any of their respective officers, directors, employees or agents that is
not disclosed in the 8-K Filing. In addition, effective upon the filing of the 8-K Filing, the Company acknowledges and agrees
that any and all confidentiality or similar obligations under any agreement, whether written or oral, between the Company, any
of its Subsidiaries or any of their respective officers, directors, affiliates, employees or agents, on the one hand, and the
Buyer or any of its affiliates, on the other hand, shall terminate.

 

n.
Legal Counsel Opinions. Upon the request of the Buyer from to time to time, the Company shall be responsible (at its cost)
for promptly supplying to the Company’s transfer agent and the Buyer a customary legal opinion letter of its counsel (the
“Legal Counsel Opinion”) to the effect that the resale of the Conversion Shares by the Buyer or its affiliates, successors
and assigns is exempt from the registration requirements of the 1933 Act pursuant to Rule 144 (provided the requirements of Rule
144 are satisfied and provided the Conversion Shares are not then registered under the 1933 Act for resale pursuant to an effective
registration statement) or other applicable exemption (provided the requirements of such other applicable exemption are satisfied).
Should the Company’s legal counsel fail for any reason to issue the Legal Counsel Opinion, the Buyer may (at the Company’s
cost) secure another legal counsel to issue the Legal Counsel Opinion, and the Company will instruct its transfer agent to accept
such opinion. The Company hereby agrees that it has never taken the position that it is a “shell company” in connection
with its obligations under this Agreement or otherwise.

 

o.
Piggyback Registration Rights. The Company hereby grants to the Buyer the registration rights set forth on Exhibit B
hereto.

 

p.
Most-Favored Nation. While the Note or any principal amount, interest or fees or expenses due thereunder remain outstanding
and unpaid, the Company shall not enter into any public or private offering of its securities (including securities convertible
into shares of Common Stock) with any individual or entity (an “Other Investor”) that has the effect of establishing
rights or otherwise benefiting such Other Investor in a manner more favorable in any material respect to such Other Investor than
the rights and benefits established in favor of the Buyer by this Agreement or the Note unless, in any such case, the Buyer has
been provided with such rights and benefits pursuant to a definitive written agreement or agreements between the Company and the
Buyer. In the event the Company enters into an offering with an Other Investor, and the terms thereof are more favorable to the
Other Investor and the Company fails to notify Buyer, the terms of this Agreement and the Note shall automatically be amended
to give the Buyer the more favorable term, without the need for further consent from the Company.

 

q.
Subsequent Variable Rate Transactions. From the date hereof until such time as the Buyer no longer holds the Note or any
of the Conversion or Commitment Shares, the Company shall be prohibited from effecting or entering into an agreement involving
a Variable Rate Transaction. “Variable Rate Transaction” means a transaction in which the Company (i) issues or sells
any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive, additional
shares of Common Stock either (A) at a conversion price, exercise price or exchange rate or other price that is based upon, and/or
varies with, the trading prices of or quotations for the shares of Common Stock at any time after the initial issuance of such
debt or equity securities or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date
after the initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or
indirectly related to the business of the Company or the market for the Common Stock or (ii) enters into any agreement, including,
but not limited to, an equity line of credit, whereby the Company may issue securities at a future determined price. Any Purchaser
shall be entitled to obtain injunctive relief against the Company to preclude any such issuance, which remedy shall be in addition
to any right to collect damages.

 

    	 	13	 

     

    

 

r.
Brokerage Account Restrictions. If the Common Stock issued upon conversion of the Note cannot be delivered to a brokerage
account of the Buyer as a result of restrictions imposed by such brokerage firm, then the Company agrees to take any such action
required, including but not limited to a reverse stock split, to remove any such restrictions on depositing the Common Stock into
such brokerage account or to satisfy any requirement for deposit of the Common Stock into such brokerage account.

 

s.
Non-Public Information. The Company covenants and agrees that neither it, nor any other person acting on its behalf will
provide the Buyer or its agents or counsel with any information that constitutes, or the Company reasonably believes constitutes,
material non-public information, unless prior thereto the Buyer shall have consented to the receipt of such information and agreed
with the Company to keep such information confidential. The Company understands and confirms that the Buyer shall be relying on
the foregoing covenant in effecting transactions in securities of the Company. To the extent that the Company delivers any material,
non-public information to the Buyer without such Buyer’s consent, the Company hereby covenants and agrees that such Buyer
shall not have any duty of confidentiality to the Company, any of its Subsidiaries, or any of their respective officers, directors,
agents, employees or affiliates, not to trade on the basis of, such material, non-public information, provided that the Buyer
shall remain subject to applicable law. To the extent that any notice provided, information provided, or any other communications
made by the Company, to the Buyer, constitutes or contains material non-public information regarding the Company or any Subsidiaries,
the Company shall simultaneously file such notice or other material information with the SEC pursuant to a Current Report on Form
8-K. In addition to any other remedies provided by this Agreement or the related transaction documents, if the Company provides
any material non-public information to the Buyer without their prior written consent, and it fails to immediately (no later than
that business day) file a Form 8-K disclosing this material non-public information, it shall pay the Buyer as partial liquidated
damages and not as a penalty a sum equal to $3,000 per day beginning with the day the information is disclosed to the Buyer and
ending and including the day the Form 8-K disclosing this information is filed.

 

t.
D&O Insurance. Within sixty (60) calendar days of the Closing, the Company shall purchase director and officer insurance
on behalf of the Company’s (including its subsidiary) officers and directors for a period of eighteen (18) months after
the Closing with respect to any losses, claims, damages, liabilities, costs and expense in connection with any actual or threatened
claim or proceeding that is based on, or arises out of their status as a director or officer of the Company. The insurance policy
shall provide for two (2) years of tail coverage.

 

u.
Trading Activities. Neither the Buyer nor its affiliates has an open short position in the common stock of the Company
and the Buyer agrees that it shall not, and that it will cause its affiliates not to, engage in any short sales of or hedging
transactions with respect to the common stock of the Company during the term of the Note.

 

5.
Transfer Agent Instructions. The Company shall issue irrevocable instructions to the Company’s transfer agent to
issue certificates, registered in the name of the Buyer or its nominee, upon conversion of the Note, the Conversion Shares, in
such amounts as specified from time to time by the Buyer to the Company in accordance with the terms thereof (the “Irrevocable
Transfer Agent Instructions”). In the event that the Company proposes to replace its transfer agent, the Company shall provide,
prior to the effective date of such replacement, a fully executed Irrevocable Transfer Agent Instructions in a form as initially
delivered pursuant to this Agreement (including but not limited to the provision to irrevocably reserved shares of Common Stock
in the Reserved Amount (as defined in the Note)) signed by the successor transfer agent to the Company and the Company. Prior
to registration of the Conversion Shares under the 1933 Act or the date on which the Conversion Shares may be sold pursuant to
Rule 144, Rule 144A, Regulation S, or other applicable exemption without any restriction as to the number of Securities as of
a particular date that can then be immediately sold, all such certificates shall bear the restrictive legend specified in Section
2(g) of this Agreement. The Company warrants that: (i) no instruction other than the Irrevocable Transfer Agent Instructions referred
to in this Section 5 will be given by the Company to its transfer agent and that the Securities shall otherwise be freely transferable
on the books and records of the Company as and to the extent provided in this Agreement and the Note; (ii) it will not direct
its transfer agent not to transfer or delay, impair, and/or hinder its transfer agent in transferring (or issuing)(electronically
or in certificated form) any certificate for Securities to be issued to the Buyer upon conversion of or otherwise pursuant to
the Note as and when required by the Note and this Agreement; (iii) it will not fail to remove (or directs its transfer agent
not to remove or impairs, delays, and/or hinders its transfer agent from removing) any restrictive legend (or to withdraw any
stop transfer instructions in respect thereof) on any certificate for any Securities issued to the Buyer upon conversion of or
otherwise pursuant to the Note as and when required by the Note and this Agreement and (iv) it will provide any required corporate
resolutions and issuance approvals to its transfer agent within six (6) hours of each conversion of the Note. Nothing in this
Section shall affect in any way the Buyer’s obligations and agreement set forth in Section 2(g) hereof to comply with all
applicable prospectus delivery requirements, if any, upon re-sale of the Securities. If the Buyer provides the Company, at the
cost of the Company, with (i) an opinion of counsel in form, substance and scope customary for opinions in comparable transactions,
to the effect that a public sale or transfer of such Securities may be made without registration under the 1933 Act and such sale
or transfer is effected or (ii) the Buyer provides reasonable assurances that the Securities can be sold pursuant to Rule 144,
Rule 144A, Regulation S, or other applicable exemption, the Company shall permit the transfer, and, in the case of the Securities,
promptly instruct its transfer agent to issue one or more certificates, free from restrictive legend, in such name and in such
denominations as specified by the Buyer. The Company acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to the Buyer, by vitiating the intent and purpose of the transactions contemplated hereby. Accordingly, the Company
acknowledges that the remedy at law for a breach of its obligations under this Section 5 may be inadequate and agrees, in the
event of a breach or threatened breach by the Company of the provisions of this Section, that the Buyer shall be entitled, in
addition to all other available remedies, to an injunction restraining any breach and requiring immediate transfer, without the
necessity of showing economic loss and without any bond or other security being required.

 

    	 	14	 

     

    

 

6.
Conditions to the Company’s Obligation to Sell. The obligation of the Company hereunder to issue and sell the Note
to the Buyer at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions
thereto, provided that these conditions are for the Company’s sole benefit and may be waived by the Company at any time
in its sole discretion:

 

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

 

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

 

c.
The representations and warranties of the Buyer shall be true and correct in all material respects as of the date when made and
as of the Closing Date, as though made at that time (except for representations and warranties that speak as of a specific date),
and the Buyer shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the Buyer at or prior to the Closing Date.

 

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

 

7.
Conditions to The Buyer’s Obligation to Purchase. The obligation of the Buyer hereunder to purchase the Note, on
the Closing Date, is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided
that these conditions are for the Buyer’s sole benefit and may be waived by the Buyer at any time in its sole discretion:

 

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

 

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

 

c.
The Irrevocable Transfer Agent Instructions, in form and substance satisfactory to the Buyer, shall have been delivered to and
acknowledged in writing by the Company’s Transfer Agent.

 

d.
The representations and warranties of the Company shall be true and correct in all material respects as of the date when made
and as of Closing Date, as though made at such time (except for representations and warranties that speak as of a specific date)
and the Company shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the Company at or prior to the Closing Date.

 

    	 	15	 

     

    

 

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

 

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

 

g.
Trading in the Common Stock on the Principal Market shall not have been suspended by the SEC, FINRA or the Principal Market.

 

h.
The Company shall have delivered to the Buyer (i) a certificate evidencing the formation and good standing of the Company and
each of its Subsidiaries in such entity’s jurisdiction of formation issued by the Secretary of State (or comparable office)
of such jurisdiction, as of a date within ten (10) days of the Closing Date and (ii) resolutions adopted by the Company’s
Board of Directors at a duly called meeting or by unanimous written consent authorizing this Agreement and all other documents,
instruments and transactions contemplated hereby.

 

8.
Governing Law; Miscellaneous.

 

a.
Governing Law; Venue. This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada
without regard to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions
contemplated by this Agreement, the Note, or any other agreement, certificate, instrument or document contemplated hereby shall
be brought only in the state courts of New York or in the federal courts located in the state of New York. The parties to this
Agreement hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert
any defense based on lack of jurisdiction or venue or based upon forum non conveniens. EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION
WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTIONS CONTEMPLATED HEREBY. The prevailing party shall be entitled to recover
from the other party its reasonable attorney’s fees and costs. Each party hereby irrevocably waives personal service of
process and consents to process being served in any suit, action or proceeding in connection with this Agreement, the Note, or
any other agreement, certificate, instrument or document contemplated hereby or thereby by mailing a copy thereof via registered
or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under
this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.

 

b.
Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but
all of which shall constitute one and the same agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party. A facsimile or .pdf signature shall be considered due execution and shall be binding upon
the signatory thereto with the same force and effect as if the signature were an original, not a facsimile or .pdf signature.
Delivery of a counterpart signature hereto by facsimile or email/.pdf transmission shall be deemed validly delivery thereof.

 

c.
Construction; Headings. This Agreement shall be deemed to be jointly drafted by the Company and the Buyer and shall not
be construed against any person as the drafter hereof. The headings of this Agreement are for convenience of reference only and
shall not form part of, or affect the interpretation of, this Agreement.

 

d.
Severability. In the event that any provision of this Agreement, the Note, or any other agreement or instrument delivered
in connection herewith is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of
law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability
of any other provision of this Agreement, the Note, or any other agreement, certificate, instrument or document contemplated hereby
or thereby.

 

    	 	16	 

     

    

 

e.
Entire Agreement; Amendments. This Agreement, the Note, and the instruments referenced herein contain the entire understanding
of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein,
neither the Company nor the Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. No
provision of this Agreement or any agreement or instrument contemplated hereby may be waived or amended other than by an instrument
in writing signed by the Buyer.

 

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

 

If
to the Company, to:

 

RESONATE
BLENDS, INC.

26565
Agoura Road, Suite 200

Calabasas,
California 91302

Attention:
Geoff Selzer

 

If
to the Buyer:

 

FIRSTFIRE
GLOBAL OPPORTUNITIES FUND, LLC

1040
First Avenue, Suite 190

New
York, NY 10022

Attn:
Eli Fireman

e-mail:
eli@firstfirecapital.com

 

With
a copy by e-mail only to (which copy shall not constitute notice):

 

FABIAN
VANCOTT

215
South Main Street, Suite 1200

Salt
Lake City, Utah 84111

Attn:
Anthony Michael Panek

e-mail:
apanek@fabianvancott.com

 

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

 

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

 

    	 	17	 

     

    

 

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

 

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

 

k.
Expense Reimbursement; Further Assurances. At the Closing to occur as of the Closing Date, the Company shall pay on behalf
of the Buyer or reimburse the Buyer for its legal fees and expenses incurred in connection with this Agreement, pursuant to the
disbursement authorization signed by the Company of even date. Each party shall do and perform, or cause to be done and performed,
all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents,
as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.

 

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

 

m.
Indemnification. In consideration of the Buyer’s execution and delivery of this Agreement and acquiring the Securities
hereunder, and in addition to all of the Company’s other obligations under this Agreement or the Note, the Company shall
defend, protect, indemnify and hold harmless the Buyer and its stockholders, partners, members, officers, directors, employees
and direct or indirect investors and any of the foregoing persons’ agents or other representatives (including, without limitation,
those retained in connection with the transactions contemplated by this Agreement) (collectively, the “Indemnitees”)
from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages,
and expenses in connection therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification
hereunder is sought), and including reasonable attorneys’ fees and disbursements (the “Indemnified Liabilities”),
incurred by any Indemnitee as a result of, or arising out of, or relating to (a) any misrepresentation or breach of any representation
or warranty made by the Company in this Agreement, the Note or any other agreement, certificate, instrument or document contemplated
hereby or thereby, (b) any breach of any covenant, agreement or obligation of the Company contained in this Agreement, the Note
or any other agreement, certificate, instrument or document contemplated hereby or thereby or (c) any cause of action, suit or
claim brought or made against such Indemnitee by a third party (including for these purposes a derivative action brought on behalf
of the Company) and arising out of or resulting from (i) the execution, delivery, performance or enforcement of this Agreement,
the Note or any other agreement, certificate, instrument or document contemplated hereby or thereby, (ii) any transaction financed
or to be financed in whole or in part, directly or indirectly, with the proceeds of the issuance of the Securities, or (iii) the
status of the Buyer or holder of the Securities as an investor in the Company pursuant to the transactions contemplated by this
Agreement. To the extent that the foregoing undertaking by the Company may be unenforceable for any reason, the Company shall
make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities that is permissible under
applicable law.

 

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

 

o.
Payment Set Aside. To the extent that the Company makes a payment or payments to the Buyer hereunder or pursuant to the
Note, or the Buyer enforces or exercises its rights hereunder or thereunder, and such payment or payments or the proceeds of such
enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside,
recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver
or any other person or entity under any law (including, without limitation, any bankruptcy law, foreign, state or federal law,
common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally
intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred.

 

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

 

[Signature
Page Follows]

 

    	 	18	 

     

    

 

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

 

RESONATE
BLENDS, INC.

 

	By:	 	 
	Name:	Geoff Selzer	 
	Title:	Chief Executive Officer	 

 

FIRSTFIRE
GLOBAL OPPORTUNITIES FUND, LLC

 

By:
FirstFire Capital Management LLC, its manager

 

	By:	 	 
	 	Eli
    Fireman	 

 

SUBSCRIPTION
AMOUNT:

 

Principal Amount of Note: $225,000.00

Actual Amount of Purchase Price of Note: $200,000.00*

 

*The
purchase price of $200,000.00 shall be paid within a reasonable amount of time after the full execution of the Note and all related
transaction documents.

 

    	 	19	 

     

    

 

EXHIBIT
A

 

FORM
OF NOTE

 

[attached
hereto]

 

    	 	20	 

     

    

 

EXHIBIT
B

REGISTRATION
RIGHTS

 

All
of the Conversion Shares will be deemed “Registrable Securities” subject to the provisions of this Exhibit B. All
capitalized terms used but not defined in this Exhibit B shall have the meanings ascribed to such terms in the Securities Purchase
Agreement to which this Exhibit is attached.

 

1.
Piggy-Back Registration.

 

1.1
Piggy-Back Rights. If at any time on or after the date of the Closing the Company proposes to file any Registration Statement
under the 1933 Act (a “Registration Statement”) with respect to any offering of equity securities, or securities or
other obligations exercisable or exchangeable for, or convertible into, equity securities, by the Company for its own account
or for shareholders of the Company for their account (or by the Company and by shareholders of the Company), other than a Registration
Statement (i) filed in connection with any employee stock option or other benefit plan on Form S-8, (ii) for a dividend reinvestment
plan or (iii) in connection with a merger or acquisition, then the Company shall (x) give written notice of such proposed filing
to the holders of Registrable Securities appearing on the books and records of the Company as such a holder as soon as practicable
but in no event less than ten (10) days before the anticipated filing date of the Registration Statement, which notice shall describe
the amount and type of securities to be included in such Registration Statement, the intended method(s) of distribution, and the
name of the proposed managing underwriter or underwriters, if any, of the offering, and (y) offer to the holders of Registrable
Securities in such notice the opportunity to register the sale of such number of Registrable Securities as such holders may request
in writing within three (3) days following receipt of such notice (a “Piggy-Back Registration”). The Company shall
cause such Registrable Securities to be included in such registration and shall cause the managing underwriter or underwriters
of a proposed underwritten offering to permit the Registrable Securities requested to be included in a Piggy-Back Registration
on the same terms and conditions as any similar securities of the Company and to permit the sale or other disposition of such
Registrable Securities in accordance with the intended method(s) of distribution thereof. All holders of Registrable Securities
proposing to distribute their securities through a Piggy-Back Registration that involves an underwriter or underwriters shall
enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such Piggy-Back Registration.

 

1.2
Withdrawal. Any holder of Registrable Securities may elect to withdraw such holder’s request for inclusion of Registrable
Securities in any Piggy-Back Registration by giving written notice to the Company of such request to withdraw prior to the effectiveness
of the Registration Statement. The Company (whether on its own determination or as the result of a withdrawal by persons making
a demand pursuant to written contractual obligations) may withdraw a Registration Statement at any time prior to the effectiveness
of such Registration Statement. Notwithstanding any such withdrawal, the Company shall pay all expenses incurred by the holders
of Registrable Securities in connection with such Piggy-Back Registration as provided in Section 1.5 below.

 

1.3
The Company shall notify the holders of Registrable Securities at any time when a prospectus relating to such holder’s Registrable
Securities is required to be delivered under the 1933 Act, upon discovery that, or upon the happening of any event as a result
of which, the prospectus included in such Registration Statement, as then in effect, includes an untrue statement of a material
fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading
in light of the circumstances then existing. At the request of such holder, the Company shall also prepare, file and furnish to
such holder a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of the Registrable Securities, such prospectus shall not include an untrue statement of
a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing. The holders of Registrable Securities shall not to offer or sell any Registrable
Securities covered by the Registration Statement after receipt of such notification until the receipt of such supplement or amendment.

 

1.4
The Company may request a holder of Registrable Securities to furnish the Company such information with respect to such holder
and such holder’s proposed distribution of the Registrable Securities pursuant to the Registration Statement as the Company
may from time to time reasonably request in writing or as shall be required by law or by the SEC in connection therewith, and
such holders shall furnish the Company with such information.

 

    	 	21	 

     

    

 

1.5
All fees and expenses incident to the performance of or compliance with this Exhibit B by the Company shall be borne by the Company
whether or not any Registrable Securities are sold pursuant to a Registration Statement. The fees and expenses referred to in
the foregoing sentence shall include, without limitation, (i) all registration and filing fees (including, without limitation,
fees and expenses of the Company’s counsel and independent registered public accountants) (A) with respect to filings made
with the SEC, (B) with respect to filings required to be made with any trading market on which the Common Stock is then listed
for trading, (C) in compliance with applicable state securities or Blue Sky laws reasonably agreed to by the Company in writing
(including, without limitation, fees and disbursements of counsel for the Company in connection with Blue Sky qualifications or
exemptions of the Registrable Securities) and (D) with respect to any filing that may be required to be made by any broker through
which a holder of Registrable Securities intends to make sales of Registrable Securities with the FINRA, (ii) printing expenses,
(iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of counsel for the Company, (v) 1933 Act liability
insurance, if the Company so desires such insurance, (vi) fees and expenses of all other persons or entities retained by the Company
in connection with the consummation of the transactions contemplated by this Exhibit B and (vii) reasonable fees and disbursements
of a single special counsel for the holders of Registrable Securities (selected by holders of the majority of the Registrable
Securities requesting such registration). In addition, the Company shall be responsible for all of its internal expenses incurred
in connection with the consummation of the transactions contemplated by this Agreement (including, without limitation, all salaries
and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit and the fees
and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange as required hereunder.
In no event shall the Company be responsible for any broker or similar commissions of any holder of Registrable Securities.

 

1.6
The Company and its successors and assigns shall indemnify and hold harmless the Buyer, each holder of Registrable Securities,
the officers, directors, members, partners, agents and employees (and any other individuals or entities with a functionally equivalent
role of a person holding such titles, notwithstanding a lack of such title or any other title) of each of them, each individual
or entity who controls the Buyer or any such holder of Registrable Securities (within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act) and the officers, directors, members, stockholders, partners, agents and employees (and any other
individuals or entities with a functionally equivalent role of a person holding such titles, notwithstanding a lack of such title
or any other title) of each such controlling individual or entity (each, an “Indemnified Party”), to the fullest extent
permitted by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation,
reasonable attorneys’ fees) and expenses (collectively, “Losses”), as incurred, arising out of or relating
to (1) any untrue or alleged untrue statement of a material fact contained in a Registration Statement, any related prospectus
or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating
to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein
(in the case of any such prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading
or (2) any violation or alleged violation by the Company of the 1933 Act, the 1934 Act or any state securities law, or any rule
or regulation thereunder, in connection with the performance of its obligations under this Exhibit B, except to the extent, but
only to the extent, that (i) such untrue statements or omissions are based upon information regarding the Buyer or such holder
of Registrable Securities furnished to the Company by such party for use therein. The Company shall notify the Buyer and each
holder of Registrable Securities promptly of the institution, threat or assertion of any proceeding arising from or in connection
with the transactions contemplated by this Exhibit B of which the Company is aware.

 

1.7
If the indemnification under Section 1.6 is unavailable to an Indemnified Party or insufficient to hold an Indemnified Party harmless
for any Losses, then the Company shall contribute to the amount paid or payable by such Indemnified Party, in such proportion
as is appropriate to reflect the relative fault of the Company and Indemnified Party in connection with the actions, statements
or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of the Company
and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue
or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by,
or relates to information supplied by, the Company or the Indemnified Party, and the parties’ relative intent, knowledge,
access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or payable by
a party as a result of any Losses shall be deemed to include any reasonable attorneys’ or other fees or expenses incurred
by such party in connection with any proceeding to the extent such party would have been indemnified for such fees or expenses
if the indemnification provided for in Section 1.6 was available to such party in accordance with its terms. It is agreed that
it would not be just and equitable if contribution pursuant to this Section 1.7 were determined by pro rata allocation or by any
other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding
sentence. Notwithstanding the provisions of this Section 1.7, neither the Buyer nor any holder of Registrable Securities shall
be required to contribute, in the aggregate, any amount in excess of the amount by which the net proceeds actually received by
such party from the sale of all of their Registrable Securities pursuant to such Registration Statement or related prospectus
exceeds the amount of any damages that such party has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission.

 

[End
of Exhibit B]

 

    	 	22exhibit41descriptionofea

                        DESCRIPTION OF THE COMPANY’S SECURITIES                          REGISTERED PURSUANT TO SECTION 12 OF THE                                SECURITIES EXCHANGE ACT OF 1934             As  of  March  31,  2020,  the  Company  has  two  classes  of  securities  registered  under  Section 12  of  the  Securities Exchange Act of 1934, as amended (the “Exchange Act”): (1) our Capital Stock and (2) our American  Depository Shares.                                  DESCRIPTION OF CAPITAL STOCK       We are a public company incorporated in South Africa with registration number 1995/013858/06.         The  following  description  is  a  summary  of  the  Company’s  share  capital  and  the  various  provisions  of  the  Company’s Memorandum of Incorporation, the South African Companies Act 71 of 2008 (“Companies Act”) and the  Listings Requirements of the JSE Limited (“JSE Listings Requirements”), which does not purport to be complete and  is qualified in its entirety by reference to all of the provisions of those sources.     Share Capital        The Company’s authorized share capital consists of:              1,000,000,000 ordinary shares, no par value, each ranking pari passu in all respects; and                           100,000,000 preference shares.    No preference shares are currently in issue and no specific preferences rights, limitations or other terms have been  determined for the preference shares.  The Company’s Board of Directors may from time to time, in accordance with  the Companies Act and the JSE Listings Requirements determine the preferences, rights, limitations or other terms of  the preference shares.   Voting Rights        Each shareholder is entitled to vote on any matter to be decided by the shareholders and to one vote in respect  of each share held in the case of a vote by means of a poll, and to vote at every general meeting or annual general  meeting, in person or by proxy.    Issuance of Additional Shares and Pre-emption Rights        The Company’s Board of Directors may resolve at any time to issue additional shares provided that:             the Company’s Board of Directors may only issue shares within the classes and to the extent that those shares            have been authorized by or in terms of the Memorandum of Incorporation;            pursuant  to  the  authorization  granted  by  shareholders  at  the  Company’s annual  general  meeting,  the         Company’s Board of Directors may only allot, and/or issue and/or dispose of such number of shares which         shall not exceed 10% of the Company’s issued share capital as from the date of passing of the resolution         authorizing the allotment, issue or disposal, less the aggregate number of shares, if any, held by the Company         and its subsidiaries, from time to time, as treasury shares;                  pursuant to a general authorization, the Company’s Board of Directors may only issue for cash additional         ordinary  shares  representing  up  to  5%  of  the  ordinary  shares  outstanding  at  the  time  of  the  general         authorization and not with a greater than 10% discount to the 30-day VWAP as of the issuance date; and             if the voting power of the class of shares that are issued or issuable as a result of the transaction or series of         integrated transactions will be equal to or exceed 30% of the voting power of all the shares of that class held         by shareholders immediately before that transaction or series of integrated transactions, the approval of the         shareholders by special resolution (i.e., a resolution supported by the holders of at least 75% of the voting         rights exercised on the resolution) will also be required.  

 

     Although holders of ordinary shares have no pre-emptive rights under the Companies Act, the JSE Listings  Requirements and our Memorandum of Incorporation require that any of our unissued equity securities must first be  offered to existing shareholders pro rata to their holdings of shares  unless these securities are issued (i) for the  acquisition of assets or (ii) upon receipt of shareholder approval. Subject to shareholder approval at the shareholder  meeting to be held prior to the completion of the offering, pre-emptive rights will not apply to shares deposited with  the depository for issuance of ADSs because this offering involves a specific issuance of shares for cash.    Variation of Rights   Subject to the provisions  of the Companies  Act, we may  from time to time, by way  of a special resolution of  shareholders (i.e., a resolution supported by the holders of at least 75% of the voting rights exercised on the resolution)  and an amendment to the Memorandum of Incorporation, vary the preferences, rights, limitations or other terms of  any shares (the ordinary shares); provided that if any amendment of the Memorandum of Incorporation relates to the  variation of any preferences, rights, limitation and other share terms attaching to any other class of shares already in  issue (i.e. the preference shares), that amendment must not be implemented without a special resolution of the holders  of the shares of that class at a separate meeting. In such instances, the holders of such shares will be allowed to vote  at the meeting of ordinary shareholders, subject to the provisions of the Memorandum of Incorporation dealing with  “affected shareholders.”   Distributions of Assets on Liquidation        If the Company is liquidated, shareholders are entitled to receive their proportionate share of the Company’s net  assets after the payment of creditors.   Changes in Capital or Objects and Powers        Subject to the provisions of the Companies Act and JSE Listings Requirements, the Company may from time  to time, by way of a special resolution of the shareholders (i.e., a resolution supported by the holders of at least 75%  of the voting rights exercised on the resolution) and an amendment to the Memorandum of Incorporation:             increase or decrease the number of authorized shares of any class of shares;             consolidate and reduce the number of issued and authorized shares of that class without an increase of its            capital;             subdivide its shares of any class by increasing the number of its issued and authorized shares of that class            without an increase of its capital;             reclassify any classified shares that have been authorized but not issued; or             classify any unclassified shares that have been authorized but not issued.   Rights of Minority Shareholders and Fiduciary Duties        Majority shareholders of South African companies have no fiduciary duties to minority shareholders. However,  the Companies Act provides certain relief and protection for minority shareholders, including access to the court in  instances where such minority shareholder has been unfairly prejudiced. The provisions of the Companies Act are  designed to provide some protection and relief for minority shareholders without overly restricting the powers of any  majority shareholder. There may also be common law personal actions available to a minority shareholder of a  company.        The fiduciary obligations of directors may differ from those in the United States and certain other countries. In  South Africa, the common law imposes on directors a duty to act with care, skill and diligence and a fiduciary duty to  conduct the company’s affairs honestly and in the best interests of the company. These common law fiduciary duties  have also been codified in the Companies Act and include acting in good faith and for a proper purpose.    General Meetings of Shareholders   The Company is required to convene an annual general meeting at least once in each calendar year, but not more than  fifteen months after the date of the previous annual general meeting. The Company’s Board of Directors is required  to call a meeting of shareholders if one or more demands are delivered to it and each such demand describes the 

 

specific purpose for which the meeting is proposed and, in the aggregate, demands for substantially the same purpose  are made by shareholders, as of the earliest time specified in any such demands, of at least 10% of the voting rights  entitled to be exercised in relation to the matter proposed to be considered at the meeting. All meetings (whether called  for the passing of special or ordinary resolutions) shall be called on not less than fifteen business days’ notice. Annual  general meetings may be held by way of electronic communication, but may not be held by way of signed written  resolutions.    Change of Control        Various transactions including, without limitation, those which result in a person or a group of persons acting  in concert, holding shares entitled to exercise or cause to be exercised 35% of more of the voting rights at meetings of  the Company’s shareholders,  will be subject to the Takeover Regulations, which are regulated by the Takeover  Regulation  Panel.  The  Takeover  Regulations  impose  various  obligations  in  such  circumstances  including  the  requirement of an offer to minority shareholders.         A transaction will be subject to the approval of the competition authorities in terms of the Competition Act 89  of 1998 (“Competition Act”) if it results in the acquisition of “control”, as defined in the Competition Act, and  otherwise falls within the scope of the Competition Act. The Competition Act prohibits a transaction falling within its  scope from being implemented without the necessary approvals.         To the extent applicable, a transaction may be subject to the JSE Listings Requirements as well as the approval  of the Exchange Control Department of the South African Reserve Bank, and other applicable regulatory bodies.         Certain  fundamental  transactions,  such  as  a  merger,  amalgamation,  scheme  of  arrangement  and  sale  of  a  majority of the company’s assets, require a special resolution of shareholders, and if 15% or more of shareholders  vote against such a resolution, any dissenting shareholder may, within five days, require the company, at its expense,  to obtain court approval before implementing the resolution. Even if less than 15% of the shareholders vote against  the resolution, any dissenting shareholder may apply to court for a review of the transaction.   Non-South African Shareholders        There are no limitations in the Memorandum of Incorporation or under South African law on the right of non- South African shareholders to hold or exercise voting rights attaching to any of the Company’s ordinary shares.    Amendment of the Memorandum of Incorporation        The Memorandum of Incorporation may only be amended by a special resolution approved by the shareholders,  or in compliance with a court order.    Differences in Corporate Law   You should be aware that the Companies Act, which applies to the Company, differs in certain material respects from  laws generally applicable to U.S. corporations and their shareholders. In order to highlight these differences, set forth  below is a summary of certain significant provisions of the Companies Act applicable to the Company which differ in  certain respects from provisions of the Delaware corporate law. As the following statements are summaries, they do  not address all aspects of South African law that may be relevant to the Company and its shareholders.   Duties of Directors        The fiduciary obligations of directors may differ from those in the United States. In South Africa, common law  imposes on directors a duty to act with care, skill and diligence and a fiduciary duty to conduct the company’s affairs  honestly and in the best interests of the company. These common law fiduciary duties have also been codified in the  Companies Act and require that when acting as a director, a person must exercise the powers and perform the functions  of a director:             in good faith and for a proper purpose;             in the best interests of the company; and             with the degree of care, skill and diligence that may reasonably be expected of a person:     

 

          carrying out the same functions in relation to the company as those carried out by that director; and                having the general knowledge, skill and experience of that director.         A director will be seen to have complied with these requirements, if the director has taken reasonably diligent  steps to become informed about the matter; had a rational basis for believing the decision was in the best interests of  the company; and either had no material financial interest in the matter (and had no reasonable basis to know that any  related person had a financial interest in the matter) or complied with the requirements of the Companies Act in  relation to disclosure of such interest and recusal from decisions relating to the matter.         A director is entitled to rely on one or more employees of the company whom the director reasonably believes  to be reliable and competent in the functions performed or the information, opinions, report or statements provided.  In addition, directors may rely on legal counsel, accountants or other professional persons where required.         Under Delaware law, the business and affairs of a corporation are managed by or under the direction of its board  of directors. In exercising their powers, directors are charged with a fiduciary duty of care to protect the interests of  the corporation and a fiduciary duty of loyalty to act in the best interests of its stockholders.         The duty of care requires that directors act in an informed and deliberative manner and inform themselves, prior  to making a business decision, of all material information reasonably available to them. The duty of care also requires  that directors exercise care in overseeing and investigating the conduct of corporate employees. The duty of loyalty  may be summarized as the duty to act in good faith, not out of self-interest, and in a manner which the director  reasonably believes to be in the best interests of the stockholders.         A  party  challenging  the  propriety  of  a  decision  of  a  board  of  directors  bears the burden  of  rebutting  the  applicability of the presumptions afforded to directors by the “business judgment rule”. If the presumption is not  rebutted, the business judgment rule attaches to protect the directors and their decisions, and their business judgments  will  not  be  second  guessed.  Where,  however,  the  presumption  is  rebutted,  the  directors  bear  the  burden  of  demonstrating the entire fairness of the relevant transaction. Notwithstanding the foregoing, Delaware courts subject  directors’ conduct to enhanced scrutiny in respect of defensive actions taken in response to a threat to corporate control  and approval of a transaction resulting in a sale of control of the corporation.     Indemnification of Directors and Officers        The Company may advance expenses to a director or directly or indirectly indemnify a director in respect of the  defense of legal proceedings or liability arising out of his service to the Company (or purchase insurance to protect  the Company or the director) save in certain instances including bad faith, actual knowledge that conduct was outside  the scope of the Memorandum of Incorporation or willful misconduct or willful breach of trust on the part of the  director.          Under Delaware law, a corporation may indemnify a director or officer of the corporation against expenses  (including  attorneys’  fees),  judgments, fines  and  amounts  paid in settlement  actually  and  reasonably  incurred in  defense of an action, suit or proceeding by reason of such position if (i) such director or officer acted in good faith  and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation and  (ii) with respect to any criminal action or proceeding, such director or officer had no reasonable cause to believe  his/her conduct was unlawful.   Liability of Directors and Officers         South African law specifies a number of instances where a director may be held personally liable for his actions,  such as instances where he has breached his duties, where he has acted without authority (where he has knowledge of  his incapacity), where he has been party to any act or omission by the company despite knowing that the act or  omission was calculated to defraud a creditor, employee or shareholder of the company or had another fraudulent  purpose, as well as instances where he has been present at a meeting or participated in a decision and failed to vote  against the decision, which decision contravened the provisions of the Companies Act (including the solvency and  liquidity test).         Under  Delaware  law,  a  corporation  may  include  in  its  certificate  of  incorporation  provisions  limiting  the  personal liability of its directors to the corporation or its stockholders for monetary damages for many types of breach  of fiduciary duty. However, these provisions may not limit liability for any breach of the duty of loyalty, acts or 

 

omissions not in good faith or that involve intentional misconduct or a knowing violation of law, the authorization of  unlawful dividends, stock repurchases or stock redemptions, or any transaction  from which a director derived  an  improper personal benefit.   Interested Directors         The Companies Act requires that a director who has a personal financial interest in a matter to be considered at  a board meeting, or knows that a related person has a personal financial interest in the matter, must, amongst other  things, disclose the interest and its general nature, disclose any material information relating to the matter and known  to the director, and must recuse himself from the meeting and not take part in the consideration of the matter. Non- compliance with these requirements can, however, be ratified by an ordinary resolution of shareholders.         Under Delaware law, such transaction would not be voidable if (i) the material facts as to  such interested  director’s relationship or interests are disclosed or are known to the board of directors and the board of directors in  good faith authorizes the transaction by the affirmative vote of a majority of the disinterested directors, (ii) such  material facts are disclosed or are known to the stockholders entitled to vote on such transaction and the transaction  is specifically approved in good faith by vote of the majority of shares entitled to vote thereon or (iii) the transaction  is fair as to the corporation as of the time it is authorized, approved or ratified. Under Delaware law, such interested  director could be held liable for a transaction in which such director derived an improper personal benefit.    Committees of the Board of Directors         The  Companies  Act  provides  that,  except  to  the  extent  that  the  company’s  Memorandum  of  Incorporation  provides otherwise, the board of directors may appoint any number of committees of directors and delegate to any  committee any of the authority of the board. The Company’s Memorandum of Incorporation does not restrict this  provision  and the  Company  has a  number  of  committees,  including  an  Executive  Committee,  an  Audit  and  Risk  Committee, a Remuneration and Nominations Committee and a Social and Ethics Committee.         Delaware law allows the board of directors of a corporation to delegate many of its powers to committees, but  those committees may consist only of directors.   Voting Rights and Quorum Requirements        Under  South  African  law,  the  meeting,  voting  and  quorum  requirements  are  governed  by  a  company’s  memorandum  of  incorporation  and  the  Companies  Act,  except  in  certain  circumstances.  The  quorum  for  a  shareholders’ meeting to begin or for a matter to be considered, is at least three shareholders entitled to attend and  vote. In addition, a shareholders’ meeting may not begin and no matter may be decided until sufficient persons are  present to exercise, in aggregate, at least 25% of the voting rights. If a quorum is not achieved, the meeting will be  postponed by one week and if at the adjourned meeting, a quorum is still not achieved, those present will be deemed  to constitute a quorum.         For an ordinary resolution to be approved it must be supported by more than 50% of the voting rights exercised  in relation to such resolution. For a special resolution to be approved, it must be supported by the holders of at least  75% of the voting rights exercised in relation to such resolution. The Companies Act sets out a number of matters  where  the  approval  of  a  special  resolution  is  required  (e.g.,  amendment  of  the  company’s  memorandum  of  incorporation, granting of financial assistance, winding up of the company). Companies may add further matters to  this list specified in the Companies Act. In accordance with the provisions of the Companies Act and in compliance  with the JSE Listings Requirements, the Company has included a requirement that an increase or decrease in the  number of authorized shares and the classification and reclassification of shares may not be undertaken by the Board  of  Directors  and  requires  approval  of  75%  of  the  votes  represented,  of  our  shareholders.  Furthermore,  any  share  repurchase by the Company requires the same level of shareholder approval. In addition, JSE Listings Requirements  requires a special majority of 75% of the voting rights for an ordinary resolution relating to certain matters including  the issuance of equity securities for cash.          Shareholders are entitled to one vote on a show of hands, irrespective of the number of voting rights held, or  where voting takes place on a poll, the shareholders shall have such number of voting rights as equates to the securities  held by that shareholder. The  Company has  proposed to its shareholders for their approval  an  amendment  to the  Memorandum of Incorporation providing that all votes shall be taken by way of poll.    

 

     Under Delaware law, unless otherwise provided in the company’s certificate of incorporation, each stockholder  is entitled to one vote for each share of stock held by the stockholder. Delaware law provides that a majority of the  shares entitled to vote, present in person or represented by proxy, constitutes a quorum at a meeting of stockholders.  In  matters  other  than  the  election  of  directors,  with  the  exception  of  special  voting  requirements  related  to  extraordinary transactions, the affirmative vote of a majority of shares present in person or represented by proxy at  the meeting and entitled to vote is required for stockholder action, and the affirmative vote of a plurality of shares is  required for the election of directors.   Dividends        Under South African law, a company may not make any proposed distribution unless:             the distribution:                is pursuant to an existing legal obligation of the company, or a court order; or                the board of the company, by resolution, has authorized the distribution;             it reasonably appears that the company will satisfy the solvency and liquidity test (set out in the Companies            Act) immediately after completing the proposed distribution; and             the board, by resolution, has acknowledged that it has applied the solvency and liquidity test, and reasonably            concluded that the company will satisfy the test immediately after completing the proposed distribution.         Under  Delaware law, subject  to any  restrictions  contained  in the  company’s  certificate  of incorporation, a  company may pay dividends out of surplus or, if there is no surplus, out of net profits for the fiscal year in which the  dividend is declared and for the preceding fiscal year. Delaware law also provides that dividends may not be paid out  of net profits if, after the payment of the dividend, capital is less than the capital represented by the outstanding stock  of all classes having a preference upon the distribution of assets.   Amalgamations, Mergers and Similar Arrangements and Takeovers         Various transactions including, without limitation, those which result in a person or a group of persons acting  in concert, holding shares entitling the shareholder(s) to exercise or cause to be exercised 35% or more of the voting  rights at meetings of shareholders of the company, will be subject to the Takeover Regulations, which are regulated  by  the  Takeover  Regulation Panel.  The  Takeover  Regulations impose  various obligations in  such  circumstances  including the requirement of an offer to minority shareholders.         Two or more companies may amalgamate or merge under South African law, if upon the implementation of the  amalgamation or merger, each amalgamated or merged company will satisfy the solvency and liquidity test set out in  the Companies Act. The boards of each company are required to consider the solvency and liquidity test and if the  boards reasonably believe that each proposed amalgamated or merged company will satisfy the solvency and liquidity  test, the agreement may be submitted for consideration at a shareholders meeting. The amalgamation or merger will  need to be approved by way of special resolution of the shareholders and in certain circumstances, a compliance  certificate will need to be obtained from the Takeover Regulation Panel.         A transaction will be subject to the approval of the competition authorities in terms of the Competition Act if it  results in the acquisition of “control,” as defined in the Competition Act and otherwise falls within the scope of the  Competition Act. The Competition Act prohibits a transaction (falling within its ambit) from being implemented  without the necessary approvals.        To the extent applicable, a transaction may be subject to JSE listings requirements, as well as the approval of  the Exchange Control Department of the South African Reserve Bank, and other applicable regulatory bodies.         Certain  fundamental  transactions  (such  as  a  merger,  amalgamation,  scheme  of  arrangement  and  sale  of  a  majority of the company’s assets) require a special resolution of shareholders, and if 15% or more of shareholders  vote against such a resolution, any dissenting shareholder may (within five days) require the company, at its expense,  to obtain court approval before implementing the resolution. Even if less than 15% of the shareholders vote against  the resolution, any dissenting shareholder may apply to court for a review of the transaction.  

 

     Under Delaware law, with certain exceptions, a merger, consolidation or sale of all or substantially all the assets  of a corporation must be approved by the board of directors and a majority of the outstanding shares entitled to vote  thereon. Under Delaware law, a shareholder of a corporation participating in certain major corporate transactions may,  under certain circumstances, be entitled to appraisal rights pursuant to which such shareholder may receive payment  in the amount of the fair market value of the shares held by such shareholder (as determined by a court) in lieu of the  consideration such shareholder would otherwise receive in the transaction.         In respect of takeover transactions, under Delaware law, the board of directors may take defensive actions  against a takeover if the directors believe in good faith that the takeover is a threat to the company’s interests and if  the response is reasonable in light of the threat posed by the takeover. However, the board may not use such measures  for its own personal interests. For example, a board may institute defensive measures to allow it to negotiate a higher  price with the acquirer or prevent shareholders from being coerced into selling at a price which is clearly too low.  However, the board of directors may not use such measures just to keep itself in control of the company. This is  different from South African law, where the board of directors may not, without shareholder and Takeover Regulation  Panel approval, do anything which may result in the frustration of a genuine offer.         In addition, the completion of certain merger or acquisition arrangements above a statutory threshold level is  also subject to the receipt of competition and antitrust clearances in the United States. Under the Hart-Scott-Rodino  Antitrust Improvements Act of 1976, as amended, and the rules promulgated thereunder, such merger or acquisition  transactions  may  not  be  completed  until  notification  and  report  forms  have  been  filed  with  the  Federal  Trade  Commission and the Department of Justice and the applicable waiting periods have expired.   Shareholders’ Suits         Generally, shareholders in South Africa may not sue for wrongs suffered by the company (derivative actions)  and any such action would instead be implemented in the name of the company, under the direction of the board of  directors. The Companies Act does, however, afford shareholders (and certain other interested persons) the right to  serve a demand on the company to commence or continue legal proceedings, or take related steps, to protect the legal  interests of the company. Shareholders would also be entitled to sue in their own names for prejudices or wrongs that  they have suffered through the actions of the company and/or the directors.         A shareholder or a director may apply to court for relief if any act or omission of the company has had a result  that is oppressive or unfairly prejudicial to, or that unfairly disregards the interests of, such person.         Further, even if a resolution (in relation to a fundamental transaction) has been adopted by way of a special  resolution, the company may not proceed to implement the resolution without the approval of a court if the resolution  was opposed by at least 15% of the voting rights that were exercised on that resolution and any person who voted  against the resolution has required the company to seek court approval; or the court, on an application by any person  who voted against the resolution, grants that person leave to apply to court for a review of the transaction.         In  certain  circumstances  (namely  resolutions  relating  to  the  alteration  of  the  company’s  memorandum  of  incorporation that prejudicially alter the rights of a particular class of shares, or any fundamental transaction, such as  a takeover or merger), the Companies Act allows dissenting shareholders to lodge a written objection to the resolution  prior to the vote being cast, and if the resolution is then adopted such shareholders may demand that the company pay  them the fair value for all of the shares of the company held by that person.         Delaware law generally allows a shareholder to sue for wrongs suffered by the company if the shareholder first  demands that the company sue on its own behalf and the company declines to do so, but allows the shareholder to. In  certain situations, such as when there are specific reasons to believe that the directors are protecting their personal  interests, the shareholder may sue directly without first making the demand.   Inspection of Corporate Records         Rights  of  access  to  information  (including  access  to  inspect  and  copy  the  company’s  memorandum  of  incorporation, directors’ reports, reports of annual meetings, notices and minutes of annual meetings and the securities  register) are granted to persons who hold or have a beneficial interest in any securities in South African companies,  under the Companies Act.         Delaware law permits any shareholder to inspect or obtain copies of a corporation’s shareholder list and its other  books and records for any purpose reasonably related to such person’s interest as a shareholder.  

 

Shareholder Proposals         The Companies Act provides that any two shareholders of a company may propose a resolution concerning any  matter in respect of which they are each entitled to exercise voting rights and may require that the resolution be  submitted to shareholders for consideration at a special meeting demanded in accordance with the provisions of the  Companies Act, at the next meeting of shareholders or by way of written vote.         Under Delaware law, a corporation’s bylaws may provide that if the corporation solicits proxies with respect to  an election of directors, it may be required, to the extent and subject to such procedures or conditions as may be  provided in the bylaws, to include in its proxy solicitation materials, in addition to individuals nominated by the board  of directors, one or more individuals nominated by a shareholder. Furthermore, the corporation’s bylaws may provide  for the reimbursement by the corporation of expenses incurred by a shareholder in soliciting proxies in connection  with an election of directors, subject to certain procedures and conditions. Delaware law does not include a provision  restricting the manner in which nominations for directors may be made by shareholders or the manner in which other  business may be brought before a meeting.   Calling of Special Shareholders’ Meetings    The board of directors of a company is required to call a shareholders meeting if one or more written and signed  demands for such meeting are delivered to the company, and each such demand described the specific purposed for  which the meeting is proposed; and in aggregate, demands for substantially the same purpose are made and signed by  holders of at least 10% of the voting rights entitled to be exercised in relation to the matter proposed to be considered  at the meeting.        Delaware law permits the board of directors or any person who is authorized under a corporation’s certificate  of incorporation or bylaws to call a special meeting of shareholders.   Staggered Board of Directors         In accordance with the Company’s Memorandum of Incorporation, no directors are appointed for life or for an  indefinite period and at least one-third of the non-executive directors retire by rotation each year and stand to re- election at the annual general meeting in accordance with the Memorandum of Incorporation.        Delaware law permits corporations to have a staggered board of directors.   Approval of Corporate Matters by Written Consent         Except in respect of annual general meetings or, in the case of a listed company, any meetings required in terms  of the JSE Listings Requirements, any matter that could be voted on by shareholders at a meeting may instead be  submitted for consideration to the shareholders entitled to vote thereon, and voted on in writing by the shareholders  within 20 business days thereafter.         In addition, South African company law also provides for electronic communication at shareholders’ meetings  and  for  meetings  to  be  conducted  entirely  by  way  of  electronic  communication;  provided  that  the  electronic  communication employed ordinarily enables all persons participating in the meeting to communicate concurrently  with each other without an intermediary, and to participate reasonably effectively in the meeting.         Delaware law permits shareholders to take action by the consent in writing by the holders of outstanding stock  having not less than the minimum number of votes that would be necessary to authorize or take such action at a  meeting of stockholders at which all shares entitled to vote thereon were present and voted.   Amendment of Constitutional Documents         Under South African law, a company’s memorandum of incorporation may only be amended by way of a special  resolution approved by the shareholders, or in compliance with a court order.         Under Delaware law, a company’s certificate of incorporation may be amended if the amendment is approved  by both the board of directors and the shareholders. Unless a different percentage is provided for in the certificate of  incorporation,  a  majority  of  the  voting  power  of  the  shareholders  of  the  corporation  is  required  to  approve  an  amendment. Under Delaware law, the certificate of incorporation may limit or remove the voting power of a class of  the  company’s  stock.  However,  if  the  amendment  would  alter  the  number  of  authorized  shares  or  par  value  or 

 

otherwise adversely affect the rights or preference of a class of stock, the holders of shares of that class are entitled to  vote, as a class, upon the proposed amendment, without regard to the restriction in the certificate of incorporation.  Additionally, Delaware law allows the bylaws of the corporation to be amended either by the shareholders or, if  allowed in the certificate of incorporation, by the board of directors.                                DESCRIPTION OF AMERICAN DEPOSITARY SHARES  American Depositary Shares        The Bank of New York Mellon,  as depositary, registered and delivered American  Depositary Shares,  also  referred to as ADSs. Each ADS represents 25 shares (or a right to receive 25 shares) deposited with the principal  Johannesburg office of any of Standard Bank of South Africa, FirstRand Bank Ltd or Societe Generale (ZA), as  custodian for the depositary. Each ADS will also represent any other securities, cash or other property which may be  held by the depositary. The depositary’s corporate trust office at which the ADSs will be administered is located at  101 Barclay Street,  New  York,  New  York 10286. The Bank of New York  Mellon’s  principal executive office is  located at One Wall Street, New York, New York 10286.         A person may hold ADSs either (A) directly (i) by having an American Depositary Receipt, also referred to as  an ADR, which is a certificate evidencing a specific number of ADSs, registered in that person’s name, or (ii) by  having ADSs registered in a person’s name in the Direct Registration System, or (B) indirectly by holding a security  entitlement in ADSs through a person’s broker or other financial institution. If a person holds ADSs directly, the  person is a registered ADS holder, also referred to as an ADS holder. This description assumes that a person is an  ADS holder. If a person holds the ADSs indirectly, that person must rely on the procedures of his/her broker or other  financial institution to assert the rights of ADS holders described in this section.         The Direct Registration System, or DRS, is a system administered by The Depository Trust Company, also  referred to as DTC, pursuant to which the depositary may register the ownership of uncertificated ADSs, which  ownership is confirmed by periodic statements sent by the depositary to the registered holders of uncertificated ADSs.         As an ADS holder, the Company will not treat a person as one of its shareholders and that person will not have  shareholder rights. South African  law governs shareholder rights. The depositary will be the holder of the shares  underlying the ADSs. As a registered holder of ADSs, a person will have ADS holder rights. A deposit agreement  among the Company, the depositary and the relevant person, as an ADS holder, and all other persons indirectly holding  ADSs sets out ADS holder rights as well as the rights and obligations of the depositary. New York law governs the  deposit agreement and the ADSs.         The following is a summary of the material provisions of the deposit agreement. For more complete information,  please read the entire deposit agreement and the form of ADR.    Dividends and Other Distributions   How will an ADS holder receive dividends and other distributions on the shares?        The depositary has agreed to pay to ADS holders the cash dividends or other distributions it or the custodian  receives on shares or other deposited securities, after deducting its fees and expenses. The ADS holder will receive  these distributions in proportion to the number of Shares that ASD holder’s ADSs represent.          Cash. The depositary will convert any cash dividend or other cash distribution the Company pays on the shares  into U.S. dollars, if it can do so on a reasonable basis and can transfer the U.S. dollars to the United States. If that is  not  possible  or  if  any  government  approval  is  needed  and  cannot  be  obtained,  the  deposit  agreement  allows  the  depositary to distribute the foreign currency only to those ADS holders to whom it is possible to do so. It will hold the  foreign currency it cannot convert for the account of the ADS holders who have not been paid. It will not invest the  foreign currency and it will not be liable for any interest.         Before making a distribution, any withholding taxes, or other governmental charges that must be paid will be  deducted. The depositary will distribute only whole U.S. dollars and cents and will round fractional cents to the nearest  whole cent. If the exchange rates fluctuate during a time when the depositary cannot convert the foreign currency, the  ADS holder may lose some or all of the value of the distribution.  

 

     Shares. The depositary may distribute additional ADSs representing any shares the Company distributes as a  dividend or free distribution. The depositary will only distribute whole ADSs. It will sell shares which would require  it to deliver a fractional ADS and distribute the net proceeds in the same way as it does with cash. If the depositary  does not distribute additional ADSs, the outstanding ADSs will also represent the new shares. The depositary may sell  a portion of the distributed shares sufficient to pay its fees and expenses in connection with that distribution.         Rights to purchase additional shares. If the Company offers holders of its securities any rights to subscribe for  additional shares or any other rights, the depositary may make these rights available to ADS holders. If the depositary  decides it is not legal and practical to make the rights available but that it is practical to sell the rights, the depositary  will use reasonable efforts to sell the rights and distribute the proceeds in the same way as it does with cash. The  depositary will allow rights that are not distributed or sold to lapse. In that case, the ADS holder will receive no value  for them.         If the depositary makes rights available to ADS holders, it will exercise the rights and purchase the shares on  the ADS holder’s behalf. The depositary will then deposit the shares and deliver ADSs to the persons entitled to them.  It will only exercise rights if the ADS holder pays it the exercise price and any other charges the rights require to be  paid.         U.S. securities laws may restrict transfers and cancellation of the ADSs represented by shares purchased upon  exercise of rights. For example, an ADS holder may not be able to trade these ADSs freely in the United States. In  this case, the depositary may deliver restricted depositary shares that have the same terms as the ADSs described in  this section except for changes needed to put the necessary restrictions in place.        Other  Distributions.  The  depositary  will  send  to  ADS  holders  anything  else  the  Company  distributes  on  deposited securities by any means it thinks is legal, fair and practical. If it cannot make the distribution in that way,  the depositary has a choice. It may decide to sell what the Company distributed and distribute the net proceeds, in the  same way as it does with cash. Or, it may decide to hold what the Company distributed, in which case ADSs will also  represent the newly distributed property. However, the depositary is not required to distribute any securities (other  than ADSs) to ADS holders unless it receives satisfactory evidence from the Company that it is legal to make that  distribution. The depositary may sell a portion of the distributed securities or property sufficient to pay its fees and  expenses in connection with that distribution.            The depositary is not responsible if it decides that it is unlawful or impractical to make a distribution available  to any ADS holders. The Company has no obligation to register ADSs, shares, rights or other securities under the  Securities Act. The Company also has no obligation to take any other action to permit the distribution of ADSs, shares,  rights or anything else to ADS holders. This means that an ADS holder may not receive the distributions which the  Company makes on its shares or any value for them if it is illegal or impractical for the Company to make them  available to the ADS holder.    Deposit, Withdrawal and Cancellation   How are ADSs issued?        The depositary will deliver ADSs if the ADS holder or its broker deposits shares or evidence of rights to receive  shares with the custodian. Upon payment of its fees and expenses and of any taxes or charges, such as stamp taxes or  stock transfer taxes or fees, the depositary will register the appropriate number of ADSs in the names the ADS holder  requests and will deliver the ADSs to or upon the order of the person or persons that made the deposit.    How can ADS holders withdraw the deposited securities?        The ADS holder may surrender his/her ADSs at the depositary’s corporate trust office. Upon payment of its fees  and expenses and of any taxes or charges, such as stamp taxes or stock transfer taxes or fees, the depositary will deliver  the shares and any other deposited securities underlying the ADSs to the ADS holder or a person the ADS holder  designates at the office of the custodian. Or, at the ADS holder’s request, risk and expense, the depositary will deliver  the deposited securities at its corporate trust office, if feasible.    How do ADS holders interchange between certificated ADSs and uncertificated ADSs?        The ADS holder  may surrender  his/her ADR to the depositary for the purpose of exchanging the ADR  for  uncertificated ADSs. The depositary will cancel that ADR and will send to the ADS holder a statement confirming 

 

that the ADS holder is the registered holder of uncertificated ADSs. Alternatively, upon receipt by the depositary of  a proper instruction from a registered holder of uncertificated ADSs requesting the exchange of uncertificated ADSs  for certificated ADSs, the depositary will execute and deliver to the ADS holder an ADR evidencing those ADSs.   Voting Rights    How do you vote?        ADS holders may instruct the depositary to vote the number of deposited shares their ADSs represent. The  depositary will notify ADS holders of shareholders’ meetings and arrange to deliver the Company’s voting materials  to them if the Company asks it to. Those materials will describe the matters to be voted on and explain how ADS  holders may instruct the depositary how to vote. For instructions to be valid, they much reach the depositary by a date  set by the depositary.    Otherwise, the ADS holder won’t be able to exercise the right to vote unless the shares are withdrawn. However, the  ADS holder may not know about the meeting enough in advance to withdraw the shares.         The  depositary  will  try,  as  far  as  practical,  subject  to  the  laws  of  South  Africa  and  of  the  Company’s  Memorandum of Incorporation or similar documents, to vote or to have its agents vote the shares or other deposited  securities as instructed by ADS holders. The depositary will only vote or attempt to vote as instructed or as described  in the following sentence. If the Company requests the depositary to solicit the ADS holder’s instructions but the  depositary does not receive instructions by the specified date, the depositary will give a discretionary proxy to a person  designated by the Company to vote the shares as to each matter to be voted on, unless the Company notifies the  depositary that (i) the Company does not wish to receive a proxy, (ii) substantial opposition to the matter exists or (iii)  the matter would materially and adversely affect the rights of holders of ADSs.         The Company cannot assure the ADS holders that they will receive the voting materials in time to ensure that  they can instruct the depositary to vote their shares. In addition, the depositary and its agents are not responsible for  failing to carry out voting instructions or for the manner of carrying out voting instructions. This means that the ADS  holder may not be able to exercise the right to vote and there may be nothing the ADS holder can do if the shares are  not voted as requested.       In order to give the ADS holders a reasonable opportunity to instruct the depositary as to the exercise of voting  rights relating to Deposited Securities, if the Company requests the depositary to act, the Company agrees to give the  depositary notice of any such meeting and details concerning the matters to be voted upon as soon as practicable in  advance of the meeting date.   Fees and Expenses                                                          Persons  depositing  or  withdrawing  shares  or  ADS  holders must pay:                                           For:  $5.00 (or less) per 100 ADSs (or portion of 100 ADSs) Issuance of ADSs, including issuances resulting from a                                                    distribution of shares or rights or other property                                                                                                         Cancellation of ADSs for the purpose of  withdrawal,                                                      including if the deposit agreement terminates                                                     $.05 (or less) per ADS                              Any cash distribution to ADS holders                                                     A fee equivalent to the fee that would be payable if securities Distribution  of  securities  distributed  to  holders  of  distributed to the holder had been shares and the shares had deposited  securities  which  are  distributed  by  the  been deposited for issuance of ADSs                 depositary to ADS holders                                                     $.05 (or less) per ADSs per calendar year           Depositary services                                                     Registration or transfer fees                     Transfer and registration of shares on the Company’s                                                   share register to or from the name of the depositary or                                                      its agent when you deposit or withdraw shares 

 

                                                   Expenses of the depositary                        Cable, telex  and  facsimile  transmissions  (when                                                    expressly provided in the deposit agreement)                                                                                                           Converting foreign currency to U.S. dollars                                                     Taxes and other governmental charges the depositary or the As necessary  custodian have to pay on any ADS or share underlying an  ADS,  for  example,  stock  transfer  taxes,  stamp  duty  or  withholding taxes                                                                                       Any  charges  incurred  by  the  depositary  or  its  agents  for As necessary  servicing the deposited securities                          The  depositary  collects  its  fees  for  delivery  and  surrender  of  ADSs directly  from  investors  depositing  shares or  surrendering ADSs for the purpose of withdrawal or from intermediaries acting for them. The depositary collects fees  for making distributions to investors by deducting those fees from the amounts distributed or by selling a portion of  distributable property to pay the fees. The depositary may collect its annual fee for depositary services by deduction  from cash distributions or by directly billing investors or by charging the book-entry system accounts of participants  acting for them. The depositary may collect any of its fees by deduction from any cash distribution payable to ADS  holders that are obligated to pay those fees. The depositary may generally refuse to provide fee-attracting services  until its fees for those services are paid.         From time to time, the depositary may make payments to the Company to reimburse and / or share revenue from  the fees collected from ADS holders, or waive fees and expenses for services provided, generally relating to costs and  expenses arising out of establishment and maintenance of the ADS program. In performing its duties under the deposit  agreement, the depositary may use brokers, dealers or other service providers that are affiliates of the depositary and  that may earn or share fees or commissions.     Payment of Taxes        The ADS holder will be responsible for any taxes or other governmental charges payable on the ADSs or on the  deposited securities represented by any of the ADSs. The depositary may refuse to register any transfer of the ADS  holder’s ADSs or allow the withdrawal of the deposited securities represented by the ADSs until such taxes or other  charges are paid. It may apply payments owed to the ADS holder or sell deposited securities represented by the ADSs  to pay any taxes owed and the ADS holder will remain liable for any deficiency. If the depositary sells deposited  securities, it will, if appropriate, reduce the number of ADSs to reflect the sale and pay to ADS holders any proceeds,  or send to ADS holders any property, remaining after it has paid the taxes.    Reclassifications, Recapitalizations and Mergers                                                          If we:                                              Then:  Change the nominal or par value of our shares;    The  cash,  shares  or  other  securities  received  by  the                                                    depositary will become deposited securities. Each ADS  Reclassify,  split  up  or  consolidate  any  of  the  deposited will automatically represent its equal share of the new  securities;                                       deposited securities;                                                       Distribute securities on the shares that are not distributed to and,  the ADS holder; or,                                                                                    The depositary may distribute new ADSs representing  Recapitalize,  reorganize,  merge,  liquidate,  sell  all  or the new deposited securities or ask the ADS holder to  substantially all of the Company’s assets, or take any similar surrender  outstanding  ADRs  in  exchange  for  new  action                                              ADRs identifying the new deposited securities.  Amendment and Termination   How may the deposit agreement be amended?  

 

     The Company may agree with the depositary to amend the deposit agreement and the ADRs without the ADS  holders’  consent  for  any  reason.  If  an  amendment  adds  or  increases  fees  or  charges,  except  for  taxes  and  other  governmental charges or expenses of the depositary for registration fees, facsimile costs, delivery charges or similar  items, or prejudices a substantial right of ADS holders, it will not become effective for outstanding ADSs until 30  days after the depositary notifies ADS holders of the amendment. At the time an amendment becomes effective, the  ADS holders are considered, by continuing to hold ADSs, to agree to the amendment and to be bound by the ADRs  and the deposit agreement as amended.    How may the deposit agreement be terminated?        The depositary will terminate the deposit agreement at the Company’s direction by mailing notice of termination  to the ADS holders then outstanding at least 30 days prior to the date fixed in such notice for such termination. The  depositary may also terminate the deposit agreement by mailing notice of termination to the Company and the ADS  holders if 60 days have passed since the depositary told the Company it wants to resign but a successor depositary has  not been appointed and accepted its appointment.          After termination, the depositary and its agents will do the following under the deposit agreement but nothing  else:  collect  distributions  on the  deposited securities,  sell  rights  and  other  property,  and  deliver  shares  and  other  deposited securities upon cancellation of ADSs. Four months after termination, the depositary may sell any remaining  deposited securities by public or private sale. After that, the depositary will hold the money it received on the sale, as  well as any other cash it is holding under the deposit agreement for the pro rata benefit of the ADS holders that have  not surrendered their ADSs. It will not invest the money and has no liability for interest. The depositary’s only  obligations will be to account for the money and other cash. After termination the Company’s only obligations will  be to indemnify the depositary and to pay fees and expenses of the depositary that the Company agreed to pay.   Limitations on Obligations and Liability    Limits on the Company’s Obligations and the Obligations of the Depositary; Limits on Liability to Holders of ADSs        The deposit agreement expressly limits the Company’s obligations and the obligations of the depositary. It also  limits the Company’s liability and the liability of the depositary. The Company and the depositary:             are only obligated to take the actions specifically set forth in the deposit agreement without negligence or bad            faith;             are not liable if the Company is or is prevented or delayed by law or circumstances beyond the Company’s           control from performing its obligations under the deposit agreement;             are not liable if the Company or it exercises discretion permitted under the deposit agreement;              are not liable for the inability of any holder of ADSs to benefit from any distribution on deposited securities         that is not made available to holders of ADSs under the terms of the deposit agreement, or for any special,         consequential or punitive damages for any breach of the terms of the deposit agreement;             have no obligation to become involved in a lawsuit or other proceeding related to the ADSs or the deposit            agreement on the ADS holder’s behalf or on behalf of any other person; and             may rely upon any documents the Company believes or it believes in good faith to be genuine and to have            been signed or presented by the proper person.         In  the  deposit  agreement,  the  Company  and  the  depositary  agree  to  indemnify  each  other  under  certain  circumstances.    Requirements for Depositary Actions        Before  the  depositary  will  deliver  or  register  a  transfer  of  ADSs,  make  a  distribution  on  ADSs,  or  permit  withdrawal of shares, the depositary may require:            payment of stock transfer or other taxes or other governmental charges and transfer or registration fees charged            by third parties for the transfer of any shares or other deposited securities;     

 

       satisfactory proof of the identity and genuineness of any signature or other information it deems necessary;            and             compliance  with  regulations  it  may  establish,  from  time  to  time,  consistent  with  the  deposit  agreement,            including presentation of transfer documents.         The depositary may refuse to deliver ADSs or register transfers of ADSs generally when the transfer books of  the depositary or the Company’s transfer books are closed or at any time if the depositary or the Company think it  advisable to do so.    The ADS holder’s Right to Receive the Shares Underlying the ADS holder’s ADSs        ADS holders have the right to cancel their ADSs and withdraw the underlying shares at any time except:             when temporary delays arise because: (i) the depositary has closed its transfer books or the Company has         closed its transfer books; (ii) the transfer of shares is blocked to permit voting at a shareholders’ meeting; or         (iii) the Company is paying a dividend on its shares;             when the ADS holder owes money to pay fees, taxes and similar charges; or             when it is necessary to prohibit withdrawals in order to comply with any laws or governmental regulations            that apply to ADSs or to the withdrawal of shares or other deposited securities.        This right of withdrawal may not be limited by any other provision of the deposit agreement.    Pre-Release   The deposit agreement permits the depositary to deliver ADSs before deposit of the underlying shares. This is called  a pre-release of the ADSs. The deposit agreement permits the depositary to deliver shares before surrender of ADSs  if the shares are delivered to a South African bank. This is called a pre-release of the shares. Pre-release of ADSs and  pre-release of shares is referred to generally as pre-release. The depositary may also deliver shares upon cancellation  of pre-released ADSs (even if the ADSs are canceled before the pre-release transaction has been closed out). A pre- release of ADSs is closed out as soon as the underlying shares are delivered to the depositary. The depositary may  receive ADSs instead of shares to close out a pre-release of ADSs. The depositary may pre-release only under the  following conditions: (1) before or at the time of the pre-release, the person to whom the pre-release is being made  represents to the depositary in writing that it or its customer owns the shares or ADSs to be remitted; (2) the pre- release is fully collateralized with cash or other collateral that the depositary considers appropriate and, in the case of  a pre-release of shares, preceded or accompanied by an unconditional guaranty by a South-African bank to deliver  ADSs for cancellation on the same calendar day on which the shares are delivered to the South-African bank (or, if  such ADSs are not so delivered, to return the shares) and (3) the depositary must be able to close out the pre-release  on not more than five business days’ notice. In addition, the depositary will limit the number of ADSs that may be  outstanding at any time as a result of pre-release, although the depositary may disregard the limit from time to time,  if it thinks it is appropriate to do so.   Direct Registration System        In  the  deposit  agreement,  all  parties  to  the  deposit  agreement  acknowledge  that  the  DRS  and  Profile  Modification System, or Profile, will apply to uncertificated ADSs upon acceptance thereof to DRS by DTC. DRS is  the system administered by DTC under which the depositary may register the ownership of uncertificated ADSs,  which  ownership  will  be  evidenced  by  periodic  statements  sent  by  the  depositary  to  the  registered  holders  of  uncertificated ADSs. Profile is a required feature of DRS that allows a DTC participant, claiming to act on behalf of  a registered holder of ADSs, to direct the depositary to register a transfer of those ADSs to DTC or its nominee and  to  deliver  those  ADSs  to  the  DTC  account  of  that  DTC  participant  without  receipt  by  the  depositary  of  prior  authorization from the ADS holder to register that transfer.         In connection with and in accordance with the arrangements and procedures relating to DRS/Profile, the parties  to the deposit agreement understand that the depositary will not determine whether the DTC participant that is claiming  to be acting on behalf of an ADS holder in requesting registration of transfer and delivery described in the paragraph  above has the actual authority to act on behalf of the ADS holder (notwithstanding any requirements under the Uniform  Commercial Code). In the deposit agreement, the parties agree that the depositary’s reliance on and compliance with 

 

instructions received by the depositary through the DRS/Profile System and in accordance with the deposit agreement  will not constitute negligence or bad faith on the part of the depositary.   Shareholder Communications; Inspection of Register of Holders of ADSs; Disclosure of Interests        The depositary will make available for the ADS holder’s inspection at its office all communications that it  receives from the Company as a holder of deposited securities that the Company makes generally available to holders  of deposited securities. The depositary will send the ADS holder copies of those communications if the Company asks  it to. The ADS holder has a right to inspect the register of holders of ADSs, but not for the purpose of contacting those  holders about a matter unrelated to the Company’s business or the ADSs.         In the deposit agreement, each ADS holder agrees to comply with requests from the Company pursuant to  applicable law or the rules of any applicable stock exchange or clearing system, or the Company’s Memorandum of  Incorporation, as to the capacity in which the ADS holder owns ADSs (and the ordinary shares as the case may be)  and regarding the identity of any other persons interested in those ADSs (and the ordinary shares, as the case may be)  and the nature of such interest and various other matters, whether or not they are ADSs holders at the time of such  request.

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