Document:

Exhibit 10.1

 

SECURITIES
PURCHASE AGREEMENT

 

This SECURITIES
PURCHASE AGREEMENT (the “Agreement”), dated as of April 29, 2019, is by and among KushCo Holdings, Inc.,
a Nevada corporation with offices located at 11958 Monarch Street, Garden Grove, CA 92841 (the “Company”), and
each of the investors listed on the Schedule of Buyers attached hereto (individually, a “Buyer” and collectively,
the “Buyers”).

 

RECITALS

 

A.       The
Company and each Buyer is 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) of Regulation
D (“Regulation D”) as promulgated by the United States Securities and Exchange Commission (the “SEC”)
under the 1933 Act.

 

B.       The
Company has authorized a new series of senior notes of the Company, in the aggregate original principal amount of $21,300,000,
substantially in the form attached hereto as Exhibit A (the “Notes” or the “Securities”).

 

C.       Each
Buyer wishes to purchase, and the Company wishes to sell, upon the terms and conditions stated in this Agreement, a Note in the
aggregate original principal amount set forth opposite such Buyer’s name in column (3) on the Schedule of Buyers.

 

D.       The
Company has engaged Canaccord Genuity LLC as its exclusive placement agent (the “Placement Agent”) for the offering
of the Securities on a “best efforts” basis.

 

AGREEMENT

 

NOW, THEREFORE, in
consideration of the premises and the mutual covenants contained herein and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Company and each Buyer hereby agree as follows:

 

		1.	PURCHASE AND SALE OF NOTES.

 

(a)       Purchase
of Notes. Subject to the satisfaction (or waiver) of the conditions set forth in Sections 6 and 7 below, the Company shall
issue and sell to each Buyer, and each Buyer severally, but not jointly, agrees to purchase from the Company on the Closing Date
(as defined below) a Note in the original principal amount as is set forth opposite such Buyer’s name in column (3) on the
Schedule of Buyers.

 

(b)       Closing.
The closing (the “Closing”) of the purchase of the Notes by the Buyers shall occur at the offices of Kelley
Drye & Warren LLP, 101 Park Avenue, New York, NY 10178, or via electronic transfer (with original Notes to be overnighted on
the Closing Date to the respective Buyer). The date and time of the Closing (the “Closing Date”) shall be 10:00
a.m., New York time, on the first (1st) Business Day on which the conditions to the Closing set forth in Sections 6 and 7 below
are satisfied or waived (or such other date as is mutually agreed to by the Company and each Buyer). As used herein “Business
Day” means any day other than a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized
or required by law to remain closed.

 

     

     
 

    

 

(c)       Purchase
Price. The aggregate purchase price for the Notes to be purchased by each Buyer (the “Purchase Price”) shall
be the amount set forth opposite such Buyer’s name in column (4) on the Schedule of Buyers. Each Buyer shall pay approximately
$939 for each $1,000 of principal amount of Notes to be purchased by such Buyer at the Closing.

 

(d)       Form
of Payment. On the Closing Date, (i) each Buyer shall pay its respective Purchase Price (less the amounts withheld pursuant
to Section 4(f)) to the Company for the Notes to be issued and sold to such Buyer at the Closing, by wire transfer of immediately
available funds in accordance with the Flow of Funds Letter (as defined below) and (ii) the Company shall deliver to each
Buyer a Note, in the aggregate original principal amount as is set forth opposite such Buyer’s name in column (3) of the
Schedule of Buyers, duly executed on behalf of the Company and registered in the name of such Buyer or its designee.

 

		2.	BUYER’S REPRESENTATIONS AND WARRANTIES.

 

Each Buyer, severally
and not jointly, represents and warrants to the Company and the Placement Agent with respect to only itself that, as of the date
hereof and as of the Closing Date:

 

(a)       Organization;
Authority. Such Buyer is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction
of its organization with the requisite power and authority to enter into and to consummate the transactions contemplated by the
Transaction Documents (as defined below) to which it is a party and otherwise to carry out its obligations hereunder and thereunder.

 

(b)       No
Public Sale or Distribution. Such Buyer is acquiring its Note for its own account and not with a view towards, or for resale
in connection with, the public sale or distribution thereof in violation of applicable securities laws, except pursuant to sales
registered or exempted under the 1933 Act; provided, however, by making the representations herein, such Buyer does not agree,
or make any representation or warranty, 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 from registration
under the 1933 Act. Such Buyer does not presently have any agreement or understanding, directly or indirectly, with any Person
to distribute any of the Securities in violation of applicable securities laws. For purposes of this Agreement, “Person”
means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization,
any other entity and any Governmental Entity or any department or agency thereof.

 

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

 

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

 

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(e)       Information.
Such Buyer and its advisors, if any, have been 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 that have been requested by such Buyer. Such Buyer and
its advisors, if any, have been afforded the opportunity to ask questions of the Company. Neither such inquiries nor any other
due diligence investigations conducted by such Buyer or its advisors, if any, or its representatives shall modify, amend or affect
such Buyer’s right to rely on the Company’s representations and warranties contained herein. Such Buyer understands
that its investment in the Securities involves a high degree of risk. Such Buyer has sought such accounting, legal and tax advice
as it has considered necessary to make an informed investment decision with respect to its acquisition of the Securities. Such
Buyer understands that the Placement Agent has acted solely as the agent of the Company in this placement of the Securities and
such Buyer has not relied on the business or legal advice of the Placement Agent or any of its agents, counsel or affiliates in
making its investment decision hereunder, and confirms that none of such persons has made any representations or warranties to
such Buyer in connection with the transactions contemplated by the Transaction Documents.

 

(f)       No
Governmental Review. Such Buyer understands that no United States federal or state agency or any other government or governmental
agency has passed on or made any recommendation or endorsement of the Securities or the fairness or suitability of the investment
in the Securities nor have such authorities passed upon or endorsed the merits of the offering of the Securities.

 

(g)       Transfer
or Resale. Such Buyer understands that except as provided in the Section 4(g) hereof: (i) the Securities have not been and
are not being registered under the 1933 Act or any applicable state securities laws, and may not be offered for sale, sold, assigned
or transferred unless (A) subsequently registered thereunder, (B) such Buyer shall have delivered to the Company (if requested
by the Company) an opinion of counsel, in a form reasonably acceptable to the Company, to the effect that such Securities to be
sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration, or (C) such
Buyer provides the Company with reasonable assurance that such Securities can be sold, assigned or transferred pursuant to Rule
144 or Rule 144A promulgated under the 1933 Act (or a successor rule thereto) (collectively, “Rule 144”); (ii)
any sale of the Securities made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144, and further,
if Rule 144 is not applicable, any resale of the 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 promulgated thereunder; and (iii) neither the Company
nor any other Person is under any obligation to register the Securities under the 1933 Act or any state securities laws or to comply
with the terms and conditions of any exemption thereunder. 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 and such pledge of Securities
shall not be deemed to be a transfer, sale or assignment of the Securities hereunder, and no Buyer effecting a pledge of Securities
shall be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this
Agreement or any other Transaction Document (as defined in Section 3(b)), including, without limitation, this Section 2(g).

 

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(h)       Validity;
Enforcement. This Agreement has been duly and validly authorized, executed and delivered on behalf of such Buyer and shall
constitute the legal, valid and binding obligations of such Buyer enforceable against such Buyer in accordance with their respective
terms, except as such enforceability may be limited by general principles of equity or to applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’
rights and remedies.

 

(i)       No
Conflicts. The execution, delivery and performance by such Buyer of this Agreement and the consummation by such Buyer of the
transactions contemplated hereby will not (i) result in a violation of the organizational documents of such Buyer, or (ii) conflict
with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which such
Buyer is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and
state securities laws) applicable to such Buyer, except in the case of clauses (ii) and (iii) above, for such conflicts, defaults,
rights or violations which could not, individually or in the aggregate, reasonably be expected to have a material adverse effect
on the ability of such Buyer to perform its obligations hereunder.

 

(j)       Bad
Actor Disclosure. Such Buyer hereby acknowledges and agrees that it has received and reviewed the disclosure set forth on Annex
I attached hereto a reasonable time prior to the time that such Buyer has agreed to purchase the Securities.

 

		3.	REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

 

The Company represents
and warrants to each of the Buyers and the Placement Agent that, as of the date hereof and as of the Closing Date:

 

(a)       Organization
and Qualification. Each of the Company and each of its Subsidiaries are entities duly organized and validly existing and in
good standing under the laws of the jurisdiction in which they are formed, and have the requisite power and authority to own their
properties and to carry on their business as now being conducted and as presently proposed to be conducted. Each of the Company
and each of its Subsidiaries is duly qualified as a foreign entity to do business and is in good standing in every jurisdiction
in which the character of the properties owned or leased by it or the nature of the business conducted by it makes such qualification
necessary, except to the extent that the failure to be so qualified or be in good standing would not reasonably be expected to
have a Material Adverse Effect (as defined below). As used in this Agreement, “Material Adverse Effect” means
any material adverse effect on (i) the business, properties, assets, liabilities, operations (including results thereof), condition
(financial or otherwise) or prospects of the Company and its Subsidiaries, taken as a whole, (ii) the transactions contemplated
hereby or in any of the other Transaction Documents or any other agreements or instruments to be entered into in connection herewith
or therewith or (iii) the authority or ability of the Company or any of its Subsidiaries to perform any of their respective obligations
under any of the Transaction Documents (as defined below). Other than the Persons (as defined below) set forth on Schedule 3(a),
the Company has no Subsidiaries. “Subsidiaries” means any Person in which the Company, directly or indirectly,
(I) owns any of the outstanding capital stock or holds any equity or similar interest of such Person or (II) controls or operates
all or any part of the business, operations or administration of such Person, and each of the foregoing, is individually referred
to herein as a “Subsidiary.”

 

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(b)       Authorization;
Enforcement; Validity. The Company has the requisite power and authority to enter into and perform its obligations under this
Agreement and the other Transaction Documents and to issue the Securities in accordance with the terms hereof and thereof. The
execution and delivery of this Agreement and the other Transaction Documents by the Company, and the consummation by the Company
of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Notes) have been duly authorized
by the Company’s board of directors or other governing body, as applicable, and (other than the filing of a Form D and Form
8-K with the SEC and any other filings as may be required by any state securities agencies) no further filing, consent or authorization
is required by the Company, its Subsidiaries, their respective boards of directors or their shareholders or other governing body,
in connection with the execution and delivery of this Agreement and the other Transaction Documents. This Agreement has been, and
the other Transaction Documents to which it is a party will be prior to the Closing, duly executed and delivered by the Company,
and each constitutes the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with
its respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors’
rights and remedies and except as rights to indemnification and to contribution may be limited by federal or state securities law.
“Transaction Documents” means, collectively, this Agreement, the Notes and each of the other agreements and
instruments entered into or delivered by any of the parties hereto in connection with the transactions contemplated hereby and
thereby, as may be amended from time to time.

 

(c)       Issuance
of Securities. The issuance of the Notes are duly authorized and upon issuance in accordance with the terms of the Transaction
Documents shall be validly issued, fully paid and non-assessable and free from all preemptive or similar rights, mortgages, defects,
claims, liens, pledges, charges, taxes, rights of first refusal, encumbrances, security interests and other encumbrances (collectively
“Liens”) with respect to the issuance thereof. Subject to the accuracy of the representations and warranties
of the Buyers in this Agreement, the offer and issuance by the Company of the Securities is exempt from registration under the
1933 Act.

 

(d)       No
Conflicts. The execution, delivery and performance of the Transaction Documents by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Notes) will not
(i) result in a violation of the Articles of Incorporation (as defined below) (including, without limitation, any certificate of
designation contained therein), Bylaws (as defined below), certificate of formation, memorandum of association, articles of association,
bylaws or other organizational documents of the Company or any of its Subsidiaries, or any capital stock or other securities of
the Company or any of its Subsidiaries, (ii) after giving effect to any consents or approvals obtained on or prior to the Closing
Date, conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) in
any respect under, or 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 (iii) result in a violation of any law, rule, regulation,
order, judgment or decree (including, without limitation, foreign, federal and state securities laws and regulations and the rules
and regulations of the OTCQB (the “Principal Market”) and including all applicable foreign, federal and state
laws, rules and regulations) 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.

 

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(e)       Consents.
Neither the Company nor any Subsidiary is required to obtain any consent from, authorization or order of, or make any filing or
registration with (other than the filing of a Form D and Form 8-K with the SEC and any other filings as may be required by any
state securities agencies), any Governmental Entity (as defined below) or any regulatory or self-regulatory agency or any other
Person in order for it to execute, deliver or perform any of its respective obligations under or contemplated by the Transaction
Documents, in each case, in accordance with the terms hereof or thereof and other than such consents or approvals obtained on or
prior to the Closing Date. All consents, authorizations, orders, filings and registrations which the Company or any Subsidiary
is required to obtain pursuant to the preceding sentence have been or will be obtained or effected on or prior to the Closing Date,
and neither the Company nor any of its Subsidiaries are aware of any facts or circumstances which might prevent the Company or
any of its Subsidiaries from obtaining or effecting any of the registration, application or filings contemplated by the Transaction
Documents. The Company is not in violation of the requirements of the Principal Market and has no knowledge of any facts or circumstances
which could reasonably lead to delisting or suspension of the Common Stock in the foreseeable future. “Governmental Entity”
means any nation, state, county, city, town, village, district, or other political jurisdiction of any nature, federal, state,
local, municipal, foreign, or other government, governmental or quasi-governmental authority of any nature (including any governmental
agency, branch, department, official, or entity and any court or other tribunal), multi-national organization or body; or body
exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory, or taxing authority
or power of any nature or instrumentality of any of the foregoing, including any entity or enterprise owned or controlled by a
government or a public international organization or any of the foregoing.

 

(f)       Acknowledgment
Regarding Buyer’s Purchase of Securities. The Company acknowledges and agrees that each Buyer is acting solely in the
capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated hereby
and thereby and that no Buyer is (i) an officer or director of the Company or any of its Subsidiaries, (ii) an “affiliate”
(as defined in Rule 144) of the Company or any of its Subsidiaries or (iii) to its knowledge, a “beneficial owner”
of more than 10% of the shares of Common Stock (as defined for purposes of Rule 13d-3 of the Securities Exchange Act of 1934, as
amended (the “1934 Act”)). The Company further acknowledges that no Buyer is acting as a financial advisor or
fiduciary of the Company or any of its Subsidiaries (or in any similar capacity) with respect to the Transaction Documents and
the transactions contemplated hereby and thereby, and any advice given by a Buyer or any of its representatives or agents in connection
with the Transaction Documents and the transactions contemplated hereby and thereby is merely incidental to such Buyer’s
purchase of the Securities. The Company further represents to each Buyer that the Company’s and each Subsidiary’s decision
to enter into the Transaction Documents to which it is a party has been based solely on the independent evaluation by the Company,
each Subsidiary and their respective representatives.

 

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(g)       No
General Solicitation; Placement Agent’s Fees. Neither the Company, nor any of its Subsidiaries or affiliates, nor any
Person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning
of Regulation D) in connection with the offer or sale of the Securities. The Company shall be responsible for the payment of any
placement agent’s fees, financial advisory fees, or brokers’ commissions (other than for Persons engaged by any Buyer
or its investment advisor) relating to or arising out of the transactions contemplated hereby, including, without limitation, placement
agent fees payable to the Placement Agent in connection with the sale of the Securities. The fees and expenses of the Placement
Agent to be paid by the Company or any of its Subsidiaries are as set forth on Schedule 3(g) attached hereto. The Company shall
pay, and hold each Buyer harmless against, any liability, loss or expense (including, without limitation, attorney’s fees
and out-of-pocket expenses) arising in connection with any such claim. The Company acknowledges that it has engaged the Placement
Agent in connection with the sale of the Securities. Other than the Placement Agent, neither the Company nor any of its Subsidiaries
has engaged any placement agent or other agent in connection with the offer or sale of the Securities.

 

(h)       No
Integrated Offering. None of the Company, its Subsidiaries or any of their affiliates, nor any Person acting on their behalf
has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances
that would require registration of the issuance of any of the Securities under the 1933 Act, whether through integration with prior
offerings or otherwise, or cause this offering of the Securities to require approval of shareholders of the Company for purposes
of the 1933 Act or under any applicable shareholder approval provisions, including, without limitation, under the rules and regulations
of any exchange or automated quotation system on which any of the securities of the Company are listed or designated for quotation.
None of the Company, its Subsidiaries, their affiliates nor any Person acting on their behalf will take any action or steps that
would require registration of the issuance of any of the Securities under the 1933 Act or cause the offering of any of the Securities
to be integrated with other offerings of securities of the Company.

 

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(i)       SEC
Documents; Financial Statements. Except as set forth in Schedule 3(i), during the two (2) years prior to the date hereof, the
Company has timely filed all reports, schedules, forms, proxy statements, statements and other documents required to be filed by
it with the SEC pursuant to the reporting requirements under Section 13(a) or 15(d) of the 1934 Act (all of the foregoing filed
prior to the date hereof and all exhibits and appendices included therein and financial statements, notes and schedules thereto
and documents incorporated by reference therein being hereinafter referred to as the “SEC Documents”), or has
received a valid extension of such time of filing and has filed any such SEC Documents prior to the expiration of any such extension,
except to the extent such extension has not yet expired. Except as disclosed in 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 the light of the circumstances under which they were made, not misleading. Except as
disclosed in the SEC Documents, as of their respective dates, the financial statements of the Company included in the SEC Documents
complied in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with
respect thereto as in effect as of the time of filing. Except as disclosed in the SEC Documents, such financial statements have
been prepared in accordance with generally accepted accounting principles (“GAAP”), consistently applied, during
the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto, or (ii) in the
case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements) and fairly
present in all material respects the financial position of the Company as of the dates thereof and the results of its operations
and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments which
will not be material, either individually or in the aggregate). The reserves, if any, established by the Company or the lack of
reserves, if applicable, are reasonable based upon facts and circumstances known by the Company on the date hereof and there are
no loss contingencies that are required to be accrued by the Statement of Financial Accounting Standard No. 5 of the Financial
Accounting Standards Board which are not provided for by the Company in its financial statements or otherwise. No other information
provided by or on behalf of the Company to any of the Buyers which is not included in the SEC Documents (including, without limitation,
information referred to in Section 2(e) of this Agreement or in the disclosure schedules to this Agreement) contains any untrue
statement of a material fact or omits to state any material fact necessary in order to make the statements therein not misleading,
in the light of the circumstance under which they are or were made. Except as disclosed in the SEC Documents, the Company is not
currently contemplating to amend or restate any of the financial statements (including, without limitation, any notes or any letter
of the independent accountants of the Company with respect thereto) included in the SEC Documents (the “Financial Statements”),
nor is the Company currently aware of facts or circumstances which would require the Company to amend or restate any of the Financial
Statements, in each case, in order for any of the Financials Statements to be in compliance with GAAP and the rules and regulations
of the SEC. Except as disclosed in the SEC Documents, the Company has not been informed by its independent accountants that they
recommend that the Company amend or restate any of the Financial Statements or that there is any need for the Company to amend
or restate any of the Financial Statements.

 

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(j)       Absence
of Certain Changes. Except as disclosed in the SEC Documents, since the date of the Company’s most recent audited financial
statements contained in a Form 10-K, there has been no material adverse change and no material adverse development in the business,
assets, liabilities, properties, operations (including results thereof), condition (financial or otherwise) or prospects of the
Company or any of its Subsidiaries. Since the date of the Company’s most recent audited financial statements contained in
a Form 10-K, neither the Company nor any of its Subsidiaries has (i) declared or paid any dividends, (ii) sold any assets, individually
or in the aggregate, outside of the ordinary course of business or (iii) made any capital expenditures, individually or in the
aggregate, outside of the ordinary course of business. Neither the Company nor any of its Subsidiaries has taken any steps to seek
protection pursuant to any law or statute relating to bankruptcy, insolvency, reorganization, receivership, liquidation or winding
up, nor does the Company or any Subsidiary have any knowledge or reason to believe that any of their respective creditors intend
to initiate involuntary bankruptcy proceedings or any actual knowledge of any fact which would reasonably lead a creditor to do
so. The Company and its Subsidiaries, individually and on a consolidated basis, are not as of the date hereof, and after giving
effect to the transactions contemplated hereby to occur at the Closing, will not be Insolvent (as defined below). For purposes
of this Section 3(j), “Insolvent” means, (i) with respect to the Company and its Subsidiaries, on a consolidated
basis, (A) the present fair saleable value of the Company’s and its Subsidiaries’ assets is less than the amount required
to pay the Company’s and its Subsidiaries’ total Indebtedness (as defined below), (B) the Company and its Subsidiaries
are unable to pay their debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute
and matured or (C) the Company and its Subsidiaries intend to incur or believe that they will incur debts that would be beyond
their ability to pay as such debts mature; and (ii) with respect to the Company and each Subsidiary, individually, (A) the present
fair saleable value of the Company’s or such Subsidiary’s (as the case may be) assets is less than the amount required
to pay its respective total Indebtedness, (B) the Company or such Subsidiary (as the case may be) is unable to pay its respective
debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured or (C)
the Company or such Subsidiary (as the case may be) intends to incur or believes that it will incur debts that would be beyond
its respective ability to pay as such debts mature. Neither the Company nor any of its Subsidiaries has engaged in any business
or in any transaction, and is not about to engage in any business or in any transaction, for which the Company’s or such
Subsidiary’s remaining assets constitute unreasonably small capital with which to conduct the business in which it is engaged
as such business is now conducted and is proposed to be conducted.

 

(k)       No
Undisclosed Events, Liabilities, Developments or Circumstances. Except as disclosed in the SEC Documents, no event, liability,
development or circumstance has occurred or exists, or is reasonably expected to exist or occur with respect to the Company, any
of its Subsidiaries or any of their respective businesses, properties, liabilities, prospects, operations (including results thereof)
or condition (financial or otherwise), that (i) would be required to be disclosed by the Company under applicable securities laws
on a registration statement on Form S-1 filed with the SEC relating to an issuance and sale by the Company of its Common Stock
and which has not been publicly announced, (ii) would reasonably be expected to have a material adverse effect on any Buyer’s
investment hereunder or (iii) would reasonably be expected to have a Material Adverse Effect.

 

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(l)       Conduct
of Business; Regulatory Permits. Neither the Company nor any of its Subsidiaries is in violation of any term of or in default
under its Articles of Incorporation, any certificate of designation, preferences or rights of any other outstanding series of preferred
stock of the Company or any of its Subsidiaries or Bylaws or their organizational charter, certificate of formation, memorandum
of association, articles of association, Articles of Incorporation or certificate of incorporation or bylaws, respectively. Neither
the Company nor any of its Subsidiaries is in violation of any judgment, decree or order or any statute, ordinance, rule or regulation
applicable to the Company or any of its Subsidiaries, and neither the Company nor any of its Subsidiaries will conduct its business
in violation of any of the foregoing. Without limiting the generality of the foregoing, the Company is not in violation of any
of the rules, regulations or requirements of the Principal Market and has no knowledge of any facts or circumstances that could
reasonably lead to delisting or suspension of the Common Stock by the Principal Market in the foreseeable future. During the two
years prior to the date hereof, (i) the Common Stock has been listed or designated for quotation on the Principal Market, (ii)
trading in the Common Stock has not been suspended by the SEC or the Principal Market and (iii) the Company has received no communication,
written or oral, from the SEC or the Principal Market regarding the suspension or delisting of the Common Stock from the Principal
Market. The Company and each of its Subsidiaries possess all certificates, authorizations and permits issued by the appropriate
regulatory authorities necessary to conduct their respective businesses, and neither the Company nor any such Subsidiary has received
any notice of proceedings relating to the revocation or modification of any such certificate, authorization or permit. There is
no agreement, commitment, judgment, injunction, order or decree binding upon the Company or any of its Subsidiaries or to which
the Company or any of its Subsidiaries is a party which has or would reasonably be expected to have the effect of prohibiting or
materially impairing any business practice of the Company or any of its Subsidiaries, any acquisition of property by the Company
or any of its Subsidiaries or the conduct of business by the Company or any of its Subsidiaries as currently conducted other than
such effects, individually or in the aggregate.

 

(m)       Foreign
Corrupt Practices. Neither the Company, the Company’s subsidiary or any director, officer, agent, employee, nor any
other person acting for or on behalf of the foregoing (individually and collectively, a “Company Affiliate”)
have violated the U.S. Foreign Corrupt Practices Act (the “FCPA”) or any other applicable anti-bribery or anti-corruption
laws, nor has any Company Affiliate offered, paid, promised to pay, or authorized the payment of any money, or offered, given,
promised to give, or authorized the giving of anything of value, to any officer, employee or any other person acting in an official
capacity for any Governmental Entity to any political party or official thereof or to any candidate for political office (individually
and collectively, a “Government Official”) or to any person under circumstances where such Company Affiliate
knew or was aware of a high probability that all or a portion of such money or thing of value would be offered, given or promised,
directly or indirectly, to any Government Official, for the purpose of:

 

(i)       (A)
influencing any act or decision of such Government Official in his/her official capacity, (B) inducing such Government Official
to do or omit to do any act in violation of his/her lawful duty, (C) securing any improper advantage, or (D) inducing such Government
Official to influence or affect any act or decision of any Governmental Entity, or

 

(ii)       assisting
the Company or its Subsidiaries in obtaining or retaining business for or with, or directing business to, the Company or its Subsidiaries.

 

(n)       Sarbanes-Oxley
Act. Except as disclosed in the SEC Documents, the Company and each Subsidiary is in compliance with any and all applicable
requirements of the Sarbanes-Oxley Act of 2002, as amended, and any and all applicable rules and regulations promulgated by the
SEC thereunder.

 

    	 	10	 

     
 

    

 

(o)       Transactions
With Affiliates. Except as disclosed in the SEC Documents, no current or former employee, partner, director, officer or shareholder
(direct or indirect) of the Company or its Subsidiaries, or any associate, or, to the knowledge of the Company, any affiliate of
any thereof, or any relative with a relationship no more remote than first cousin of any of the foregoing, is presently, or has
ever been, (i) a party to any transaction with the Company or its Subsidiaries (including any contract, agreement or other arrangement
providing for the furnishing of services by, or rental of real or personal property from, or otherwise requiring payments to, any
such director, officer or shareholder or such associate or affiliate or relative Subsidiaries (other than for ordinary course services
as employees, officers or directors of the Company or any of its Subsidiaries)) or (ii) the direct or indirect owner of an interest
in any corporation, firm, association or business organization which is a competitor, supplier or customer of the Company or its
Subsidiaries (except for a passive investment (direct or indirect) in less than 5% of the common stock of a company whose securities
are traded on or quoted through The New York Stock Exchange, the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Select
Market, the Nasdaq Global Market or the Principal Market (each, an “Eligible Market”)), nor does any such Person
receive income from any source other than the Company or its Subsidiaries which relates to the business of the Company or its Subsidiaries
or should properly accrue to the Company or its Subsidiaries. No employee, officer, shareholder or director of the Company or any
of its Subsidiaries or member of his or her immediate family is indebted to the Company or its Subsidiaries, as the case may be,
nor is the Company or any of its Subsidiaries indebted (or committed to make loans or extend or guarantee credit) to any of them,
other than (i) for payment of salary for services rendered, (ii) reimbursement for reasonable expenses incurred on behalf of the
Company, and (iii) for other standard employee benefits made generally available to all employees or executives (including stock
option agreements outstanding under any stock option plan approved by the Board of Directors of the Company).

 

(p)       Equity
Capitalization. 

 

(i)       Definitions:

 

(A)       “Common
Stock” means (x) the Company’s shares of common stock, $0.001 par value per share, and (y) any capital stock
into which such common stock shall have been changed or any share capital resulting from a reclassification of such common stock.

 

(B)       “Preferred
Stock” means (x) the Company’s blank check preferred stock, $0.001 par value per share, the terms of which may
be designated by the board of directors of the Company in a certificate of designations and (y) any capital stock into which such
preferred stock shall have been changed or any share capital resulting from a reclassification of such preferred stock (other than
a conversion of such preferred stock into Common Stock in accordance with the terms of such certificate of designations).

 

(ii)       Authorized
and Outstanding Capital Stock. As of the date hereof, the authorized capital stock of the Company consists of (A) 265,000,000
shares of Common Stock, of which 88,182,716 are issued and outstanding and 20,401,513 shares are reserved for issuance pursuant
to Convertible Securities (as defined below) exercisable or exchangeable for, or convertible into, shares of Common Stock and (B)
10,000,000 shares of Preferred Stock, none of which are issued and outstanding. No shares of Common Stock are held in the treasury
of the Company. “Convertible Securities” means any capital stock or other security of the Company or any of
its Subsidiaries that is at any time and under any circumstances directly or indirectly convertible into, exercisable or exchangeable
for, or which otherwise entitles the holder thereof to acquire, any capital stock or other security of the Company (including,
without limitation, Common Stock) or any of its Subsidiaries.

 

    	 	11	 

     
 

    

 

(iii)       Valid
Issuance; Available Shares; Affiliates. All of such outstanding shares are duly authorized and have been, or upon issuance
will be, validly issued and are fully paid and nonassessable. Schedule 3(p)(iii) sets forth the number of shares of Common
Stock that are (A) reserved for issuance pursuant to Convertible Securities (as defined below) and (B) that are, as of the date
hereof, owned by Persons who are “affiliates” (as defined in Rule 405 of the 1933 Act and calculated based on the assumption
that only officers, directors and holders of at least 10% of the Company’s issued and outstanding Common Stock are “affiliates”
without conceding that any such Persons are “affiliates” for purposes of federal securities laws) of the Company or
any of its Subsidiaries. To the Company’s knowledge, no Person owns 10% or more of the Company’s issued and outstanding
shares of Common Stock (calculated based on the assumption that all Convertible Securities (as defined below), whether or not presently
exercisable or convertible, have been fully exercised or converted (as the case may be) taking account of any limitations
on exercise or conversion (including “blockers”) contained therein without conceding that such identified Person is
a 10% shareholder for purposes of federal securities laws).

 

(iv)       Existing
Securities; Obligations. Except as disclosed in the SEC Documents: (A) none of the Company’s or any Subsidiary’s
shares, interests or capital stock is subject to preemptive rights or any other similar rights or Liens suffered or permitted by
the Company or any Subsidiary; (B) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments
of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any shares,
interests or capital stock of the Company or any of its Subsidiaries, or contracts, commitments, understandings or arrangements
by which the Company or any of its Subsidiaries is or may become bound to issue additional shares, interests or capital stock of
the Company or any of its Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any shares, interests or
capital stock of the Company or any of its Subsidiaries; (C) there are no agreements or arrangements under which the Company or
any of its Subsidiaries is obligated to register the sale of any of their securities under the 1933 Act; (D) there are no outstanding
securities or instruments of the Company or any of its Subsidiaries which contain any redemption or similar provisions, and there
are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become
bound to redeem a security of the Company or any of its Subsidiaries; (E) there are no securities or instruments containing anti-dilution
or similar provisions; and (F) neither the Company nor any Subsidiary has any stock appreciation rights or “phantom stock”
plans or agreements or any similar plan or agreement.

 

(v)       Organizational
Documents. The Company has furnished to the Buyers true, correct and complete copies of the Company’s Amended and Restated
Articles of Incorporation, as amended and as in effect on the date hereof (the “Articles of Incorporation”),
and the Company’s bylaws, as amended and as in effect on the date hereof (the “Bylaws”), and the material
terms of all Convertible Securities and the material rights of the holders thereof in respect thereto.

 

    	 	12	 

     
 

    

 

(q)       Indebtedness
and Other Contracts. Neither the Company nor any of its Subsidiaries, (i) except as disclosed on Schedule 3(q),
has any outstanding debt securities, notes, credit agreements, credit facilities or other agreements, documents or instruments
evidencing Indebtedness of the Company or any of its Subsidiaries or by which the Company or any of its Subsidiaries is or may
become bound, (ii) is a party to any contract, agreement or instrument, the violation of which, or default under which, by the
other party(ies) to such contract, agreement or instrument could reasonably be expected to result in a Material Adverse Effect,
(iii) except as disclosed on Schedule 3(q), has any financing statements securing obligations in any amounts filed
in connection with the Company or any of its Subsidiaries; (iv) is in violation of any term of, or in default under, any contract,
agreement or instrument relating to any Indebtedness, except where such violations and defaults would not result, individually
or in the aggregate, in a Material Adverse Effect, or (v) is a party to any contract, agreement or instrument relating to any Indebtedness,
the performance of which, in the judgment of the Company’s officers, has or could reasonably be expected to have a Material
Adverse Effect. Neither the Company nor any of its Subsidiaries have any liabilities or obligations required to be disclosed in
the SEC Documents which are not so disclosed in the SEC Documents, other than those incurred in the ordinary course of the Company’s
or its Subsidiaries’ respective businesses and which, individually or in the aggregate, do not or could not reasonably be
expected to have a Material Adverse Effect. For purposes of this Agreement: (x) “Indebtedness” of any Person
means, without duplication (A) all indebtedness for borrowed money, (B) all obligations issued, undertaken or assumed as the deferred
purchase price of property or services (including, without limitation, “capital leases” in accordance with GAAP) (other
than trade payables entered into in the ordinary course of business consistent with past practice), (C) all reimbursement or payment
obligations with respect to letters of credit, surety bonds and other similar instruments, (D) all obligations evidenced by notes,
bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition of property,
assets or businesses, (E) all indebtedness created or arising under any conditional sale or other title retention agreement, or
incurred as financing, in either case with respect to any property or assets acquired with the proceeds of such indebtedness (even
though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession or
sale of such property), (F) all monetary obligations under any leasing or similar arrangement which, in connection with GAAP, consistently
applied for the periods covered thereby, is classified as a capital lease, (G) all indebtedness referred to in clauses (A) through
(F) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured
by) any Lien upon or in any property or assets (including accounts and contract rights) owned by any Person, even though the Person
which owns such assets or property has not assumed or become liable for the payment of such indebtedness, and (H) all Contingent
Obligations in respect of indebtedness or obligations of others of the kinds referred to in clauses (A) through (G) above; and
(y) “Contingent Obligation” means, as to any Person, any direct or indirect liability, contingent or otherwise,
of that Person with respect to any Indebtedness, lease, dividend or other obligation of another Person if the primary purpose or
intent of the Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability
that such liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders
of such liability will be protected (in whole or in part) against loss with respect thereto.

 

    	 	13	 

     
 

    

 

(r)       Litigation.
There is no action, suit, arbitration, proceeding, inquiry or to the knowledge of the Company, investigation, before or by the
Principal Market, any court, public board, other Governmental Entity, self-regulatory organization or body pending or, to the knowledge
of the Company, threatened against or affecting the Company or any of its Subsidiaries, the Common Stock or any of the Company’s
or its Subsidiaries’ officers or directors, whether of a civil or criminal nature or otherwise, in their capacities as such,
except as set forth in Schedule 3(r), or which if it was determined adversely to the Company, its Subsidiaries or any of
the Company’s or its Subsidiaries’ officers or directors, would not reasonably be expected to have a Material
Adverse Effect. No director, officer or employee of the Company or any of its subsidiaries has willfully violated 18 U.S.C. §1519
or engaged in spoliation in reasonable anticipation of litigation. Without limitation of the foregoing, there has not been, and
to the knowledge of the Company, there is not pending or contemplated, any investigation by the SEC involving the Company, any
of its Subsidiaries or any current or former director or officer of the Company or any of its Subsidiaries. The SEC has not issued
any stop order or other order suspending the effectiveness of any registration statement filed by the Company under the 1933 Act
or the 1934 Act. Neither the Company nor any of its Subsidiaries is subject to any order, writ, judgment, injunction, decree, determination
or award of any Governmental Entity.

 

(s)       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 be unable
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.

 

(t)       Employee
Relations. Neither the Company nor any of its Subsidiaries is a party to any collective bargaining agreement or employs any
member of a union. The Company and its Subsidiaries believe that their relations with their employees are good. No executive officer
(as defined in Rule 501(f) promulgated under the 1933 Act) of the Company or any of its Subsidiaries has notified the Company or
any such Subsidiary that such officer intends to leave the Company or any such Subsidiary or otherwise terminate such officer’s
employment with the Company or any such Subsidiary. To the knowledge of the Company, no executive officer of the Company or any
of its Subsidiaries is, or is now expected to be, in violation of any material term of any employment contract, confidentiality,
disclosure or proprietary information agreement, non-competition agreement, or any other contract or agreement or any restrictive
covenant, and to the knowledge of the Company, the continued employment of each such executive officer does not subject the Company
or any of its Subsidiaries to any liability with respect to any of the foregoing matters. The Company and its Subsidiaries are
in compliance with all federal, state, local and foreign laws and regulations respecting labor, employment and employment practices
and benefits, terms and conditions of employment and wages and hours, except where failure to be in compliance would not, either
individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

 

(u)       Title.

 

(i)       Real
Property. The Company does not own any real property. Any real property and facilities held under lease by the Company and
its Subsidiaries are held by them under valid, subsisting and enforceable leases.

 

    	 	14	 

     
 

    

 

(ii)       Fixtures
and Equipment. Each of the Company and its Subsidiaries (as applicable) has good title to, or a valid leasehold interest in,
the tangible personal property, equipment, improvements, fixtures, and other personal property and appurtenances that are used
by the Company or its Subsidiary in connection with the conduct of its business (the “Fixtures and Equipment”).
Each of the Company and its Subsidiaries owns all of its Fixtures and Equipment free and clear of all Liens except for except for
Permitted Liens (as defined in each Note).

 

(v)       Intellectual
Property Rights. The Company and its Subsidiaries own or possess adequate rights or licenses to use all trademarks, trade names,
service marks, service mark registrations, service names, original works of authorship, patents, patent rights, copyrights, inventions,
licenses, approvals, governmental authorizations, trade secrets and other intellectual property rights and all applications and
registrations therefor (“Intellectual Property Rights”) necessary to conduct their respective businesses as
now conducted and presently proposed to be conducted. Each of patents owned by the Company or any of its Subsidiaries is listed
on Schedule 3(v)(i). The Company does not have any knowledge of any infringement by the Company or its Subsidiaries of Intellectual
Property Rights of others. There is no claim, action or proceeding being made or brought, or to the knowledge of the Company or
any of its Subsidiaries, being threatened, against the Company or any of its Subsidiaries regarding its Intellectual Property Rights.
Neither the Company nor any of its Subsidiaries is aware of any facts or circumstances which might give rise to any of the foregoing
infringements or claims, actions or proceedings. The Company and its Subsidiaries have taken reasonable security measures to protect
the secrecy, confidentiality and value of all of their material Intellectual Property Rights, except in each case where the failure
to so protect could not reasonably be expected to have a Material Adverse Effect.

 

(w)       Environmental
Laws. (i) The Company and its Subsidiaries (A) are in compliance with any and all Environmental Laws (as defined below),
(B) have received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their
respective businesses and (C) are in compliance with all terms and conditions of any such permit, license or approval where, in
each of the foregoing clauses (A), (B) and (C), the failure to so comply could be reasonably expected to have, individually or
in the aggregate, a Material Adverse Effect. 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.

 

    	 	15	 

     
 

    

 

(ii)       No
Hazardous Materials:

 

(A)       have
been disposed of or otherwise released from any Real Property of the Company or any of its Subsidiaries in violation of any Environmental
Laws; or

 

(B)       are
present on, over, beneath, in or upon any Real Property or any portion thereof in quantities that would constitute a violation
of any Environmental Laws. No prior use by the Company or any of its Subsidiaries of any Real Property has occurred that violates
any Environmental Laws, which violation would have a material adverse effect on the business of the Company or any of its Subsidiaries.

 

(iii)       Except
as set forth on Schedule 3(w)(iii), neither the Company nor any of its Subsidiaries knows of any other person who or entity which
has stored, treated, recycled, disposed of or otherwise located on any Real Property any Hazardous Materials, including, without
limitation, such substances as asbestos and polychlorinated biphenyls.

 

(iv)       None
of the Real Properties are on any federal or state “Superfund” list or Liability Information System (“CERCLIS”)
list or any state environmental agency list of sites under consideration for CERCLIS, nor subject to any environmental related
Liens.

 

(x)       Subsidiary
Rights. The Company or one of its Subsidiaries has the unrestricted right to vote, and (subject to limitations imposed by applicable
law) to receive dividends and distributions on, all capital securities of its Subsidiaries as owned by the Company or such Subsidiary.

 

(y)       Tax
Status. Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect, The Company and each of its Subsidiaries (i) has timely made or filed all foreign, federal and state income
and all other tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has timely 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 (iii) has set aside on its books provision reasonably
adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply.
Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse
Effect, 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 and its Subsidiaries know of no basis for any such claim. The Company is not operated in such a manner
as to qualify as a passive foreign investment company, as defined in Section 1297 of the Code. The net operating loss carryforwards
(“NOLs”) for United States federal income tax purposes of the consolidated group of which the Company is the
common parent, if any, shall not be adversely affected by the transactions contemplated hereby. The transactions contemplated hereby
do not constitute an “ownership change” within the meaning of Section 382 of the Code, thereby preserving the Company’s
ability to utilize such NOLs.

 

    	 	16	 

     
 

    

 

(z)       Internal
Accounting and Disclosure Controls. Except as set forth on Schedule 3(z), the Company and each of its Subsidiaries maintains
internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the 1934 Act) that is effective to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles, including 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 GAAP and to maintain asset and liability accountability, (iii) access to assets or incurrence
of liabilities is permitted only in accordance with management’s general or specific authorization and (iv) the recorded
accountability for assets and liabilities is compared with the existing assets and liabilities at reasonable intervals and appropriate
action is taken with respect to any difference. Except as set forth on Schedule 3(z), the Company maintains disclosure controls
and procedures (as such term is defined in Rule 13a-15(e) under the 1934 Act) that are effective in ensuring that information required
to be disclosed by the Company in the reports that it files or submits under the 1934 Act is recorded, processed, summarized and
reported, within the time periods specified in the rules and forms of the SEC, including, without limitation, controls and procedures
designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the 1934
Act is accumulated and communicated to the Company’s management, including its principal executive officer or officers and
its principal financial officer or officers, as appropriate, to allow timely decisions regarding required disclosure. Neither the
Company nor any of its Subsidiaries has received any notice or correspondence from any accountant, Governmental Entity or other
Person relating to any potential material weakness or significant deficiency in any part of the internal controls over financial
reporting of the Company or any of its Subsidiaries.

 

(aa)      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)      Investment
Company Status. The Company is not, and upon consummation of the sale of the Securities will not be, an “investment company,”
an affiliate of an “investment company,” a company controlled by an “investment company” or an “affiliated
person” of, or “promoter” or “principal underwriter” for, an “investment company” as
such terms are defined in the Investment Company Act of 1940, as amended.

 

(cc)      Acknowledgement
Regarding Buyers’ Trading Activity. It is understood and acknowledged by the Company that (i) following the public disclosure
of the transactions contemplated by the Transaction Documents, in accordance with the terms thereof, none of the Buyers have been
asked by the Company or any of its Subsidiaries to agree, nor has any Buyer agreed with the Company or any of its Subsidiaries,
to desist from effecting any transactions in or with respect to (including, without limitation, purchasing or selling, long and/or
short) any securities of the Company, or “derivative” securities based on securities issued by the Company or to hold
any of the Securities for any specified term; (ii) any Buyer, and counterparties in “derivative” transactions to which
any such Buyer is a party, directly or indirectly, presently may have a “short” position in the Common Stock which
was established prior to such Buyer’s knowledge of the transactions contemplated by the Transaction Documents; and (iii)
each Buyer shall not be deemed to have any affiliation with or control over any arm’s length counterparty in any “derivative”
transaction. The Company further understands and acknowledges that following the public disclosure of the transactions contemplated
by the Transaction Documents pursuant to the Press Release (as defined below) one or more Buyers may engage in hedging and/or trading
activities (including, without limitation, the location and/or reservation of borrowable shares of Common Stock) at various times
during the period that the Securities are outstanding, and such hedging and/or trading activities (including, without limitation,
the location and/or reservation of borrowable shares of Common Stock), if any, can reduce the value of the existing shareholders’
equity interest in the Company both at and after the time the hedging and/or trading activities are being conducted. The Company
acknowledges that such aforementioned hedging and/or trading activities do not constitute a breach of this Agreement, the Notes
or any other Transaction Document or any of the documents executed in connection herewith or therewith.

 

    	 	17	 

     
 

    

 

(dd)      Manipulation
of Price. Neither the Company nor any of its Subsidiaries has, and, to the knowledge of the Company, no Person acting on their
behalf has, directly or indirectly, (i) taken any action designed to cause or to result in the stabilization or manipulation of
the price of any security of the Company or any of its Subsidiaries to facilitate the sale of any of the Securities, (ii) sold,
bid for, purchased, or paid any compensation for soliciting purchases of, any of the Securities (other than the Placement Agent),
(iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of the Company
or any of its Subsidiaries or (iv) paid or agreed to pay any Person for research services with respect to any securities of the
Company or any of its Subsidiaries.

 

(ee)      U.S. Real
Property Holding Corporation. Neither the Company nor any of its Subsidiaries is, or has ever been, and so long as any of the
Securities are held by any of the Buyers, shall become, a U.S. real property holding corporation within the meaning of Section 897
of the Code, and the Company and each Subsidiary shall so certify upon any Buyer’s request.

 

(ff)      Transfer
Taxes. On the Closing Date, all stock transfer or other taxes (other than income or similar taxes) which are required to be
paid in connection with the issuance, sale and transfer of the Securities to be sold to each Buyer hereunder will be, or will
have been, fully paid or provided for by the Company, and all laws imposing such taxes will be or will have been complied with.

 

(gg)     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.

 

(hh)      Shell Company
Status. The Company is not, and has never been, an issuer identified in, or subject to, Rule 144(i).

 

    	 	18	 

     
 

    

 

(ii)       Illegal
or Unauthorized Payments; Political Contributions. Neither the Company nor any of its Subsidiaries nor, to the best of the
Company’s knowledge (after reasonable inquiry of its officers and directors), 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.

 

(jj)      Money Laundering.
The Company and its Subsidiaries are in compliance with, and have not previously violated, the USA Patriot Act of 2001 and all
other applicable U.S. and non-U.S. anti-money laundering laws and regulations, including, without limitation, the laws, regulations
and Executive Orders and sanctions programs administered by the U.S. Office of Foreign Assets Control, including, but not limited,
to (i) Executive Order 13224 of September 23, 2001 entitled, “Blocking Property and Prohibiting Transactions With Persons
Who Commit, Threaten to Commit, or Support Terrorism” (66 Fed. Reg. 49079 (2001)); and (ii) any regulations contained in
31 CFR, Subtitle B, Chapter V.

 

(kk)      Management.
Except as set forth in Schedule 3(kk) hereto, during the past five year period, no current or former officer or director
or, to the knowledge of the Company, no current ten percent (10%) or greater shareholder of the Company or any of its Subsidiaries
has been the subject of:

 

(i)       a
petition under bankruptcy laws or any other insolvency or moratorium law or the appointment by a court of a receiver, fiscal agent
or similar officer for such Person, or any partnership in which such person was a general partner at or within two years before
the filing of such petition or such appointment, or any corporation or business association of which such person was an executive
officer at or within two years before the time of the filing of such petition or such appointment;

 

(ii)       a
conviction in a criminal proceeding or a named subject of a pending criminal proceeding (excluding traffic violations);

 

(iii)      any
order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently
or temporarily enjoining any such person from, or otherwise limiting, the following activities:

 

(1)       Acting
as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage
transaction merchant, any other person regulated by the United States Commodity Futures Trading Commission or an associated person
of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person,
director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing
any conduct or practice in connection with such activity;

 

    	 	19	 

     
 

    

 

(2)       Engaging
in any particular type of business practice; or

 

(3)       Engaging
in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of securities
laws or commodities laws;

 

(iv)       any
order, judgment or decree, not subsequently reversed, suspended or vacated, of any authority barring, suspending or otherwise limiting
for more than sixty (60) days the right of any such person to engage in any activity described in the preceding sub paragraph,
or to be associated with persons engaged in any such activity;

 

(v)       a
finding by a court of competent jurisdiction in a civil action or by the SEC or other authority to have violated any securities
law, regulation or decree and the judgment in such civil action or finding by the SEC or any other authority has not been subsequently
reversed, suspended or vacated; or

 

(vi)       a
finding by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated
any federal commodities law, and the judgment in such civil action or finding has not been subsequently reversed, suspended or
vacated.

 

(ll)       Stock Option
Plans. Each stock option granted by the Company was granted (i) in accordance with the terms of the applicable stock
option plan of the Company and (ii) with an exercise price at least equal to the fair market value of the Common Stock on the date
such stock option would be considered granted under GAAP and applicable law. No stock option granted under the Company’s
stock option plan has been backdated. The Company has not knowingly granted, and there is no and has been no policy or practice
of the Company to knowingly grant, stock options prior to, or otherwise knowingly coordinate the grant of stock options with, the
release or other public announcement of material information regarding the Company or its Subsidiaries or their financial results
or prospects.

 

(mm)     No Disagreements
with Accountants and Lawyers. There are no material disagreements of any kind presently existing, or reasonably anticipated
by the Company to arise, between the Company and the accountants and lawyers formerly or presently employed by the Company and
the Company is current with respect to any fees owed to its accountants and lawyers which could affect the Company’s ability
to perform any of its obligations under any of the Transaction Documents. In addition, on or prior to the date hereof, the Company
had discussions with its accountants about its financial statements previously filed with the SEC. Based on those discussions,
except for restatements made prior to the date hereof and disclosed in the SEC Documents, the Company has no reason to believe
that it will need to restate any such financial statements or any part thereof.

 

(nn)      No Disqualification
Events. With respect to Securities to be offered and sold hereunder in reliance on Rule 506(b) under the 1933 Act (“Regulation
D Securities”), none of the Company, any of its predecessors, any affiliated issuer, any director, executive officer,
other officer of the Company participating in the offering contemplated hereby, any beneficial owner of 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”
and, together, “Issuer Covered Persons”) 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. The Company has complied, to the extent applicable, with its disclosure obligations under
Rule 506(e), and has furnished to the Buyers a copy of any disclosures provided thereunder.

 

    	 	20	 

     
 

    

 

(oo)      Other
Covered Persons. The Company is not aware of any Person (other than the Placement Agent) that has been or will be paid (directly
or indirectly) remuneration for solicitation of Buyers or potential purchasers in connection with the sale of any Regulation D
Securities.

 

(pp)      No
Additional Agreements. The Company does not have any agreement or understanding with any Buyer with respect to the transactions
contemplated by the Transaction Documents other than as specified in the Transaction Documents.

 

(qq)      Public Utility
Holding Act. None of the Company nor any of its Subsidiaries is a “holding company,” or an “affiliate”
of a “holding company,” as such terms are defined in the Public Utility Holding Act of 2005.

 

(rr)    
  Federal Power Act. None of the Company nor any of its Subsidiaries is subject to regulation as a
“public utility” under the Federal Power Act, as amended.

 

(ss)      Ranking
of Notes. No Indebtedness of the Company, at the Closing, will be senior to, or pari passu with, the Notes in right
of payment, whether with respect to payment or redemptions, interest, damages, upon liquidation or dissolution or otherwise (other
than Permitted Senior Indebtedness (as defined in the Notes) and, solely to the extent of the actual value of any Permitted Lien
(as defined in the Notes), any Permitted Indebtedness (as defined in the Notes) secured by a Permitted Lien).

 

(tt)      Disclosure.
The Company confirms that neither it nor any other Person acting on its behalf has provided any of the Buyers or their agents or
counsel with any information that constitutes or could reasonably be expected to constitute material, non-public information concerning
the Company or any of its Subsidiaries, other than the existence of the transactions contemplated by this Agreement and the other
Transaction Documents. The Company understands and confirms that each of the Buyers will rely on the foregoing representations
in effecting transactions in securities of the Company. All disclosure provided to the Buyers regarding the Company and its Subsidiaries,
their businesses and the transactions contemplated hereby, including the schedules to this Agreement, furnished by or on behalf
of the Company or any of its Subsidiaries is true and correct and does not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which
they were made, not misleading. All of the written information furnished after the date hereof by or on behalf of the Company or
any of its Subsidiaries to each Buyer pursuant to or in connection with this Agreement and the other Transaction Documents, taken
as a whole, will be true and correct in all material respects as of the date on which such information is so provided and will
not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements
made therein, in the light of the circumstances under which they were made, not misleading. No event or circumstance has occurred
or information exists with respect to the Company or any of its Subsidiaries or its or their business, properties, liabilities,
prospects, operations (including results thereof) or conditions (financial or otherwise), which, under applicable law, rule or
regulation, requires public disclosure at or before the date hereof or announcement by the Company but which has not been so publicly
disclosed. The Company acknowledges and agrees that no Buyer makes or has made any representations or warranties with respect to
the transactions contemplated hereby other than those specifically set forth in Section 2.

 

    	 	21	 

     
 

    

 

		4.	COVENANTS.

 

(a)       Best
Efforts. Each Buyer shall use its best efforts to timely satisfy each of the covenants hereunder and conditions to be satisfied
by it as provided in Section 6 of this Agreement. The Company shall use its best efforts to timely satisfy each of the covenants
hereunder and conditions to be satisfied by it as provided in Section 7 of this Agreement.

 

(b)       Form
D and Blue Sky. The Company shall file a Form D with respect to the Securities as required under Regulation D and to provide
a copy thereof to each 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 in order to obtain an exemption for, or to, qualify the Securities for sale
to the Buyers at the 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 Buyers on or prior to the Closing Date. Without limiting any other obligation of the Company under this Agreement, the Company
shall timely make all filings and reports relating to the offer and sale of the Securities required under all applicable securities
laws (including, without limitation, all applicable federal securities laws and all applicable “Blue Sky” laws), and
the Company shall comply with all applicable foreign, federal, state and local laws, statutes, rules, regulations and the like
relating to the offering and sale of the Securities to the Buyers.

 

(c)       Reporting
Status. Until the date on which no Notes remain outstanding (the “Reporting Period”), the Company shall
use its best efforts to timely file all reports required to be filed with the SEC pursuant to the 1934 Act, and the Company shall
not terminate its status as an issuer required to file reports under the 1934 Act even if the 1934 Act or the rules and regulations
thereunder would no longer require or otherwise permit such termination.

 

(d)       Use
of Proceeds. The Company will use the proceeds from the sale of the Securities for general corporate purposes, but not, directly
or indirectly, for (i) except as set forth on Schedule 4(d) and except for any Permitted Senior Credit Facility (as such term is
defined in the Notes), the satisfaction of any indebtedness of the Company or any of its Subsidiaries, (ii) the redemption or repurchase
of any securities of the Company or any of its Subsidiaries, or (iii) the settlement of any outstanding litigation.

 

(e)       EDGAR
Filings. The Company agrees to electronically file all SEC Documents with the SEC through its EDGAR filing system.

 

    	 	22	 

     
 

    

 

(f)       Fees.
The Company shall reimburse the lead Buyer for all costs and expenses incurred by it or its affiliates in connection with the structuring,
documentation, negotiation and closing of the transactions contemplated by the Transaction Documents (including, without limitation,
as applicable, all reasonable legal fees of outside counsel and disbursements of Kelley Drye & Warren LLP, counsel to the lead
Buyer, any other reasonable fees and expenses in connection with the structuring, documentation, negotiation and closing of the
transactions contemplated by the Transaction Documents and due diligence and regulatory filings in connection therewith) in an
aggregate amount not to exceed $100,000 (less $35,000 previously paid by the Company to Kelley Drye & Warren LLP) (the “Transaction
Expenses”) and shall be withheld by the lead Buyer from its Purchase Price at the Closing; provided, that the Company
shall promptly reimburse Kelley Drye & Warren LLP on demand for all Transaction Expenses not so reimbursed through such withholding
at the Closing. The Company shall be responsible for the payment of any placement agent’s fees, financial advisory fees or
other fees relating to or arising out of the transactions contemplated hereby (including, without limitation, any fees or commissions
payable to the Placement Agent, who is the Company’s sole placement agent in connection with the transactions contemplated
by this Agreement). The Company shall pay, and hold each Buyer harmless against, any liability, loss or expense (including, without
limitation, reasonable attorneys’ fees and out-of-pocket expenses) arising in connection with any claim relating to any such
payment. Except as otherwise set forth in the Transaction Documents, each party to this Agreement shall bear its own expenses in
connection with the sale of the Securities to the Buyers.

 

(g)       Pledge
of Securities. Notwithstanding anything to the contrary contained in this Agreement, the Company acknowledges and agrees that
the Securities may be pledged by any holder of Notes (each, an “Investor”) in connection with a bona fide margin
agreement or other loan or financing arrangement that is secured by the Securities. The pledge of Securities shall not be deemed
to be a transfer, sale or assignment of the Securities hereunder, and no Investor effecting a pledge of Securities shall be required
to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or any
other Transaction Document, including, without limitation, Section 2(g) hereof; provided that an Investor and its pledgee
shall be required to comply with the provisions of Section 2(g) hereof in order to effect a sale, transfer or assignment of Securities
to such pledgee. The Company hereby agrees to execute and deliver such documentation as a pledgee of the Securities may reasonably
request in connection with a pledge of the Securities to such pledgee by a Buyer.

 

(h)       Disclosure
of Transactions and Other Material Information.

 

(i)       Disclosure
of Transaction. The Company shall, on or before 9:30 a.m., New York time, on the first (1st) Business Day after
the date of this Agreement, issue a press release (the “Press Release”) reasonably acceptable to the Buyers
and the Placement Agent disclosing all the material terms of the transactions contemplated by the Transaction Documents. On or
before 9:30 a.m., New York time, on the first (1st) Business Day after the date of this Agreement, the Company shall
file a Current Report on Form 8-K describing all the material terms of the transactions contemplated by the Transaction Documents
in the form required by the 1934 Act and attaching all the material Transaction Documents (including, without limitation, this
Agreement (and all schedules to this Agreement) and the form of Notes) (including all attachments, the “8-K Filing”).
From and after the filing of the 8-K Filing, the Company shall have disclosed all material, non-public information (if any) provided
to any of the Buyers by the Company or any of its Subsidiaries or any of their respective officers, directors, employees or agents
in connection with the transactions contemplated by the Transaction Documents. 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 any of the Buyers or any of their affiliates, on the other hand, shall terminate.

 

    	 	23	 

     
 

    

 

(ii)       Limitations
on Disclosure. The Company shall not, and the Company shall cause each of its Subsidiaries and each of its and their respective
officers, directors, employees and agents not to, provide any Buyer with any material, non-public information regarding the Company
or any of its Subsidiaries from and after the date hereof without the express prior written consent of such Buyer (which may be
granted or withheld in such Buyer’s sole discretion). In the event of a breach of any of the foregoing covenants, including,
without limitation, Section 4(j) of this Agreement, or any of the covenants or agreements contained in any other Transaction
Document, by the Company, any of its Subsidiaries, or any of its or their respective officers, directors, employees and agents
(as determined in the reasonable good faith judgment of such Buyer), in addition to any other remedy provided herein or in the
Transaction Documents, such Buyer shall have the right to make a public disclosure, in the form of a press release, public advertisement
or otherwise, of such breach or such material, non-public information, as applicable, without the prior approval by the Company,
any of its Subsidiaries, or any of its or their respective officers, directors, employees or agents, provided that the Buyer shall
first notify the Company of its intention to make such disclosure, and in addition to providing the Company the opportunity to
file its own disclosure regarding the same within two (2) hours thereof, or provide of draft of such disclosure to the Company
for its review and comment and shall make any changes reasonable requested by the Company. No Buyer shall have any liability to
the Company, any of its Subsidiaries, or any of its or their respective officers, directors, employees, affiliates, shareholders
or agents, for any such disclosure. To the extent that the Company delivers any material, non-public information to a Buyer without
such Buyer’s consent, the Company hereby covenants and agrees that such Buyer shall not have any duty of confidentiality
with respect to such material, non-public information. Subject to the foregoing, neither the Company, its Subsidiaries nor any
Buyer shall issue any press releases or any other public statements with respect to the transactions contemplated hereby; provided,
however, the Company shall be entitled, without the prior approval of any Buyer, to make the Press Release and any press release
or other public disclosure with respect to such transactions (i) in substantial conformity with the 8-K Filing and contemporaneously
therewith and (ii) as is required by applicable law and regulations (provided that in the case of clause (i) each Buyer shall be
consulted by the Company in connection with any such press release or other public disclosure prior to its release). Without the
prior written consent of the applicable Buyer (which may be granted or withheld in such Buyer’s sole discretion), the Company
shall not (and shall cause each of its Subsidiaries and affiliates to not) disclose the name of such Buyer in any filing, announcement,
release or otherwise. Notwithstanding anything contained in this Agreement to the contrary and without implication that the contrary
would otherwise be true, the Company expressly acknowledges and agrees that no Buyer shall have (unless expressly agreed to by
a particular Buyer after the date hereof in a written definitive and binding agreement executed by the Company and such particular
Buyer (it being understood and agreed that no Buyer may bind any other Buyer with respect thereto)), any duty of confidentiality
with respect to, or a duty not to trade on the basis of, any material, non-public information regarding the Company or any of its
Subsidiaries.

 

    	 	24	 

     
 

    

 

(i)       Conduct
of Business. The Company and its Subsidiaries will comply in all material respects with the legal business compliance disclosures
and procedures previously provided to the Buyers (other than with respect to changes in applicable law, rules and regulations on
or after the date hereof).

 

(j)       Participation
Right. At any time on or prior to the later of (x) the date no Notes remain outstanding and (y) the second anniversary of the
Closing Date, neither the Company nor any of its Subsidiaries shall, directly or indirectly, effect any Subsequent Placement (as
defined below) unless the Company shall have first complied with this Section 4(j). The Company acknowledges and agrees that
the right set forth in this Section 4(j) is a right granted by the Company, separately, to each Buyer.

 

(i)       At
least two (2) Business Days prior to any proposed or intended Subsequent Placement, the Company shall deliver to each Buyer a written
notice (each such notice, a “Pre-Notice”), which Pre-Notice shall not contain any information (including, without
limitation, material, non-public information) other than: (A) if the proposed Offer Notice (as defined below) constitutes or contains
material, non-public information, a statement asking whether the Investor is willing to accept material non-public information
or (B) if the proposed Offer Notice does not constitute or contain material, non-public information, (x) a statement that the Company
proposes or intends to effect a Subsequent Placement, (y) a statement that the statement in clause (x) above does not constitute
material, non-public information and (z) a statement informing such Buyer that it is entitled to receive an Offer Notice (as defined
below) with respect to such Subsequent Placement upon its written request. Upon the written request of a Buyer within two (2) Business
Days after the Company’s delivery to such Buyer of such Pre-Notice, and only upon a written request by such Buyer, the Company
shall promptly, but no later than 6:00 p.m. New York Time on the second Business Day after the delivery to such Buyer of such Pre-Notice,
deliver to such 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 (A) identify and describe the Offered Securities, (B) 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, (C) identify the Persons (if known) to which or with which the Offered Securities are to be offered, issued,
sold or exchanged and (D) offer to issue and sell to or exchange with such Buyer in accordance with the terms of the Offer such
Buyer’s pro rata portion of (I) with respect to any Subsequent Placement of notes or other Indebtedness (other than Permitted
Senior Indebtedness (as defined in the Notes) or any other security of the Company or any of its Subsidiaries that, directly or
indirectly, grants any holder thereof the right to have such security redeemed in cash or other assets of the Company or any of
its Subsidiaries (other than ordinary conversions or exercises, as applicable, into shares of Common Stock), 100% of such Offered
Securities, or (II) with respect to any other Subsequent Placement, 15% of such Offered Securities, in each case, provided that
the number of Offered Securities which such Buyer shall have the right to subscribe for under this Section 4(j) shall be (x) based
on such Buyer’s pro rata portion of the aggregate original principal amount of the Notes purchased hereunder by all Buyers
(the “Basic Amount”), and (y) with respect to each Buyer that elects to purchase its Basic Amount, any additional
portion of the Offered Securities attributable to the Basic Amounts of other Buyers as such Buyer shall indicate it will purchase
or acquire should the other Buyers subscribe for less than their Basic Amounts (the “Undersubscription Amount”),
which process shall be repeated until each Buyer shall have an opportunity to subscribe for any remaining Undersubscription Amount.

 

    	 	25	 

     
 

    

 

(ii)       To
accept an Offer, in whole or in part, such Buyer must deliver a written notice to the Company prior to the end of the first (1st)
Business Day after such Buyer’s receipt of the Offer Notice (the “Offer Period”), setting forth the portion
of such Buyer’s Basic Amount that such Buyer elects to purchase and, if such Buyer shall elect to purchase all of its Basic
Amount, the Undersubscription Amount, if any, that such Buyer elects to purchase (in either case, the “Notice of Acceptance”).
If the Basic Amounts subscribed for by all Buyers are less than the total of all of the Basic Amounts, then each Buyer who has
set forth an Undersubscription Amount in its Notice of Acceptance shall be entitled to purchase, in addition to the Basic Amounts
subscribed for, the Undersubscription Amount it has subscribed for; provided, however, if the Undersubscription Amounts subscribed
for exceed the difference between the total of all the Basic Amounts and the Basic Amounts subscribed for (the “Available
Undersubscription Amount”), each Buyer who has subscribed for any Undersubscription Amount shall be entitled to purchase
only that portion of the Available Undersubscription Amount as the Basic Amount of such Buyer bears to the total Basic Amounts
of all Buyers that have subscribed for Undersubscription Amounts, subject to rounding by the Company to the extent it deems reasonably
necessary. Notwithstanding the foregoing, 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 may deliver to each Buyer a new Offer Notice and the Offer Period shall expire
at 10:00 p.m. New York Time on the first (1st) Business Day after the day such Buyer receives such new Offer Notice.

 

(iii)       The
Company shall have five (5) Business Days from the expiration of the Offer Period above (A) to offer, issue, sell or exchange all
or any part of such Offered Securities as to which a Notice of Acceptance has not been given by a Buyer (the “Refused
Securities”) pursuant to a definitive agreement(s) (the “Subsequent Placement Agreement”), but only
to the offerees described in the Offer Notice (if so described therein) and only upon terms and conditions (including, without
limitation, unit prices and interest rates) that are not more favorable to the acquiring Person or Persons or less favorable to
the Company than those set forth in the Offer Notice and (B) to publicly announce (x) the execution of such Subsequent Placement
Agreement, and (y) either (I) the consummation of the transactions contemplated by such Subsequent Placement Agreement or (II)
the termination of such Subsequent Placement Agreement, which shall be filed with the SEC on a Current Report on Form 8-K with
such Subsequent Placement Agreement and any documents contemplated therein filed as exhibits thereto.

 

    	 	26	 

     
 

    

 

(iv)       In
the event the Company shall propose to sell less than all the Refused Securities (any such sale to be in the manner and on the
terms specified in Section 4(j)(iii) above), then each Buyer may, at its sole option and in its sole discretion, withdraw
its Notice of Acceptance or reduce the number or amount of the Offered Securities specified in its Notice of Acceptance to an amount
that shall be not less than the number or amount of the Offered Securities that such Buyer elected to purchase pursuant to Section 4(j)(ii)
above multiplied by a fraction, (i) the numerator of which shall be the number or amount of Offered Securities the Company actually
proposes to issue, sell or exchange (including Offered Securities to be issued or sold to Buyers pursuant to this Section 4(j)
prior to such reduction) and (ii) the denominator of which shall be the original amount of the Offered Securities. In the event
that any Buyer so elects to reduce the number or amount of Offered Securities specified in its Notice of Acceptance, the Company
may not issue, sell or exchange more than the reduced number or amount of the Offered Securities unless and until such securities
have again been offered to the Buyers in accordance with Section 4(j)(i) above.

 

(v)       Upon
the closing of the issuance, sale or exchange of all or less than all of the Refused Securities, such Buyer shall acquire from
the Company, and the Company shall issue to such Buyer, the number or amount of Offered Securities specified in its Notice of Acceptance,
as reduced pursuant to Section 4(j)(iv) above if such Buyer has so elected, upon the terms and conditions specified in the
Offer. The purchase by such Buyer of any Offered Securities is subject in all cases to the preparation, execution and delivery
by the Company and such Buyer of a separate purchase agreement relating to such Offered Securities reasonably satisfactory in form
and substance to such Buyer and its counsel.

 

(vi)       Any
Offered Securities not acquired by a Buyer or other Persons in accordance with this Section 4(j) may not be issued, sold or
exchanged until they are again offered to such Buyer under the procedures specified in this Agreement.

 

(vii)       The
Company and each Buyer agree that if any Buyer elects to participate in the Offer, neither the Subsequent Placement Agreement with
respect to such Offer nor any other transaction documents related thereto (collectively, the “Subsequent Placement Documents”)
shall include any term or provision whereby such Buyer shall be required to agree to any restrictions on trading as to any securities
of the Company or be required to consent to any amendment to or termination of, or grant any waiver, release or the like under
or in connection with, any agreement previously entered into with the Company or any instrument received from the Company and no
other representation, warranty or covenant shall more onerous to a Buyer than such representations, warranties and covenants set
forth in this Agreement.

 

(viii)       Notwithstanding
anything to the contrary in this Section 4(j) and unless otherwise agreed to by such Buyer, the Company shall either confirm in
writing to such Buyer that the transaction with respect to the Subsequent Placement has been abandoned or shall publicly disclose
its intention to issue the Offered Securities, in either case, in such a manner such that such Buyer will not be in possession
of any material, non-public information, by the fifth (5th) Business Day following delivery of the Offer Notice. If
by such fifth (5th) Business Day, 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 such Buyer, such transaction shall
be deemed to have been abandoned and such Buyer shall not be in possession of any material, non-public information with respect
to the Company or any of its Subsidiaries. Should the Company decide to pursue such transaction with respect to the Offered Securities,
the Company shall provide such Buyer with another Offer Notice and such Buyer will again have the right of participation set forth
in this Section 4(j). The Company shall not be permitted to deliver more than two such Offer Notices to such Buyer in any sixty
(60) day period, except as expressly contemplated by the last sentence of Section 4(j)(ii).

 

    	 	27	 

     
 

    

 

(ix)       The
restrictions contained in this Section 4(j) shall not apply in connection with the issuance of (i) equity awards issued to directors,
officers, employees or consultants of the Company pursuant to any stock option, equity incentive or other benefit plan which has
been approved by the board of directors of the Company prior to or subsequent to the date hereof pursuant to which equity awards
may be issued to any employee, officer, director or consultant for services provided, or to be provided, to the Company in their
capacity as such (each, an “Approved Equity Plan”), provided that the exercise price of any such options is
not lowered, none of such options are amended to increase the number of shares issuable thereunder and none of the terms or conditions
of any such options are otherwise materially changed in any manner that adversely affects any of the Buyers; (ii) shares of Common
Stock issued upon the conversion or exercise of Convertible Securities (other than standard options to purchase Common Stock issued
pursuant to an Approved Equity Plan that are covered by clause (i) above) issued prior to the date hereof, provided that the conversion
price of any such Convertible Securities (other than standard options to purchase Common Stock issued pursuant to an Approved Equity
Plan that are covered by clause (i) above) is not lowered, none of such Convertible Securities (other than standard options to
purchase Common Stock issued pursuant to an Approved Equity Plan that are covered by clause (i) above) are amended to increase
the number of shares issuable thereunder and none of the terms or conditions of any such Convertible Securities (other than standard
options to purchase Common Stock issued pursuant to an Approved Equity Plan that are covered by clause (i) above) are otherwise
materially changed in any manner that adversely affects any of the Buyers, or (iii) the issuance of any securities issued in connection
with strategic alliances, acquisitions, mergers, and strategic partnerships, provided, that (1) the primary purpose of such issuance
is not to raise capital as determined in good faith by the Board of Directors of the Company, (2) the purchaser or acquirer of
the securities in such issuance (I) does not include any Person primarily in the business of investing in securities and (II) solely
consists of either (x) the actual participants in such strategic alliance or strategic partnership, (y) the actual owners of such
assets or securities acquired in such acquisition or merger or (z) the stockholders, partners or members of the foregoing Persons
and (3) the number or amount of securities issued to such Person by the Company shall not be disproportionate to such Person’s
actual participation in such strategic alliance or strategic partnership or ownership of such assets or securities to be acquired
by the Company, as applicable. The Company shall not circumvent the provisions of this Section 4(j) by providing terms or conditions
to one Buyer that are not provided to all.

 

    	 	28	 

     
 

    

 

(x)       For
the purpose of this Agreement, “Subsequent Placement” means any issuance, offer, sale, grant of any option or
right to purchase, or otherwise dispose of (or announcement of any issuance, offer, sale, grant of any option or right to purchase
or other disposition of) by the Company or any of its Subsidiaries, directly or indirectly, of any equity security or any equity-linked
or related security (including, without limitation, any “equity security” (as that term is defined under Rule 405 promulgated
under the 1933 Act)), any Convertible Securities (as defined below), any debt, any preferred stock or any purchase rights.

 

(xi)       Notwithstanding
the foregoing, in the event that a Buyer exercises the redemption right set forth in Section 3(b) of the Notes as a result of the
occurrence of an Event of Default (as such term is defined in the Notes) other than an Event of Default pursuant to Section 3(a)(i)
of the Notes, such Buyer shall be deemed to have waived its participation rights pursuant to this Section 4(j) solely for such
Buyer (but not with respect to any other Buyer hereunder) for any Subsequent Placements thereafter.

 

(xii)       Notwithstanding
the foregoing, solely with respect to registered public offerings or other Subsequent Placements in which securities are issued
primarily pursuant to one or more registration statements filed with the SEC with an underwriter or placement agent engaged by
the Company with respect to such Subsequent Placement (each, a “Registered Subsequent Placement”), (x) any corresponding
Offer Notice with respect thereto shall not be required to include pricing information to the extent such pricing information is
then unavailable (but the Company (or the placement agent or underwriter, as applicable) shall provide such pricing information
to each Buyer as soon as commercially practicable following the pricing call or meeting, as applicable, of such Registered Subsequent
Placement) and (y) in lieu of the end of the Offer Period being determined as described above (but without modifying the obligation
of the Company to deliver the Offer Notice for such Registered Subsequent Placement without such pricing in the timeframe as described
above), each Buyer shall, after receipt of such pricing information, have the customary period, as reasonably determined by the
underwriter or placement agent, as applicable, to thereafter elect to subscribe for all, or any part, of the Offered Securities
(or such greater allocation, at the discretion of the placement agent or underwriter, as applicable, and the Company) in Registered
Subsequent Placement.

 

(k)       Passive
Foreign Investment Company. The Company shall conduct its business, and shall cause its Subsidiaries to conduct their respective
businesses, in such a manner as will ensure that the Company will not be deemed to constitute a passive foreign investment company
within the meaning of Section 1297 of the Code.

 

(l)       Restriction
on Redemption and Cash Dividends. So long as any Notes are outstanding, the Company shall not, and the Company shall cause
each of its Subsidiaries to not, directly or indirectly, redeem, repurchase or declare or pay any cash dividend or distribution
on, any securities of the Company without the prior express written consent of the Buyers.

 

(m)       Corporate
Existence. So long as any Buyer beneficially owns any Notes, the Company shall not be party to any Fundamental Transaction
(as defined in the Notes) unless the Company is in compliance with the applicable provisions governing Fundamental Transactions
set forth in the Notes.

 

    	 	29	 

     
 

    

 

(n)       Regulation
M. The Company will not take any action prohibited by Regulation M under the 1934 Act, in connection with the distribution
of the Securities contemplated hereby.

 

(o)      General Solicitation.
None of the Company, any of its affiliates (as defined in Rule 501(b) under the 1933 Act) or any person acting on behalf of the
Company or such affiliate will solicit any offer to buy or offer or sell the Securities by means of any form of general solicitation
or general advertising within the meaning of Regulation D, including: (i) any advertisement, article, notice or other communication
published in any newspaper, magazine or similar medium or broadcast over television or radio; and (ii) any seminar or meeting whose
attendees have been invited by any general solicitation or general advertising.

 

(p)      Integration.
None of the Company, any of its affiliates (as defined in Rule 501(b) under the 1933 Act), or any person acting on behalf of the
Company or such affiliate will sell, offer for sale, or solicit offers to buy or otherwise negotiate in respect of any security
(as defined in the 1933 Act) which will be integrated with the sale of the Securities in a manner which would require the registration
of the Securities under the 1933 Act or require shareholder approval under the rules and regulations of the Principal Market and
the Company will take all action that is appropriate or necessary to assure that its offerings of other securities will not be
integrated for purposes of the 1933 Act or the rules and regulations of the Principal Market, with the issuance of Securities contemplated
hereby.

 

(q)      Notice of
Disqualification Events. The Company will notify the Buyers in writing, prior to the Closing Date of (i) any Disqualification
Event relating to any Issuer Covered Person and (ii) any event that would, with the passage of time, become a Disqualification
Event relating to any Issuer Covered Person.

 

(r)       Closing
Documents. On or prior to fourteen (14) calendar days after the Closing Date, the Company agrees to deliver, or cause to be
delivered, to each Buyer and Kelley Drye & Warren LLP a complete closing set of the executed Transaction Documents, Securities
and any other document required to be delivered to any party pursuant to Section 7 hereof or otherwise.

 

		5.	REGISTER; LEGEND.

 

(a)       Register.
The Company shall maintain at its principal executive offices (or such other office or agency of the Company as it may designate
by notice to each holder of Securities), a register for the Notes in which the Company shall record the name and address of the
Person in whose name the Notes have been issued (including the name and address of each transferee), the principal amount of the
Notes held by such Person. The Company shall keep the register open and available at all times during business hours for inspection
of any Buyer or its legal representatives.

 

(b)       Legends.
Each Buyer understands that the Securities have been issued pursuant to an exemption from registration or qualification under the
1933 Act and applicable state securities laws, and except as set forth below, the Securities shall bear any legend as required
by the “blue sky” laws of any state and restrictive legends in substantially the following form:

 

    	 	30	 

     
 

    

 

THE ISSUANCE AND SALE OF THE SECURITY
REPRESENTED BY THIS NOTE HAS NOT 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 TO THE HOLDER (IF REQUESTED BY THE
COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD
OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED
IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

 

THIS NOTE HAS BEEN ISSUED WITH ORIGINAL
ISSUE DISCOUNT (“OID”). PURSUANT TO TREASURY REGULATION §1.1275-3(b)(1), THE CHIEF FINANCIAL OFFICER, A REPRESENTATIVE
OF THE COMPANY HEREOF WILL, BEGINNING TEN DAYS AFTER THE ISSUANCE DATE OF THIS NOTE, PROMPTLY MAKE AVAILABLE TO THE HOLDER UPON
REQUEST THE INFORMATION DESCRIBED IN TREASURY REGULATION §1.1275-3(b)(1)(i). THE CHIEF FINANCIAL OFFICER MAY BE REACHED AT
THE FOLLOWING ADDRESS: 11958 MONARCH STREET, GARDEN GROVE, CA 92841.

 

		6.	CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL.

 

(a)       The
obligation of the Company hereunder to issue and sell the Notes to each Buyer at the Closing is subject to the satisfaction, at
or before the Closing Date, of each of the following conditions, 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 by providing each Buyer with prior written notice thereof:

 

(i)       Such
Buyer shall have executed each of the other Transaction Documents to which it is a party and delivered the same to the Company.

 

(ii)       Such
Buyer and each other Buyer shall have delivered to the Company the Purchase Price for the Note (less the amounts withheld pursuant
to Section 4(f)) being purchased by such Buyer at the Closing by wire transfer of immediately available funds in accordance with
the Flow of Funds Letter.

 

(iii)       The
representations and warranties of such Buyer shall be true and correct in all material respects (other than such representation
or warranty qualified by materiality, which shall be true and correct in all respects) as of the date when made and as of the Closing
Date as though originally made at that time (except for representations and warranties that speak as of a specific date, which
shall be true and correct in all material respects (other than such representation or warranty qualified by materiality, which
shall be true and correct in all respects) as of such specific date), and such 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 such Buyer at or prior to the Closing Date.

 

    	 	31	 

     
 

    

 

		7.	CONDITIONS TO EACH BUYER’S OBLIGATION TO PURCHASE.

 

(a)       The
obligation of each Buyer hereunder to purchase its Note at the Closing is subject to the satisfaction, at or before the Closing
Date, of each of the following conditions, provided that these conditions are for each Buyer’s sole benefit and may be waived
by such Buyer at any time in its sole discretion by providing the Company with prior written notice thereof: 

 

(i)       The
Company and each Subsidiary (as the case may be) shall have duly executed and delivered to such Buyer a counterpart signature to
this Agreement and the Company shall have duly executed and delivered to such Buyer a Note in such original principal amount as
is set forth across from such Buyer’s name in column (3) of the Schedule of Buyers as being purchased by such Buyer at the
Closing pursuant to this Agreement.

 

(ii)       Such
Buyer shall have received the opinion of Burns & Levinson LLP, the Company’s counsel, dated as of the Closing Date, addressed
to the Buyers and the Placement Agent, in the form acceptable to such Buyer.

 

(iii)       The
Company shall have delivered to such Buyer a certificate evidencing the formation and good standing of the Company in such entity’s
jurisdiction of formation issued by the Secretary of State (or comparable office) of such jurisdiction of formation as of a date
within ten (10) days of the Closing Date.

 

(iv)       The
Company shall have delivered to such Buyer a certificate evidencing the Company’s qualification as a foreign corporation
and good standing issued by the Secretary of State (or comparable office) of each jurisdiction in which the Company conducts business
and is required to so qualify, as of a date within ten (10) days of the Closing Date.

 

(v)       The
Company shall have delivered to such Buyer a certified copy of the Articles of Incorporation as certified by the Nevada Secretary
of State within ten (10) days of the Closing Date.

 

(vi)       The
Company shall have delivered to such Buyer a certificate, in the form acceptable to such Buyer, executed by the Secretary of the
Company and dated as of the Closing Date, as to (i) the resolutions consistent with Section 3(b) as adopted by the Company’s
board of directors in a form reasonably acceptable to such Buyer, (ii) the Articles of Incorporation of the Company and (iii) the
Bylaws of the Company, each as in effect at the Closing.

 

    	 	32	 

     
 

    

 

(vii)      Each
and every representation and warranty of the Company shall be true and correct in all material respects (other than such representation
or warranty qualified by materiality or Material Adverse Effect, which shall be true and correct in all respects) as of the date
when made and as of the Closing Date as though originally made at that time (except for representations and warranties that speak
as of a specific date, which shall be true and correct in all material respects (other than such representation or warranty qualified
by materiality or Material Adverse Effect, which shall be true and correct in all respects) as of such specific date) and the Company
shall have performed, satisfied and complied in all respects with the covenants, agreements and conditions required to be performed,
satisfied or complied with by the Company at or prior to the Closing Date. Such Buyer shall have received a certificate, duly executed
by the Chief Executive Officer of the Company, dated as of the Closing Date, to the foregoing effect and as to such other matters
as may be reasonably requested by such Buyer in the form acceptable to such Buyer.

 

(viii)     The
Common Stock (A) shall be designated for quotation or listed (as applicable) on the Principal Market and (B) shall not have been
suspended, as of the Closing Date, by the SEC or the Principal Market from trading on the Principal Market nor shall suspension
by the SEC or the Principal Market have been threatened, as of the Closing Date, either (I) in writing by the SEC or the Principal
Market or (II) by falling below the minimum maintenance requirements of the Principal Market.

 

(ix)       The
Company shall have obtained all governmental, regulatory or third party consents and approvals, if any, necessary for the sale
of the Securities, including without limitation, those required by the Principal Market, if any.

 

(x)       No
statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed
by any court or Governmental Entity of competent jurisdiction that prohibits the consummation of any of the transactions contemplated
by the Transaction Documents.

 

(xi)       Since
the date of execution of this Agreement, no event or series of events shall have occurred that reasonably would have or result
in a Material Adverse Effect.

 

(xii)       Within
two (2) Business Days prior to the Closing, the Company shall have delivered or caused to be delivered to each Buyer certified
copies of requests for copies of information on Form UCC-11, listing all effective financing statements which name as debtor the
Company or any of its Subsidiaries.

 

(xiii)       Such
Buyer shall have received a letter on the letterhead of the Company, duly executed by the Chief Executive Officer of the Company,
setting forth the wire amounts of each Buyer and the wire transfer instructions of the Company (the “Flow of Funds Letter”).

 

(xiv)       The
Company and its Subsidiaries shall have delivered to such Buyer such other documents, instruments or certificates relating to the
transactions contemplated by this Agreement as such Buyer or its counsel may reasonably request.

 

    	 	33	 

     
 

    

 

		8.	TERMINATION.

 

In the event that the
conditions of Section 7(a) have not been satisfied by the Company (or waived by such Buyer), with respect to a Buyer within five
(5) days of the date hereof, then such Buyer shall have the right to terminate its obligations under this Agreement with respect
to itself at any time on or after the close of business on such date without liability of such Buyer to any other party; provided,
however, (i) the right to terminate this Agreement under this Section 8 shall not be available to such Buyer if the failure
of the transactions contemplated by this Agreement to have been consummated by such date is the result of such Buyer’s breach
of this Agreement and (ii) the abandonment of the sale and purchase of the Notes shall be applicable only to such Buyer providing
such written notice, provided further that no such termination shall affect any obligation of the Company under this Agreement
to reimburse such Buyer for the expenses described in Section 4(f) above. Nothing contained in this Section 8 shall be
deemed to release any party from any liability for any breach by such party of the terms and provisions of this Agreement or the
other Transaction Documents or to impair the right of any party to compel specific performance by any other party of its obligations
under this Agreement or the other Transaction Documents.

 

		9.	MISCELLANEOUS.

 

(a)       Governing
Law; Jurisdiction; Jury Trial. All questions concerning the construction, validity, enforcement, interpretation and performance
of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application
of the laws of any jurisdictions other than the State of New York. The Company hereby irrevocably submits to the exclusive jurisdiction
of the state and federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder
or in connection herewith or under any of the other Transaction Documents or with any transaction contemplated hereby or thereby,
and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that
the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address
for such 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 manner permitted
by law. Nothing contained herein shall be deemed or operate to preclude any Buyer from bringing suit or taking other legal action
against the Company in any other jurisdiction to collect on the Company’s obligations to such Buyer, to realize on any collateral
or any other security for such obligations, or to enforce a judgment or other court ruling in favor of such Buyer. EACH PARTY
HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR UNDER ANY OTHER TRANSACTION DOCUMENT OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT, ANY OTHER TRANSACTION
DOCUMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY. In addition to, but not in limitation of, any other rights of a
Buyer hereunder, if (a) this Agreement is placed in the hands of an attorney for collection of any indemnification or other obligation
hereunder then outstanding or enforcement or any such obligation is collected or enforced through any legal proceeding or a Buyer
otherwise takes action to collect amounts due under this Agreement or to enforce the provisions of this Agreement or (b) there
occurs any bankruptcy, reorganization, receivership of the Company or other proceedings affecting Company creditors’ rights
and involving a claim under this Agreement, then the Company shall pay the costs incurred by such Buyer for such collection, enforcement
or action or in connection with such bankruptcy, reorganization, receivership or other proceeding, including, without limitation,
attorneys’ fees and disbursements. The Company expressly acknowledges and agrees that no amounts due under this Agreement
shall be affected, or limited, by the fact that the Purchase Price paid for the Notes was less than the original principal amount
thereof.

 

    	 	34	 

     
 

    

 

(b)       Counterparts.
This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each party and delivered to the other party. In the event that
any signature is delivered by facsimile transmission or by an e-mail which contains a portable document format (.pdf) file of an
executed signature page, such signature page shall create a valid and binding obligation of the party executing (or on whose behalf
such signature is executed) with the same force and effect as if such signature page were an original thereof.

 

(c)       Headings;
Gender. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation
of, this Agreement. Unless the context clearly indicates otherwise, each pronoun herein shall be deemed to include the masculine,
feminine, neuter, singular and plural forms thereof. The terms “including,” “includes,” “include”
and words of like import shall be construed broadly as if followed by the words “without limitation.” The terms “herein,”
“hereunder,” “hereof” and words of like import refer to this entire Agreement instead of just the provision
in which they are found. Unless expressly indicated otherwise, all section references are to sections of this Agreement. Terms
used in this Agreement and not otherwise defined herein, but defined in the other Transaction Documents, shall have the meanings
ascribed to such terms on the Closing Date in such other Transaction Documents unless otherwise consented to in writing by the
Required Holders.

 

(d)       Severability;
Maximum Payment Amounts. If any provision of this Agreement is prohibited by law or otherwise determined to be invalid or unenforceable
by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed
amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such
provision shall not affect the validity of the remaining provisions of this Agreement so long as this Agreement as so modified
continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited
nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations
or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the
parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s)
with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).
Notwithstanding anything to the contrary contained in this Agreement or any other Transaction Document (and without implication
that the following is required or applicable), it is the intention of the parties that in no event shall amounts and value paid
by the Company and/or any of its Subsidiaries (as the case may be), or payable to or received by any of the Buyers, under the Transaction
Documents (including without limitation, any amounts that would be characterized as “interest” under applicable law)
exceed amounts permitted under any applicable law. Accordingly, if any obligation to pay, payment made to any Buyer, or collection
by any Buyer pursuant the Transaction Documents is finally judicially determined to be contrary to any such applicable law, such
obligation to pay, payment or collection shall be deemed to have been made by mutual mistake of such Buyer, the Company and its
Subsidiaries and such amount shall be deemed to have been adjusted with retroactive effect to the maximum amount or rate of interest,
as the case may be, as would not be so prohibited by the applicable law. Such adjustment shall be effected, to the extent necessary,
by reducing or refunding, at the option of such Buyer, the amount of interest or any other amounts which would constitute unlawful
amounts required to be paid or actually paid to such Buyer under the Transaction Documents. For greater certainty, to the extent
that any interest, charges, fees, expenses or other amounts required to be paid to or received by such Buyer under any of the Transaction
Documents or related thereto are held to be within the meaning of “interest” or another applicable term to otherwise
be violative of applicable law, such amounts shall be pro-rated over the period of time to which they relate.

 

    	 	35	 

     
 

    

 

(e)       Entire
Agreement; Amendments. This Agreement, the other Transaction Documents and the schedules and exhibits attached hereto and thereto
and the instruments referenced herein and therein supersede all other prior oral or written agreements between the Buyers, the
Company, its Subsidiaries, their affiliates and Persons acting on their behalf, including, without limitation, any transactions
by any Buyer with respect to Common Stock or the Securities, and the other matters contained herein and therein, and this Agreement,
the other Transaction Documents, the schedules and exhibits attached hereto and thereto and the instruments referenced herein and
therein contain the entire understanding of the parties solely with respect to the matters covered herein and therein; provided,
however, nothing contained in this Agreement or any other Transaction Document shall (or shall be deemed to) (i) have any effect
on any agreements any Buyer has entered into with, or any instruments any Buyer has received from, the Company or any of its Subsidiaries
prior to the date hereof with respect to any prior investment made by such Buyer in the Company or (ii) waive, alter, modify or
amend in any respect any obligations of the Company or any of its Subsidiaries, or any rights of or benefits to any Buyer or any
other Person, in any agreement entered into prior to the date hereof between or among the Company and/or any of its Subsidiaries
and any Buyer, or any instruments any Buyer received from the Company and/or any of its Subsidiaries prior to the date hereof,
and all such agreements and instruments shall continue in full force and effect. Except as specifically set forth herein or therein,
neither the Company nor any Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. For
clarification purposes, the Recitals are part of this Agreement. No provision of this Agreement may be amended other than by an
instrument in writing signed by the Company and the Required Holders (as defined below), and any amendment to any provision of
this Agreement made in conformity with the provisions of this Section 9(e) shall be binding on all Buyers and holders of Securities,
as applicable; provided that no such amendment shall be effective to the extent that it (A) applies to less than all of the holders
of the Securities then outstanding or (B) imposes any obligation or liability on any Buyer without such Buyer’s prior written
consent (which may be granted or withheld in such Buyer’s sole discretion). No waiver shall be effective unless it is in
writing and signed by an authorized representative of the waiving party, provided that the Required Holders may waive any provision
of this Agreement, and any waiver of any provision of this Agreement made in conformity with the provisions of this Section 9(e)
shall be binding on all Buyers and holders of Securities, as applicable, provided that no such waiver shall be effective to the
extent that it (1) applies to less than all of the holders of the Securities then outstanding (unless a party gives a waiver as
to itself only) or (2) imposes any obligation or liability on any Buyer without such Buyer’s prior written consent (which
may be granted or withheld in such Buyer’s sole discretion). No consideration (other than reimbursement of legal fees) shall
be offered or paid to any Person to amend or consent to a waiver or modification of any provision of any of the Transaction Documents
unless the same consideration also is offered to all of the parties to the Transaction Documents, all holders of the Notes. From
the date hereof and while any Notes are outstanding, the Company shall not be permitted to receive any consideration from a Buyer
or a holder of Notes that is not otherwise contemplated by the Transaction Documents in order to, directly or indirectly, induce
the Company or any Subsidiary (i) to treat such Buyer or holder of Notes in a manner that is more favorable than to other similarly
situated Buyers or holders of Notes, as applicable, or (ii) to treat any Buyer(s) or holder(s) of Notes in a manner that is less
favorable than the Buyer or holder of Notes that is paying such consideration; provided, however, that the determination of whether
a Buyer has been treated more or less favorably than another Buyer shall disregard any securities of the Company purchased or sold
by any Buyer. The Company has not, directly or indirectly, made any agreements with any Buyers relating to the terms or conditions
of the transactions contemplated by the Transaction Documents except as set forth in the Transaction Documents. Without limiting
the foregoing, the Company confirms that, except as set forth in this Agreement, no Buyer has made any commitment or promise or
has any other obligation to provide any financing to the Company, any Subsidiary or otherwise. As a material inducement for each
Buyer to enter into this Agreement, the Company expressly acknowledges and agrees that (x) no due diligence or other investigation
or inquiry conducted by a Buyer, any of its advisors or any of its representatives shall affect such Buyer’s right to rely
on, or shall modify or qualify in any manner or be an exception to any of, the Company’s representations and warranties contained
in this Agreement or any other Transaction Document and (y) unless a provision of this Agreement or any other Transaction Document
is expressly preceded by the phrase “except as disclosed in the SEC Documents,” nothing contained in any of the SEC
Documents shall affect such Buyer’s right to rely on, or shall modify or qualify in any manner or be an exception to any
of, the Company’s representations and warranties contained in this Agreement or any other Transaction Document. “Required
Holders” means (I) prior to the Closing Date, each Buyer entitled to purchase Notes at the Closing and (II) on or after
the Closing Date, holders of a majority of aggregate principal amount of the Notes then outstanding (or the Buyers, with respect
to any waiver or amendment of Section (j)).

 

    	 	36	 

     
 

    

 

(f)       Notices.
Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must
be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent
by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending
party) or electronic mail (provided that such sent email is kept on file (whether electronically or otherwise) by the sending party
and the sending party does not receive an automatically generated message from the recipient’s email server that such e-mail
could not be delivered to such recipient); or (iii) one (1) Business Day after deposit with an overnight courier service with next
day delivery specified, in each case, properly addressed to the party to receive the same. The addresses, facsimile numbers and
e-mail addresses for such communications shall be:

 

If to the Company:

 

KushCo Holdings, Inc.

11958 Monarch Street

Garden Grove, CA 92841

Telephone: (714) 462-4603

Attention: Arun Kurichety, Esq., General Counsel

E-Mail: arun.kurichety@kushco.com

 

    	 	37	 

     
 

    

 

With a copy (for informational purposes only) to:

 

Burns & Levinson LLP

125 Summer Street

Boston, MA 02110

Telephone: (617) 345-3361

Attention: Robert A. Petitt, Esq.

E-Mail: rpetitt@burnslev.com

 

If to a Buyer, to its address, e-mail address
and facsimile number set forth on the Schedule of Buyers, with copies to such Buyer’s representatives as set forth on the
Schedule of Buyers,

 

with a copy (for informational purposes only) to:

 

Kelley Drye & Warren LLP

101 Park Avenue

New York, NY 10178

Telephone: (212) 808-7540

Facsimile: (212) 808-7897

Attention: Michael A. Adelstein, Esq.

E-mail: madelstein@kelleydrye.com

 

or to such other address, e-mail address
and/or facsimile number and/or to the attention of such other Person as the recipient party has specified by written notice given
to each other party five (5) days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient
of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender’s facsimile
machine or e-mail containing the time, date, recipient facsimile number and, with respect to each facsimile transmission, an image
of the first page of such transmission or (C) provided by an overnight courier service shall be rebuttable evidence of personal
service, receipt by facsimile or receipt from an overnight courier service in accordance with clause (i), (ii) or (iii) above,
respectively.

 

(g)       Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and
assigns, including any purchasers of any of the Notes. The Company shall not assign this Agreement or any rights or obligations
hereunder without the prior written consent of the Required Holders, including, without limitation, by way of a Fundamental Transaction
(as defined in the Notes) (unless the Company is in compliance with the applicable provisions governing Fundamental Transactions
set forth in the Notes). A Buyer may assign some or all of its rights hereunder in connection with any transfer of any of its Securities
without the consent of the Company, in which event such assignee shall be deemed to be a Buyer hereunder with respect to such assigned
rights, provided that the neither a Buyer nor any Holder of any Note may assign its rights hereunder or any Note to any actual
competitor of the Company (which, for the avoidance of doubt, does not include any Person whose primary business is investing in
securities). A Buyer and any Holder shall provide written notice to the Company promptly following any such assignment.

 

    	 	38	 

     
 

    

 

(h)       No
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, other than
the Indemnitees referred to in Section 9(k) and except that the Placement Agent is an intended third party beneficiary of
Sections 2 and 3 hereof..

 

(i)       Survival.
The representations, warranties, agreements and covenants shall survive the Closing. Each Buyer shall be responsible only for its
own representations, warranties, agreements and covenants hereunder.

 

(j)       Further
Assurances. 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 any 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.

 

(k)       Indemnification.

 

(i)       In
consideration of each Buyer’s execution and delivery of the Transaction Documents and acquiring the Securities thereunder
and in addition to all of the Company’s other obligations under the Transaction Documents, the Company shall defend, protect,
indemnify and hold harmless each Buyer and each holder of any Securities and all of their shareholders, 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 (i) any misrepresentation or breach of any representation
or warranty made by the Company or any Subsidiary in any of the Transaction Documents, (ii) any breach of any covenant, agreement
or obligation of the Company or any Subsidiary contained in any of the Transaction Documents or (iii) any cause of action, suit,
proceeding 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 or any Subsidiary) or which otherwise involves such Indemnitee that arises out of or results from
(A) the execution, delivery, performance or enforcement of any of the Transaction Documents, (B) any transaction financed or to
be financed in whole or in part, directly or indirectly, with the proceeds of the issuance of the Securities, (C) any disclosure
properly made by such Buyer pursuant to Section 4(h), or (D) the status of such Buyer or holder of the Securities either as
an investor in the Company pursuant to the transactions contemplated by the Transaction Documents or as a party to this Agreement
(including, without limitation, as a party in interest or otherwise in any action or proceeding for injunctive or other equitable
relief); provided, however, that such indemnity shall not, as to any given Indemnitee, apply to any Indemnified Liabilities
otherwise payable to such Indemnitee hereunder to the extent primarily arising as a direct result of the gross negligence or willful
misconduct of such Indemnitee as finally judicially determined. 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 which is permissible under applicable law.

 

    	 	39	 

     
 

    

 

(ii)       Promptly
after receipt by an Indemnitee under this Section 9(k) of notice of the commencement of any action or proceeding (including any
governmental action or proceeding) involving an Indemnified Liability, such Indemnitee shall, if a claim in respect thereof is
to be made against the Company under this Section 9(k), deliver to the Company a written notice of the commencement thereof, and
the Company shall have the right to participate in, and, to the extent the Company so desires, to assume control of the defense
thereof with counsel mutually satisfactory to the Company and the Indemnitee; provided, however, that an Indemnitee shall have
the right to retain its own counsel with the fees and expenses of such counsel to be paid by the Company if: (A) the Company has
agreed in writing to pay such fees and expenses; (B) the Company shall have failed promptly to assume the defense of such Indemnified
Liability and to employ counsel reasonably satisfactory to such Indemnitee in any such Indemnified Liability; or (C) the named
parties to any such Indemnified Liability (including any impleaded parties) include both such Indemnitee and the Company, and such
Indemnitee shall have been reasonably advised by counsel that a conflict of interest is likely to exist if the same counsel were
to represent such Indemnitee and the Company (in which case, if such Indemnitee notifies the Company in writing that it elects
to employ separate counsel at the expense of the Company, then the Company shall not have the right to assume the defense thereof
and such counsel shall be at the expense of the Company), provided further, that in the case of clause (C) above the Company shall
not be responsible for the reasonable fees and expenses of more than one (1) separate legal counsel for the Indemnitees. The Indemnitee
shall reasonably cooperate with the Company in connection with any negotiation or defense of any such action or Indemnified Liability
by the Company and shall furnish to the Company all information reasonably available to the Indemnitee which relates to such action
or Indemnified Liability. The Company shall keep the Indemnitee reasonably apprised at all times as to the status of the defense
or any settlement negotiations with respect thereto. The Company shall not be liable for any settlement of any action, claim or
proceeding effected without its prior written consent, provided, however, that the Company shall not unreasonably withhold, delay
or condition its consent. The Company shall not, without the prior written consent of the Indemnitee (which shall not be unreasonably
withheld, delayed or conditioned), consent to entry of any judgment or enter into any settlement or other compromise which does
not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnitee of a release from all liability
in respect to such Indemnified Liability or litigation, and such settlement shall not include any admission as to fault on the
part of the Indemnitee. Following indemnification as provided for hereunder, the Company shall be subrogated to all rights of the
Indemnitee with respect to all third parties, firms or corporations relating to the matter for which indemnification has been made.
The failure to deliver written notice to the Company within a reasonable time of the commencement of any such action shall not
relieve the Company of any liability to the Indemnitee under this Section 9(k), except to the extent that the Company is materially
and adversely prejudiced in its ability to defend such action.

 

    	 	40	 

     
 

    

 

(iii)       The
indemnification required by this Section 9(k) shall be made by periodic payments of the amount thereof during the course of the
investigation or defense, within ten (10) days after bills are received or Indemnified Liabilities are incurred.

 

(iv)       The
indemnity agreement contained herein shall be in addition to (A) any cause of action or similar right of the Indemnitee against
the Company or others, and (B) any liabilities the Company may be subject to pursuant to the law.

 

(l)       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. No specific representation or warranty shall limit the generality
or applicability of a more general representation or warranty. Each and every reference to share prices, shares of Common Stock
and any other numbers in this Agreement that relate to the Common Stock shall be automatically adjusted for any stock splits, stock
dividends, stock combinations, recapitalizations or other similar transactions that occur with respect to the Common Stock after
the date of this Agreement. Notwithstanding anything in this Agreement to the contrary, for the avoidance of doubt, nothing contained
herein shall constitute a representation or warranty against, or a prohibition of, any actions with respect to the borrowing of,
arrangement to borrow, identification of the availability of, and/or securing of, securities of the Company in order for such Buyer
(or its broker or other financial representative) to effect short sales or similar transactions in the future.

 

(m)       Remedies.
Each Buyer and in the event of assignment by Buyer of its rights and obligations hereunder, each holder of Securities, shall have
all rights and remedies set forth in the Transaction Documents and all rights and remedies which such holders have been granted
at any time under any other agreement or contract and all of the rights which such holders have under any law. Any Person having
any rights under any provision of this Agreement shall be entitled to enforce such rights specifically (without posting a bond
or other security), to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights
granted by law. Furthermore, the Company recognizes that in the event that it or any Subsidiary fails to perform, observe, or discharge
any or all of its or such Subsidiary’s (as the case may be) obligations under the Transaction Documents, any remedy at law
would inadequate relief to the Buyers. The Company therefore agrees that the Buyers shall be entitled to specific performance and/or
temporary, preliminary and permanent injunctive or other equitable relief from any court of competent jurisdiction in any such
case without the necessity of proving actual damages and without posting a bond or other security. The remedies provided in this
Agreement and the other Transaction Documents shall be cumulative and in addition to all other remedies available under this Agreement
and the other Transaction Documents, at law or in equity (including a decree of specific performance and/or other injunctive relief).

 

    	 	41	 

     
 

    

 

(n)       Withdrawal
Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) the Transaction
Documents, whenever any Buyer exercises a right, election, demand or option under a Transaction Document and the Company or any
Subsidiary does not timely perform its related obligations within the periods therein provided, then such Buyer may rescind or
withdraw, in its sole discretion from time to time upon written notice to the Company or such Subsidiary (as the case may be),
any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights.

 

(o)       Payment
Set Aside; Currency. To the extent that the Company makes a payment or payments to any Buyer hereunder or pursuant to any of
the other Transaction Documents or any of the Buyers enforce or exercise their 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 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. Unless otherwise expressly indicated, all dollar amounts referred to in this Agreement and the other
Transaction Documents are in United States Dollars (“U.S. Dollars”), and all amounts owing under this Agreement
and all other Transaction Documents shall be paid in U.S. Dollars. All amounts denominated in other currencies (if any) shall be
converted into the U.S. Dollar equivalent amount in accordance with the Exchange Rate on the date of calculation. “Exchange
Rate” means, in relation to any amount of currency to be converted into U.S. Dollars pursuant to this Agreement, the
U.S. Dollar exchange rate as published in the Wall Street Journal on the relevant date of calculation.

 

(p)       Judgment
Currency.

 

(i)       If
for the purpose of obtaining or enforcing judgment against the Company in connection with this Agreement or any other Transaction
Document in any court in any jurisdiction it becomes necessary to convert into any other currency (such other currency being hereinafter
in this Section 9(p) referred to as the “Judgment Currency”) an amount due in US Dollars under this Agreement,
the conversion shall be made at the Exchange Rate prevailing on the Business Day immediately preceding:

 

(1)       the
date actual payment of the amount due, in the case of any proceeding in the courts of New York or in the courts of any other jurisdiction
that will give effect to such conversion being made on such date: or

 

(2)       the
date on which the foreign court determines, in the case of any proceeding in the courts of any other jurisdiction (the date as
of which such conversion is made pursuant to this Section 9(p)(i)(2) being hereinafter referred to as the “Judgment
Conversion Date”).

 

    	 	42	 

     
 

    

 

(ii)       If
in the case of any proceeding in the court of any jurisdiction referred to in Section 9(p)(i)(2) above, there is a change
in the Exchange Rate prevailing between the Judgment Conversion Date and the date of actual payment of the amount due, the applicable
party shall pay such adjusted amount as may be necessary to ensure that the amount paid in the Judgment Currency, when converted
at the Exchange Rate prevailing on the date of payment, will produce the amount of US Dollars which could have been purchased with
the amount of Judgment Currency stipulated in the judgment or judicial order at the Exchange Rate prevailing on the Judgment Conversion
Date.

 

(iii)       Any
amount due from the Company under this provision shall be due as a separate debt and shall not be affected by judgment being obtained
for any other amounts due under or in respect of this Agreement or any other Transaction Document.

 

(q)       Independent
Nature of Buyers’ Obligations and Rights. The obligations of each Buyer under the Transaction Documents are several and
not joint with the obligations of any other Buyer, and no Buyer shall be responsible in any way for the performance of the obligations
of any other Buyer under any Transaction Document. Nothing contained herein or in any other Transaction Document, and no action
taken by any Buyer pursuant hereto or thereto, shall be deemed to constitute the Buyers as, and the Company acknowledges that the
Buyers do not so constitute, a partnership, an association, a joint venture or any other kind of group or entity, or create a presumption
that the Buyers are in any way acting in concert or as a group or entity, and the Company shall not assert any such claim with
respect to such obligations or the transactions contemplated by the Transaction Documents or any matters, and the Company acknowledges
that the Buyers are not acting in concert or as a group, and the Company shall not assert any such claim, with respect to such
obligations or the transactions contemplated by the Transaction Documents. The decision of each Buyer to purchase Securities pursuant
to the Transaction Documents has been made by such Buyer independently of any other Buyer. Each Buyer acknowledges that no other
Buyer has acted as agent for such Buyer in connection with such Buyer making its investment hereunder and that no other Buyer will
be acting as agent of such Buyer in connection with monitoring such Buyer’s investment in the Securities or enforcing its
rights under the Transaction Documents. The Company and each Buyer confirms that each Buyer has independently participated with
the Company and its Subsidiaries in the negotiation of the transaction contemplated hereby with the advice of its own counsel and
advisors. Each Buyer shall be entitled to independently protect and enforce its rights, including, without limitation, the rights
arising out of this Agreement or out of any other Transaction Documents, and it shall not be necessary for any other Buyer to be
joined as an additional party in any proceeding for such purpose. The use of a single agreement to effectuate the purchase and
sale of the Securities contemplated hereby was solely in the control of the Company, not the action or decision of any Buyer, and
was done solely for the convenience of the Company and its Subsidiaries and not because it was required or requested to do so by
any Buyer. It is expressly understood and agreed that each provision contained in this Agreement and in each other Transaction
Document is between the Company, each Subsidiary and a Buyer, solely, and not between the Company, its Subsidiaries and the Buyers
collectively and not between and among the Buyers.

 

[signature pages follow]

 

    	 	43	 

     
 

    

 

IN WITNESS WHEREOF,
each Buyer and the Company have caused their respective signature page to this Agreement to be duly executed as of the date first
written above.

 

 

	 	
        COMPANY:

         

	 	
        KUSHCO HOLDINGS, INC.

         

        

         

	 	By:	/s/ Nicholas Kovacevich
	 	 	Name:	Nicholas Kovacevich
	 	 	Title:	Chairman and Chief Executive Officer
	 	 	 	 

 

 

 

 

 

     

     
 

    

 

IN WITNESS WHEREOF,
each Buyer and the Company have caused their respective signature page to this Agreement to be duly executed as of the date first
written above.

 

 

	 	
        BUYER:

         

	 	
        HB SUB FUND II LLC

        

         

         

	 	By:	 /s/ George Antonopoulos
	 	 	Name:	George Antonopoulos
	 	 	Title:	Authorized Signatory
	 	 	 	 

 

 

 

 

 

 

     

     
 

    

 

SCHEDULE
OF BUYERS

 

	(1)	(2)	(3)	(4)	(5)
	 	 	 	 	 
	
        Buyer
	
        Address
        and Facsimile Number
	
        Original
        Principal Amount of Notes
	
        Purchase
        Price
	
        Legal
        Representative’s

        Address and Facsimile Number

	 	 	 	 	 
	

HB Sub Fund II LLC	
        

        Please deliver any notices other than Pre-Notices to:

         

        777 Third Avenue, 30th Floor

        New York, NY 10017

        Attention: Yoav Roth

        Facsimile: (212) 571-1279

        E-mail: investments@hudsonbaycapital.com

        Residence: Cayman Islands

         

        Please deliver any Pre-Notice to:

         

        777 Third Ave., 30th Floor

        New York, NY 10017

        Facsimile: (646) 214-7946

        Attention: Scott Black

        General Counsel and Chief Compliance Officer

         
	$21,300,000	$20,000,000	
        

        Kelley Drye & Warren LLP

        101 Park Avenue

        New York, NY 10178

        Telephone: (212) 808-7540

        Facsimile: (212) 808-7897

        Attention: Michael A. Adelstein, Esq.

	TOTAL	$21,300,000	$20,000,000Exhibit

Exhibit 10.1
SEPARATION AND GENERAL RELEASE AGREEMENT
This SEPARATION AND GENERAL RELEASE AGREEMENT (“Agreement”) is made by and between STAG INDUSTRIAL, INC., a Maryland corporation, and STAG INDUSTRIAL OPERATING PARTNERSHIP, L.P., a Delaware limited partnership (collectively, the “Company”), and PETER S. FEAREY (“Executive”).  The Company and the Executive are referred to herein as the “Parties.”
WHEREAS, Executive voluntarily resigned from employment with the Company effective as of February 15, 2019, in order to pursue other professional opportunities; and

WHEREAS, the Company previously granted Executive equity incentive or compensation awards that are currently outstanding and unvested (the “Equity Awards”) and that, but for this Agreement, would be forfeited upon Executive’s resignation from the Company; and

WHEREAS, the Company desires to engage Executive to provide consulting services to the Company during the period beginning February 15, 2019 through December 31, 2019 (the “Consulting Period”) in accordance with the terms of this Agreement; and

WHEREAS, the Company is willing to enter into this Agreement in consideration for Executive’s agreement to provide consulting services during the Consulting Period, Executive’s agreement to provide a release of claims, etc. as provided in Paragraph 6 of this Agreement and Executive’s agreement to cancel or forfeit certain Equity Awards as provided in Paragraph 5; and

WHEREAS, Executive is willing to enter into this Agreement and to provide consulting services during the Consulting Period, to provide Executive’s release of claims, etc. as provided in Paragraph 6 of this Agreement and to cancel or forfeit certain Equity Awards as provided in Paragraph 5 in consideration for the right to vest in certain Equity Awards as provided in Paragraph 4;

NOW, THEREFORE, in consideration of the mutual promises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

1.    Separation of Employment.  Executive’s employment with the Company terminated effective February 15, 2019 (the “Separation Date”).  Executive’s employment with the Company terminated on account of Executive’s voluntary resignation without “Good Reason” (as defined in that certain Executive Employment Agreement between Executive and the Company dated effective February 25, 2016 (the “Employment Agreement”) and the agreements evidencing the Equity Awards. Executive will have no right to employment with the Company after the Separation Date and the Company will have no obligation to employ Executive after the Separation Date.  Except as required by applicable law, Executive shall not be entitled to participate in any benefit plans or programs provided to employees of the Company following the Separation Date.
2.    Accrued Obligations/Acknowledgment of Full Payment. Whether or not Executive signs this Agreement:
(a)    Executive will be paid (i) all accrued base salary that is unpaid on the Separation Date, (ii) any awarded Bonus (as defined in the Employment Agreement) for the most recently completed fiscal year that is unpaid on the Separation Date and (iii) all accrued but unused vacation days as of the Separation Date that are payable in accordance with the Company’s vacation policy. Such amounts, less applicable withholdings and deductions, shall be paid after the Separation Date in accordance with the Company’s regular payroll schedule;
(b)    the Company will continue Executive’s group health and dental insurance benefits and the Company’s group life and disability insurance benefits through February 28, 2019; 

(c)    Executive will be reimbursed for any legitimate business expenses incurred through the Separation Date, which shall be paid in accordance with the Company’s expense reimbursement policy; and
(d)    Executive will continue to have the rights afforded a terminated employee under the employee benefit plans of the Company in which Executive participates or participated.
The payments and benefits described in Paragraph 2(a), (b), (c) and (d) collectively shall be defined as “Accrued Obligations.”
3.    Consulting Services.  In exchange for the right to vest in certain Equity Awards as provided in Paragraph 4 and the Company’s covenants, representations and waivers herein, Executive agrees to provide consulting services to the Company during the Consulting Period.  Subject to clauses (a), (b), (c) and (d) below, Executive shall personally provide advice and assistance to the Company with respect to such matters as may be assigned to Executive by the President of the Company.
(a)    From the Separation Date and through March 15, 2019, Executive shall be available to provide such services in the Company’s office for one-half day per week (if requested to do so by the President of the Company).

(b)    After March 15, 2019 and through June 30, 2019, Executive shall be available (either by phone or in person) to provide such services to the Company for ten hours per month (if requested to do so by the President of the Company).

(c)    From July 1, 2019 through October 31, 2019, Executive shall be available by phone to provide such services to the Company for five hours per month (if requested to do so by the President of the Company).

(d)    From November 1, 2019 through the end of the Consulting Period Executive shall be available by phone to provide such services to the Company for one hour per month (if requested to do so by the President of the Company).

The Parties agree that Executive will provide the consulting services to the Company as an independent contractor and not as an employee of the Company and nothing in this Agreement shall be construed to create the relationship of employer and employee between the Parties.  Executive agrees to exercise his best efforts to perform the consulting services in accordance with applicable law and with a high degree of competence, with good faith and in an exemplary fashion and in a manner intended to promote and preserve the goodwill and reputation of the Company.  Executive agrees that he is not entitled to any compensation or benefits in connection with his performance of the consulting services except as provided in Paragraph 4.
4.    Equity Award Vesting.  In exchange for Executive executing this Agreement and Executive’s covenants, representations and waivers herein (including Executive’s agreement to cancel or forfeit certain Equity Awards as provided in Paragraph 5, Executive’s release as provided in Paragraph 6 and Executive's continuing obligations referenced in Paragraph 8), the Company agrees that Executive shall have the right to vest in certain Equity Awards, subject to Executive providing consulting services to the Company in accordance with Paragraph 3 until the applicable vesting date and otherwise complying with this Agreement.
(a)    With respect to the LTIP Units granted to Executive on February 22, 2016, Executive shall vest in 414 LTIP Units on each of March 31, 2019, June 30, 2019, September 30, 2019 and December 31, 2019.

(b)    With respect to the LTIP Units granted to Executive on January 6, 2017 (the “2017 LTIP Award”) Executive shall vest in 405 LTIP Units on each of March 31, 2019, June 30, 2019, September 30, 2019 and December 31, 2019.

(c)    With respect to the LTIP Units granted to Executive on January 5, 2018 (the “2018 LTIP Award”) Executive shall vest in 599 LTIP Units on March 31, 2019, 599 LTIP Units on June 30, 2019, 598 LTIP Units on September 30, 2019 and 599 LTIP Units on December 31, 2019.

(d)    With respect to the shares of restricted stock granted to Executive on January 7, 2019, Executive shall vest in 7,128 shares on December 31, 2019.

Without liming the generality of Paragraph 11, any LTIP Units or shares of restricted stock that have not vested on or before Executive fails to provide consulting services in accordance with Paragraph 3 shall be forfeited on the date that Executive fails to provide such services.

5.    Equity Award Forfeiture.  In exchange for the right to vest in certain Equity Awards as provided in Paragraph 4 and the Company’s covenants, representations and waivers herein, Executive agrees that Executive shall forfeit his rights under certain Equity Awards as follows:
(a)    Shares of restricted stock granted to Executive on January 8, 2016 that are scheduled to vest after December 31, 2019 shall be forfeited and cancelled effective as of the Separation Date;

(c)    All of the Performance Award Share Units granted to Executive on January 6, 2017 shall be forfeited and cancelled effective as of the Separation Date;

(d)    All of the Performance Award Share Units granted to Executive on January 5, 2018 shall be forfeited and cancelled effective as of the Separation Date; 

(e)    All of the Performance Award Share Units granted to Executive on January 7, 2019 shall be forfeited and cancelled effective as of the Separation Date; and

(f)    All of the LTIP Units granted to Executive on January 7, 2019 shall be forfeited and cancelled effective as of the Separation Date.

In addition, unless the Parties agree to extend the Consulting Period in a writing signed by the Parties, LTIP Units granted under the 2017 LTIP Award or the 2018 LTIP Award that are scheduled to vest after December 31, 2019 shall be forfeited and cancelled effective December 31, 2019.

6.    Release.  Executive, on Executive’s own behalf and on behalf of Executive’s heirs, administrators, representatives, executors, successors, and assigns (collectively, the “Executive Releasors”), does hereby irrevocably and unconditionally release, acquit, and fully and forever discharge the Company, together with its current, former and future parents, subsidiaries, affiliates, divisions, predecessors, successors, assigns and business entities, and its current, former or future trustees, officers, directors, owners, stockholders, partners, members, agents, employees, insurers and reinsurers, and employee benefit plans (and the trustees, administrators, fiduciaries, insurers and reinsurers of such plans), including without limitation all persons acting by, through, under, or in concert with any of them, and their heirs, executors, administrators, predecessors, successors and assigns (collectively, the “Released Parties”) from any and all charges, complaints, claims, liabilities, obligations, promises, agreements, controversies, damages, remedies, actions, causes of action, suits, rights, demands, costs, losses, debts, and expenses (including attorneys’ fees and costs) of any nature whatsoever, known or unknown, whether in law or equity and whether arising under federal, state, or local law that the Executive Releasors had, now have, or may hereafter claim to have had against each or any of the Released Parties by reason of any matter, cause, or thing occurring, done, or omitted to be done from the beginning of the world until the date hereof, including claims relating to the Employment Agreement, Executive’s employment with the Company or termination from employment.  Without limitation, this Agreement includes a knowing and voluntary waiver of any and all rights, claims, and causes of action for discrimination based upon race, color, ethnicity, sex, national origin, religion, disability, and age (including without limitation under the Age Discrimination in Employment Act of 1967 as amended by the Older Workers Benefit Protection Act (“ADEA”), Title VII of the Civil Rights Act of 1964 as amended by the Civil Rights Act of 1991, the Equal Pay Act of 1962, the Americans with Disabilities Act of 1990, the Family and Medical Leave Act, the Massachusetts Fair Employment Practices Act, the Massachusetts Wage Act, the Massachusetts Earned Sick Time Act; and any other federal, state, or local anti-discrimination law) or any other unlawful criterion or circumstance, and any claims arising under common law, including breach of contract claims relating to Executive’s prior employment with any Released Party, including 

a full release of any and all claims under the Employment Agreement. Nothing in this Agreement is intended to interfere with Executive’s right to receive the Accrued Obligations or to vest in certain Equity Awards in accordance with Paragraph 4.

Nothing in this Agreement is intended to interfere with Executive’s right to file a charge with the Equal Employment Opportunity Commission or similar state agency in connection with any claim Executive believes Executive may have against the Released Parties.  However, by executing this Agreement, the Executive hereby waives the right to any individual relief, including the right to recover monetary damages, in any proceeding that the Executive may bring before the Equal Employment Opportunity Commission or any state human rights commission or in any proceeding brought by the Equal Employment Opportunity Commission or any state human rights commission on the Executive’s behalf.  In addition, this Agreement is not intended to interfere with the Executive’s right to challenge that this waiver of any and all ADEA claims pursuant to this Agreement is a knowing and voluntary waiver, although the Executive, by signing below, specifically represents to the Company that Executive has entered into this Agreement knowingly and voluntarily.
Executive acknowledges that this Agreement does not constitute an admission by any of the Released Parties of any unlawful acts or of any violation of federal, state, or local laws.  The Parties to this Agreement expressly deny any such unlawful act or violation.
The Executive acknowledges and agrees that, if Executive should hereafter make any claim or demand or commence or threaten to commence any action, claim, or proceeding against the Released Parties with respect to any cause, matter, or thing which is the subject of the release under Paragraph 4 of this Agreement, this Agreement may be raised as a complete bar to any such action, claim, or proceeding, and the applicable Released Party may recover from the Executive all expenses and costs incurred in connection with such action, claim, or proceeding, including attorneys’ fees.
In addition, for purposes of this Agreement, Executive represents that Executive is not aware of any claims against the Released Parties.  Executive acknowledges that Executive may discover facts or law different from, or in addition to, the facts or law that Executive knows or believes to be true with respect to the claims released in this Agreement and agrees, nonetheless, that this Agreement and the general release contained in it shall be and remain effective in all respects notwithstanding such different or additional facts or the discovery of them.
7.    Acknowledgements and Representations.  Executive acknowledges and agrees that except for the Accrued Obligations and the vesting of certain Equity Awards in accordance with Paragraph 4, Executive has received full payment for any and all compensation and/or benefits owed, and has no rights to any other salary, benefits, incentive compensation, vacation or sick pay, commissions, overtime, bonuses, equity, or other form of compensation or remuneration, or expense reimbursement from the Company.  Executive represents that, as of the date of this Agreement, Executive has not filed any lawsuits, charges, complaints, petitions, claims or other accusatory pleadings against the Company or any of the other Released Parties in any court or with any governmental agency or in any arbitral forum.
8.    Continuing Obligations. Executive acknowledges and reaffirms Executive’s commitment to comply with the surviving provisions of the Employment Agreement, including: Section 9 (“Confidentiality”), Section 10 (“Interference with Business Relations”), Section 11 (“Injunctive Relief”); Section 12 (“Agreement to Arbitrate”); Section 13 (“General Provisions”); and Section 14 (“Entire Agreement”).
9.    Period of Consideration and Right to Revoke.  The Company hereby advises Executive that he should consult with an attorney prior to executing this Agreement.  Executive acknowledges and understands that he has had at least twenty-one (21) days to consider this Agreement and his decision to enter into it.  In addition, Executive has a period of seven (7) days following the execution of this Agreement during which he may revoke this Agreement by sending written notification of such revocation to the Company.  Should Executive exercise his right to revoke during the seven-day revocation period, this entire Agreement will become null and void, and neither Executive nor Company will have any rights or obligations under it.  If Executive does not revoke the Agreement within seven (7) days, it will become effective and enforceable on the eighth day after Executive signs it.

10.    Section 16.  Executive acknowledges that he will be subject to Section 16 of the Securities Exchange Act of 1934, as amended, for up to a 6-month period after the Separation Date with respect to certain matters such as the short-swing profit rule.
11.    Enforcement.  Executive agrees that Executive’s breach of the covenants referenced in Paragraph 8 of this Agreement, relating to the surviving covenants in the Employment agreement, shall result in Executive’s forfeiture of the Equity Awards that vest or otherwise may vest in accordance with Paragraph 4.  Executive further acknowledges that the Company’s remedies at law for a breach or threatened breach of any of the covenants referenced in Paragraph 8 of this Agreement would be inadequate and, in recognition of this fact, Executive agrees that in the event of such a breach or threatened breach, in addition to any other available remedies, the Company, without the necessity of posting any bond or other security, shall be entitled to obtain equitable relief in the form of specific performance, temporary restraining order, a temporary or permanent injunction or any other equitable remedy which may then be available.
12.    Section 409A.  This Agreement and the amounts payable and other benefits provided under this Agreement are intended to comply with, or otherwise be exempt from, Section 409A of the Code (“Section 409A”), after giving effect to the exemptions in Treasury Regulation sections 1.409A-1(b)(3) through (b)(12).  This Agreement shall be administered, interpreted and construed in a manner consistent with Section 409A.  If any provision of this Agreement is found not to comply with, or otherwise not be exempt from, the provisions of Section 409A, it shall be modified and given effect, in the sole discretion of the Company and without requiring Executive’s consent, in such manner as the Company determines to be necessary or appropriate to comply with, or to effectuate an exemption from, Section 409A; provided, however, that in exercising this discretion, the Company shall modify this Agreement in the least restrictive manner necessary.  Each payment under this Agreement shall be treated as a separate identified payment for purposes of Section 409A.
With respect to any reimbursement of expenses of, or any provision of in-kind benefits to, Executive, as specified under this Agreement, such reimbursement of expenses or provision of in-kind benefits shall be subject to the following limitations: (i) the expenses eligible for reimbursement or the amount of in-kind benefits provided in one taxable year shall not affect the expenses eligible for reimbursement or the amount of in-kind benefits provided in any other taxable year; (ii) the reimbursement of an eligible expense shall be made as specified in this Agreement and in no event later than the end of the year after the year in which such expense was incurred and (iii) the right to reimbursement or in-kind benefit shall not be subject to liquidation or exchange for another benefit.
Executive agrees and acknowledges that he and his counsel have had the opportunity to assess the tax consequences of this Agreement and the payments to be provided under it and that he shall be solely responsible for all tax consequences.  Executive further acknowledges and agrees that the Company has no obligation to indemnify or otherwise reimburse or provide additional compensation or benefits to Executive for any penalties, interest, or adverse tax consequences arising under Section 409A.
13.    Waiver.  The failure of either Party to insist upon strict performance of any of the terms or provisions of this Agreement or to exercise any rights or remedies contained in this Agreement shall not be construed as a waiver or as a relinquishment for the future of such terms, provisions, rights, or remedies.  Neither this Agreement nor any of its provisions may be changed, waived, or discharged, except by an instrument in writing signed by all Parties.
14.    Governing Law.  It is the intent of the Parties hereto that all questions with respect to the construction of this Agreement and the rights and liabilities of the Parties shall be determined in accordance with the applicable provisions of the laws of the Commonwealth of Massachusetts regardless of Massachusetts’ choice of law provisions.
15.    Arbitration.  The Parties agree that Section 12 of the Employment Agreement (“Agreement to Arbitrate”) is incorporated in this Paragraph 15 by reference and the Parties expressly agree that all disputes or controversies arising out of this Agreement, its performance, or the alleged breach thereof, if not disposed of by 

agreement, shall be resolved by arbitration in accordance with this Paragraph 15.  Either Party must demand such arbitration only within three (3) months after the controversy arises by sending a notice of demand to arbitrate to the American Arbitration Association, with a copy thereof to the other Party.  
16.    Entire Agreement/Amendments.  This Agreement constitutes the entire agreement between the Parties concerning the subject matter hereof, and may be amended or modified only by a writing signed by the Parties.  If any term of this Agreement, or the application hereof to any person, entity, or circumstances, shall to any extent be invalid or unenforceable, the remainder of this Agreement, or the application of such term to persons, entities, or circumstances other than those as to which it is invalid or unenforceable, shall not be affected thereby, and each term of this Agreement shall be valid and enforceable to the fullest extent permitted by law.
17.    Method of Acceptance; Signatures.  This Agreement cannot be accepted or executed by Executive prior to the Separation Date.  This Agreement may be executed in one or more counterparts, and each counterpart shall, for all purposes, be deemed to be an original, and all such counterparts shall together constitute one and the same instrument.  Any Party’s signature on this Agreement that is transmitted by facsimile or electronic means shall be deemed to be an original.
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IN WITNESS WHEREOF, the Parties hereto have executed this Separation and General Release Agreement.
STAG INDUSTRIAL, INC.
		
	Date:  2/21/19
	By:    /s/ Benjamin S. Butcher

Benjamin S. Butcher
Chief Executive Officer and President
STAG INDUSTRIAL OPERATING 
PARTNERSHIP, L.P.

By: STAG Industrial GP, LLC, its general partner
By: STAG Industrial, Inc., its sole member
		
	Date:  2/21/19
	By:    /s/ Benjamin S. Butcher

Benjamin S. Butcher
Chief Executive Officer and President
		
	Date:  2/21/19
	By:     /s/ Peter S. Fearey

Peter S. Fearey

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