Exhibit 10.1

 

SHARE EXCHANGE AGREEMENT

 

This Share Exchange Agreement, dated as of June 19, 2015, (this “Agreement”) by
and among Aqua Power Systems Inc., a State of Nevada corporation having its
executive offices at 1107 Town Creek Road, Eden, North Carolina, USA 27288,
(“APSI”), and Aqua Power System Japan Kabushiki Kaisha, (“AP Japan”), a
corporation in Japan with an office at 2-7-17 Omorihoncho, Tokyo, Ota-ku, Japan,
143-0011, and Tadashi Ishikawa (“AP Japan Shareholder”), with an address at
2-7-17 Omorihoncho, Tokyo, Ota-ku, Japan, 143-0011. For purposes of this
Agreement, APSI, AP Japan, and the AP Japan Shareholder are sometimes
collectively referred to as the “Parties” and individually as a “Party”.

 

RECITALS

 

WHEREAS, on May 29, 2015, the Parties hereto entered into that certain License
and Option Agreement (the “License Agreement”), whereby, APSI entered into a
licensing and option agreement with the Shareholder, and Aqua Power Japan.
Pursuant to the terms of the licensing and option agreement, APSI agreed to
purchase (i) an exclusive worldwide license to the Intellectual Property and
Products in exchange for a 10% royalty on the net sales by us derived from the
use of the License; and, (ii) an option to purchase an aggregate of 9,890 shares
registered to and legally and beneficially owned by the Shareholder representing
all of the issued and outstanding shares of AP Japan; and,

 

WHEREAS, the Parties have determined that the License Agreement shall be
terminated in favor of this Agreement; and,

 

WHEREAS, the AP Japan Shareholder owns Nine Thousand Eight Hundred Ninety
(9,890) shares of APSI, which represents One Hundred (100%) percent of the AP
Japan common stock outstanding immediately prior to the closing on a fully
diluted (such shares being hereinafter referred to as the “AP Japan Shares”);
and,

 

WHEREAS, (i) the AP Japan Shareholder and AP Japan believe it is in their
respective best interests for the AP Japan Shareholder to exchange Nine Thousand
Eight Hundred Ninety (9,890) common shares of AP Japan, representing 100% of AP
Japan, for Three Million Eight Hundred Six Thousand Five Hundred Fifty Nine
(3,806,559) shares of common stock of APSI at a deemed price of $0.20 per share
(such shares being hereinafter referred to as the “APSI Shares”); and (ii) APSI
believes it is in its best interest and the best interest of its stockholders to
acquire the AP Japan Shares in exchange for the APSI Shares, all upon the terms
and subject to the conditions set forth in this Agreement (the “Share
Exchange”); and,

 

WHEREAS, in addition to the Share Exchange, the Parties agree that AP Japan
shall receive an aggregate of Five Hundred Fifty Thousand ($550,000) dollars, in
six tranches (i) an aggregate of $50,000 in cash received on June 8, 2015 (ii)
an aggregate of $100,000 in cash on the execution of this Agreement, and (iii)
APSI will issue the four promissory notes as attached hereto as Exhibit A to AP
Japan (the “Promissory Notes”); and,

 

WHEREAS, it is the intention of the parties that: (i) the Share Exchange shall
qualify as a tax-free reorganization under Section 368(a)(1)(B) of the Internal
Revenue Code of 1986, as amended (the “Code”); and (ii) the Share Exchange shall
qualify as a transaction in securities exempt from registration or qualification
under the Securities Act of 1933, as amended and in effect on the date of this
Agreement (the “Securities Act”); and,

 

WHEREAS, it is the intention of the parties that upon the Closing (as
hereinafter defined) AP Japan shall become a wholly owned subsidiary of APSI;
and,

 

WHEREAS, the Parties agree that the foregoing Recitals are true and correct and
are hereby incorporated into this Agreement by this reference.

 

NOW, THEREFORE, in consideration of the mutual terms, conditions and other
agreements set forth herein, the parties hereto agree as follows:

 

 

 

 

ARTICLE I

 

EXCHANGE OF AP JAPAN SHARES FOR APSI SHARES

 

Section 1.1           Agreements to Exchange AP Japan Shares for APSI Shares. On
the Closing Date (as hereinafter defined) and upon the terms and subject to the
conditions set forth in this Agreement, the AP Japan Shareholder shall assign,
transfer, convey and deliver the AP Japan Shares to APSI and, in consideration
and exchange for the AP Japan Shares, APSI shall issue, transfer, convey and
deliver the APSI Shares to the AP Japan Shareholder.

  

Section 1.2           Closing and Actions at Closing. The closing of the Share
Exchange (the “Closing”) shall take place on June 19, 2015 or on the date via
the exchange of documents and signatures at such time and date as the parties
hereto shall agree orally or in writing (the “Closing Date”).

 

Section 1.3           Share Exchange. After Closing and contingent upon the
satisfaction of the terms and conditions set forth in this Agreement, Nine
Thousand Eight Hundred Ninety (9,890) shares of common stock, representing One
Hundred (100%) of the AP Japan Shares shall be exchanged and delivered to APSI
in exchange APSI shall exchange and deliver Three Million Eight Hundred Six
Thousand Five Hundred Fifty Nine (3,806,559) restricted common shares of APSI to
the AP Japan Shareholder.

 

Section 1.4           Cash Consideration. The Parties agree that:

 

(i)AP Japan received payment of $50,000 from APSI on June 8, 2015;

 

(ii)AP Japan shall receive on the execution of this Agreement, payment of One
Hundred Thousand ($100,000) dollars in cash from APSI; and

 

(iii)APSI will issue the Promissory Notes (the four promissory notes for
$100,000 each) to AP Japan. Copies of the Promissory Notes are attached hereto
as Exhibit A; and,

 

Section 1.5           Restrictions on APSI Shares Issued Pursuant to this
Agreement. The APSI shares to be issued by APSI pursuant to this Agreement have
not been registered and are being issued pursuant to a specific exemption under
the Securities Act, as well as under certain state securities laws for
transactions by an issuer not involving any public offering or in reliance on
limited federal preemption from such state securities registration laws, based
on the suitability and investment representations made by APSI to the AP Japan
Shareholder. The APSI Shares to be issued by APSI pursuant to this Agreement
must be held and may not be sold, transferred, or otherwise disposed of for
value unless such securities are subsequently registered under the Securities
Act or an exemption from such registration is available, and that the
certificates representing the Shares of APSI Common Stock issued in the Share
Exchange will bear a legend in substantially the following form so restricting
the sale of such securities:

 

The securities represented by this certificate have not been registered under
the Securities Act of 1933, as amended (the “Securities Act”), and are
“restricted securities” within the meaning of Rule 144 promulgated under the
Securities Act. The securities have been acquired for investment and may not be
sold or transferred without complying with Rule 144 in the absence of an
effective registration or other compliance under the Securities Act.

 

Section 1.6           Share Exchange Procedure. The AP Japan Shareholder may
exchange his certificate(s) representing the AP Japan Shares by delivering such
certificate(s) to APSI duly executed and endorsed in blank (or accompanied by
duly executed stock powers duly endorsed in blank), in each case in proper form
for transfer, with signatures guaranteed, and, if applicable, with all stock
transfer and any other required documentary stamps affixed thereto and with
appropriate instructions to allow the transfer agent to issue certificates for
the APSI Shares to the holder thereof, together with a Certificate of Non-U.S.
Shareholder, a copy of which attached hereto as Exhibit B.

 

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Section 1.7           Financial Statements. AP Japan shall deliver all books and
records since inception and the financial statements for fiscal years 2014 and
2015 will have been prepared in accordance with Generally Accepted Accounting
Principles (“GAAP”) (the “Financial Statements”) on or before June 30, 2015.All
of AP Japan’s assets are reflected on its financial statements, and AP Japan has
no material undisclosed liabilities, direct or indirect, matured or unmatured,
contingent or otherwise which are not reflected on its financial statements.

 

Section 1.8           Cancellation of Common Shares of APSI. The AP Japan
Shareholder will cancel an aggregate of 105,863,935 common shares of APSI
registered to and beneficially owned by the AP Japan Shareholder when the
Financial Statements are delivered to APSI by AP Japan.

 

ARTICLE II

 

REPRESENTATIONS AND WARRANTIES OF APSI

 

APSI represent, warrant and agree that all of the statements in the following
subsections of this Article II are true and complete as of the date hereof.

 

Section 2.1  Corporate Organization

 

A.           APSI is a corporation duly organized, validly existing and in good
standing under the laws of Nevada, and has all requisite corporate power and
authority to own its properties and assets and governmental licenses,
authorizations, consents and approvals to conduct its business as now conducted
and is duly qualified to do business and is in good standing in each
jurisdiction in which the nature of its activities makes such qualification and
being in good standing necessary, except where the failure to be so qualified
and in good standing will not have a Material Adverse Effect on the activities,
business, operations, properties, assets, condition or results of operation of
APSI. “Material Adverse Effect” means, when used with respect to APSI, any
event, occurrence, fact, condition, change or effect, which, individually or in
the aggregate, would reasonably be expected to be materially adverse to the
business, operations, properties, assets, condition (financial or otherwise), or
operating results of APSI, or materially impair the ability of APSI to perform
its obligations under this Agreement, excluding any change, effect or
circumstance resulting from (i) the announcement, pendency or consummation of
the transactions contemplated by this Agreement; or (ii) changes in the U.S.
securities markets generally.

 

B.           Copies of the Articles of Incorporation and Bylaws of APSI with all
amendments thereto, as of the date hereof (the “APSI Charter Documents”), have
been furnished to AP Japan, if so requested, and such copies are accurate and
complete as of the date hereof. The minute books of APSI are current as required
by law, contain the minutes of all meetings of the APSI Board and its
stockholders from its date of incorporation to the date of this Agreement, and
adequately reflect all material actions taken by the APSI Board and its
stockholders. APSI is not in violation of any of the provisions of the APSI
Charter Documents.

 

Section 2.2  Capitalization of APSI.

 

A.           The authorized capital stock of APSI consists of: (i) 200,000,000
shares of common stock, par value $0.0001, of which 161,124,318 shares of common
stock are issued and outstanding immediately prior to the Share Exchange; and
(ii) 10,000,000 shares of preferred stock, par value $0.0001, of which there are
no shares of preferred stock which are issued and outstanding immediately prior
to the Share Exchange.

 

B.           All of the issued and outstanding shares of common stock of APSI
immediately prior to this Share Exchange are, and all shares of common stock of
APSI when issued in accordance with the terms hereof will be, duly authorized,
validly issued, fully paid and non-assessable, will have been issued in
compliance with all applicable U.S. federal and state securities laws and state
corporate laws, and will have been issued free of preemptive rights of any
security holder. The issuance of all of the shares of APSI described in this
Section 2.2 have been, or will be, as applicable, in compliance with U.S.
federal and state securities laws and state corporate laws and no stockholder of
APSI has any right to rescind or bring any other claim against APSI for failure
to comply with the Securities Act, or state securities laws.

 

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Section 2.3           Shell Status. As of the date of this Agreement, APSI
represents that to its knowledge and belief it is not and has not been a “shell
company” for the proceeding twelve (12) months, as that term is defined in Rule
405 of the Securities Act and Rule 12b-2 of the Exchange Act. Further, APSI has
not filed and Quarterly or Annual Reports with the SEC indicating that it was,
during the relevant period, a shell company. Management represents that during
the existence of the entity there has always been a viable business with ongoing
operations and has had more than nominal operations.

 

Section 2.4           Authorization, Validity and Enforceability of Agreements.
APSI has all corporate power and authority to execute and deliver this Agreement
and all agreements, instruments and other documents to be executed and delivered
in connection with the transactions contemplated by this Agreement (collectively
the “Agreements”) to perform its obligations hereunder and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of the
Agreements by APSI and the consummation by APSI of the transactions contemplated
hereby and thereby, have been duly authorized by all necessary corporate action
of APSI, and no other corporate proceedings on the part of APSI are necessary to
authorize the Agreements or to consummate the transactions contemplated hereby
and thereby. The Agreements constitute the valid and legally binding obligation
of APSI and is enforceable in accordance with its terms, except as such
enforcement may be limited by general equitable principles, or by bankruptcy,
insolvency and other similar laws affecting the enforcement of creditors rights
generally. APSI does not need to give any notice to, make any filings with, or
obtain any authorization, consent or approval of any government or governmental
agency or other party in order for it to consummate the transactions
contemplated by any of the Agreements, resulting from the issuance of the APSI
Shares in connection with the Share Exchange.

 

Section 2.5           No Conflict or Violation. Neither the execution and
delivery of the Agreements by APSI, nor the consummation by APSI of the
transactions contemplated thereby will: (i) contravene, conflict with, or
violate any provision of the APSI Charter Documents; (ii) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge or other restriction of any government, governmental agency,
court, administrative panel or other tribunal to which APSI is subject;
(iii) conflict with, result in a breach of, constitute a default (or an event or
condition which, with notice or lapse of time or both, would constitute a
default) under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify or cancel, or require any notice under any
agreement, contract, lease, license, instrument or other arrangement to which
APSI is a party or by which it is bound, or to which any of its assets or
properties are subject; or (iv) result in or require the creation or imposition
of any encumbrance of any nature upon or with respect to any of APSI’ assets,
including without limitation, the APSI Shares.

 

Section 2.6           Litigation. There is no action, suit, proceeding or
investigation (“Action”) pending or, to the knowledge of APSI, currently
threatened against APSI or any of its affiliates, that may affect the validity
of this Agreement or the right of APSI to enter into this Agreement or to
consummate the transactions contemplated hereby or thereby. There is no Action
pending or, to the knowledge of APSI, currently threatened against APSI or any
of its affiliates, before any court or by or before any governmental body or any
arbitration board or tribunal, nor is there any judgment, decree, injunction or
order of any court, governmental department, commission, agency, instrumentality
or arbitrator against or relating to APSI or any of its affiliates. Neither APSI
nor any of its affiliates is a party or subject to the provisions of any order,
writ, injunction, judgment or decree of any court or government agency or
instrumentality. There is no Action by APSI or any of its affiliates currently
pending or which APSI or any of its affiliates intends to initiate.

 

Section 2.7           Compliance with Laws. APSI has been and is in compliance
with, and has not received any notice of any violation of any, applicable law,
order, ordinance, regulation or rule of any kind whatsoever, including without
limitation the Securities Act, the Exchange Act, the applicable rules and
regulations of the SEC or the applicable securities laws and rules and
regulations of any state.

 

Section 2.8           Financial Statements. APSI’ financial statements have been
prepared in accordance with generally accepted accounting principles applicable
in the United States of America (“U.S. GAAP”) applied on a consistent basis,
except that those Financial Statements that are not audited do not contain all
footnotes required by U.S. GAAP. Such financial statements fairly present the
financial condition and operating results of APSI as of the dates, and for the
periods, indicated therein, subject to normal year-end audit adjustments. Except
for loans in the aggregate of $678,897, APSI has no material liabilities
(contingent or otherwise). APSI is not a guarantor or indemnitor of any
indebtedness of any other person, entity or organization. APSI maintains a
standard system of accounting established and administered in accordance with
U.S. GAAP.

 

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Section 2.9           Books, Financial Records and Internal Controls. All the
accounts, books, registers, ledgers, APSI Board minutes and financial and other
records of whatsoever kind of APSI have been fully, properly and accurately kept
and completed; there are no material inaccuracies or discrepancies of any kind
contained or reflected therein; and they give and reflect a true and fair view
of the financial, contractual and legal position of APSI. APSI maintains a
system of internal accounting controls sufficient to provide reasonable
assurance that: (i) transactions are executed in accordance with management’s
general or specific authorizations; (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with GAAP and to
maintain asset accountability; (iii) access to assets is permitted only in
accordance with management’s general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate actions are taken with respect to any
differences.

  

Section 2.10         No Disagreements with Accountants and Lawyers. There are no
disagreements of any kind presently existing, or anticipated by APSI to arise,
between APSI and any accountants and/or lawyers formerly or presently engaged by
APSI. APSI is current with respect to fees owed to its accountants and lawyers.

 

Section 2.11         Absence of Undisclosed Liabilities. Except for loans in the
aggregate of $678,897 and as specifically disclosed herein: (A) there has been
no event, occurrence or development that has resulted in or could result in a
Material Adverse Effect; (B) APSI has not incurred any liabilities, obligations,
claims or losses, contingent or otherwise, including debt obligations, other
than professional fees to be paid prior to Closing; (C) APSI has not declared or
made any dividend or distribution of cash or property to its shareholders,
purchased, redeemed or made any agreements to purchase or redeem any shares of
its capital stock, or issued any equity securities other than with respect to
transactions contemplated hereby; (D) APSI has not made any loan, advance or
capital contribution to or investment in any person or entity; (E) APSI has not
discharged or satisfied any lien or encumbrance or paid any obligation or
liability (absolute or contingent), other than current liabilities paid in the
ordinary course of business; (F) APSI has not suffered any losses or waived any
rights of material value, whether or not in the ordinary course of business, or
suffered the loss of any material amount of prospective business; and (G) except
for the Share Exchange, APSI has not entered into any transaction other than in
the ordinary course of business, or entered into any other material transaction,
whether or not in the ordinary course of business.

 

Section 2.12         No Undisclosed Events or Circumstances. No event or
circumstance has occurred or exists with respect to APSI or its respective
businesses, properties, prospects, operations or financial condition, which,
under applicable law, rule or regulation, requires public disclosure or
announcement by APSI but which has not been so publicly announced or disclosed.
APSI has not provided to AP Japan, or the AP Japan Shareholder, any material
non-public information or other information which, according to applicable law,
rule or regulation, was required to have been disclosed publicly by APSI but
which has not been so disclosed, other than with respect to the transactions
contemplated by this Agreement and/or the Share Exchange.

 

Section 2.13         Disclosure. This Agreement and any certificate attached
hereto or delivered in accordance with the terms hereof by or on behalf of APSI
in connection with the transactions contemplated by this Agreement, when taken
together, do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements contained
herein and/or therein not misleading.

 

Section 2.14         Directors and Officers of APSI. The duly elected or
appointed directors and the duly appointed officers of APSI are set forth on
Schedule 2.14.

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES OF AP JAPAN

 

AP Japan represents, warrants and agrees that all of the statements in the
following subsections of this Article III, pertaining to AP Japan, are true and
complete as of the date hereof.

 

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Section 3.1           Corporate Organization

 

A.           AP Japan is a corporation duly organized, validly existing and in
good standing under the laws of Japan, and has all requisite corporate power and
authority to own its properties and assets and governmental licenses,
authorizations, consents and approvals to conduct its business as now conducted
and is duly qualified to do business and is in good standing in each
jurisdiction in which the nature of its activities makes such qualification and
being in good standing necessary, except where the failure to be so qualified
and in good standing will not have a Material Adverse Effect on the activities,
business, operations, properties, assets, condition or results of operation of
AP Japan. “Material Adverse Effect” means, when used with respect to AP Japan,
any event, occurrence, fact, condition, change or effect, which, individually or
in the aggregate, would reasonably be expected to be materially adverse to the
business, operations, properties, assets, condition (financial or otherwise), or
operating results of AP Japan, or materially impair the ability of AP Japan to
perform its obligations under this Agreement, excluding any change, effect or
circumstance resulting from (i) the announcement, pendency or consummation of
the transactions contemplated by this Agreement; or (ii) changes in the U.S.
securities markets generally.

 

B.           Copies of the formation documents of AP Japan, or their equivalent,
with all amendments thereto, as of the date hereof (the “AP Japan Charter
Documents”), have been furnished to APSI, if so requested, and such copies are
accurate and complete as of the date hereof. The minute books of AP Japan are
current as required by law, contain the minutes of all meetings of the AP Japan
Board and its stockholders from its date of formation to the date of this
Agreement, and adequately reflect all material actions taken by the AP Japan
Board and its stockholders. AP Japan is not in violation of any of the
provisions of the AP Japan Charter Documents.

 

Section 3.2           Capitalization of AP Japan.

 

A.           The authorized capital stock of AP Japan consists of: (i) 50,000
shares of common stock, no par value, of which Nine Thousand Eight Hundred
Ninety (9,890) shares of common stock are issued and outstanding immediately
prior to the Share Exchange; and (ii) 0 shares of Preferred Stock.

 

B.           All of the issued and outstanding shares of common stock of AP
Japan immediately prior to this Share Exchange are, and all shares of common
stock of AP Japan when issued in accordance with the terms hereof will be, duly
authorized, validly issued, fully paid and non-assessable, will have been issued
in compliance with all applicable securities laws and corporate laws of the
Country of Japan, and will have been issued free of preemptive rights of any
security holder. The issuance of all of the shares of AP Japan described in this
Section 2.2 have been, or will be, as applicable, in compliance with U.S.
federal and state securities laws and state corporate laws and no stockholder of
AP Japan has any right to rescind or bring any other claim against AP Japan for
failure to comply with the Securities Act, or state securities laws.

 

Section 3.3           Shareholders of AP Japan’s Common Stock. Schedule 3.3
contains a true and complete list of the holders of all issued and outstanding
shares of AP Japan including number of APSI shares held as of the date of this
Agreement.

 

Section 3.4           Directors and Officers of AP Japan. The duly elected or
appointed directors and the duly appointed officers of AP Japan are as set out
in Schedule 3.4.

 

Section 3.5           Financial Statements. The books and records, financial and
otherwise, of AP Japan are, in all material aspects, complete and correct and
have been maintained in accordance with good business and accounting practices
since inception. The balance sheets are true and accurate and present fairly as
of their respective dates the financial condition of AP Japan.  As of the date
of such balance sheets, except as and to the extent reflected or reserved
against therein, including but not limited to any previous tax liability AP
Japan had no undisclosed liabilities or obligations (absolute or contingent)
which are not reflected in the balance sheets or the notes thereto, and all
assets reflected therein are properly reported and present fairly the value of
the assets of AP Japan.

 

Section 3.6           Information. The information concerning AP Japan set forth
in this Agreement is complete and accurate in all material respects and does not
contain any untrue statement of a material fact or omit to state a material fact
required to make the statements made, in light of the circumstances under which
they were made, not misleading.

 

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Section 3.7           Personal Property. Each of AP Japan and its subsidiaries
possesses, and has good and marketable title of all property necessary for the
continued operation of the business of AP Japan and its subsidiaries as
presently conducted and as represented to APSI. All such property is used in the
business of AP Japan and its subsidiaries. All such property is in reasonably
good operating condition (normal wear and tear excepted), and is reasonably fit
for the purposes for which such property is presently used. All material
equipment, furniture, fixtures and other tangible personal property and assets
owned or leased by AP Japan and its subsidiaries is owned by AP Japan or its
subsidiaries free and clear of all liens, security interests, charges,
encumbrances, and other adverse claims, except as disclosed in Schedule 3.7.

 

Section 3.8           Intellectual Property. AP Japan represents and warrants
that all trademarks and trademark applications, and all patents and patent
applications, as set forth in Schedule 3.8, and any trade secrets, and
“know-how” held relating to business of AP Japan, and all other intangible
assets, in AP Japan’s possession or that may be reasonably acquired by AP Japan
any other proprietary information and trade secrets relating to the business of
AP Japan (collectively the “Intellectual Property”) shall remain the
intellectual property of AP Japan as of the date of Closing of this Agreement
and that AP Japan shall take any steps reasonable to assign or otherwise
transfer any Intellectual Property right to APSI, as necessary to protect APSI’s
rights to the same. Further, AP Japan owns, free and clear of any encumbrance,
or has the valid right to sell all Intellectual Property used by in its
business, as currently conducted. AP Japan represents that it has not received
any written complaint, claim or notice alleging any such infringement, violation
or misappropriation. Additionally, AP Japan has taken reasonable precautions (i)
to protect its rights in its Intellectual Property and (ii) to maintain the
confidentiality of its trade secrets, know-how and other confidential
Intellectual Property, related to the business and to AP Japan’s knowledge,
there have been no acts or omissions by the managers, members, employees and
agents of AP Japan, the result of which would be to materially compromise the
rights of AP Japan to apply for or enforce appropriate legal protection of AP
Japan’s Intellectual Property.

 

Section 3.8           Products. Schedule 3.9 contains a complete list of
products currently being sold, developed or marketed by AP Japan.

 

Section 3.10         Material Contracts and Transactions. Schedule 3.10 attached
hereto lists each material contract, agreement, license, permit, arrangement,
commitment, instrument or contract to which AP Japan or any of its subsidiaries
is a party (each, a “Contract”). Each Contract is in full force and effect, and
there exists no material breach or violation of or default by AP Japan or any of
its subsidiaries under any Contract, or any event that with notice or the lapse
of time, or both, will create a material breach or violation thereof or default
under any Contract by AP Japan or any of its subsidiaries. The continuation,
validity, and effectiveness of each Contract will in no way be affected by the
consummation of the Transaction or any of the transactions contemplated in this
Agreement. There exists no actual or threatened termination, cancellation, or
limitation of, or any amendment, modification, or change to any Contract.

 

Section 3.11         Subsidiaries. Except as set forth on Schedule 3.11, AP
Japan does not have any subsidiaries or agreements of any nature to acquire any
subsidiary or to acquire or lease any other business operations.

 

Section 3.12         Absence of Certain Changes or Events. As of the date of
this Agreement, (a) there has not been any material adverse change in the
business, operations, properties, assets, or condition (financial or otherwise)
of AP Japan; and (b) AP Japan has not: (i) declared or made, or agreed to
declare or make, any payment of dividends or distributions of any assets of any
kind whatsoever to stockholders or purchased or redeemed, or agreed to purchase
or redeem, any of its shares; (ii) made any material change in its method of
management, operation or accounting; (iii) entered into any other material
transaction other than in the ordinary course of its business; or (iv) made any
increase in or adoption of any profit sharing, bonus, deferred compensation,
insurance, pension, retirement, or other employee benefit plan, payment, or
arrangement made to, for, or with its officers, directors, or employees.

 

Section 3.13         Litigation and Proceedings. There are no actions, suits,
proceedings, or investigations pending or, to the knowledge of AP Japan after
reasonable investigation, threatened by or against AP Japan or affecting AP
Japan or its properties, at law or in equity, before any court or other
governmental agency or instrumentality, domestic or foreign, or before any
arbitrator of any kind.  AP Japan does not have any knowledge of any material
default on its part with respect to any judgment, order, injunction, decree,
award, rule, or regulation of any court, arbitrator, or governmental agency or
instrumentality.

  

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Section 3.14         Compliance With Laws and Regulations. To the best of its
knowledge, AP Japan has complied with all applicable statutes and regulations,
except to the extent that noncompliance would not materially and adversely
affect the business, operations, properties, assets, or condition of AP Japan or
except to the extent that noncompliance would not result in the occurrence of
any material liability for AP Japan.  This compliance includes, but is not
limited to, the filing of all reports to date with relevant authorities.

 

Section 3.15         Approval of Agreement. The Board of Directors of AP Japan
has authorized the execution and delivery of this Agreement by AP Japan and has
approved this Agreement and the transactions contemplated hereby.

 

Section 3.16         Valid Obligation. This Agreement and all agreements and
other documents executed by AP Japan in connection herewith constitute the valid
and binding obligation of AP Japan, enforceable in accordance with its or their
terms, except as may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting the enforcement of creditors’ rights generally and
subject to the qualification that the availability of equitable remedies is
subject to the discretion of the court before which any proceeding therefore may
be brought.

 

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES OF AP JAPAN SHAREHOLDER

 

The AP Japan Shareholder hereby severally and not jointly represents and
warrants to APSI:

 

Section 4.1           Authority. The AP Japan Shareholder has the right, power,
authority and capacity to execute and deliver this Agreement to which such AP
Japan Shareholder is a party, to consummate the transactions contemplated by
this Agreement, and to perform such AP Japan Shareholder’s obligations under
this Agreement. This Agreement has been duly and validly authorized and
approved, executed and delivered by the AP Japan Shareholder. Assuming this
Agreement has been duly and validly authorized, executed and delivered by the
parties thereto other than such AP Japan Shareholder, this Agreement is duly
authorized, executed and delivered by the AP Japan Shareholder and constitutes
the legal, valid and binding obligations of the AP Japan Shareholder,
enforceable against the AP Japan Shareholder in accordance with their respective
terms, except as such enforcement is limited by general equitable principles, or
by bankruptcy, insolvency and other similar laws affecting the enforcement of
creditors’ rights generally.

 

Section 4.2           No Conflict. Neither the execution or delivery by the AP
Japan Shareholder of this Agreement to which the AP Japan Shareholder is a party
nor the consummation or performance by the AP Japan Shareholder of the
transactions contemplated hereby or thereby will, directly or indirectly,
(a) contravene, conflict with, or result in a violation of any provision of the
organizational documents of the AP Japan Shareholder; (b) contravene, conflict
with, constitute a default (or an event or condition which, with notice or lapse
of time or both, would constitute a default) under, or result in the termination
or acceleration of, any agreement or instrument to which any of the AP Japan
Shareholder is a party or by which the properties or assets of the AP Japan
Shareholder is bound; or (c) contravene, conflict with, or result in a violation
of, any law or order to which any of the AP Japan Shareholder, or any of the
properties or assets of the AP Japan Shareholder, may be subject.

 

Section 4.3           Litigation. There is no pending Action against the AP
Japan Shareholder that involves the AP Japan Shares or that challenges, or may
have the effect of preventing, delaying or making illegal, or otherwise
interfering with, any of the transactions contemplated by this Agreement or the
business of AP Japan and, to the knowledge of the AP Japan Shareholder, no such
Action has been threatened, and no event or circumstance exists that is
reasonably likely to give rise to or serve as a basis for the commencement of
any such Action.

  

Section 4.4           Ownership of Shares. The AP Japan Shareholder is the
record and beneficial owner of the AP Japan Shares. The AP Japan Shareholder is
not the record or beneficial owner of any other shares of AP Japan. The AP Japan
Shareholder has and shall transfer at the Closing, good and marketable title to
the AP Japan Shares, free and clear of all liens, claims, charges, encumbrances,
pledges, mortgages, security interests, options, rights to acquire, proxies,
voting trusts or similar agreements, restrictions on transfer or adverse claims
of any nature whatsoever, excepting only restrictions on future transfers
imposed by applicable law.

 

8

 

 

Section 4.5           Pre-emptive Rights. The AP Japan Shareholder has no
pre-emptive rights or any other rights to acquire any shares of AP Japan that
have not been waived or exercised.

 

ARTICLE V

 

CONDITIONS TO OBLIGATIONS OF AP JAPAN AND THE AP JAPAN SHAREHOLDER

 

The obligations of AP Japan to consummate the transactions contemplated by this
Agreement are subject to the fulfillment, at or before the Closing Date, of the
following conditions, any one or more of which may be waived by AP Japan or the
AP Japan Shareholder, as the case may be, in their sole discretion:

 

Section 5.1          Representations and Warranties of APSI. All representations
and warranties made by APSI in this Agreement shall be true and correct in all
material respects on and as of the Closing Date.

 

Section 5.2          Agreements and Covenants. APSI shall have performed and
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with on or prior to the Closing Date.

 

Section 5.3          Consents and Approvals. All consents, waivers,
authorizations and approvals of any governmental or regulatory authority,
domestic or foreign, and of any other person, firm or corporation, required in
connection with the execution, delivery and performance of this Agreement shall
be in full force and effect on the Closing Date.

 

Section 5.4           No Violation of Orders. No preliminary or permanent
injunction or other order issued by any court or governmental or regulatory
authority, domestic or foreign, nor any statute, rule, regulation, decree or
executive order promulgated or enacted by any government or governmental or
regulatory authority, which declares this Agreement invalid in any respect or
prevents the consummation of the transactions contemplated hereby, or which
materially and adversely affects the assets, properties, operations, prospects,
net income or financial condition of APSI shall be in effect; and no action or
proceeding before any court or governmental or regulatory authority, domestic or
foreign, shall have been instituted or threatened by any government or
governmental or regulatory authority, domestic or foreign, or by any other
person or entity, which seeks to prevent or delay the consummation of the
transactions contemplated by this Agreement or which challenges the validity or
enforceability of this Agreement.

 

Section 5.5           Documents. APSI must have caused the following documents
to be delivered to AP Japan:

 

A.           share certificates evidencing the APSI Shares registered in the
name of the AP Japan Shareholder;

 

B.            this Agreement duly executed;

 

C.           such other documents as AP Japan or the AP Japan Shareholder may
reasonably request for the purpose of (i) evidencing the accuracy of any of the
representations and warranties of APSI, (ii) evidencing the performance of, or
compliance by APSI with any covenant or obligation required to be performed or
complied with by APSI, (iii) evidencing the satisfaction of any condition
referred to in this Article V, or (iv) otherwise facilitating the consummation
or performance of any of the transactions contemplated by this Agreement.

 

D.           a fully completed and executed Certificate of Non-U.S. Shareholder
(as attached hereto as Exhibit B and entered into by the AP Japan Shareholder);

 

Section 5.6          No Material Adverse Effect.  There shall not have been any
event, occurrence or development that has resulted in or could result in a
Material Adverse Effect on or with respect to APSI.

 

9

 

 

Section 5.7           Employment Agreements. APSI will have received from AP
Japan copies of all agreements or arrangements that evidence the employment of
all of the hourly and salaried employees of AP Japan as set forth on Schedule
5.7 attached hereto, which constitute all of the employees reasonably necessary
to operate the business of AP Japan substantially as presently operated.

  

ARTICLE VI

 

CONDITIONS TO OBLIGATIONS OF APSI

 

The obligations of APSI to consummate the transactions contemplated by this
Agreement are subject to the fulfillment, at or before the Closing Date, of the
following conditions, any one or more of which may be waived by APSI in its sole
discretion:

 

Section 6.1           Representations and Warranties of AP Japan and the AP
Japan Shareholder. All representations and warranties made by AP Japan and the
AP Japan Shareholder on behalf of themselves individually in this Agreement
shall be true and correct on and as of the Closing Date.

 

Section 6.2           Approval by Majority Consent. The holders of at least a
majority (51%) of the outstanding shares of common stock of AP Japan must
approve this Agreement by written consent prior to the Closing Date.

 

Section 6.3           Agreements and Covenants. AP Japan and the AP Japan
Shareholder shall have performed and complied in all material respects with all
agreements and covenants required by this Agreement to be performed or complied
with by each of them on or prior to the Closing Date.

 

Section 6.4           Consents and Approvals. All consents, waivers,
authorizations and approvals of any governmental or regulatory authority,
domestic or foreign, and of any other person, firm or corporation, required in
connection with the execution, delivery and performance of this Agreement, shall
have been duly obtained and shall be in full force and effect on the Closing
Date.

 

Section 6.5           No Violation of Orders. No preliminary or permanent
injunction or other order issued by any court or other governmental or
regulatory authority, domestic or foreign, nor any statute, rule, regulation,
decree or executive order promulgated or enacted by any government or
governmental or regulatory authority, domestic or foreign, that declares this
Agreement invalid or unenforceable in any respect or which prevents the
consummation of the transactions contemplated hereby, or which materially and
adversely affects the assets, properties, operations, prospects, net income or
financial condition of AP Japan shall be in effect; and no action or proceeding
before any court or government or regulatory authority, domestic or foreign,
shall have been instituted or threatened by any government or governmental or
regulatory authority, domestic or foreign, or by any other person or entity,
which seeks to prevent or delay the consummation of the transactions
contemplated by this Agreement or which challenges the validity or
enforceability of this Agreement.

 

Section 6.6           Documents. AP Japan and the AP Japan Shareholder must
deliver to APSI at the Closing:

 

A.           share certificates evidencing the number of AP Japan Shares, along
with executed share transfer forms transferring such AP Japan Shares to APSI;

 

B.           this Agreement to which the AP Japan and the AP Japan Shareholder
are each a party, duly executed; and

 

C.           such other documents as APSI may reasonably request for the purpose
of (i) evidencing the accuracy of any of the representations and warranties of
AP Japan and the AP Japan Shareholder, (ii) evidencing the performance of, or
compliance by AP Japan and the AP Japan Shareholder with, any covenant or
obligation required to be performed or complied with by AP Japan and the AP
Japan Shareholder, as the case may be, (iii) evidencing the satisfaction of any
condition referred to in this Article VI, or (iv) otherwise facilitating the
consummation or performance of any of the transactions contemplated by this
Agreement.

 

10

 

 

Section 6.7           Cash Consideration. Concurrently with the execution of
this Agreement, APSI shall remit by wire transfer good and lawful funds in the
amount of One Hundred Thousand ($100,000) dollars to AP Japan as set out in
Section 1.4 of this Agreement.

 

Section 6.8           No Claim Regarding Stock Ownership or Consideration. There
must not have been made or threatened by any person, any claim asserting that
such person (a) is the holder of, or has the right to acquire or to obtain
beneficial ownership of the AP Japan Shares, or any other stock, voting, equity,
or ownership interest in, AP Japan, or (b) is entitled to all or any portion of
the APSI Shares.

 

ARTICLE VII

 

SURVIVAL AND INDEMNIFICATION

 

Section 7.1           Survival of Provisions. The respective representations,
warranties, covenants and agreements of each of the parties to this Agreement
(except covenants and agreements which are expressly required to be performed
and are performed in full on or before the Closing Date) shall expire on the
first day of the three-year anniversary of the Closing Date (the “Survival
Period”). The right to indemnification, payment of damages or other remedy based
on such representations, warranties, covenants, and obligations will not be
affected by any investigation conducted with respect to, or any knowledge
acquired (or capable of being acquired) at any time, whether before or after the
execution and delivery of this Agreement, with respect to the accuracy or
inaccuracy of or compliance with, any such representation, warranty, covenant,
or obligation. The waiver of any condition based on the accuracy of any
representation or warranty, or on the performance of or compliance with any
covenant or obligation, will not affect the right to indemnification, payment of
damages, or other remedy based on such representations, warranties, covenants,
and obligations.

 

Section 7.2  Indemnification.

 

A.            Indemnification Obligations in favor of APSI. From and after the
Closing Date until the expiration of the Survival Period, AP Japan shall
reimburse and hold harmless APSI and its shareholders (such person and their
heirs, executors, administrators, agents, successors and assigns is referred to
herein as a “APSI Indemnified Party”) against and in respect of any and all
damages, losses, settlement payments, in respect of deficiencies, liabilities,
costs, expenses and claims suffered, sustained, incurred or required to be paid
by such APSI Indemnified Party, and any and all actions, suits, claims, or
legal, administrative, arbitration, governmental or other procedures or
investigation against any APSI Indemnified Party, which arises or results from a
third-party claim brought against a APSI Indemnified Party to the extent based
on a breach of the representations and warranties with respect to the business,
operations or assets of AP Japan. All claims of APSI pursuant to this Section
7.2 shall be brought by APSI on behalf of APSI and those Persons who were
stockholders of APSI immediately prior to the Closing Date.  In no event shall
any such indemnification payments exceed $50,000 in the aggregate from AP
Japan.   No claim for indemnification may be brought under this Section 7.2(A)
unless all claims for indemnification, in the aggregate, total more than
$10,000.

 

B.            Indemnification Obligations in favor of AP Japan and the AP Japan
Shareholder. From and after the Closing Date until the expiration of the
Survival Period, APSI and the APSI shareholders shall indemnify and hold
harmless AP Japan, the AP Japan Shareholder, and his respective officers,
directors, agents, attorneys and employees, and each person, if any, who
controls or may “control” (within the meaning of the Securities Act) any of the
forgoing persons or entities from and against any and all losses, costs,
damages, liabilities and expenses arising from claims, demands, actions, causes
of action, including, without limitation, legal fees (collectively, “Damages”)
arising out of: (i) any breach of representation or warranty made by APSI in
this Agreement and in any certificate delivered by APSI pursuant to this
Agreement; (ii) any breach by APSI of any covenant, obligation or other
agreement made by APSI in this Agreement; and (iii) a third-party claim based on
any acts or omissions by APSI. In no event shall any such indemnification
payments exceed $50,000 in the aggregate from APSI.  No claim for
indemnification may be brought under this Section 7.2(B) unless all claims for
indemnification, in the aggregate, total more than $10,000.

 

11

 

 

ARTICLE VIII

 

MISCELLANEOUS PROVISIONS

 

Section 8.1           Successors and Assigns. This Agreement shall inure to the
benefit of, and be binding upon, the parties hereto and their respective
successors and assigns; provided that no party shall assign or delegate any of
the obligations created under this Agreement without the prior written consent
of the other parties.

 

Section 8.2           Fees and Expenses. Except as otherwise expressly provided
in this Agreement, all legal and other fees, costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by each Party, as incurred respectively.

 

Section 8.3           Notices. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been given
or made if in writing and delivered personally or 7 days after being sent by
registered or certified mail (postage prepaid, return receipt requested) to the
parties at the addresses set forth in the Preamble of this Agreement, or to such
other persons or at such other addresses as shall be furnished by any party by
like notice to the others, and such notice or communication shall be deemed to
have been given or made as of the date so delivered or mailed. No change in any
of such addresses shall be effective insofar as notices under this Section 8.3
are concerned unless notice of such change shall have been given to such other
party hereto as provided in this Section 8.3.

 

Section 8.4           Entire Agreement. This Agreement, together with the
exhibits hereto, represents the entire agreement and understanding of the
parties with reference to the transactions set forth herein and no
representations or warranties have been made in connection with this Agreement
other than those expressly set forth herein or in the exhibits, certificates and
other documents delivered in accordance herewith. This Agreement supersedes all
prior negotiations, discussions, correspondence, communications, understandings
and agreements between the parties relating to the subject matter of this
Agreement and all prior drafts of this Agreement, all of which are merged into
this Agreement. No prior drafts of this Agreement and no words or phrases from
any such prior drafts shall be admissible into evidence in any action or suit
involving this Agreement.

 

Section 8.5           Severability. This Agreement shall be deemed severable,
and the invalidity or unenforceability of any term or provision hereof shall not
affect the validity or enforceability of this Agreement or of any other term or
provision hereof. Furthermore, in lieu of any such invalid or unenforceable term
or provision, the parties hereto intend that there shall be added as a part of
this Agreement a provision as similar in terms to such invalid or unenforceable
provision as may be possible so as to be valid and enforceable.

 

Section 8.6           Titles and Headings. The Article and Section headings
contained in this Agreement are solely for convenience of reference and shall
not affect the meaning or interpretation of this Agreement or of any term or
provision hereof.

 

Section 8.7           Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement. Fax and PDF copies
shall be considered originals for all purposes.

 

Section 8.8           Convenience of Forum; Consent to Jurisdiction. The parties
to this Agreement, acting for themselves and for their respective successors and
assigns, without regard to domicile, citizenship or residence, hereby expressly
and irrevocably elect as the sole judicial forum for the adjudication of any
matters arising under or in connection with this Agreement, and consent and
subject themselves to the jurisdiction of, the courts of the State of Nevada,
and/or the U.S. District Court for Nevada, in respect of any matter arising
under this Agreement. Service of process, notices and demands of such courts may
be made upon any party to this Agreement by personal service at any place where
it may be found or giving notice to such party as provided in Section 8.3.

 

12

 

 

Section 8.9           Enforcement of the Agreement. The parties hereto agree
that irreparable damage would occur if any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereto, this being in addition to any
other remedy to which they are entitled at law or in equity.

 

Section 8.10         Governing Law. This Agreement shall be governed by and
interpreted and enforced in accordance with the laws of the State of Nevada
without giving effect to the choice of law provisions thereof.

 

[THIS PART LEFT INTENTIONALLY BLANK]

 

13

 

 

Section 8.11         Amendments and Waivers. Except as otherwise provided
herein, no amendment of any provision of this Agreement shall be valid unless
the same shall be in writing and signed by all of the parties hereto. No waiver
by any party of any default, misrepresentation, or breach of warranty or
covenant hereunder, whether intentional or not, shall be deemed to extend to any
prior or subsequent default, misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any rights arising by virtue of any such
prior or subsequent occurrence.

 

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

 

AQUA POWER SYSTEMS INC.         Per: /s/Tadashi Ishikawa     Name: Tadashi
Ishikawa     Title: Director       AQUA POWER SYSTEM JAPAN KABUSHIKI KAISHA    
    Per: /s/Tadashi Ishikawa     Name: Tadashi Ishikawa     Title: President and
Director       AP JAPAN SHAREHOLDER         Per: /s/Tadashi Ishikawa     Name:
Tadashi Ishikawa  

 

14

 

 

EXHIBIT A

 

UNSECURED PROMISSORY NOTE

 

    PRINCIPAL AMOUNT:   $100,000.00     LOAN DATE:   Dated as of the Share
Exchange Agreement dated June 19, 2015 by and among Aqua Power Systems Inc.,
Aqua Power System Japan Kabushiki Kaisha, and Mr. Tadashi Ishikawa     INTEREST
RATE: 0.00%     DEBTOR: Aqua Power Systems Inc.     CREDITOR: Aqua Power System
Japan Kabushiki Kaisha     PAYMENT: The Due Date

 

1.          Principal Repayment. For value received, Aqua Power Systems, Inc., a
Nevada corporation (the “Debtor”) hereby unconditionally promises to pay to the
order of Aqua Power System Japan Kabushiki Kaisha (the “Creditor”), the
principal amount of $100,000.00. The principal amount is due and payable on July
31, 2015 (the “Due Date”).

 

2.          Payment Terms. The Debtor shall pay the principal in full on or
before Due Date, this Note shall bear no interest.

 

3.          Default. Debtor will be in default if any of the following occur:

 

(a)The Debtor fails to make the Principal Repayment when due;

 

(b)The Debtor breaks any promise that the Debtor has made to the Creditor in
this Note Debtor fails to perform promptly at the time and strictly in the
manner provided in this Note;

 

(c)Any representation or statement made or furnished to the Creditor by the
Debtor or on Debtor's behalf in connection with this Note is false or misleading
in any material respect; or,

 

(d)A receiver is appointed for any part of the Debtor's property, the Debtor
makes an assignment for the benefit of creditors, or any proceeding is commenced
either by the Debtor or against the Debtor under any Bankruptcy or insolvency
laws seeking the liquidation or reorganization of the Debtor and such proceeding
is not dismissed within 60 days after such filing.

 

4.          Debtor’s Right to Prepay. The Debtor may pay without penalty, all or
a portion of the amount owed earlier that it is due. Any prepayment shall be
first applied against any accrued and unpaid interest and then to reduce the
amount of principal due under this Note.

 

5.          Waiver of Demand, Presentment, etc. The Debtor hereby expressly
waives demand and presentment for payment, notice of nonpayment, protest, notice
of protest, notice of dishonor, notice of acceleration or intent to accelerate,
bringing of suit and diligence in taking any action to collect amounts called
for hereunder and shall be directly and primarily liable for the payment of all
sums owing and to be owing hereunder, regardless of and without any notice,
diligence, act or omission as or with respect to the collection of any amount
called for hereunder.

 

15

 

 

6.          Payment. Except as otherwise provided for herein, all payments with
respect to this Note shall be made in lawful currency of the United States of
America by check or wire transfer of immediately available funds, at the option
of the Creditor, at the principal office of the Creditor or such other place or
places or designated accounts as may be reasonably specified by the Creditor of
this Note in a written notice to the Debtor at least one (1) business day prior
to payment.

 

7.          Assignment. The rights and obligations of the Debtor and the
Creditor of this Note shall be binding upon, and inure to the benefit of, the
permitted successors, assigns, heirs, administrators and transferees of the
parties hereto.

 

8.          Waiver and Amendment. Any provision of this Note, including, without
limitation, the due date hereof, and the observance of any term hereof, may be
amended, waived or modified (either generally or in a particular instance and
either retroactively or prospectively) only with the written consent of the
Debtor and the Creditor

 

9.          Notices. Any notice, payment or other communication required or
permitted hereunder shall be expressed in writing and sent by certified or
registered mail, return receipt requested, to their respective parties at the
following addresses, or at such other addresses as the parties shall designate
by written notice to be the other:

 

If to the Creditor to:

2-7-17 Omorihoncho,

Tokyo, Ota-ku, Japan,

143-0011

 

If to the Debtor to:

1107 Town Creek Road

Eden, NC 27288

 

10.         Severability. If one or more provisions of this Note are held to be
unenforceable under applicable law, such provisions shall be excluded from this
Note, and the balance of this Note shall be interpreted as if such provisions
were so excluded and shall be enforceable in accordance with its terms.

 

11.         Headings. Section headings in this Note are for convenience only,
and shall not be used in the construction of this Note.

 

IN WITNESS WHEREOF, the Debtor has caused this Note to be issued as of the date
first above written.

 

  AQUA POWER SYSTEMS INC.         By: /s/Tadashi Ishikawa     Name:  Tadashi
Ishikawa     Title: CEO & President

 

16

 

 

UNSECURED PROMISSORY NOTE

 

    PRINCIPAL AMOUNT:   $100,000.00     LOAN DATE:   Dated as of the Share
Exchange Agreement dated June 19, 2015 by and among Aqua Power Systems Inc.,
Aqua Power System Japan Kabushiki Kaisha, and Mr. Tadashi Ishikawa     INTEREST
RATE: 0.00%     DEBTOR: Aqua Power Systems Inc.     CREDITOR: Aqua Power System
Japan Kabushiki Kaisha     PAYMENT: The Due Date

 

1.          Principal Repayment. For value received, Aqua Power Systems, Inc., a
Nevada corporation (the “Debtor”) hereby unconditionally promises to pay to the
order of Aqua Power System Japan Kabushiki Kaisha (the “Creditor”), the
principal amount of $100,000.00. The principal amount is due and payable on
August 31, 2015 (the “Due Date”).

 

2.          Payment Terms. The Debtor shall pay the principal in full on or
before Due Date, this Note shall bear no interest.

 

3.          Default. Debtor will be in default if any of the following occur:

 

(a)The Debtor fails to make the Principal Repayment when due;

 

(b)The Debtor breaks any promise that the Debtor has made to the Creditor in
this Note Debtor fails to perform promptly at the time and strictly in the
manner provided in this Note;

 

(c)Any representation or statement made or furnished to the Creditor by the
Debtor or on the Debtor's behalf in connection with this Note is false or
misleading in any material respect; or,

 

(d)A receiver is appointed for any part of the Debtor's property, the Debtor
makes an assignment for the benefit of creditors, or any proceeding is commenced
either by the Debtor or against the Debtor under any Bankruptcy or insolvency
laws seeking the liquidation or reorganization of the Debtor and such proceeding
is not dismissed within 60 days after such filing.

 

4.          Debtor’s Right to Prepay. The Debtor may pay without penalty, all or
a portion of the amount owed earlier that it is due. Any prepayment shall be
first applied against any accrued and unpaid interest and then to reduce the
amount of principal due under this Note.

 

5.          Waiver of Demand, Presentment, etc. The Debtor hereby expressly
waives demand and presentment for payment, notice of nonpayment, protest, notice
of protest, notice of dishonor, notice of acceleration or intent to accelerate,
bringing of suit and diligence in taking any action to collect amounts called
for hereunder and shall be directly and primarily liable for the payment of all
sums owing and to be owing hereunder, regardless of and without any notice,
diligence, act or omission as or with respect to the collection of any amount
called for hereunder.

 

17

 

 

6.          Payment. Except as otherwise provided for herein, all payments with
respect to this Note shall be made in lawful currency of the United States of
America by check or wire transfer of immediately available funds, at the option
of the Creditor, at the principal office of the Creditor or such other place or
places or designated accounts as may be reasonably specified by the Creditor of
this Note in a written notice to the Debtor at least one (1) business day prior
to payment.

 

7.          Assignment. The rights and obligations of the Debtor and the
Creditor of this Note shall be binding upon, and inure to the benefit of, the
permitted successors, assigns, heirs, administrators and transferees of the
parties hereto.

 

8.          Waiver and Amendment. Any provision of this Note, including, without
limitation, the due date hereof, and the observance of any term hereof, may be
amended, waived or modified (either generally or in a particular instance and
either retroactively or prospectively) only with the written consent of the
Debtor and the Creditor

 

9.          Notices. Any notice, payment or other communication required or
permitted hereunder shall be expressed in writing and sent by certified or
registered mail, return receipt requested, to their respective parties at the
following addresses, or at such other addresses as the parties shall designate
by written notice to be the other:

 

If to the Creditor to:

2-7-17 Omorihoncho,

Tokyo, Ota-ku, Japan,

143-0011

 

If to the Debtor to:

1107 Town Creek Road

Eden, NC 27288

 

10.         Severability. If one or more provisions of this Note are held to be
unenforceable under applicable law, such provisions shall be excluded from this
Note, and the balance of this Note shall be interpreted as if such provisions
were so excluded and shall be enforceable in accordance with its terms.

 

11.         Headings. Section headings in this Note are for convenience only,
and shall not be used in the construction of this Note.

 

IN WITNESS WHEREOF, the Debtor has caused this Note to be issued as of the date
first above written.

 

  AQUA POWER SYSTEMS INC.         By: /s/Tadashi Ishikawa     Name:  Tadashi
Ishikawa     Title: CEO & President

 

18

 

 

UNSECURED PROMISSORY NOTE

 

    PRINCIPAL AMOUNT:   $100,000.00     LOAN DATE:   Dated as of the Share
Exchange Agreement dated June 19, 2015 by and among Aqua Power Systems Inc.,
Aqua Power System Japan Kabushiki Kaisha, and Mr. Tadashi Ishikawa     INTEREST
RATE: 0.00%     DEBTOR: Aqua Power Systems Inc.     CREDITOR: Aqua Power System
Japan Kabushiki Kaisha     PAYMENT: The Due Date (as defined herein)

 

1.          Principal Repayment. For value received, Aqua Power Systems, Inc., a
Nevada corporation (the “Debtor”) hereby unconditionally promises to pay to the
order of Aqua Power System Japan Kabushiki Kaisha (the “Creditor”), the
principal amount of $100,000.00. The principal amount is due and payable
September 30, 2015 (the “Due Date”).

 

2.          Payment Terms. The Debtor shall pay the principal in full on or
before Due Date, this Note shall bear no interest.

 

3.          Default. Debtor will be in default if any of the following occur:

 

(a)The Debtor fails to make the Principal Repayment when due;

 

(b)The Debtor breaks any promise that the Debtor has made to the Creditor in
this Note Debtor fails to perform promptly at the time and strictly in the
manner provided in this Note;

 

(c)Any representation or statement made or furnished to the Creditor by the
Debtor or on the Debtor's behalf in connection with this Note is false or
misleading in any material respect; or,

 

(d)A receiver is appointed for any part of the Debtor's property, the Debtor
makes an assignment for the benefit of creditors, or any proceeding is commenced
either by the Debtor or against the Debtor under any Bankruptcy or insolvency
laws seeking the liquidation or reorganization of the Debtor and such proceeding
is not dismissed within 60 days after such filing.

 

4.          Debtor’s Right to Prepay. The Debtor may pay without penalty, all or
a portion of the amount owed earlier that it is due. Any prepayment shall be
first applied against any accrued and unpaid interest and then to reduce the
amount of principal due under this Note.

 

5.          Waiver of Demand, Presentment, etc. The Debtor hereby expressly
waives demand and presentment for payment, notice of nonpayment, protest, notice
of protest, notice of dishonor, notice of acceleration or intent to accelerate,
bringing of suit and diligence in taking any action to collect amounts called
for hereunder and shall be directly and primarily liable for the payment of all
sums owing and to be owing hereunder, regardless of and without any notice,
diligence, act or omission as or with respect to the collection of any amount
called for hereunder.

 

19

 

 

6.          Payment. Except as otherwise provided for herein, all payments with
respect to this Note shall be made in lawful currency of the United States of
America by check or wire transfer of immediately available funds, at the option
of the Creditor, at the principal office of the Creditor or such other place or
places or designated accounts as may be reasonably specified by the Creditor of
this Note in a written notice to the Debtor at least one (1) business day prior
to payment.

 

7.          Assignment. The rights and obligations of the Debtor and the
Creditor of this Note shall be binding upon, and inure to the benefit of, the
permitted successors, assigns, heirs, administrators and transferees of the
parties hereto.

 

8.          Waiver and Amendment. Any provision of this Note, including, without
limitation, the due date hereof, and the observance of any term hereof, may be
amended, waived or modified (either generally or in a particular instance and
either retroactively or prospectively) only with the written consent of the
Debtor and the Creditor

 

9.          Notices. Any notice, payment or other communication required or
permitted hereunder shall be expressed in writing and sent by certified or
registered mail, return receipt requested, to their respective parties at the
following addresses, or at such other addresses as the parties shall designate
by written notice to be the other:

 

If to the Creditor to:

2-7-17 Omorihoncho,

Tokyo, Ota-ku, Japan,

143-0011

 

If to the Debtor to:

1107 Town Creek Road

Eden, NC 27288

 

10.         Severability. If one or more provisions of this Note are held to be
unenforceable under applicable law, such provisions shall be excluded from this
Note, and the balance of this Note shall be interpreted as if such provisions
were so excluded and shall be enforceable in accordance with its terms.

 

11.         Headings. Section headings in this Note are for convenience only,
and shall not be used in the construction of this Note.

 

IN WITNESS WHEREOF, the Debtor has caused this Note to be issued as of the date
first above written.

 

  AQUA POWER SYSTEMS INC.         By: /s/Tadashi Ishikawa     Name:  Tadashi
Ishikawa     Title: CEO & President

 

20

 

 

UNSECURED PROMISSORY NOTE

 

    PRINCIPAL AMOUNT:   $100,000.00     LOAN DATE:   Dated as of the Share
Exchange Agreement dated June 19, 2015 by and among Aqua Power Systems Inc.,
Aqua Power System Japan Kabushiki Kaisha, and Mr. Tadashi Ishikawa     INTEREST
RATE: 0.00%     DEBTOR: Aqua Power Systems Inc.     CREDITOR: Aqua Power System
Japan Kabushiki Kaisha     PAYMENT: The Due Date (as defined herein)

 

1.          Principal Repayment. For value received, Aqua Power Systems, Inc., a
Nevada corporation (the “Debtor”) hereby unconditionally promises to pay to the
order of Aqua Power System Japan Kabushiki Kaisha (the “Creditor”), the
principal amount of $100,000.00. The principal amount is due and payable on
October 31, 2015 (the “Due Date”).

 

2.          Payment Terms. The Debtor shall pay the principal in full on or
before Due Date, this Note shall bear no interest.

 

3.          Default. Debtor will be in default if any of the following occur:

 

(a)The Debtor fails to make the Principal Repayment when due;

 

(b)The Debtor breaks any promise that the Debtor has made to the Creditor in
this Note Debtor fails to perform promptly at the time and strictly in the
manner provided in this Note;

 

(c)Any representation or statement made or furnished to the Creditor by the
Debtor or on the Debtor's behalf in connection with this Note is false or
misleading in any material respect; or,

 

(d)A receiver is appointed for any part of the Debtor's property, the Debtor
makes an assignment for the benefit of creditors, or any proceeding is commenced
either by the Debtor or against the Debtor under any Bankruptcy or insolvency
laws seeking the liquidation or reorganization of the Debtor and such proceeding
is not dismissed within 60 days after such filing.

 

4.          Debtor’s Right to Prepay. The Debtor may pay without penalty, all or
a portion of the amount owed earlier that it is due. Any prepayment shall be
first applied against any accrued and unpaid interest and then to reduce the
amount of principal due under this Note.

 

5.          Waiver of Demand, Presentment, etc. The Debtor hereby expressly
waives demand and presentment for payment, notice of nonpayment, protest, notice
of protest, notice of dishonor, notice of acceleration or intent to accelerate,
bringing of suit and diligence in taking any action to collect amounts called
for hereunder and shall be directly and primarily liable for the payment of all
sums owing and to be owing hereunder, regardless of and without any notice,
diligence, act or omission as or with respect to the collection of any amount
called for hereunder.

 

21

 

 

6.          Payment. Except as otherwise provided for herein, all payments with
respect to this Note shall be made in lawful currency of the United States of
America by check or wire transfer of immediately available funds, at the option
of the Creditor, at the principal office of the Creditor or such other place or
places or designated accounts as may be reasonably specified by the Creditor of
this Note in a written notice to the Debtor at least one (1) business day prior
to payment.

 

7.          Assignment. The rights and obligations of the Debtor and the
Creditor of this Note shall be binding upon, and inure to the benefit of, the
permitted successors, assigns, heirs, administrators and transferees of the
parties hereto.

 

8.          Waiver and Amendment. Any provision of this Note, including, without
limitation, the due date hereof, and the observance of any term hereof, may be
amended, waived or modified (either generally or in a particular instance and
either retroactively or prospectively) only with the written consent of the
Debtor and the Creditor

 

9.          Notices. Any notice, payment or other communication required or
permitted hereunder shall be expressed in writing and sent by certified or
registered mail, return receipt requested, to their respective parties at the
following addresses, or at such other addresses as the parties shall designate
by written notice to be the other:

 

If to the Creditor to:

2-7-17 Omorihoncho,

Tokyo, Ota-ku, Japan,

143-0011

 

If to the Debtor to:

1107 Town Creek Road

Eden, NC 27288

 

10.         Severability. If one or more provisions of this Note are held to be
unenforceable under applicable law, such provisions shall be excluded from this
Note, and the balance of this Note shall be interpreted as if such provisions
were so excluded and shall be enforceable in accordance with its terms.

 

11.         Headings. Section headings in this Note are for convenience only,
and shall not be used in the construction of this Note.

 

IN WITNESS WHEREOF, the Debtor has caused this Note to be issued as of the date
first above written.

 

  AQUA POWER SYSTEMS INC.         By: /s/Tadashi Ishikawa     Name:  Tadashi
Ishikawa     Title: CEO & President

 

22

 

 

EXHIBIT B

 

CERTIFICATE OF NON-U.S. SHAREHOLDER

 

In connection with the issuance of common stock (the “APSI Shares”) of Aqua
Power Systems Inc.., a company incorporated pursuant to the laws of the State of
Nevada (“APSI”), to the undersigned, pursuant to that certain Share Exchange
Agreement dated June 19, 2015 (the “Agreement”), among Aqua Power System Japan
Kabushiki Kaisha., a company incorporated pursuant to the laws of Japan (“AP
Japan”), and the sole shareholder of AP Japan as set out in the Agreement (each,
a “AP Japan Shareholder”), the undersigned hereby agrees, acknowledges,
represents and warrants that:

 

1.          the undersigned is not a “U.S. Person” as such term is defined by
Rule 902 of Regulation S under the United States Securities Act of 1933, as
amended (“U.S. Securities Act”) (the definition of which includes, but is not
limited to, an individual resident in the U.S. and an estate or trust of which
any executor or administrator or trust, respectively is a U.S. Person and any
partnership or corporation organized or incorporated under the laws of the
U.S.);

 

2.          none of the APSI Shares have been or will be registered under the
U.S. Securities Act, or under any state securities or “blue sky” laws of any
state of the United States, and may not be offered or sold in the United States
or, directly or indirectly, to U.S. Persons, as that term is defined in
Regulation S, except in accordance with the provisions of Regulation S or
pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the U.S. Securities Act and in compliance with any
applicable state and foreign securities laws;

 

3.          the undersigned understands and agrees that offers and sales of any
of the APSI Shares prior to the expiration of a period of one year after the
date of original issuance of the APSI Shares (the one year period hereinafter
referred to as the Distribution Compliance Period) shall only be made in
compliance with the safe harbor provisions set forth in Regulation S, pursuant
to the registration provisions of the U.S. Securities Act or an exemption
therefrom, and that all offers and sales after the Distribution Compliance
Period shall be made only in compliance with the registration provisions of the
U.S. Securities Act or an exemption therefrom and in each case only in
accordance with applicable state and foreign securities laws;

 

4.          the undersigned understands and agrees not to engage in any hedging
transactions involving any of the APSI Shares unless such transactions are in
compliance with the provisions of the U.S. Securities Act and in each case only
in accordance with applicable state and provincial securities laws;

 

5.          the undersigned is acquiring the APSI Shares for investment only and
not with a view to resale or distribution and, in particular, it has no
intention to distribute either directly or indirectly any of the APSI Shares in
the United States or to U.S. Persons;

 

6.          the undersigned has not acquired the APSI Shares as a result of, and
will not itself engage in, any directed selling efforts (as defined in
Regulation S under the U.S. Securities Act) in the United States in respect of
the APSI Shares which would include any activities undertaken for the purpose
of, or that could reasonably be expected to have the effect of, conditioning the
market in the United States for the resale of any of the APSI Shares; provided,
however, that the undersigned may sell or otherwise dispose of the APSI Shares
pursuant to registration thereof under the U.S. Securities Act and any
applicable state and provincial securities laws or under an exemption from such
registration requirements;

 

7.          the statutory and regulatory basis for the exemption claimed for the
sale of the APSI Shares, although in technical compliance with Regulation S,
would not be available if the offering is part of a plan or scheme to evade the
registration provisions of the U.S. Securities Act or any applicable state and
provincial securities laws;

 

8.          the undersigned has not undertaken, and will have no obligation, to
register any of the APSI Shares under the U.S. Securities Act;

 

23

 

 

9.          APSI is entitled to rely on the acknowledgements, agreements,
representations and warranties and the statements and answers of the AP Japan
Shareholder contained in the Agreement and those of the undersigned contained in
this Certificate, and the undersigned will hold harmless APSI from any loss or
damage either one may suffer as a result of any such acknowledgements,
agreements, representations and/or warranties made by the AP Japan Shareholder
and/or the undersigned not being true and correct;

 

10.         the undersigned has been advised to consult their own respective
legal, tax and other advisors with respect to the merits and risks of an
investment in the APSI Shares and, with respect to applicable resale
restrictions, is solely responsible (and APSI is not in any way responsible) for
compliance with applicable resale restrictions;

 

11.         none of the APSI Shares are listed on any stock exchange or
automated dealer quotation system and no representation has been made to the
undersigned that any of the APSI Shares will become listed on any stock exchange
or automated dealer quotation system, except that currently certain market
makers make market in the common shares of APSI on the OTC Bulletin Board;

 

12.         the undersigned is outside the United States when receiving and
executing this Agreement and is acquiring the APSI Shares as principal for their
own account, for investment purposes only, and not with a view to, or for,
resale, distribution or fractionalization thereof, in whole or in part, and no
other person has a direct or indirect beneficial interest in the APSI Shares;

 

13.         neither the SEC nor any other securities commission or similar
regulatory authority has reviewed or passed on the merits of the APSI Shares;

 

14.         the APSI Shares are not being acquired, directly or indirectly, for
the account or benefit of a U.S. Person or a person in the United States;

 

15.         the undersigned acknowledges and agrees that APSI shall refuse to
register any transfer of APSI Shares not made in accordance with the provisions
of Regulation S, pursuant to registration under the U.S. Securities Act, or
pursuant to an available exemption from registration under the U.S. Securities
Act;

 

16.         the undersigned understands and agrees that the APSI Shares will
bear the following legend:

 

“THE SECURITIES REPRESENTED HEREBY HAVE BEEN OFFERED IN AN OFFSHORE TRANSACTION
TO A PERSON WHO IS NOT A U.S. PERSON (AS DEFINED HEREIN) PURSUANT TO REGULATION
S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”).

 

NONE OF THE SECURITIES REPRESENTED HEREBY HAVE BEEN REGISTERED UNDER THE 1933
ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, MAY NOT BE
OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES (AS DEFINED
HEREIN) OR TO U.S. PERSONS EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF
REGULATION S UNDER THE 1933 ACT, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE 1933 ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN
EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION,
HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN
COMPLIANCE WITH THE 1933 ACT. “UNITED STATES” AND “U.S. PERSON” ARE AS DEFINED
BY REGULATION S UNDER THE 1933 ACT.”

 

17.         the address of the undersigned included herein is the sole address
of the undersigned as of the date of this certificate.

 

24

 

 

IN WITNESS WHEREOF, I have executed this Certificate of Non-U.S. Shareholder.

 

/s/Tadashi Ishikawa   Date:  June 18, 2015 Signature           Tadashi Ishikawa
    Print Name           Not applicable     Title (if applicable)              
  Address    

 

25

 

 

DISCLOSURE SCHEDULE

 

to the

 

SHARE EXCHANGE AGREEMENT

 

By and Among

 

AQUA POWER SYSTEMS INC.,

 

AQUA POWER SYSTEM JAPAN KABUSHIKI KAISHA,

 

AND

 

THE SOLE SHAREHOLDER OF AQUA POWER SYSTEM JAPAN KABUSHIKI KAISHA

 

These Disclosure Schedules have been prepared pursuant to the Share Exchange
Agreement (the “Agreement”) by and among AQUA POWER SYSTEMS INC., a Nevada
corporation (“APSI”), AQUA POWER SYSTEM JAPAN KABUSHIKI KAISHA, a corporation
formed under the laws of Japan (“AP JAPAN”), Tadashi Ishikawa, and individual
and sole shareholder of AP Japan. Except as otherwise defined herein,
capitalized terms used herein will have the same meaning given to them in the
Share Exchange Agreement. Schedule and paragraph numbers herein correspond to
the Section and Subsection numbering in applicable Article of the Share Exchange
Agreement. Section and Subsection headings contained herein are included for
purposes of identifying the relevant disclosures and for the convenience of the
reader and are not intended to supplement or modify the meaning of the
disclosures in any way.

 

26

 

 

SCHEDULE 2.14

 

DIRECTORS AND OFFICERS OF APSI

 

Directors:

 

1.Tadashi Ishikawa.

 

2.Jeffrey Alt.

 

Officers:

 

1.Tadashi Ishikawa – President, Chief Executive Officer, Chief Financial
Officer, Secretary and Treasurer.

 

27

 

 

SCHEDULE 3.3

 

SHAREHOLDERS OF AP JAPAN

 

   Name  Number of Shares of
AP Japan held as of
the date of this
Agreement  1.  Tadashi Ishikawa   9,980     Total:   9,980 

 

28

 

 

SCHEDULE 3.4

 

DIRECTORS AND OFFICERS OF AP JAPAN

 

Directors:

 

1.Tadashi Ishikawa.

 

2.Yoshiaki Hasebe.

 

Officers:

 

1.Tadashi Ishikawa – President.

 

2.Yoshiaki Hasebe – Chief Engineer.

 

SCHEDULE 3.7

 

MATERIAL LEASES, SUBLEASES, CLAIMS, CAPITAL EXPENDITURES,
TAXES AND OTHER PROPERTY INTERESTS

 

        Lease Company   Contract Number 1.   Office copier KONIKA MINOLTA  
Japan Business Lease   1021-0970-5800-00 2.   Office telephone   NEC Capital
Solution   Not available 3.   Office (2-7-17 Morimoto cho, Ota-ku, Tokyo)  
Degawa Suisan   Not available

 

29

 

 

SCHEDULE 3.8

 

INTELLECTUAL PROPERTY

 

    Country:   Title of
Property:   Aqua Power
Reference
Number:   Description:   Filing Date: 1.   Japan   Water Battery   2008-8180U  
Water battery adapted to generate large amount of electricity by having enlarged
area contacting with water in an inner circumference surface of a negatively
electrode cylinder.   11/21/2008 2.   Japan   Water Battery for Supplying Low
Current   2009-3895U   Water battery for supplying low current adapted to be
readily positioned in a socket.   6/9/2009 3.   Japan   Boost Circuit  
2009-6313U   Boosting Circuit capable of boosting power supply voltage of a
power supply battery and realizing low power consumption current with
a  relatively simple and low cost structure.   9/3/2009 4.   Japan   Water
Battery   2009-4737U   Water battery adapted to generate electricity by having
an enlarged electrochemical area.   7/8/2009 5.   Japan   Water Battery  
2009-3896U   Water battery having a high generating efficiency and being
unlikely to be broken in part during use.   6/9/2009 6.   PCT   Water Battery  
2009-3896U-PCT
(Not entered into National Phase)   N/A   6/9/2009 7.   Japan   Water Battery  
2010-88994   Water battery that is thin and small that can generate a
predetermined electromotive force with slight amount of water supply.   4/7/2010
8.   Japan   Water Battery and Method for Making the Same   2010-160142   Water
battery which can carry predetermined electromotive force by supply of small
amount of water, and it relatively thin.   7/14/2010 9.   Japan   Water Battery
  2010-160132   Water battery which can generate predetermined electromotive
force by supplying a small amount of water and is relatively thin and small.  
7/14/2010

 

30

 

 

10.   Japan   Liquid Detection Apparatus   2011-29212   Withdrawn - Does not
exist   2/14/2011 11.   Japan   Liquid Detection System   2011-286603   Liquid
detection system with simpler and more compact structure, with self electric
power generation function and capable of more accurately detecting leakage of
liquid.   12/27/2011 12.   Japan   Water Battery   2012-136386   Water battery
capable of easily switching on and off an electromotive forces by changing
direction arrangement.   6/15/2012 13.   Japan   Water Battery   2012-261719  
Water battery capable of generating electricity at one push of a button without
pouring water into an inlet as first step.   11/29/2012 14.   Japan   Air
Magnesium Battery   2012-276235   Air magnesium battery with excellent water
repellency, air permeability and leakage preventing properties and capable of
reaching peak discharging reaction and constant amount of electric current for
relatively long time.   12/18/2012 15.   Japan   Air Magnesium Battery  
2013-13684   Air magnesium battery capable of switching on power supply by
connecting a cap and switching off by releasing a cap.   1/28/2013 16.   Japan  
Air Magnesium Battery and Electric Supply Apparatus Using the Same   2013-13724
  Air magnesium battery with relatively small distance between an anode and
cathode, being capable of containing a relatively large amount of reaction
liquid and generating certain amount of electricity for a certain time in
constant manner and an electric supply appartus using the air magnesium batter  
1/28/2013 17.   Japan   Air Magnesium Battery   2013-267982   Air magnesium
battery being excellent in water repellency, air permeability and leakage
preventing properties and captable of reaching the peak of discharging reaction
and discharging a constant amojnt of electric current for a relatively long
time.   12/25/2013 18.   Japan   Air Magnesium Battery   2014-91711
(divisional appl. of 2013-267982)   N/A   4/25/2014

 

31

 

 

19.   PCT   Liquid Holding Container Provided w/ Sensor & Liquid Quantity
Measuring System   10-0701-PCT   Liquid quantity measuring system having a
liquid holding container, which is provided with a sensor that detects that a
predetermined quantity of a liquid is contained, and a relatively simple
structure for measuring the liquid quantity   8/13/2010 20.   Japan   Liquid
Holding Container Provided w/ Sensor & Liquid Quantity Measuring System  
10-0701-PCT-JP   Liquid quantity measuring system having a liquid holding
container, which is provided with a sensor that detects that a predetermined
quantity of a liquid is contained, and a relatively simple structure for
measuring the liquid quantity   8/13/2010 21.   China   Liquid Holding Container
Provided w/ Sensor & Liquid Quantity Measuring System   10-0701-PCT-CN
　(出願中止)   Liquid quantity measuring system having a liquid holding container,
which is provided with a sensor that detects that a predetermined quantity of a
liquid is contained, and a relatively simple structure for measuring the liquid
quantity   8/13/2010 22.   USA   Liquid Holding Container Provided w/ Sensor &
Liquid Quantity Measuring System   10-0701-PCT-US
(出願中止)   Liquid quantity measuring system having a liquid holding container,
which is provided with a sensor that detects that a predetermined quantity of a
liquid is contained, and a relatively simple structure for measuring the liquid
quantity   8/13/2010 23.   EU   Liquid Holding Container Provided w/ Sensor &
Liquid Quantity Measuring System   10-0701-PCT-EP
　(出願中止)   Liquid quantity measuring system having a liquid holding container,
which is provided with a sensor that detects that a predetermined quantity of a
liquid is contained, and a relatively simple structure for measuring the liquid
quantity   8/13/2010 24.   PCT   Liquid Leakage Detection System   10-0702-PCT  
Liquid Leakage Detection System   8/13/2010 25.   Japan   Liquid Leakage
Detection System   10-0702-PCT-JP   Liquid Leakage Detection System   8/13/2010

 

32

 

 

26.   China   Liquid Leakage Detection System   10-0702-PCT-CN   Liquid Leakage
Detection System   8/13/2010 27.   USA   Liquid Leakage Detection System  
10-0702-PCT-US   Liquid Leakage Detection System   8/13/2010 28.   EU   Liquid
Leakage Detection System   10-0702-PCT-EP   Liquid Leakage Detection System  
8/13/2010 29.   PCT   Liquid Detection Apparatus   11-0101-PCT   Liquid
detection device where liquid leakage can be detected and reported to exterior
without need for exterior power.   2/18/2011 30.   Japan   Liquid Detection
Apparatus   11-0101-PCT   Liquid detection device where liquid leakage can be
detected and reported to exterior without need for exterior power.   2/18/2011
31.   Taiwan   Liquid Detection Apparatus   11-0101-TW   Liquid detection device
where liquid leakage can be detected and reported to exterior without need for
exterior power.   2/18/2011 32.   USA   NoPoPo   2009-17-US   NoPoPo USA
Trademark   12/9/2009 33.   EU   NoPoPo   2009-03-CTM   NoPoPo Europe Trademark
  12/11/2009 34.   JP   AQUPA   SL25T050   AQUPA Japan Trademark   12/25/2013

 

33

 

 

SCHEDULE 3.9

 

PRODUCTS

 

1.Batteries

 

The NoPoPo battery was Aqua Power’s first product, launched in 2009. The water
activated 1.5 V AA batteries can power LED flashlights, mini lanterns and
portable radios and have a shelf life of 20 years (dry cell battery is less than
three years). They are made up of manganese dioxide (+) and magnesium alloy (-).

 

2.Lighting Products

 

Aqua Power has developed cutting edge lighting products using their RMAF system
technology. The products can be broken into four categories: Lanterns,
Flashlights, Speciality Lighting Products and Power Bars.

 

3.Lanterns

 

A magnesium fuel bolt reacts with an aqueous electrolyte to provides a
determined hours of illumination, making these lanterns ideal for off-grid
lighting for disaster response, camping, remote worksites, and marine use. An
on-off switch starts – and stops – the chemical reaction that generates
electricity to power the lantern. The magnesium bolt is easily replaced – a
see-though bottom indicates when a replacement is needed. Yamazen currently
distributes the production ready lanterns in Japan.

 

The table below provides the estimated product specifications for the Aqua Power
lanterns, marketed under the Aqupa brand in Japan.

 

PRODUCT   HOURS   LUMENS   POWER   WEIGHT   SIZE   RETAIL
PRICE
(est)   STAGE Aqupa Lamp 210   80 hrs   2,000   1.5 V   350g   215x95x95 mm  
$25.00   Available in Stores Aqupa Lamp 250   120 hrs   3,500   1.5 V   630g  
255X110x110 mm   $30.00   Available in Stores Lantern with Aqua Power AA Battery
  80 hrs   N/A   1.5 V   N/A   255X110x110 mm   $25.00   In Development Home Use
Lantern – Dual USB Charger   80 hrs   N/A   3.0V   N/A   250x250x150 mm   $42.00
  In Development Developing Nation Lantern with Phone Charger   80 hrs   N/A  
3.0V   N/A   255X110x110 mm   $21.00   In Advanced Development  

 

34

 

 

The Aqupa Lamps 210 and 250 are stand-up light sources (lanterns). The Lantern
using Aqua Power AA Battery is a modified version of the Aqupa Lamp 250 to have
a lower price. The Home Use Lantern is an upgraded Aqupa Lamp 250 with higher
current, which provides up to 2A power.

 

4.Flashlights

 

The Company has currently developed three flashlights and flashlight hybrids
which are expected to go into production over the next year.

 

The following table provides the expected product specifications:

 

PRODUCT   HOURS   LUMENS   POWER   WEIGHT   SIZE   RETAIL
PRICE
(EST)   STAGE OMUSUBI-Kun   90 hrs   1,500   1.5 V   350g   200X60x55 mm  
US$20.50   In Development Aqupa Flash   90 hrs   1,500   1.5 V   350g  
180X50x55 mm   US$20.50   In Development   Aqupa Flash/Lantern   90 hrs   1,500
  1.5 V   350g   187X197x50 mm   US$26.00   In Development

 

The OMUSUBI-Kun is a flashlight with rolling switch; the light comes on when the
flashlight is rotated one way, and turns off when rotated the other. The Aqupa
Flash/Lantern can be used as either a handheld or stand up light source.

 

5.          Speciality Lighting Products

 

Aqua Power has developed several specialty lighting products to suit the needs
of particular customers and industries. The following table depicts proposed
product specifications of the specialty lighting products currently being
developed:

 

PRODUCT   HOURS   LUMENS   POWER   WEIGHT   SIZE   RETAIL
PRICE
(EST)   STAGE Mining Industry Flash Light   80 hrs   N/A   1.5V   N/A   N/A  
US$15.50   In Development. Car and Boat Light/Battery   80 hrs   N/A   3.0V  
N/A   N/A   US$50.00   In Development. Mountaineering & Outdoor Recreation Light
  80 hrs   N/A   1.5V   N/A   N/A   US$12.50   In Development.

 

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The Mining Industry Flashlight is to be used by workers in underground mining
operations where safety is a top priority. The Car and Boat Light/Battery is
being designed to be a light source as well as electricity source to be used in
cars and boats. The Mountain Climbing & Outdoor Recreation light is to be used
as a light source for both markets.

 

6.Lighting Products: Power Bars

 

The Aqupa Power Bars are magnesium rods that provide the power source for the
Lanterns and Flashlights. The magnesium rod is easily replaced and range in size
from 130 x 25 mm to 102 x 30 mm.

 

7.Power Supply Equipment

 

Aqua Power’s R&D team is currently developing a number of power supply equipment
products of increasing power output, physical size and cost.

 

8.First Generation Portable Power Plant

 

The first generation portable power plant was originally designed specifically
for the Government of Mexico as a back-up power plant for disaster situations.
In September 2011, 510 units were sold to the City of Sonora. Based upon the
water battery technology used in the NoPoPo batteries, it is made to order for
specific customers. It will last approximately 240 hours and generates 15-19V DC
/ 100-220 AC.

 

9.Handheld Power Supply Equipment

 

The small sized power charger is designed to be handheld using RMAF technology.
Its estimated output is approximately 80 hours of electricity at up to 3.0 V.
The small size – 150 mm (L) X 150 mm (W) X 80 mm (D) -- and lightweight of 350
grams make it a great handheld charger for laptops.

 

10.Small (2-3A) Power Supply Equipment

 

Using RMAF technology, the small-sized power plant is designed for outdoor and
home use to power digital equipment. Its estimated output is 8 hours of
electricity per day for 14 days at up to 2-3A with voltage of 15 to 19V DC. The
unit can convert to 100 or 220 AC and is refueled using the magnesium bolt. The
small size – 20 cm (L) X 15 cm (W) X 15 cm (H) -- and light weight of 1.8 kg
make it highly portable and easily stored.

 

11.Medium (5A) Power Supply Equipment

 

Based on RMAF technology, the medium-sized power plant is designed for outdoor
and home use. Its estimated output of electricity is 8 hours a day for 14 days
at up to 5A with voltage of 22.5V DC. The unit can convert to 100 or 220 AC and
is refueled using the magnesium bolt. The small size – 28 cm (L) X 13.5 cm (W) X
16.5 cm (H) -- and lightweight of 3.5 kg make it highly portable and easily
stored.

 

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12.Large (10A) Power Supply Equipment

 

The large-sized power plant is designed outdoor and home use and was designed
using RMAF technology. Its estimated output of electricity is 8 hours a day for
14 days at up to 10A with voltage of 22.5V DC. The unit can convert to 100 or
220 AC and is refueled using the magnesium bolt.

 

13.X-Large (30A) Power Supply Equipment

 

This unit is designed to power a home or be used for other purposes, such as an
electric vehicle charging station. It uses RMAF magnesium plate technology and
is estimated to be able to generate up to 30 amps / 37.5 V AC. The compact size
1 m (L) x 1m (W) x 1m also makes it relatively portable and storable.

 

14.Power Supply Equipment Exchange Power Bars

 

The Power Supply Equipment power bars last up to 112 hours (8 hours a day for 14
days).

 

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SCHEDULE 3.10

 

MATERIAL CONTRACTS

 

    With:   Dated:   Material Terms/Description: 1.   Yamazen Corporation  
October 3, 2013   Basic Distribution Agreement 2.   Nippon Valqua   December
2012   Basic Co-development Contract

 

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SCHEDULE 3.11

 

SUBSIDIARIES

APSI:

 

Name:   Jurisdiction: Stoneville Solar, LLC   North Carolina limited liability
company established on December 14, 2010.

 

AP JAPAN:

 

Name:   Jurisdiction:   Percentage Owned None.        

 

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SCHEDULE 5.7

 

AP JAPAN EMPLOYMENT AGREEMENTS AND ARRANGEMENTS

 

As of the date of this Agreement, the following hourly and salaried employees of
AP Japan are reasonably necessary to operate the business of AP Japan as
substantially presently operated:

 

    Name of Party   Date of Agreement 1.   Yasuo Morimoto    April 1, 2012 2.  
Yuri Kommo   December 18, 2014

 

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