Document:

Exhibit 10.2

 

ASSET
PURCHASE AGREEMENT

 

THIS ASSET
PURCHASE AGREEMENT (the “Agreement”) is made as of May 8, 2014 by and among Leonard S. Ackerman, as Chapter 7 trustee
in the Bankruptcy Case (as defined below) (the “Seller”), on the one hand, and Chatand, Inc., a Nevada corporation
(the “Buyer,” and together with Seller, the “Parties,” and each, a “Party”), on the other
hand.

 

A.
On June 17, 2013, an involuntary petition was filed under Chapter 7 of Title 11 of the United States Code (the “Bankruptcy
Code”) against Freeline Sports, Inc., formerly known as Freeline Skates, Inc. and Draginz Corp. (the “Debtor”).

 

B.
On July 22, 2013, an order for relief was entered and the Debtor’s bankruptcy case is pending in the United States Bankruptcy
Court for the Southern District of California (the “Bankruptcy Court”) styled In re Freeline Sports, Inc., Case Number
13-06272-MM7 (the “Bankruptcy Case”).

 

C.
Seller was appointed as Chapter 7 trustee for the Debtor’s estate (the “Estate”) by order entered in the Bankruptcy
Case on September 12, 2013.

 

D.
Buyer desires to purchase and Seller desires to sell to Buyer, or a successful overbidder, as the case may be, substantially all
of the Debtor’s assets free and clear of all liens, claims, encumbrances, licenses and interests in accordance with Section
363 of the Bankruptcy Code, and otherwise on the terms and conditions set forth herein.

 

IN CONSIDERATION
OF the premises and mutual covenants contained in this Agreement, and for good and valuable consideration, the Parties agree as
follows:

 

1. Purchase
and Sale of Assets. On the Closing Date (as hereinafter defined), Seller will transfer, sell, assign and convey to Buyer,
and Buyer will purchase and acquire from Seller, free and clear of all liens, claims, licenses, encumbrances and interests, in
accordance with Section 363 of the Bankruptcy Code, all of the Estate’s right, title and interest in and to all of the assets
of the Debtor, including those set forth on Exhibit “A” attached hereto, but excluding only those Excluded Assets
identified at Exhibit B (collectively referred to herein as the “Assets”). The Assets shall not include the excluded
assets set forth in Exhibit “B” attached hereto (collectively referred to herein as the “Excluded Assets”).
To the extent the Assets include any books, records and/or other documents (whether in electronic, hard copy or any other form)
(collectively, the “Records”), Buyer shall retain copies of the Records or the originals thereof as may be reasonably
necessary to administer the Estate and/or wind up the affairs of the Estate and/or the Debtor or otherwise relating thereto; and
Buyer agrees to provide reasonable access to Seller to the Records as may be necessary to administer the Estate and/or wind-up
the affairs of the Debtor and the Estate or otherwise relating thereto. To the extent the Excluded Assets include any Records,
Seller agrees that Buyer shall be permitted to access such Records with Seller’s consent, which consent shall not be unreasonably
withheld. Buyer understands and acknowledges that Seller has limited Records in his possession and Buyer shall be responsible
for obtaining possession of any Records it has acquired, and records it seeks to review that are defined as Excluded Assets (provided
that if the Records are Excluded Assets, Buyer must first obtain Seller’s consent). Without limiting the foregoing, Seller
may also retain copies of the Records as may be reasonably necessary for such administration and winding up activities, provided
that Seller provides Buyer reasonable access to such records upon request. Buyer and Seller agree that no records of the Debtor
may be destroyed without the written consent of the other for a period of at least two years after the sale is closed. After such
two year period has lapsed, the holder of such records shall be entitled to destroy them after notice to the non-custodial party.
If any such records are held by the other, but the non-holding party seeks to retain such records, the non-holding party must
request such records and pay the cost of delivering such records to the non-holding entity before two years after the closing
date. If a party desires to destroy records within two years of the closing date and the other party refuses to consent to such
destruction, the party seeking to destroy the records may deliver such records to the offices of the non-consenting party and
the non-consenting party shall be obligated to accept delivery of such records. Without limiting Seller’s other rights,
Buyer hereby grants to Seller a perpetual, non-exclusive, royalty free license to use the “Freeline Sports,” “Freeline
Skates” and “Draginz” names and related names, provided such license extends only to use of such names as may
be reasonably necessary in Seller’s efforts to administer the Estate and w ind up the affairs of the Debtor and the Estate,
including liquidation of Excluded Assets.

 

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2. Purchase
Price. The purchase price (the “Purchase Price”) of the Assets shall be Two Hundred Fifty Thousand Dollars
($250,000.00), subject to adjustment if Buyer submits an overbid at the Auction (as hereafter defined) payable by Buyer as follows:

 

2.1 Cash
Deposit at Execution of Agreement. Buyer shall pay Seller the cash sum of Thirty Thousand Dollars ($30,000.00) by cashier’s
check or wire transfer within five (5) Business Days of the mutual execution of this Agreement (such deposit, the “Deposit”),
as a deposit against the Purchase Price. The Deposit shall be paid to and held directly by Seller and may be cashed by Seller.
Any interest earned on the Deposit shall be for the account of Seller. The Deposit shall be refunded promptly to Buyer if: (i)
the Bankruptcy Court does not approve Seller’s entry into this Agreement and/or this Agreement; (ii) Buyer is neither the
Successful Bidder (as hereafter defined) nor the Backup Bidder (as hereafter defined); (iii) Buyer is the Backup Bidder but Seller
closes the sale to the Successful Bidder; or (iv) the Closing (as hereinafter defined) fails to occur within the time specified
in this Agreement for any reason other than Buyer’s breach of this Agreement or any of its obligations hereunder. If the
Closing fails to occur as a result of Buyer’s breach of this Agreement, Seller shall be entitled to receive and retain the
Deposit as liquidated damages as provided below.

 

LIQUIDATED
DAMAGES. BY PLACING THEIR INITIALS AT THE END OF THIS SECTION, BUYER AND SELLER AGREE THAT: (A) IF BUYER FAILS TO COMPLETE THE
PURCHASE OF THE ASSETS PURSUANT TO THIS AGREEMENT BY REASON OF BUYERS BREACH OF THIS AGREEMENT, THEN SELLER’S SOLE AND EXCLUSIVE
REMEDY SHALL BE TO TERMINATE THIS AGREEMENT AND RECEIVE AND RETAIN THE DEPOSIT TO THE EXTENT THAT IT HAS BECOME NONREFUNDABLE
TO BUYER PURSUANT TO THIS AGREEMENT AS LIQUIDATED DAMAGES AND NOT AS A PENALTY, AND UNDER SUCH CIRCUMSTANCES, SELLER WAIVES ALL
RIGHTS TO OBTAIN BUYER’S SPECIFIC PERFORMANCE, INCLUDING WITHOUT LIMITATION THOSE RIGHTS PURSUANT TO CALIFORNIA CIVIL CODE
SECTIONS 3384 THROUGH 3395, IF APPLICABLE; AND (B) BECAUSE OF THE NATURE OF THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT, IT
WOULD BE IMPRACTICAL AND EXTREMELY DIFFICULT TO FIX SELLER’S ACTUAL DAMAGES IF SUCH A BREACH OCCURS AND THEREFORE THE AMOUNT OF
LIQUIDATED DAMAGES SPECIFIED ABOVE SHALL BE PRESUMED TO BE THE AMOUNT OF DAMAGES SELLER WOULD SUSTAIN BY REASON OF SUCH A BREACH
AND REPRESENTS A REASONABLE ESTIMATE OF THOSE DAMAGES PURSUANT TO CALIFORNIA CIVIL CODE SECTION 1671, IF AND AS APPLICABLE, TAKING
INTO ACCOUNT, AMONG OTHER FACTORS, THE CIRCUMSTANCES EXISTING AS OF THE TIME OF ENTRY INTO THIS AGREEMENT.

 

	/s/
    Michael Lebor	 	 /s/
    Leonard S Ackerman
	Buyer’s
    Initials	 	Seller’s
    Initials

 

Notwithstanding
the foregoing, the above liquidated damages provision shall not limit any right or remedy of Seller to seek payment of the full
amount of the Deposit to the extent that any portion thereof is due but has not yet been paid, and any related fees and costs
(including attorneys’ fees). Buyer acknowledges and agrees that its obligation to pay the Deposit and Seller’s right
to retain the same in accordance with the foregoing provisions shall survive the termination of this Agreement.

 

2.2 Cash
at Closing. In addition to the Deposit, Buyer shall deliver to Seller the balance of the Purchase Price at the Closing
via cashier’s check or by wire transfer. Said sum shall be paid to Seller prior to or on the Closing Date.

 

2.3
Reimbursement of Buyer’s Expenses. In the event that: (i) Buyer is neither the Successful Bidder nor the Backup
Bidder or (ii) Buyer is the Backup Bidder, and in each such case, Seller closes a sale of the Assets to the Successful Bidder
or the Backup Bidder (but in each such case not Buyer), Seller shall, as promptly as practicable after the Closing, reimburse
Buyer, from the sale proceeds, for its reasonable actual fees and expenses not to exceed Twenty Thousand Dollars ($20,000.00)
incurred in connection with acting as the “Stalking Horse Bidder,” including, without limitation, due diligence expenses,
negotiation of this Agreement, review of the Sale Motion (as hereafter defined), and appearance at the hearing on the Sale Motion
(the “Expense Reimbursement”). For the avoidance of doubt, the Expense Reimbursement: (i) shall only be payable from
the sale proceeds received by Seller from a sale of the Assets and neither Seller nor the Estate shall have any liability for
the Expense Reimbursement and no claim shall exist therefor unless a Closing occurs; and (ii) is subject to Bankruptcy Court approval
(which is being sought concurrently with and not prior to the approval of the sale) and shall only be payable if the Bankruptcy
Court approves the Expense Reimbursement. Failure of the Bankruptcy Court to approve the Expense Reimbursement provided in this
Section 2.3 shall not act to invalidate this Agreement nor give rise to any rights, remedies or claims in favor of Buyer
(including any right to terminate this Agreement). The provisions of this Section 2.3 shall be for the benefit of Buyer
only and no other person or entity.

 

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2.4 Sales
Tax Payable by Buyer. Buyer shall pay the sales tax due, if any, with respect to the transactions contemplated hereby.

 

3. Title.
Seller shall convey title to the Assets to Buyer by bill of sale (the “Bill of Sale”) and quitclaim assignment
(“Quitclaim Assignment”) in substantially the forms attached hereto as Exhibits “C” and “D,”
and as approved by the Bankruptcy Court, free and clear of all liens, claims, licenses, encumbrances and interests pursuant to
Section 363 of the Bankruptcy Code.

 

4. Freeline
Distribution, Inc. Seller has informed Buyer that Freeline Distribution, Inc. fka BMA, Inc. and/or Lisa Negele (collectively,
the “Negele Parties”) may be in possession of certain inventory of the Estate’s and/or certain inventory paid
for by the Negele Parties that utilizes Debtor’s intellectual property which intellectual property is being sold to Buyer
pursuant to this Agreement. Concurrently with this Agreement, Seller, subject to Bankruptcy Court approval, is entering into a
settlement agreement with the Negele Parties pursuant to which the Negele Parties will consent to the sale of the Assets free
and clear of their liens, claims, licenses, encumbrances and interests, including, without limitation, any claims arising under
that certain Distribution Agreement and/or under section 365(n) of the Bankruptcy Code. Seller is not selling to Buyer and Buyer
is not buying from Seller any inventory in the possession of the Negele Parties. Moreover, Seller makes no representation or warranty
whatsoever regarding the inventory, if any, in the possession of the Negele Parties and Buyer shall be solely responsible for
negotiating any agreements regarding such inventory with the Negele Parties. In the event an agreement cannot be reached. Buyer
shall have whatever rights exist against the Negele Parties as of the Closing subject to the terms of the settlement agreement
to be approved by the Bankruptcy Court, provided, however, Seller makes no representations or warranties regarding any such rights.
A copy of the settlement agreement has been provided to Buyer and Buyer acknowledges receipt thereof.

 

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5. No
Representations; Indemnity.

 

5.1
EXCEPT AS EXPRESSLY PROVIDED HEREIN OR IN THE SALE ORDER (AS HEREAFTER DEFINED), BUYER AGREES AND ACKNOWLEDGES THAT THE TRANSFER
OF THE ASSETS IS MADE PURSUANT TO ORDER OF THE BANKRUPTCY COURT AND IS MADE “AS IS” AND “WHERE IS”, AND
ACKNOWLEDGES AND AGREES THAT. EXCEPT AS EXPRESSLY PROVIDED HEREIN, SELLER MAKES NO REPRESENTATION OR WARRANTY OF ANY KIND WHATSOEVER
WITH RESPECT TO THE ASSETS OR OTHERWISE, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO ANY REPRESENTATION OR WARRANTY REGARDING
THE TITLE OR CONDITION OF THE ASSETS OR THE FITNESS, DESIRABILITY, OR MERCHANTABILITY THEREOF OR SUITABILITY THEREOF FOR ANY PARTICULAR
PURPOSE, OR ANY BUSINESS PROSPECTS, OR VALUATION OF THE ASSETS, OR THE COMPLIANCE OF THE ASSETS IN THEIR CURRENT OR FUTURE STATE
WITH APPLICABLE LAWS OR ANY VIOLATIONS THEREOF. BUYER FURTHER ACKNOWLEDGES THAT SELLER SHALL DELIVER TO THE BUYER ALL ASSETS IN
SELLER’S OR ITS COUNSEL’S POSSESSION; BUT THAT SELLER DOES NOT HAVE POSSESSION OF ALL OF THE ASSETS, AND THAT TO THE
EXTENT THE SELLER IS NOT IN POSSESSION OF AN ASSET SOLD HEREUNDER, BUYER WILL HAVE SOLE RESPONSIBILITY TO OBTAIN POSSESSION OF
THE ASSETS, AT ITS SOLE EXPENSE. BUYER AGREES THAT SELLER HAS NO OBLIGATION OR LIABILITY WHATSOEVER WITH RESPECT TO ANY SEPARATE
AGREEMENTS, INDEMNITIES, REPRESENTATIONS OR WARRANTIES ENTERED INTO BY BUYER, UNLESS THE SELLER HAS ACTUAL KNOWLEDGE OF SUCH MATTERS
BEFORE THE CLOSING DATE AND FAILS TO DISCLOSE SUCH MATTERS TO THE BUYER PRIOR TO THE CLOSING DATE. AS TO ALL SUCH MATTERS THAT
ARE NOT KNOWN TO EITHER THE BUYER OR THE SELLER AS OF THE CLOSING DATE, ANY RISK OF LOSS SHALL BE BORNE SOLELY BY BUYER.

 

5.2
BUYER FURTHER ACKNOWLEDGES AND REPRESENTS THAT IT ENTERS INTO THIS AGREEMENT AFTER ITS INDEPENDENT INVESTIGATION OF THE FACTS
AND CIRCUMSTANCES RELATING TO THE ASSETS AND THE TRANSACTION DESCRIBED HEREIN. WITHOUT LIMITING THE FOREGOING, BUYER IS NOT RELYING
ON SELLER OR THE ESTATE FOR ANY INFORMATION REGARDING THE ASSETS OR OTHERWISE; EXCEPT THAT SELLER HAS REPRESENTED AND WARRANTS
THAT IT HAS PROVIDED BUYER WITH ALL DOCUMENTS (WITH THE EXCEPTION OF ANY DOCUMENTS SUBJECT TO ANY APPLICABLE PRIVILEGE, INCLUDING,
WITHOUT LIMITATION, ATTORNEY CLIENT AND WORK PRODUCT) IN ITS POSSESSION RELATIVE TO THE ASSETS BEING SOLD.

 

5.3
Buyer assumes responsibility for obtaining all required licenses, copyrights, patents, trademarks, permits and/or other agreements
and/or rights as may be required so that Buyer may lawfully use. sell, distribute or dispose of any of the Assets.

 

5.4
Buyer hereby agrees to indemnify, defend and hold Seller and its, attorneys, consultants, independent contractors, successors
and assigns (collectively, the “Indemnitees”) harmless from and against any and all liabilities, demands, claims,
actions or causes of action, assessments, losses, costs, damages or penalties or expenses, including attorneys’ fees, imposed
on, accrued against, asserted against, sustained or incurred by Indemnitees, directly or indirectly, resulting from, arising out
of, related to, or by virtue of: (a) any liability or obligation of Buyer arising prior to, on or after the Closing Date, whether
or not related to the ownership or use of the Assets; (b) breach of any representation, warranty, covenant or agreement of Buyer
contained herein or in any agreement executed in connection herewith; and (c) the ownership, sale, use, or distribution of the
Assets from and after the Closing Date.

 

6. Seller’s
Representations and Warranties. Seller makes the following representations and warranties, which shall survive execution
of this Agreement and which shall survive the Closing:

 

6.1 Authority.
Seller is the Chapter 7 trustee in the Bankruptcy Case. Subject to entry of the Sale Order. Seller has the authority to enter
into this Agreement and to consummate the transactions contemplated thereby.

 

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6.2 Notice
of Motion for Sale Confirmation Order. Promptly after execution by all Parties to this Agreement and the receipt by Seller
of the Deposit, Seller will file a Sale Motion seeking entry of the Sale Order.

 

7. Buyer’s
Representations and Warranties. Buyer makes the following representations, warranties and covenants (including, without
limitation, those made elsewhere in this Agreement), which shall survive execution of this Agreement and which shall survive the
Closing:

 

7.1 Authority.
Buyer has the power and authority to enter into this Agreement and consummate the transactions contemplated thereby.

 

7.2 Investigations.
Buyer acknowledges that Seller, as recently appointed Chapter 7 trustee in the Bankruptcy Case, has limited information and
documents concerning the Assets; Buyer has made its own investigation concerning Assets, the condition of title or any other matter
pertaining to the Assets; and, other than the express representations made by Seller pursuant to this Agreement. Buyer is not
relying on any representations, warranties or inducements of Seller (or any agent of Seller) with respect to the Assets, the condition
of title to the Assets or any other matter pertaining to the Assets, the transaction contemplated herein or otherwise.

 

8. Conditions
Precedent to Closing for Benefit of Seller. As independent conditions precedent for the benefit of Seller, Seller’s
obligations hereunder, including the obligation to transfer the Assets to Buyer, are contingent upon satisfaction of each of the
following conditions unless otherwise waived by Seller in writing on or before the Closing:

 

8.1 Receipt
bv Seller of Buyer’s Deliveries. Seller shall have received at the Closing the deliveries required by Section 11
of this Agreement.

 

8.2 Compliance
with Covenants. Buyer shall have performed and complied in all material respects with all obligations and agreements required
by this Agreement to be performed or complied with by Buyer on or prior to the Closing.

 

8.3 Sale
Order and Findings. This Agreement and the transactions contemplated herein shall have been approved by the Bankruptcy
Court and the Bankruptcy Court shall have entered the Sale Order in the Bankruptcy Case so approving, concurrently with findings
of fact and conclusions of law (in form and substance reasonably acceptable to Seller) (the “Findings”), and such
Sale Order shall be final with no appeal having been filed (or if any appeal has been filed, no stay shall have been issued either
preventing this Agreement from becoming enforceable or the Sale closing).

 

8.4 Buyer
is Successful Bidder or Backup Bidder. Buyer shall be either: (i) the Successful Bidder at the Auction; or (ii) Buyer
shall be the Backup Bidder at the Auction and the Successful Bidder shall have failed to close.

 

8.5 No
Violation of Orders. No preliminary or permanent injunction or other order that would prevent the consummation of the
transactions contemplated by this Agreement shall be in effect.

 

9. Conditions
Precedent to Buyer’s Closing. As independent conditions precedent for the benefit of Buyer, Buyer’s obligations
hereunder, including the obligation to pay the Purchase Price, are contingent upon satisfaction of each of the following conditions
unless otherwise waived by Buyer in writing on or before the Closing:

 

9.1 Receipt
by Buyer of Seller’s Deliveries. Buyer shall have received at the Closing the deliveries required under Section
11 of this Agreement.

 

9.2 Compliance
with Covenants. Seller shall have performed and complied in all material respects with all obligations and agreements
required by this Agreement to be performed or complied with by Seller on or prior to the Closing.

 

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9.3 Sale
Order and Findings. This Agreement and the transactions contemplated herein shall have been approved by the Bankruptcy
Court and the Bankruptcy Court shall have entered the Sale Order in the Bankruptcy Case so approving, concurrently with the Findings
(in form and substance reasonably acceptable to Seller) and such Sale Order shall be final with no appeal having been filed (or
if any appeal has been filed, no stay shall have been issued either preventing this Agreement from becoming enforceable or the
Sale closing).

 

9.4 Buyer
is Successful Bidder or Backup Bidder. Buyer shall be either: (i) the Successful Bidder at the Auction; or (ii) Buyer
shall be the Backup Bidder at the Auction and the Successful Bidder shall have failed to close.

 

9.5 No
Violation of Orders. No preliminary or permanent injunction or other order that would prevent the consummation of the
transactions contemplated by this Agreement shall be in effect.

 

10. Deliveries
at Closing. The Parties shall make the following deliveries at Closing:

 

10.1
Purchase Price. Buyer shall deliver to Seller a cashier’s check or deliver funds via wire transfer to the account
of Seller in the amount of the Purchase Price, less the Deposit.

 

10.2
Bill of Sale: Quitclaim Assignment. Seller shall deliver to Buyer a Bill of Sale and Quitclaim Assignment, substantially
in the forms attached as Exhibits “C” and “D.”

 

10.3
Corporate Documents. At Seller’s request, Buyer shall deliver to Seller a certified copy of its resolution authorizing
the purchase of the Assets and an incumbency certificate and such other corporate related documents as Seller shall reasonably
request.

 

11. Closing.
Closing of the sale (the “Closing”) shall occur at the offices of Foley & Lardner LLP, 3579 Valley Centre
Drive, Suite 300, San Diego, California 92130, or such other location as mutually agreed upon by the Parties, on a date to be
mutually agreed upon by the Parties (the “Closing Date”), but in no event later than five (5) business days after
the Sale Order is final with no appeal having been filed (or if any appeal has been filed, no stay shall have been issued either
preventing this Agreement from becoming enforceable or the Sale closing); provided, however, that in the event that the Closing
has failed to occur by March 31, 2014 (the “Outside Date”), this Agreement may be terminated as provided in and subject
to the terms of Section 13. The Parties may mutually agree in writing to effect the Closing on an earlier or a later date
at their sole discretion. The existence of the Outside Date for the Closing in this Section 11 shall not relieve either
Party of their respective obligations under this Agreement to use commercially reasonable efforts to perform and satisfy all conditions
to their respective obligations to consummate the transactions contemplated by this Agreement.

 

11.1
Backup Bidder Closing. If the Successful Bidder shall fail to close, (i) the Backup Bidder shall be obligated to close
within ten (10) business days of being notified that the Closing with the Successful Bidder has failed to close due to breach
by the Successful Bidder; and (ii) the Outside Date shall be extended by thirty (30) calendar days.

 

12. Overbid
Procedure: Bankruptcy Court Approval; Sale Order. Buyer acknowledges that:

 

12.1
Overbid Auction Procedure. The sale of the Assets to Buyer is subject to an overbid auction (the “Auction”)
to be held in Department 1 of the United States Bankruptcy Court, 325 West “F” Street, San Diego, California, on a
date to be determined by Seller concurrently with the hearing on the Sale Motion or as otherwise required by the Bankruptcy Court.
The initial overbid purchase price must be in the amount of at least Two Hundred Eighty Thousand Dollars ($280,000.00), with all
bids thereafter to be in increments of at least Five Thousand Dollars ($5,000.00). To qualify as a bidder at the Auction, any
bidder, other than the named Buyer hereunder, must deliver to Seller’s counsel: (i) evidence of financial ability to consummate
a sale for at least Two Hundred Eighty Thousand Dollars ($280,000.00); (ii) an executed version of this Agreement in substantially
the same form hereof but reflecting a Purchase Price of at least Two Hundred Eighty Thousand Dollars ($280,000.00) binding on
such bidder (provided, if any bidder proposes to make any changes to the form of this Agreement, such bidder shall highlight any
such proposed changes); and (iii) a deposit in the amount of at least Thirty Thousand Dollars ($30,000.00) by cashier’s
check or wire transfer made payable to Seller, in each case at least forty-eight (48) hours prior to the Auction (any such bidder
who has satisfied such conditions, together with Buyer, a “Qualified Bidder”). At the conclusion of the Auction. Seller
shall request that the Bankruptcy Court approve the sale of the Assets to the highest Qualified Bidder taking into account such
terms of sale as Seller may consider in his reasonable business judgment and determined by the Bankruptcy Court (the “Successful
Bidder”) and, in the event the Successful Bidder fails to close, the sale of the Assets to the second highest Qualified
Bidder taking into account such terms of sale as Seller may consider in his reasonable business judgment and determined by the
Bankruptcy Court (the “Backup Bidder”). Any overbid shall be subject to all other terms and conditions of this Agreement,
as applicable and as required by the Bankruptcy Court. The Backup Bidder shall be legally obligated to close the transaction,
as if such Backup Bidder had been the Successful Bidder; and shall be subject to the same forfeiture of its deposit and liquidated
damages provisions as would apply to the Successful Bidder. No bidder other than the two highest bidders shall be bound to close
the transaction. If both the Successful Bidder and the Backup Bidder fail to close. Seller, in his sole discretion, may conduct
a new auction sale to the extent there is any buyer willing to be a bidder at such auction.

 

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12.2
Bankruptcy Court Approval; Sale Order. The sale to Buyer by Seller and the other transactions contemplated by this
Agreement are expressly subject to approval of the Bankruptcy Court. Promptly after execution of this Agreement by Buyer and Seller
and Seller’s receipt of the Deposit, so long as neither Buyer nor Seller has terminated this Agreement, Seller shall file
with the Bankruptcy Court an application or motion (the “Sale Motion”) for entry of an order in form and substance
reasonably acceptable to Seller and Buyer (the “Sale Order”) providing that, among other things: (i) the sale of the
Assets to Buyer in accordance with this Agreement shall be pursuant to Sections 363(b) and 363(f) of the Bankruptcy Code, free
and clear of all liens, claims, licenses, encumbrances and interests except as provided in Section 3; (ii) the Sale Order
is final with no appeal having been filed (or if any appeal has been filed, no stay shall have been issued preventing this Agreement
from becoming enforceable); (iii) Buyer shall be entitled to the Expense Reimbursement if authorized by this Agreement (provided
the failure of the Bankruptcy Court to approve such Expense Reimbursement shall not give rise to a right of Buyer to terminate
this Agreement); and (iv) the Bankruptcy Court shall retain jurisdiction with respect to any matters relating to the Sale Order
or the transactions contemplated by this Agreement. Notwithstanding the foregoing, the Bankruptcy Court’s failure to approve
the requests set forth in (iii) or (iv) of this Section 12.2 shall not be a basis to object to the form and substance of
the Sale Order.

 

13. Termination.
This Agreement may be terminated by the mutual written consent of the Parties. Either Seller or Buyer may also terminate this
Agreement by written notice to the other if the Closing shall not have occurred by the Outside Date contemplated in Section
11 due to no breach by the terminating Party. Buyer may also terminate this Agreement by written notice to Seller, if any
of the conditions in Section 9 are not satisfied, or Seller shall breach any of its obligations under this Agreement. Seller
may also terminate this Agreement by written notice to Buyer if any of the conditions in Section 8 are not satisfied, or
Buyer shall breach any of its obligations under this Agreement. No termination under this Section 13 shall release either
Party from or act as a waiver of any claim against the other Party, at law or in equity (except as limited by Section 2.1)
as a result of such termination or as a result of any breach or default under this Agreement. This Agreement may be terminated
as provided herein without further order of the Bankruptcy Court.

 

14. Commissions.
Buyer and Seller each represent and warrant to the other that no person or entity has been engaged by it as a broker, agent
or finder, licensed or otherwise, in connection with the transaction contemplated by this Agreement. If any claim is made for
a commission or finder’s fee in connection with the transaction contemplated by this Agreement, then the Party upon whose
alleged statement, representation or agreement that claim arises shall indemnify, defend, protect and hold harmless the other
Party from and against all liability, damage and cost (including actual attorneys’ fees) the other Party incurs as a result
thereof. For avoidance of doubt, this Section 14 does not apply to any fee or expense payable to Seller as trustee in the
Bankruptcy Case.

 

15. Miscellaneous.

 

15.1
Entire Agreement. This Agreement and the written agreements referred to herein and executed in connection herewith
constitute the entire understanding among the parties with respect to the subject matter hereof, and supersede all negotiations,
prior discussions or other agreements, oral or written.

 

15.2
Governing Law; Venue. This Agreement has been negotiated and entered into in the State of California, and shall be
governed by, and construed in accordance with, the laws of State of California in effect at the time of its execution, without
reference or regard to the principles of conflict of laws. Any action arising out of this Agreement must be brought and maintained
in the Bankruptcy Court, and the Parties hereto consent to the jurisdiction of the Bankruptcy Court; provided, after the Bankruptcy
Case is closed, any action may be brought in a court located in San Diego County with jurisdiction.

 

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15.3
Independent Contractors. The parties hereto are independent contractors and nothing contained in this Agreement shall
be construed to place them in the relationship of partners, principal and agent, employer/employee or joint venturer. The parties
agree that they shall neither have the power or right to bind or obligate the other, nor shall either hold itself out as having
such authority.

 

15.4
Counterparts. This Agreement may be executed in counterparts. In the event that any signature to this Agreement or
any amendment hereto is delivered by facsimile transmission, by e-mail delivery of a “.pdf or by other electronic format
data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature
is executed) with the same force and effect as if such facsimile, “.pdf’ or other electronic format data file signature
page were an original thereof (and the same shall be deemed as originals).

 

15.5
Fees and Costs. If any action, including any arbitration proceeding, is instituted to enforce the terms or provisions
of this Agreement (except as provided in Section 8.3), including an action instituted after the bankruptcy of a party, the prevailing
party in such action shall be entitled to collect as part of its recovery all reasonable costs, charges and fees, including but
not limited to its expert witness fees and attorneys’ fees and costs, incurred in connection with such action.

 

15.6
Amendment. This Agreement may only be amended or modified by the written agreement of the Parties.

 

15.7
Severability. If any of the provisions of this Agreement are held invalid under any law, such invalidity shall not
affect the remainder of the Agreement.

 

15.8
No Assignment. Neither this Agreement nor any rights or obligations hereunder shall be assigned by any Party without
the prior written consent of the other Parties hereto.

 

15.9
Successors and Assigns. Subject to Sections 15.8 and 12, this Agreement shall be binding upon and inure to the
benefit of the successors and assigns of the Parties.

 

15.10
Headings; Construction. The headings of the various Sections of this Agreement are for convenience only and are not
intended to explain or modify any of the provisions of this Agreement. No rule of strict construction will be applied in the interpretation
or construction of this Agreement. When used in this Agreement, “including” means “including without limitation.”
In the event of any conflict or ambiguity between this Agreement and any Exhibit, this Agreement will control. Whenever the context
requires: (a) the singular number shall include the plural, and vice versa; (b) the masculine gender shall include the feminine
and neuter genders; (c) the feminine gender shall include the masculine and neuter genders; and (d) the neuter gender shall include
the masculine and feminine genders.

 

15.11
Notices. All notices to be given by any Party to this Agreement to the other Party shall be in writing, and shall be
given by certified United States mail, return receipt requested, postage prepaid, to the other, sent by telefax or facsimile transmission,
or personally delivered, at the addresses set forth below (or at such other address for a Party has specified by like notice)
and shall be deemed given when received if sent by facsimile transmission or personally delivered, or if mailed as provided herein,
on the second day after it is so placed in the mail.

 

The addresses
referred to above are:

 

	 	Buyer:	Chatand,
    Inc.
	 	 	Steven
    C Berger
	 	 	44
    Heather Hill Lane
	 	 	Woodcliff
    Lake NJ. 07677
	 	 	Phone
    201-307-1230
	 	 	Fax
    201-391-1728
	 	 	sberger@chatand.com

 

    	8

    	 

    

  

	 	With
    a courtesy copy to:	Brian
    T. Corrigan, Esq.
	 	 	Corrigan
    & Morris LLP
	 	 	201
    Santa Monica Blvd., Suite 475
	 	 	Santa
    Monica, California 90401-2212
	 	 	Ph:
    310-394-2829
	 	 	Fax:
    310-394-2825

 

	 	Seller:	Mr.
    Leonard J. Ackerman
	 	 	Trustee
	 	 	6977
    Navajo Road, Suite #124
	 	 	San
    Diego, California 92119
	 	 	Ph:
    619-463-0555

 

	 	With
    a courtesy copy to:	Kathryn
    M.S. Catherwood, Esq.
	 	 	Foley
    & Lardner LLP
	 	 	3579
    Valley Centre Drive, Suite 300
	 	 	San
    Diego, California 92130
	 	 	Ph:
    858-^847-6700
	 	 	Fax:
    858-792-6773

 

Any Party
at any time may give notice to the other Party of a different address other than that set forth above in accordance with the provisions
of this Section 15.11. Failure of any Party to provide courtesy-only copies of notices, demands and other communications
shall not impair, modify, limit or otherwise affect any Party’s rights or remedies nor any Party’s obligations under
this Agreement.

 

15.12
Interpretation. Each Party has had an opportunity to review and revise this Agreement and consult with counsel, and
any rule of contract interpretation to the effect that ambiguities or uncertainties are to be interpreted against the drafting
party or the party who caused it to exist shall not be employed in the interpretation of this Agreement or any document executed
in connection herewith.

 

15.13
Survival of Obligations. All obligations of the parties set forth in this Agreement shall survive the Closing and Closing
Date.

 

15.14
Waiver. No Party shall be deemed to have waived any claim arising out of this Agreement, or any power, right, privilege
or remedy under this Agreement, unless the waiver of such claim, power, right, privilege or remedy is expressly set forth in a
written instrument duly executed and delivered on behalf of such Party; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.

 

15.15
Further Assurances. Buyer and Seller shall each promptly sign and deliver all additional documents and perform all
acts reasonably necessary to perform its obligations and carry out the intent expressed in this Agreement. Without limiting the
foregoing, at Seller’s request, Buyer shall enter into an amendment to this Agreement, or enter into a superseding asset
purchase agreement, to reflect any changes in terms (including any change to the Purchase Price) as may occur as part of the Bankruptcy
Court approval, the Auction or the New Auction, if applicable.

 

15.16
No Waiver. A waiver by either Party of a default by the other Party is effective only if it is in writing and shall
not be construed as a waiver of any other default.

 

15.17
No Beneficiaries. No person or entity besides Buyer, Seller and their permitted successors and assigns has any rights
or remedies under this Agreement.

 

15.18
Incorporation. Any exhibits attached hereto and referred to herein are incorporated into this Agreement.

 

    	9

    	 

    

  

15.19
Survival of Obligations. All obligations of the Parties set forth in this Agreement shall survive the Closing and Closing
Date.

 

15.20
Effect of Course of Dealing. No course of dealing between the Parties in exercising any of their respective rights
under this Agreement shall operate as a waiver of any such rights, except where expressly waived in writing. Further, nothing
herein shall require either Party to terminate this Agreement upon breach or default of this Agreement by the other Party.

 

15.21
Time. Time is of the essence of this Agreement and each and every provision hereof.

 

15.22
Seller Capacity as Trustee of the Estate; Limitation on Liability. Buyer acknowledges and understands that Seller is
the Chapter 7 trustee of the Estate and that Seller enters this Agreement solely in his capacity as Chapter 7 trustee of the Estate
and not in his personal capacity, and no liability or obligations shall accrue to him personally as a result of this Agreement.
Buyer acknowledges and understands that the Bankruptcy Case was Filed as an involuntary bankruptcy case and the Seller has extremely
limited information regarding the Debtor and/or its assets and the sale of the Assets is “as is” “where is”
as set forth in Section 5.1 of this Agreement.

 

[Remainder
of Page Intentionally Left Blank]

 

    	10

    	 

    

  

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

 

	SELLER:	 	BUYER:
	 	 	 
	/s/ Leonard J. Ackerman	 	/s/ Michael Lebor
	Leonard
J. Ackerman, as Chapter 7 Trustee in the bankruptcy case of Freeline Sports, Inc., United States Bankruptcy Court for the Southern
District of California, Case No. 13-06272-MM7
	 	Chatand,
        Inc.

        Michael Lebor

CEO

 

    	11

    	 

    

 

EXHIBIT
“A”

 

ASSETS

 

All of the
Estate’s right, title and interest in the following personal property of the Debtor, excluding only the Excluded Assets
set forth at Exhibit B. including, without limitation:

 

	1.	All
    equipment, fixtures, furniture and furnishings, trade fixtures, machinery, vehicles, materials, tools, dies, molds, office
    equipment and supplies and computer and electronic equipment and other items of tangible personal property
	 	 
	2.	Inventory
    and work-in-process, with the exception of the Negele Inventory defined on Exhibit B
	 	 
	3.	Intellectual
    property, including software, patents, patent applications, copyrights, copyright applications, trademarks, trademark applications,
    transferable licenses, plans, specifications, technology content, trade secrets, tradenames, domain names and URL
	 	 
	4.	All
    files and documents relating to the intellectual property, including, without limitation, those files and documents held by
    the Debtor’s prior attorneys, all prosecution files, registration or similar files for the registered trademarks, and
    in each case all correspondence regarding pending applications, registrations, or other intellectual property rights
	 	 
	5.	All
    goodwill related to the Debtor’s business, including the right to conduct business under the name “Freeline”
    or “Freeline Skates’’ or “Freeline Sports” or “Draginz” or any other trademark or
    domain name (subject to the licenses granted in the Agreement)
	 	 
	6.	All
    research and development files, manufacturing and quality control records and procedures, service sand warranty records, operating
    guides and manuals, drawings, specifications, engineering specifications, blueprints, books, files, studies, manuals, reports,
    papers, agreements, correspondence, databases, production data, information systems, programs, software, documents, records
    and documentation thereof related to the Assets
	 	 
	7.	All
    accounting records of the Debtor (to be shared with the Seller as required by Section 1 of the Agreement)

 

Collectively,
the “Assets”.

 

EXHIBIT
“A”

 

    	 

    	 

    

  

EXHIBIT
“B”

 

EXCLUDED
ASSETS

 

Notwithstanding
the other provisions of the Agreement or any other exhibit, the Assets do not include the following assets owned by the Estate
or in which it has or had any interest (collectively, the “Excluded Assets”): (a) tax attributes, including, but not
limited to net operating loss carryovers; (b) tax refunds, insurance refunds or other refunds; (c) any property owned by third
parties; (d) workers’ compensation refunds; (e) utility, security or similar deposits; (f) cash, deposit accounts, certificates
of deposit or other cash equivalents; (g) the corporate minute book and related corporate governance records; (h) leases and any
property covered thereby; (i) insurance policies; (j) assets which are not assignable by Seller to Buyer as a matter of law; (k)
accounts, accounts receivable and/or money owed, including, without limitation, under a promissory note; (1) causes of action
or claims (including, without limitation, any causes of action, claims or avoidance actions under Chapter 5 of the Bankruptcy
Code and/or applicable state law) that Seller would be or may be entitled to bring as the Chapter 7 trustee or to use as an offset
or defense to any claim, except that Buyer shall be entitled to assert any claims and recover for any infringement of the Debtor’s
and/or Estate’s intellectual property arising pre-petition or post-petition except as any such claims may be settled in
that certain settlement agreement with the Negele Parties; (m) any real property interests, including leases of real property;
(n) personnel records, and/or any other records or documents required to be kept confidential or private under agreement or applicable
law, in any form (whether in hard copies, electronic files or otherwise) (confidential documents made confidential by agreement,
only (not confidential by operation of law, but only by agreement), shall be disclosed to Buyer subject to a confidentiality agreement
in a form reasonably acceptable to the Seller); (o) proceeds of any of the foregoing; (p) any inventory containing, utilizing
or infringing on the Debtor’s intellectual property in the possession of the Negele Parties, whether such inventory is property
of the Estate or property of the Negele Parties (the “Negele Inventory”); and (q) licenses, franchises, software,
copyrights, patents, trademarks or other intellectual property with respect to which the Debtor is or was the licensee or franchisee
and which may not be transferred by Trustee to Buyer under applicable law or without third party consent (including any consent
by a licensor or franchisor).

  

EXHIBIT
“B”

 

    	 

    	 

    

  

EXHIBIT
“C”

 

BILL
OF SALE

 

 

 

 

 

 

 

 

EXHIBIT
“C”

 

    	 

    	 

    

 

BILL
OF SALE

 

Leonard
S. Ackerinan, as Chapter 7 trustee (the “Seller”) for Freeline Sports, Inc., formerly known as Freeline Skates, Inc.
and Draginz Corp. (the “Debtor”), debtor in Bankruptcy Case Number 13-06272-MM7 pending in the United States Bankruptcy
Court for the Southern District of California (the “Bankruptcy Case”), for good and valuable consideration, receipt
of which is hereby acknowledged, and pursuant to the Asset Purchase Agreement dated as of May __, 2014 (the “Agreement”)
between Seller and Chatand, Inc., a Nevada corporation (the “Buyer,”), does hereby sell, convey, assign, transfer
and deliver to Buyer on the date hereof, all of the Estate’s (as that term is defined in the Agreement) right, title and
interest in and to the Assets (as that term is defined in the Agreement).

 

ALL ASSETS
ARE TRANSFERRED “AS IS” AND “WHERE IS.”

 

EXCEPT AS
PROVIDED IN THE AGREEMENT, SELLER MAKES NO REPRESENTATION OR WARRANTY OF ANY KIND WHATSOEVER WITH RESPECT TO THE ASSETS OR OTHERWISE,
EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO ANY REPRESENTATION OR WARRANTY REGARDING THE TITLE OR CONDITION OF THE ASSETS
OR THE FITNESS, DESIRABILITY, OR MERCHANTABILITY THEREOF OR SUITABILITY THEREOF FOR ANY PARTICULAR PURPOSE, OR ANY BUSINESS PROSPECTS,
OR VALUATION OF THE ASSETS, OR THE COMPLIANCE OF THE ASSETS IN THEIR CURRENT OR FUTURE STATE WITH APPLICABLE LAWS OR ANY VIOLATIONS
THEREOF. BUYER FURTHER ACKNOWLEDGES THAT SELLER SHALL DELIVER TO THE BUYER ALL ASSETS IN SELLER’S OR ITS COUNSEL’S
POSSESSION; BUT THAT SELLER DOES NOT HAVE POSSESSION OF ALL OF THE ASSETS, AND THAT TO THE EXTENT THE SELLER IS NOT IN POSSESSION
OF AN ASSET SOLD HEREUNDER, BUYER WILL HAVE SOLE RESPONSIBILITY TO OBTAIN POSSESSION OF THE ASSETS, AT ITS SOLE EXPENSE. BUYER
AGREES THAT SELLER HAS NO OBLIGATION OR LIABILITY WHATSOEVER WITH RESPECT TO ANY SEPARATE AGREEMENTS, INDEMNITIES, REPRESENTATIONS
OR WARRANTIES ENTERED INTO BY BUYER, UNLESS THE SELLER HAS ACTUAL KNOWLEDGE OF SUCH MATTERS BEFORE THE CLOSING DATE AND FAILS
TO DISCLOSE SUCH MATTERS TO THE BUYER PRIOR TO THE CLOSING DATE. AS TO ALL SUCH MATTERS THAT ARE NOT KNOWN TO EITHER THE BUYER
OR THE SELLER AS OF THE CLOSING DATE, ANY RISK OF LOSS SHALL BE BORNE SOLELY BY BUYER.

 

BUYER FURTHER
ACKNOWLEDGES AND REPRESENTS THAT IT ENTERS INTO THIS AGREEMENT AFTER ITS INDEPENDENT INVESTIGATION OF THE FACTS AND CIRCUMSTANCES
RELATING TO THE ASSETS AND THE TRANSACTION DESCRIBED HEREIN. WITHOUT LIMITING THE FOREGOING, BUYER IS NOT RELYING ON SELLER OR
THE ESTATE FOR ANY INFORMATION REGARDING THE ASSETS OR OTHERWISE; EXCEPT AS PROVIDED IN THE AGREEMENT.

 

The Assets
do not include the Excluded Assets as set forth in the Agreement.

 

This Bill
of Sale is entered into pursuant to the Agreement and is subject to the terms thereof. Buyer acknowledges and understands that
Seller is the Chapter 7 trustee of the Estate and that Seller enters this Bill of Sale solely in his capacity as Chapter 7 trustee
of the Estate and not in his personal capacity, and no liability or obligations shall accrue to him personally as a result of
this Bill of Sale.

 

This Agreement
may be executed in counterparts. In the event that any signature to this Agreement or any amendment hereto is delivered by facsimile
transmission, by e-mail delivery of a “.pdf’ or by other electronic format data file, such signature shall create
a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and
effect as if such facsimile, “.pdf” or other electronic format data file signature page were an original thereof (and
the same shall be deemed as originals).

 

(Remainder
of Page Intentionally Left Blank]

 

    	1

    	 

    

 

IN WITNESS
WHEREOF, Seller has caused the same to be signed as of ________ ,2014.

 

	SELLER:	 	ACCEPTED:
	 	 	CHATAND, INC., A Nevada Corporation
	 	 	 	 
	/s/
    Leonard J. Ackerman 	 	 /s/ Michael Lebor
	Leonard
        J. Ackerman, as Chapter 7 Trustee in the bankruptcy case of Freeline Sports, Inc., United States Bankruptcy Court for
        the Southern District of California, Case No. 13-06272-MM7

         
	 	By: 	Chatand,
        Inc.

                                                                                                    Michael Lebor

 CEO

         

 

    	2

    	 

    

  

EXHIBIT
“D”

 

Quitclaim
Assignment

 

 

 

 

 

 

 

 

 

EXHIBIT
“D”

 

    	 

    	 

    

  

QUITCLAIM
ASSIGNMENT

 

THIS QUITCLAIM
ASSIGNMENT (the “Assignment”) is being entered into by and between Leonard S. Ackerman, as Chapter 7 trustee (the
“Assignor”) for Freeline Sports, Inc., formerly known as Freeline Skates, Inc. and Draginz Corp. (the “Debtor,”
and its bankruptcy estate, the “Estate”) debtor in Bankruptcy Case Number 13- 06272-MM7 pending in the United States
Bankruptcy Court for the Southern District of California (the “Bankruptcy Case”) in favor of Chatand, Inc., a Nevada
corporation (the “Assignee”).

 

WHEREAS,
Assignor has agreed with Assignee for the transfer to it all of the Estate’s right, title and interest in and to that
certain intellectual property listed on Schedule 1 (collectively, the “IP”).

 

NOW THEREFORE,
pursuant to such agreement and in consideration of the sum of One U.S. Dollar ($1.00) paid by Assignee to Assignor (the receipt
of which Assignor hereby acknowledges), Assignor hereby assigns and transfers to Assignee Assignor’s respective right, title
and interest in said IP (if any) and any goodwill of the business symbolized by the IP.

 

EXCEPT AS
PROVIDED IN THE AGREEMENT, THIS ASSIGNMENT IS MADE WITHOUT RECOURSE AND SELLER MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND
WHATSOEVER TO ASSIGNEE AS TO THE RIGHTS, TITLE AND/OR INTEREST HELD BY THEM, RESPECTIVELY, IN THE IP OR OTHER PROPERTY TRANSFERRED
HEREBY. ADDITIONALLY, EXCEPT AS PROVIDED IN THE AGREEMENT, ALL WARRANTIES, EXPRESS OR IMPLIED ARE HEREBY DISCLAIMED, INCLUDING
WITHOUT LIMITATION ANY AND ALL WARRANTIES OF MERCHANTABILITY, SUITABILITY AND/OR FITNESS FOR A PARTICULAR PURPOSE.

 

This
Assignment is entered into pursuant to the Asset Purchase Agreement dated May , 2014 entered into by Assignor and Assignee,
and is subject to the terms thereof. This Assignment may be executed in counterparts. In the event that any signature to this
Agreement or any amendment hereto is delivered by facsimile transmission, by e-mail delivery of a “.pdf’ or by
other electronic format data file, such signature shall create a valid and binding obligation of the party executing (or on
whose behalf such signature is executed) with the same force and effect as if such facsimile, “.pdf” or other
electronic format data file signature page were an original thereof (and the same shall be deemed as originals).

 

Executed
at San Diego, California, this ____ day of ________, 2014.

 

 

	ASSIGNOR:	 	ASSIGNEE:
	 	 	 	 
	/s/ Leonard
    J. Ackerman	 	/s/ Michael Lebor
	Leonard
    J. Ackerman, as Chapter 7 Trustee in the bankruptcy case of Freeline Sports, Inc., United States Bankruptcy Court for the
    Southern District of California, Case No. 13-06272-MM	 	By:	 Chatand, Inc. 

Michael Lebor

 CEO

 

    	1

    	 

    

 

SCHEDULE
1

 

(Intellectual
Property)

 

Patents
and Patent Applications

 

	Application
    No.	 	Publication
    No.	 	Patent
    No.
	10/616,969	 	 	 	7,059,613
	12/536,437	 	2010/0176565	 	8,308,171
	29/279,978	 	 	 	D567318
	12/465,561	 	2010/0090423	 	 
	13/021,622	 	2012/0198728	 	 

 

Trademarks

 

	Serial
    No.	 	Registration
    No.
	77/009109	 	3292741
	77/278997	 	 
	77/980473	 	3872877
	85/109519	 	 
	85/109526	 	 
	85/109543	 	 
	85/142418	 	 

 

Copyrights

 

	Name	 	Title	 	Copyright
    Number	 	Date
	Freeline
    Sports, Inc	 	Ball
    Around Ramp Icon.	 	VA0001746009	 	2005

 

    	2Exhibit 10.1

 

 

August 7, 2014

 

Nitro Petroleum, Inc.

Mr. James Borem

624 W. Independence St.

STE. 101

Shawnee, OK 74804

 

Re: Proposal to Purchase the Capital Stock of Nitro Petroleum, Inc.

 

Dear Mr. Borem:

This letter (this "Letter") is intended to summarize the principal terms of a proposal being considered by Core Resource Management, Inc. ("Buyer") regarding its  acquisition of all of the outstanding capital stock of Nitro Petroleum, Inc. (collectively, the "Company") from Company and the Shareholders hereby ("Seller"). The acquisition of the stock of the Company is referred to as the "Transaction" and Buyer and Seller are referred to collectively as the "Parties."

It is the intent to utilize the structure of a Reverse Triangular Merger, “A Merger of a wholly owned subsidiary of Buyer with and into the Company, with the Company surviving the merger.” Other Merger structures, potential outcomes, and subsequent tax considerations, may be considered. However, after careful analysis and consider other potential business synergies, this appears to be the best approach to structure the deal.

1.                   Acquisition of Shares and Purchase Price.

(a)            Subject to the satisfaction of the conditions described in this Letter, at the closing of the Transaction Buyer would acquire all of the outstanding shares of Capital Stock of the Company (the "Shares"), free and clear of all encumbrances, at the purchase price set forth in Section 1(b).  It is the intent of both parties to utilize a single merger process.  As such, the subsidiary company with be set up to contain the shares necessary to consummate the transaction.  Simultaneously, a proxy will be drafted and submitted to shareholder.  Regulatory filings and reporting will take place during this time.

(b)            The purchase price consideration to acquire the Shares of Nitro Petroleum would be CRMI Common Stock (the "Purchase Price") paid upon execution, subject to adjustment, and payable as follows:

(i)             Share fully payable at the closing of the Transaction; and

(ii)            Share price consideration of both Companies, and the amount for consideration thereby, will be determined upon a conversion ratio of 10.5 shares of Nitro Petroleum to 1 share of Core Resource Management.  This was based on a benchmark of the weighted average of the share prices over the preceding quarter plus a premium value given to the Nitro shareholders as discussed and approved by Nitro management.

(iii)          Shares to be deposited with a mutually agreeable transfer agent, in accordance with Securities Law, to be held for the regulated period of time after the closing, in order to secure the performance of Seller’s post-closing obligations under the definitive purchase agreement.

 

(c)            Buyer will modify the purchase price based upon calculated share price at a ratio described above and on the basis of the following assumptions:

(i)            Working capital at the closing of the Transaction will be stated at the time of agreement execution, calculated in accordance with US GAAP, consistently applied. The Purchase Price payable at closing would be increased or decreased based on changes in the Company's working capital, on a dollar-for-dollar basis.

 

2.                   Proposed Definitive Agreement. As soon as reasonably practicable after the execution of this Letter, the Parties shall commence to draft a definitive Merger agreement (the "Definitive Agreement") relating to Buyer's acquisition of all of the Shares, to be drafted by Buyer's counsel. The Definitive Agreement will include the terms summarized in this Letter and such other representations, warranties, conditions, covenants, indemnities and other terms that are customary for transactions of this kind and are not inconsistent with this Letter.

2

3.                   Conditions. Buyer's obligation to close the proposed Transaction will be subject to customary conditions, including:

(a)            Buyer's satisfactory completion of due diligence;

(b)           the Board of Directors and stockholders of Buyer and Seller approving the Transaction;

(c)           the Parties' execution of the Definitive Agreement and the ancillary agreements;

(d)           The receipt of all regulatory approvals and third party consents, on terms satisfactory to both parties, including Regulatory approval, and SEC merger approvals for each phase of the deal.

(e)            Buyers’ stockholder approval of the issuance of the buyer’s stock as consideration.

(f)             Key Employees, Mr. James Borem and Mr. Larry Wise, entering into employment agreements with the Company on terms to be agreed upon between he and the Buyer;

(g)           Seller and its affiliates entering into restrictive covenants, in a form acceptable to Buyer, agreeing not to: (i) hire or solicit any employee of the Buyer or encourage any such employee to leave such employment for a period of Two years following the closing; and

(h)           There being no material adverse change in the business, results of operations, prospects, condition (financial or otherwise) or assets of the Sellers’ Company.

 

4.                   Buyer Provisions.  In Addition to the Premium Price Buyer will pay for the outstanding Shares of NITRO Stock, Buyer also represents that it will:

(a)           Actively manage its Stock within the framework of the Capital markets through active management, marketing and public relations campaigns.

(b)           Continue to stay at the forefront of Risk Management and employ the highest level of Quantitative Risk Evaluation to all current holdings and future investments and divestitures.

(c)            Maintain highest level of thoroughness and timeliness regarding all Federal and State Securities Filings and Compliance work.

3

(d)           Continually update and maintain the internal Corporate Governance procedures to diligently run and maintain a Company with required checks and balance systems.

 

5.                   Due Diligence. From and after the date of this Letter, Seller will authorize the Company's management to allow Buyer and its advisors full access to the Company's facilities, records, key employee’s customers, suppliers and advisors for the purpose of completing Buyer's due diligence review. The due diligence investigation will include, but is not limited to, a complete review of the Company's financial, legal, tax, environmental, intellectual property and labor records and agreements, and any other matters as Buyer's accountants, tax and legal counsel, and other advisors deem relevant. Most such due diligence is well underway, and in some instances complete.

6.                   Employment Arrangements. Buyer would offer employment to substantially all of the Company's employees and would expect the Company's management to use its reasonable best effort to assist Buyer to employ those individuals.

7.                   Covenants of Seller. During the period from the signing of this Letter through the execution of the Definitive Agreement, Seller will cause the Company to:

(i)              Conduct its business in the ordinary course in a manner consistent with past practice,

(ii)            Maintain its properties and wells in working and producing fashion

(iii)           Use its best efforts to maintain the business and employees, customers, assets and operations as an ongoing concern in accordance with past practice.

(iv)           Eliminate unnecessary overhead costs as prescribed within it most recent press release.

(v)            Not cause any of its assets to be encumbered, pledged, or devalued in any manner.

 

8.                   Exclusivity.

(a)            In consideration of the expenses that Buyer has incurred and will incur in connection with the proposed Transaction, Seller agrees that until such time as this Letter has terminated in accordance with the provisions of paragraph 9 (such period, the "Exclusivity Period"), neither the Company or any of its representatives, officers, employees, directors, agents, stockholders, subsidiaries or affiliates nor Seller (the Seller collectively with the Company and all such persons and entities, the "Seller Group") shall initiate, solicit, entertain, negotiate, accept or discuss, directly or indirectly, any proposal or offer from any person or group of persons other than Buyer and its affiliates (an "Acquisition Proposal") to acquire all or any significant part of the business and properties, capital stock or capital stock equivalents of the Company, whether by merger, purchase of stock, purchase of assets, tender offer or otherwise, or provide any non-public information to any third party in connection with an Acquisition Proposal or enter into any agreement, arrangement or understanding requiring it to abandon, terminate or fail to consummate the Transaction with Buyer. Seller agrees to immediately notify Buyer if any member of the Seller Group receives any indications of interest, requests for information or offers in respect of an Acquisition Proposal, and will communicate to Buyer in reasonable detail the terms of any such indication, request or offer, and will provide Buyer with copies of all written communications relating to any such indication, request or offer.

4

(b)           Immediately upon execution of this Letter, Seller shall, and shall cause the Seller Group to, terminate any and all existing discussions or negotiations with any person or group of persons other than Buyer and its affiliates regarding an Acquisition Proposal. Seller represents that no member of the Seller Group is party to or bound by any agreement with respect to an Acquisition Proposal other than under this Letter.

(c)            If within the Exclusivity Period, Seller does not execute definitive documentation for the Transaction reflecting the material terms and conditions for the Transaction set forth in this Letter or material terms and conditions substantially similar thereto (other than as a result of either the mutual agreement by Buyer and Seller to terminate this Letter or to change such material terms and conditions in any material respects or the unilateral refusal of Buyer to execute such definitive documentation), then Seller shall pay to Buyer an amount equal to the reasonable out-of-pocket expenses (including the reasonable fees and expenses of legal counsel, accountants, due diligence personnel, travel and other related expenses) incurred by Buyer in connection with the proposed Transaction, which amount shall be payable in same day funds on the day that is the first business day after the Exclusivity Period.

 

9.                   Termination. This letter will automatically terminate and be of no further force and effect upon the earlier of (i) execution of the Definitive Agreement by Buyer and the Company or (ii) mutual agreement of Buyer and Seller Company to modify the terms or separate. Notwithstanding anything in the previous sentence, paragraphs 10, 11 and 13 shall survive the termination of this Letter and the termination of this Letter shall not affect any rights any Party has with respect to the breach of this Letter by another Party prior to such termination.

5

10.                Bid Expiration. This offer will remain in effect until August 31, 2014. By which time there must be a merger stock purchase agreement executed, the time must be mutually extended, or new terms must be negotiated.   The exact share price premium to be exchanged will be included in a tender offer and will be made by the purchaser by the above date.  The consideration rate for CRMI stock will be made at a rate of 10.5 to 1 share of NITRO stock.

11.                GOVERNING LAW. This letter shall be governed by and construed in accordance with internal laws of the state of NEVADA, without giving effect to any choice or conflict of law provision or rule that would cause the application of laws of any jurisdiction other than those of the state of NEVADA.

12.                Confidentiality. This Letter is confidential to the Parties and their representatives and is subject to the confidentiality agreements entered into between Buyer and Seller on July 8, 2014, July 22, 2014, and July 31, 2014 which continues in full force and effect.

13.                No Third Party Beneficiaries. Except as specifically set forth or referred to herein, nothing herein is intended or shall be construed to confer upon any person or entity other than the Parties and their successors or assigns, any rights or remedies under or by reason of this Letter.

14.                Expenses. The Parties will each pay their own transaction expenses, including the fees and expenses of investment bankers, legal counsel, and other advisors, incurred in connection with the proposed Transaction. (notwithstanding Section 8(c))

 

15.                Terms of Agreement Express the Intent of Parties to Proceed. This Letter reflects the intention of the Parties.  Both parties recognize a significant expense has been levied in the consummation of such meeting of the minds.  As such the parties wish these to be the basic terms that will be carried forthwith into a material stock purchase merger agreement between the two parties to be immediately drafted.  While these material terms are being drafted both parties will deal exclusively with the other and shall not shop for other offers.  Further all dealing between the parties that do not necessitate public disclosure obligations will remain strictly confidential.  The binding nature may give rise to enforceability of paragraphs Eight through Thirteen if such agreement is broken.  This agreement shall apply to any subsidiary that may be formed to consummate such transaction or hold assets of Companies that are part of the consideration for which is bargained here.

16.                Miscellaneous. This Letter may be executed in counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one agreement.  The headings of the various sections of this Letter have been inserted for reference only and shall not be deemed to be a part of this Letter.

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17.             Attachments to follow.  Attachments will be considered part of this agreement include:

(a)            Exclusivity Agreement

(b)            Confidentiality Agreement

 

(Signature Page to Follow)

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If you are in agreement with the terms set forth above and desire to proceed with the proposed Transaction on that basis, please sign this Letter in the space provided below and return an executed copy to the attention of Mr. James Clark.

 

	
 

	
Very truly yours,

	
 

	
 

	
 

	
 

	
Core Resource Management, Inc.

	
 

	
3131 E. Camelback Road

	
 

	
Phoenix, Arizona 85016

	
 

	
 

	
 

	
 

	
By:

	
/s/James D. Clark

	
 

	
Name: Mr. James Clark

	
 

	
Title: Chief Operating Officer

 

	
Agreed to and accepted:

	
 

	
 

	
 

	
 

	
Nitro Petroleum, Inc.

	
 

	
624 W. Independence St.

	
 

	
STE. 101

	
 

	
Shawnee, OK 74804

	
 

	
 

	
 

	
 

	
By:

	
/s/James G. Borem

	
 

	
Name: Mr. James Borem

	
 

	
Title: Chief Operating Officer

	
 

 

 

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