Document:

exh10-3.htm

Exhibit 10.3

SECURITIES PURCHASE AGREEMENT

This SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of June  7, 2013, by and between HDS INTERNATIONAL CORP., a Nevada corporation, with headquarters located at 10 Dorrance Street - Suite 700, Providence, RI 02903 (the “Company”), and ASHER ENTERPRISES, INC., a Delaware corporation, with its address at 1 Linden Place, Suite 207, Great Neck, NY 11021 (the “Buyer”).

WHEREAS:

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

B. Buyer desires to purchase and the Company desires to issue and sell, upon the terms and conditions set forth in this Agreement an 8% convertible note of the Company, in the form attached hereto as Exhibit A, in the aggregate principal amount of $32,500.00 (together with any note(s) issued in replacement thereof or as a dividend thereon or otherwise with respect thereto in accordance with the terms thereof, the “Note”), convertible into shares of common stock, $0.001 par value per share, of the Company (the “Common Stock”), upon the terms and subject to the limitations and conditions set forth in such Note.

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

NOW THEREFORE, the Company and the Buyer severally (and not jointly) hereby agree as follows:

1. Purchase and Sale of Note.

a. Purchase of Note.  On the Closing Date (as defined below), the Company shall issue and sell to the Buyer and the Buyer agrees to purchase from the Company such principal amount of Note as is set forth immediately below the Buyer’s name on the signature pages hereto.

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

  

  

  

c. Closing Date.  Subject to the satisfaction (or written waiver) of the conditions thereto set forth in Section 6 and Section 7 below, the date and time of the issuance and sale of the Note pursuant to this Agreement (the “Closing Date”) shall be 12:00 noon, Eastern Standard Time on or about June 7, 2013, or such other mutually agreed upon time.  The closing of the transactions contemplated by this Agreement (the “Closing”) shall occur on the Closing Date at such location as may be agreed to by the parties.

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

a. Investment Purpose.  As of the date hereof, the Buyer is purchasing the Note and the shares of Common Stock issuable upon conversion of or otherwise pursuant to the Note (including, without limitation, such additional shares of Common Stock, if any, as are issuable (i) on account of interest on the Note or (ii) as a result of the events described in Sections 1.3 and 1.4(g) of the Note such shares of Common Stock being collectively referred to herein as the “Conversion Shares” and, collectively with the Note, the “Securities”) for its own account and not with a present view towards the public sale or distribution thereof, except pursuant to sales registered or exempted from registration under the 1933 Act; provided, however, that by making the representations herein, the Buyer does not agree to hold any of the Securities for any minimum or other specific term and reserves the right to dispose of the Securities at any time in accordance with or pursuant to a registration statement or an exemption under the 1933 Act.

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

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

d. Information.  The Buyer and its advisors, if any, have been, and for so long as the Note remain outstanding will continue to be, furnished with materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Securities which have been reasonably requested by the Buyer or its advisors and which have been publicly disclosed via regulatory filings or press releases. Electronic delivery of documents is acceptable  The Buyer and its advisors, if any, have been, and for so long as the Note remain outstanding will continue to be, afforded the opportunity to ask questions of the Company.  Notwithstanding the foregoing, the Company has not disclosed to the Buyer any material nonpublic information and will not disclose such information unless such information is disclosed to the public prior to or promptly following such disclosure to the Buyer.  Neither such inquiries nor any other due diligence investigation conducted by Buyer or any of its advisors or

  

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representatives shall modify, amend or affect Buyer’s right to rely on the Company’s representations and warranties contained in Section 3 below.  The Buyer understands that its investment in the Securities involves a significant degree of risk. The Buyer is not aware of any facts that may constitute a breach of any of the Company's representations and warranties made herein.

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

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

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

“NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE

  

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STATE SECURITIES LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. ”

The legend set forth above shall be removed and the Company shall issue a certificate without such legend to the holder of any Security upon which it is stamped, if, unless otherwise required by applicable state securities laws, (a) such Security is registered for sale under an effective registration statement filed under the 1933 Act or otherwise may be sold pursuant to Rule 144 or Regulation S without any restriction as to the number of securities as of a particular date that can then be immediately sold, or (b) such holder provides the Company with an opinion of counsel, in form, substance and scope customary for opinions of counsel in comparable transactions, to the effect that a public sale or transfer of such Security may be made without registration under the 1933 Act, which opinion shall be accepted by the Company so that the sale or transfer is effected.  The Buyer agrees to sell all Securities, including those represented by a certificate(s) from which the legend has been removed, in compliance with applicable prospectus delivery requirements, if any. In the event that the Company does not accept the opinion of counsel provided by the Buyer with respect to the transfer of Securities pursuant to an exemption from registration, such as Rule 144 or Regulation S, at the Deadline, it will be considered an Event of Default pursuant to Section 3.2 of the Note.

h. Authorization; Enforcement. This Agreement has been duly and validly authorized.  This Agreement has been duly executed and delivered on behalf of the Buyer, and this Agreement constitutes a valid and binding agreement of the Buyer enforceable in accordance with its terms.

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

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

  

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

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

 

c. Capitalization.  As of the date hereof, the authorized capital stock of the Company consists of: (i) 2,000,000,000 shares of Common Stock, $0.001 par value per share, of which 377,203,075 shares are issued and outstanding; and (ii) 25,000,000 authorized shares of Series A Preferred Stock, $0.001 par value per share, of which 7,500,000 shares are issued and outstanding; and 113,750,000 shares shall be reserved for issuance upon conversion of the Note.  All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and non-assessable.  No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company.  As of the effective date of this Agreement, (i) there are no outstanding options, warrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its

  

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Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, other than as set forth in public filings (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act, other than as set forth in public filings, and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Note or the Conversion Shares.  Upon request by the Buyer, the Company shall furnish to the Buyer true and correct copies of the Company’s Certificate of Incorporation as in effect on the date hereof (“Certificate of Incorporation”), the Company’s By-laws, as in effect on the date hereof (the “By-laws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto as of the Closing Date.

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

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

f. No Conflicts.  The execution, delivery and performance of this Agreement, the Note by the Company and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance and reservation for issuance of the Conversion Shares) will not (i) conflict with or result in a violation of any provision of the Certificate of Incorporation or By-laws, or (ii) violate or conflict with, or result in a breach of any provision of, or constitute a default (or an event which with notice or lapse of time or both could become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture, patent, patent license or instrument to which the Company or any of its Subsidiaries is a party, or (iii)  result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations and regulations of any self-regulatory organizations to which the Company or its securities are subject) applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected (except for such conflicts, defaults, terminations, amendments, accelerations, cancellations and violations as would not, individually or in the aggregate, have a Material Adverse Effect).  Neither the Company nor any of its Subsidiaries is in violation of its Certificate of Incorporation, By-laws or other organizational documents and neither the Company nor any of its Subsidiaries is in default (and no event has occurred which with notice or lapse of time or both could put the Company or any of its Subsidiaries in default) under, and neither the Company nor any of its

  

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Subsidiaries has taken any action or failed to take any action that would give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any of its Subsidiaries is a party or by which any property or assets of the Company or any of its Subsidiaries is bound or affected, except for possible defaults as would not, individually or in the aggregate, have a Material Adverse Effect. The businesses of the Company and its Subsidiaries, if any, are not being conducted, and shall not be conducted so long as the Buyer owns any of the Securities, in violation of any law, ordinance or regulation of any governmental entity.  Except as specifically contemplated by this Agreement and as required under  any applicable federal and state laws, the Company is not required to obtain any consent, authorization or order of, or make any filing or registration with, any court, governmental agency, regulatory agency, self regulatory organization or stock market or any third party in order for it to execute, deliver or perform any of its obligations under this Agreement, the Note in accordance with the terms hereof or thereof or to issue and sell the Note in accordance with the terms hereof and to issue the Conversion Shares upon conversion of the Note.  All consents, authorizations, orders, filings and registrations which the Company is required to obtain pursuant to the preceding sentence have been obtained or effected on or prior to the date hereof.  The Company is not aware of being in violation of the listing requirements of the  exchange on which it is traded (the “OTCQB”) and does not reasonably anticipate that the Common Stock will be delisted by the OTCQB in the foreseeable future.  The Company and its Subsidiaries are unaware of any facts or circumstances which might give rise to any of the foregoing.

g. SEC Documents; Financial Statements.  Other than Form 5, to the best of its knowledge the Company has filed all reports, schedules, forms, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “1934 Act”) (all of the foregoing filed prior to the date hereof and all exhibits included therein and financial statements and schedules thereto and documents (other than exhibits to such documents) incorporated by reference therein, being hereinafter referred to herein as the “SEC Documents”).  Upon written request the Company will deliver to the Buyer true and complete copies of the SEC Documents, except for such exhibits and incorporated documents.  Electronic delivery of documents is acceptable.  As of their respective dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and to the best of the Company’s knowledge, none of the SEC Documents, at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.  None of the statements made in any such SEC Documents is, or has been, required to be amended or updated under applicable law (except for such statements as have been amended or updated in subsequent filings prior the date hereof).  As of their respective dates, the financial statements of the Company included in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto to the best of the Company’s knowledge.  Such financial statements have been prepared in accordance with United States generally accepted accounting principles, consistently applied, during the periods involved  and fairly present in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates

  

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thereof and the consolidated results of their operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments).  Except as set forth in the financial statements of the Company included in the SEC Documents, the Company has no liabilities, contingent or otherwise, other than (i) liabilities incurred in the ordinary course of business subsequent to March 31, 2013, and (ii) obligations under contracts and commitments incurred in the ordinary course of business and not required under generally accepted accounting principles to be reflected in such financial statements, which, individually or in the aggregate, are not material to the financial condition or operating results of the Company. The Company is subject to the reporting requirements of the 1934 Act.

h. Absence of Certain Changes.  Since March 31, 2013, there has been no material adverse change and no material adverse development in the assets, liabilities, business, properties, operations, financial condition, results of operations, prospects or 1934 Act reporting status of the Company or any of its Subsidiaries.

i. Absence of Litigation.  There is no action, suit, claim, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the Company or any of its Subsidiaries, threatened against or affecting the Company or any of its Subsidiaries, or their officers or directors in their capacity as such, that could have a Material Adverse Effect.  Schedule 3(i) contains a complete list and summary description of any pending or, to the knowledge of the Company, threatened proceeding against or affecting the Company or any of its Subsidiaries, without regard to whether it would have a Material Adverse Effect.  The Company and its Subsidiaries are unaware of any facts or circumstances which might give rise to any of the foregoing.

j. Patents, Copyrights, etc.  To the best of its knowledge, the Company and each of its Subsidiaries owns or possesses the requisite licenses or rights to use all patents, patent applications, patent rights, inventions, know-how, trade secrets, trademarks, trademark applications, service marks, service names, trade names and copyrights (“Intellectual Property”) necessary to enable it to conduct its business as now operated (and, as presently contemplated to be operated in the future); and there is no claim or action by any person pertaining to, or proceeding pending, or to the Company’s knowledge threatened, which challenges the right of the Company or of a Subsidiary with respect to any Intellectual Property necessary to enable it to conduct its business as now operated (and, as presently contemplated to be operated in the future).  The Company and each of its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of their Intellectual Property.

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

l. [INTENTIONALLY DELETED}.

  

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m. [INTENTIONALLY DELETED].

n. [INTENTIONALLY DELETED].

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

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

q. No Brokers.  The Company has taken no action which would give rise to any claim by any person for brokerage commissions, transaction fees or similar payments relating to this Agreement or the transactions contemplated hereby.

r. Permits; Compliance.  To the best of its knowledge, the Company and each of its Subsidiaries is in possession of all franchises, grants, authorizations, licenses, permits, easements, variances, exemptions, consents, certificates, approvals and orders necessary to own, lease and operate its properties and to carry on its business as it is now being conducted (collectively, the “Company Permits”), and there is no action pending or, to the knowledge of the Company, threatened regarding suspension or cancellation of any of the Company Permits.  Neither the Company nor any of its Subsidiaries is in conflict with, or in default or violation of, any of the Company Permits, except for any such conflicts, defaults or violations which, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.  Since March 31, 2013, neither the Company nor any of its Subsidiaries has received any notification with respect to possible conflicts, defaults or violations of applicable laws, except for notices relating to possible conflicts, defaults or violations, which conflicts, defaults or violations would not have a Material Adverse Effect.

s. Environmental Matters.

  

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

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

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

 

 

t. [INTENTIONALLY DELETED].

u. [INTENTIONALLY DELETED].

v. [INTENTIONALLY DELETED].

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

  

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x. [INTENTIONALLY DELETED}.

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

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

4. COVENANTS.

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

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

c. Use of Proceeds.  The Company shall use the proceeds for general working capital purposes or any other purpose as determined by the Company.

d. Right of First Refusal.  Unless it shall have first delivered to the Buyer, at least twenty four (24) hours prior to the closing of such Future Offering (as defined herein), written notice describing the proposed Future Offering, including the terms and conditions thereof and proposed definitive documentation to be entered into in connection therewith, and providing the Buyer an option during the twenty four (24) hour period following delivery of such notice to purchase the securities being offered in the Future Offering on the same terms as contemplated by such Future Offering (the limitations referred to in this sentence and the preceding sentence are collectively referred to as the “Right of First Refusal”) (and subject to the exceptions described below), the Company will not conduct any equity financing (including debt with an equity component) (“Future Offerings”) during the period beginning on the Closing Date and ending twelve (12) months following the Closing Date  provided, however, that the Right of First refusal shall apply solely to like transactions (i.e. convertible debentures) that do not exceed $100,000.00 in the aggregate.  In the event the terms and conditions of a proposed Future Offering are amended in any respect after delivery of the notice to the Buyer concerning the proposed Future Offering, the Company shall deliver a new notice to the Buyer describing the amended terms and conditions of the proposed Future Offering and the Buyer

  

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thereafter shall have an option during the twenty four (24) hour period following delivery of such new notice to purchase its pro rata share of the securities being offered on the same terms as contemplated by such proposed Future Offering, as amended.  The foregoing sentence shall apply to successive amendments to the terms and conditions of any proposed Future Offering.  The Right of First Refusal shall not apply to any transaction involving (i) issuances of securities in a firm commitment underwritten public offering (excluding a continuous offering pursuant to Rule 415 under the 1933 Act) or (ii) issuances of securities as consideration for a merger, consolidation or purchase of assets, or in connection with any strategic partnership or joint venture (the primary purpose of which is not to raise equity capital), or in connection with the disposition or acquisition of a business, product or license by the Company.  The Right of First Refusal also shall not apply to the issuance of securities upon exercise or conversion of the Company’s options, warrants or other convertible securities outstanding as of the date hereof or to the grant of additional options or warrants, or the issuance of additional securities, under any compensation plan or Company stock option or restricted stock plan.

e. Expenses.  At the Closing, the Company shall reimburse Buyer for expenses incurred by them in connection with the negotiation, preparation, execution, delivery and performance of this Agreement and the other agreements to be executed in connection herewith (“Documents”), including, without limitation, reasonable attorneys’ and consultants’ fees and expenses, transfer agent fees, fees for stock quotation services, fees relating to any amendments or modifications of the Documents or any consents or waivers of provisions in the Documents, fees for the preparation of opinions of counsel, escrow fees, and costs of restructuring the transactions contemplated by the Documents, which with respect to this transaction shall not exceed $2,500.

f. Financial Information.  Upon written request the Company agrees to send or make available the following reports to the Buyer until the Buyer transfers, assigns, or sells all of the Securities: (i) within ten (10) days after the filing with the SEC, a copy of its Annual Report on Form 10-K its Quarterly Reports on Form 10-Q and any Current Reports on Form 8-K; (ii) within one (1) day after release, copies of all press releases issued by the Company or any of its Subsidiaries; and (iii) contemporaneously with the making available or giving to the shareholders of the Company, copies of any notices or other information the Company makes available or gives to such shareholders; provided, however that the Company shall have five days to cure any breach of this covenant.

g. [INTENTIONALLY DELETED]

h. Listing.  The Company shall continue to ensure that the Common Stock is listed or quoted upon each national securities exchange or automated quotation system, if any, upon which shares of Common Stock are currently listed (subject to official notice of issuance) and, so long as the Buyer owns any of the Securities,.  The Company will obtain and, so long as the Buyer owns any of the Securities, maintain the listing and trading of its Common Stock on the OTCQB or comparable replacement exchange, the pink sheets, the Nasdaq National Market (“Nasdaq”), the Nasdaq SmallCap Market (“Nasdaq SmallCap”), the New York Stock Exchange (“NYSE”), or the American Stock Exchange (“AMEX”) and will comply in all respects with the Company’s reporting, filing and other obligations under the bylaws or rules of 

 

 

  

12

  

 

 

 

the Financial Industry Regulatory Authority (“FINRA”) and such exchanges, as applicable.  The Company shall promptly provide to the Buyer copies of any notices it receives from the OTCQB and any other exchanges or quotation systems on which the Common Stock is then listed regarding the continued eligibility of the Common Stock for listing on such exchanges and quotation systems.

i. Corporate Existence.  So long as the Buyer beneficially owns any Note, the Company shall maintain its corporate existence and shall not sell all or substantially all of the Company’s assets, except in the event of a merger or consolidation or sale of all or substantially all of the Company’s assets, where the surviving or successor entity in such transaction (i) assumes the Company’s obligations hereunder and under the agreements and instruments entered into in connection herewith and (ii) is a publicly traded corporation whose Common Stock is listed for trading on the OTCQB, pink sheets, Nasdaq, Nasdaq SmallCap, NYSE or AMEX.

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

k. Breach of Covenants.  If the Company breaches any of the covenants set forth in this Section 4, and in addition to any other remedies available to the Buyer pursuant to this Agreement, it will be considered an event of default under Section 3.4 of the Note.

l. Failure to Comply with the 1934 Act.  So long as the Buyer beneficially owns the Note, the Company shall comply with the reporting requirements of the 1934 Act, as applicable; and the Company shall continue to be subject to the reporting requirements of the 1934 Act, as applicable.

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

5. Transfer Agent Instructions.  The Company shall issue irrevocable instructions to its transfer agent to issue certificates, registered in the name of the Buyer or its nominee, for the Conversion Shares in such amounts as specified from time to time by the Buyer to the Company upon conversion of the Note in accordance with the terms thereof (the “Irrevocable Transfer Agent Instructions”).  In the event that the Borrower proposes to replace its transfer agent, the Borrower shall provide, prior to the effective date of such replacement, a fully executed Irrevocable Transfer Agent Instructions in a form as initially delivered pursuant to the Purchase Agreement (including but not limited to the provision to irrevocably reserve shares of Common Stock in the Reserved Amount) signed by the successor transfer agent to Borrower and the Borrower. Prior to registration of the Conversion Shares under the 1933 Act or the date

  

13

  

on which the Conversion Shares may be sold pursuant to Rule 144 without any restriction as to the number of Securities as of a particular date that can then be immediately sold, all such certificates shall bear the restrictive legend specified in Section 2(g) of this Agreement.  The Company warrants that: (i) no instruction other than the Irrevocable Transfer Agent Instructions referred to in this Section 5, and stop transfer instructions to give effect to Section 2(f) hereof (in the case of the Conversion Shares, prior to registration of the Conversion Shares under the 1933 Act or the date on which the Conversion Shares may be sold pursuant to Rule 144 without any restriction as to the number of Securities as of a particular date that can then be immediately sold), will be given by the Company to its transfer agent and that the Securities shall otherwise be freely transferable on the books and records of the Company as and to the extent provided in this Agreement and the Note; (ii) it will not direct its transfer agent not to transfer or delay, impair, and/or hinder its transfer agent in transferring (or issuing)(electronically or in certificated form) any certificate for Conversion Shares to be issued to the Buyer upon conversion of or otherwise pursuant to the Note as and when required by the Note and this Agreement; and (iii) it will not fail to remove (or directs its transfer agent not to remove or impairs, delays, and/or hinders its transfer agent from removing) any restrictive legend (or to withdraw any stop transfer instructions in respect thereof) on any certificate for any Conversion Shares issued to the Buyer upon conversion of or otherwise pursuant to the Note as and when required by the Note and this Agreement.  Nothing in this Section shall affect in any way the Buyer’s obligations and agreement set forth in Section 2(g) hereof to comply with all applicable prospectus delivery requirements, if any, upon re-sale of the Securities.  If the Buyer provides the Company, at the cost of the Buyer, with (i) an opinion of counsel in form, substance and scope customary for opinions in comparable transactions, to the effect that a public sale or transfer of such Securities may be made without registration under the 1933 Act and such sale or transfer is effected or (ii) the Buyer provides reasonable assurances that the Securities can be sold pursuant to Rule 144, the Company shall permit the transfer, and, in the case of the Conversion Shares, promptly instruct its transfer agent to issue one or more certificates, free from restrictive legend, in such name and in such denominations as specified by the Buyer.  The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Buyer, by vitiating the intent and purpose of the transactions contemplated hereby.  Provided that the Company will have a 24 hour window to question the calculations regarding the amount of shares owed to the Buyer under this agreement, which will be calculated using a Bloomberg closing bid snapshot and principal and interest calculations provided by the Buyer, the Company acknowledges that the remedy at law for a breach of its obligations under this Section 5 may be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Section, that the Buyer shall be entitled, in addition to all other available remedies, to an injunction restraining any breach and requiring immediate transfer, without the necessity of showing economic loss and without any bond or other security being required.

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

  

14

  

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

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

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

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

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

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

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

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

d. The representations and warranties of the Company shall be true and correct in all material respects as of the date when made and as of the Closing Date as though made at such time (except for representations and warranties that speak as of a specific date) and the Company shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Company at or prior to the Closing Date.  The Buyer shall have received a certificate or certificates, executed by the chief executive officer of the Company, dated as of the Closing Date, to the foregoing effect and as to such other matters as may be reasonably requested by the Buyer including, but not limited to certificates with respect to the Company’s Certificate of Incorporation, By-laws and Board of Directors’ resolutions relating to the transactions contemplated hereby.

  

15

  

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

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

g. The Common Stock shall be authorized for quotation on the OTCQB and trading in the Common Stock on the OTCQB shall not have been suspended by the SEC or the OTCQB.

h. The Buyer shall have received an officer’s certificate described in Section 3(c) above, dated as of the Closing Date.

8. Governing Law; Miscellaneous.

a. Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to principles of conflicts of laws.  Any action brought by either party against the other concerning the transactions contemplated by this Agreement shall be brought only in the state courts of New York or in the federal courts located in the state and county of Nassau.  The parties to this Agreement hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens.  The Company and Buyer waive trial by jury.  The prevailing party shall be entitled to recover from the other party its reasonable attorney's fees and costs.  In the event that any provision of this Agreement or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law.  Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement.   Each party hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this Agreement or any other Transaction Document by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.

b. Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which shall constitute one and

  

16

  

the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party.

c. Headings.  The headings of this Agreement are for convenience of reference only and shall not form part of, or affect the interpretation of, this Agreement.

d. Severability.  In the event that any provision of this Agreement is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law.  Any provision hereof which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision hereof.

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

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

If to the Company, to:

HDS INTERNATIONAL CORP.

10 Dorrance Street - Suite 700

Providence, RI 02903

Attn: TASSOS RECACHINAS, Chief Executive Officer

facsimile: 888-501-2280

With a copy by fax only to (which copy shall not constitute notice):

The Law Office of Conrad C. Lysiak, P.S.

  

17

  

ATTN:  Conrad C. Lysiak, Esq.

601 West First Avenue, Suite 903

Spokane, WA   99201

facsimile: 509-747-1770

If to the Buyer:

ASHER ENTERPRISES, INC.

1 Linden Pl., Suite 207

Great Neck, NY. 11021

  Attn: Curt Kramer, President

facsimile: 516-498-9894

With a copy by fax only to (which copy shall not constitute notice):

Naidich Wurman Birnbaum & Maday LLP

80 Cuttermill Road, Suite 410

Great Neck, NY 11021

Attn: Bernard S. Feldman, Esq.

     facsimile: 516-466-3555

Each party shall provide notice to the other party of any change in address within 24 hours of such change in address.

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

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

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

j. Publicity.  The Company, and the Buyer shall have the right to review a reasonable period of time before issuance of any press releases, SEC, OTCQB or FINRA filings, or any other public statements with respect to the transactions contemplated hereby; provided, however, that the Company shall be entitled, without the prior approval of the

  

18

  

Buyer, to make any press release or SEC, OTCQB (or other applicable trading market) or FINRA filings with respect to such transactions as is required by applicable law and regulations (although the Buyer shall be consulted by the Company in connection with any such press release prior to its release and shall be provided with a copy thereof and be given an opportunity to comment thereon).

k. Further Assurances.  Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

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

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

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

  

19

  

HDS INTERNATIONAL CORP.

By: ________________________________

TASSOS RECACHINAS

Chief Executive Officer

ASHER ENTERPRISES, INC.

By: ________________________________

Name: Curt Kramer

Title:   President

1 Linden Pl., Suite 207

Great Neck, NY. 11021

AGGREGATE SUBSCRIPTION AMOUNT:

Aggregate Principal Amount of Note:                                                                                           $32,500.00

Aggregate Purchase Price:                                                                                                           $32,500.00

  

20Exhibit 10.7

 

EMPLOYMENT AGREEMENT

 

 

THIS EMPLOYMENT AGREEMENT
(“Agreement”) is entered into as of June 14, 2013, to be effective retroactively as of June 1, 2013, by Focus Gold
Corporation, a Nevada corporation (the “Company”) and Gordon F. Lee (the “Executive”).

 

WHEREAS, the Company
desires to retain the services of the Executive as Chief Executive Officer, Chief Financial Officer and Chairman of the Company
and the Executive desires to render such services on the terms and conditions set forth herein;

 

WHEREAS, the Executive’s
entry into this Agreement is contingent upon the Company’s engagement of outside management, consulting, financing, and administrative
services relating to Energy (i.e., coal, coal rights, hydrocarbons, oil and gas) from Carbon Energy Handling, Inc. and Metals (i.e.,
gold, silver, platinum) from Gordon F. Lee Group, LLC.

 

NOW, THEREFORE, in
consideration of the mutual promises contained herein, the receipt and sufficiency of which is hereby acknowledged, the parties
agree as follows:

 

1.            Employment Term. The Company employs
the Executive and the Executive accepts employment by the Company, upon the terms and subject to the conditions set forth in this
Agreement, until February 28, 2015; provided, however, that this contract will automatically renew for successive twelve-month
periods unless sooner terminated pursuant to the terms of this Agreement.

2.            Management of the Company. The Executive
shall devote the Executive's full time, best efforts, attention and skill to, and shall perform faithfully, loyally and efficiently
the Executive's duties as Chief Executive Officer, Chief Financial Officer and Chairman of the Company. Further, the Executive
will punctually and faithfully perform and observe any and all rules and regulations which the Company may now or shall hereafter
reasonably establish governing the Executive's conduct and the conduct of the Company's business which are consistent with this
Agreement.

 

3.            Compensation; Benefits. In consideration
of the services rendered to the Company by the Executive, the Company shall pay the Executive a salary at the annual rate of $1,
payable in advance (the “Salary”). The Salary shall be payable in cash. The Salary, and all other forms of compensation
paid to the Executive hereunder, shall be subject to all applicable taxes required to be withheld by the Company pursuant to federal,
state or local law. The Executive shall be solely responsible for income taxes imposed on the Executive by reasons of any cash
or non-cash compensation and benefits provided by this Agreement.

 

    	 

    	 

    

 

In addition to the
Salary, during the Employment Term, the Executive shall be entitled to: (i) all legal and religious holidays, and two (2) weeks
paid vacation per annum (ii) participate in all employee benefit plans and/or arrangements adopted by the Company relating to pensions,
hospital, medical, dental, disability and life insurance, deferred salary and savings plans, and other similar employee benefit
plans or arrangements to the extent that the Executive meets the eligibility requirements for any such plan as in effect from time
to time; (iii) payment by the Company directly, or reimbursement by the Company for, reasonable and customary business and out-of-pocket
expenses incurred by the Executive in connection with the performance by the Executive of the Executive's duties under this Agreement
in accordance with the Company's policies and practices for reimbursement of such expenses, as in effect from time to time, including,
without limitation, reasonable and necessary travel, lodging, entertainment and meals incurred by the Executive in furtherance
of the Company's business and at the Company's request; and (iv) the Incentive Bonus, as defined below. Moreover, the Company shall
use its best efforts to obtain a $3,000,000 Key Man Insurance Policy on the Executive.

 

Incentive Bonus. The
Executive shall be entitled to earn up to One Hundred Million (100,000,000) shares of the Company’s common stock and One
Hundred Million (100,000,000) Common Stock Purchase Options at an exercise price of $.01 per share expiring June 1, 2018 (the “Options”)
based upon achievement of the following milestones:

 

20,000,000 shares of
the Company’s common stock and 20,000,000 Options shall vest upon closing the purchase and/or acquisition of 15 gold mining
claims in the U.S. (the “Gold Claims”).

 

20,000,000 shares of
the Company’s common stock and 20,000,000 Options shall vest upon closing the purchase and/or acquisition via lease or suitable
joint venture agreement of 4,000 net acres of coal mining rights in the U.S. (“1st Coal Asset”).

 

20,000,000 shares of
the Company’s common stock and 20,000,000 Options shall vest upon closing the purchase and/or acquisition via lease or suitable
joint venture agreement of 8,000 net acres of coal mining rights in the U.S. (“2nd Coal Asset”).

 

20,000,000 shares of
the Company’s common stock and 20,000,000 Options shall vest upon closing the purchase and/or acquisition via lease or suitable
joint venture agreement of 12,000 net acres of coal mining rights in the U.S. (“3rd Coal Asset”).

 

5,000,000 shares of
the Company’s common stock and 5,000,000 Options shall vest upon completion of the technical report specific to the standards
dictated by National Instrument 43-101 and Form 43-101F Standards of Disclosure for Mineral Projects relating to the Gold Claims.

 

5,000,000 shares of
the Company’s common stock and 5,000,000 Options shall vest upon completion of the technical report specific to the standards
dictated by National Instrument 43-101 and Form 43-101F Standards of Disclosure for Mineral Projects relating to the 1st
Coal Asset.

 

5,000,000 shares of
the Company’s common stock and 5,000,000 Options shall vest upon completion of the technical report specific to the standards
dictated by National Instrument 43-101 and Form 43-101F Standards of Disclosure for Mineral Projects relating to the 2nd
Coal Asset.

 

5,000,000 shares of
the Company’s common stock and 5,000,000 Options shall vest upon completion of the technical report specific to the standards
dictated by National Instrument 43-101 and Form 43-101F Standards of Disclosure for Mineral Projects relating to the 3rd
Coal Asset.

 

    	2

    	 

    

 

4.            Termination of Employment. The Executive's
employment hereunder shall terminate upon the earliest to occur of any the following events, on the dates and at the times specified
below:

 

(i) the close of business
on February 28, 2015, unless otherwise renewed (the “Expiration Date”);

 

(ii) the close of business
on the date of the Executive's death (“Death”);

 

(iii) the close of
business on the Termination Date (as defined below) specified in the Notice of Termination (as defined below) which the Company
shall have delivered to the Executive due to the Executive's Disability. “Disability” shall mean if (i) the Executive
is absent from work for 30 calendar days in any twelve-month period by reason of illness or incapacity whether physical or otherwise)
or (ii) the Company reasonably determines that the Executive is unable to perform his duties, services and responsibilities by
reason of illness or incapacity (whether physical or otherwise) for a total of 30 calendar days in any twelve-month period during
the Employment Term. The Executive agrees, in the event of any dispute under this Section, and after receipt by the Executive of
such Notice of Termination from the Company, to submit to a physical examination by a licensed physician selected by the Company.
The Executive may seek a second opinion from a licensed physician acceptable to the Company. If the results of the first examination
and the second examination are different, a licensed physician selected by the physicians who have performed the first and second
examinations shall perform a third physical examination of the Executive, the result of which shall be determinative for purposes
of this Section;

 

(iv) the close of business
on the Termination Date specified in the Notice of Termination which the Executive shall have delivered to the Company to terminate
his employment (“Voluntary Termination”);

 

(v) the close of business
on the Termination Date specified in the Notice of Termination which the Company shall have delivered to the Executive to terminate
the Executive's employment for Cause. “Cause” as used herein means termination based on (i) the Executive's material
breach of this Agreement, (ii) conviction of the Executive for (a) any crime constituting a felony in the jurisdiction in which
committed, (b) any crime involving moral turpitude whether or not a felony), or (c) any other criminal act against the Company
involving dishonesty or willful misconduct intended to injure the Company (whether or not a felony), (iii) substance abuse by the
Executive, (iv) the failure or refusal of the Executive to follow one or more lawful and proper directives of the Board of Directors
delivered to the Executive in writing, or (v) willful malfeasance or gross misconduct by the Executive which discredits or damages
the Company.

 

Any purported termination
by the Company or the Executive (other than by reason of Death or on the Expiration Date) shall be communicated by written Notice
of Termination to the other. As used herein, the term “Notice of Termination” shall mean a notice which indicates the
specific termination provision in this Agreement relied upon and sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Executive's employment under the provision so indicated. After receipt of a Notice of
Termination, the Executive shall continue to be available to the Company on a part-time basis at reasonable and customary hourly
rates to assist in the necessary transition.

 

    	3

    	 

    

 

As used herein, the
term “Termination Date” shall mean, (i) in the case of Death, the date of the Executive's death, (ii) in the case of
expiration of the term hereof, the Expiration Date, or (iii) in all other cases, the date specified in the Notice of Termination.

 

5.            Employee Covenants.

 

Trade Secrets and
Proprietary Information. The Executive agrees and understands that due to the Executive's position with the Company, the Executive
will be exposed to, and has received and will receive, confidential and proprietary information of the Company or relating to the
Company's business or affairs collectively, the “Trade Secrets”), including but not limited to technical information,
product information and formulae, processes, business and marketing plans, strategies, customer information, other information
concerning the Company's services or products, promotions, development, financing, expansion plans, business policies and practices
and other forms of information considered by the Company to be proprietary and confidential and in the nature of trade secrets.
Trade Secrets shall not include any such information which (A) was known to the Executive prior to his employment by the Company
or (B) was or becomes generally available to the public other than as a result of a disclosure by the Executive in violation of
the provisions of this Section. Except to the extent that the proper performance of the Executive's duties, services and responsibilities
hereunder may require disclosure, the Executive agrees that during the Employment Term and at all times thereafter the Executive
will keep such Trade Secrets confidential and will not disclose such information, either directly or indirectly, to any third person
or entity without the prior written consent of the Company. This confidentiality covenant has no temporal, geographical or territorial
restriction. On the Termination Date unless the Executive remains as an employee of the Company thereafter (in which case, on the
date which the Executive is no longer an employee of the Company), the Executive will promptly supply to the Company all property,
keys, notes, memoranda, writings, lists, files, reports, customer lists, correspondence, tapes, disks, cards, surveys, maps, logs,
machines, technical data, formulae or any other tangible product or document which has been produced by, received by or otherwise
submitted to and retained by the Executive in the course of his employment with the Company. Any material breach of the terms of
this Paragraph shall be considered Cause.

 

Prohibited and Competitive
Activities. The Executive and the Company recognize that due to the nature of the Executive's engagement hereunder and the
relationship of the Executive to the Company, the Executive has had and will have access to, has had and will acquire, and has
assisted and may continue to assist in, developing confidential and proprietary information relating to the business and operations
of the Company and its affiliates, including, without limitation, Trade Secrets. The Executive acknowledges that such information
has been and will be of central importance to the business of the Company and its affiliates and that disclosure of it to, or its
use by, others (including, without limitation, the Executive (other than with respect to the Company's business and affairs)) could
cause substantial loss to the Company.

 

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The Executive and the
Company also recognize that an important part of the Executive's duties will be to develop good will for the Company and its affiliates
through the Executive's personal contact with Clients (as defined below), employees, and others having business relationships with
the Company, and that there is a danger that this good will, a proprietary asset of the Company, may follow the Executive if and
when the Executive's relationship with the Company is terminated. The Executive accordingly agrees as follows:

 

(i) Prohibited Activities.
The Executive agrees that the Executive will not at any time during the Employment Term: (A) (other than in the course of the Executive's
employment) disclose or furnish to any other person or, directly or indirectly, use for the Executive's own account or the account
of any other person, any Trade Secrets, no matter from where or in what manner he may have acquired such Trade Secrets, and the
Executive shall retain all such Trade Secrets in trust for the benefit of the Company, its affiliates and the successors and assigns
of any of them, (B) directly or through one or more intermediaries, solicit for employment or recommend to any subsequent employer
of the Executive the solicitation for employment of, any person who, at the time of such solicitation, is employed by the Company
or any affiliate, (C) directly or indirectly, whether for the Executive's own account or for the account of any other person, solicit,
divert, or endeavor to entice away from the Company or any entity controlled by the Company, or otherwise engage in any activity
intended to terminate, disrupt, or interfere with, the Company's or any of its affiliates’ relationships with, Clients, or
otherwise adversely affect the Company's or any of its affiliates' relationships with Clients or other business relationships of
the Company or any affiliate thereof, or (D) publish or make any statement critical of the Company or any shareholder or affiliate
of the Company or in any way adversely affect or otherwise malign the business or reputation of any of the foregoing persons (any
activity described in clause (A), (B), (C) or (D) of this Section being referred to as a Prohibited Activity”); provided,
however, that if in the written opinion of Counsel, the Executive is legally compelled to disclose Trade Secrets to any tribunal
or else stand liable for contempt or suffer other similar censure or penalty, then the disclosure to such tribunal of only those
Trade Secrets which such counsel advises in writing are legally required to be disclosed shall not constitute a Prohibited Activity
provided that the Executive shall give the Company as much advance notice of such disclosure as is reasonably practicable. As used
herein, the term “Clients” shall mean those persons who, at any time during the Executive's course of employment with
the Company (including, without limitation, prior to the date of this Agreement) are or were clients or customers of the Company
or any affiliate thereof or any predecessor of any of the foregoing.

 

(ii) Non-Competition.
By and in consideration of the Company's entering into this Agreement, the Executive agrees that the Executive will not, during
the Employment Term and for a period of eighteen months thereafter, engage in any Competitive Activity. The term “Competitive
Activity” means engaging in any of the following activities: (A) serving as a director of any Competitor (as defined below),
(B) directly or indirectly through one or more intermediaries, either (X) controlling any Competitor or (Y) owning any equity or
debt interests in any Competitor (other than equity or debt interests which are publicly traded and, at the time of any acquisition
thereof by the Executive, do not in the aggregate exceed 5% of the particular class of interests of such Competitor then outstanding)
(it being understood that, if interests in any Competitor are owned by an investment vehicle or other entity in which the Executive
owns an equity interest, a portion of the interests in such Competitor owned by such entity shall be attributed to the Executive,
such portion determined by applying the percentage of the equity interest in such entity owned by the Executive to the interests
in such Competitor owned by such entity), (C) employment by (including serving as an officer, director or partner of), providing
consulting services to (including, without limitation, as an independent contractor), or managing or operating the business or
affairs of, any Competitor or (D) participating in the ownership, management, operation or control of or being connected in any
manner with any Competitor. The term “Competitor” as used herein (i) during the Employment Term, means any person (other
than the Company or any of their respective affiliates) that competes, either directly or indirectly with any of the business conducted
by the Company or any affiliate.

 

    	5

    	 

    

 

Remedies. The
Executive agrees that any breach of the terms of this Section would result in irreparable injury and damage to the Company for
which the Company would have no adequate remedy at law. The Executive therefore agrees that in the event of said breach or any
threat of breach, the Company shall be entitled to an immediate injunction and restraining order to prevent such breach and/or
threatened breach and/or continued breach by the Executive and/or any and all persons and/or entities acting for and/or with the
Executive, without having to prove damages. The terms of this Paragraph shall not prevent the Company from pursuing any other available
remedies to which the Company may be entitled at law or in equity for any breach or threatened breach hereof, including but not
limited to the recovery of damages from the Executive. The provisions of this Section 6 shall survive any termination of this Agreement.
The existence of any claim or cause of action by the Executive against the Company, whether predicated on this Agreement or otherwise,
shall not constitute a defense to the enforcement by the Company of the covenants and agreements of this Section.

 

Proprietary Information
and Inventions. The Executive agrees that any and all inventions, discoveries, improvements, processes, formulae, business
application software, patents, copyrights and trademarks made, developed, discovered or acquired by him prior to and during the
Employment Term, solely or jointly with others or otherwise, which relate to the business of the Company, and all knowledge possessed
by the Executive relating thereto collectively, the “Inventions”), shall be fully and promptly disclosed to the Board
of Directors and to such person or persons as the Board of Directors shall direct and the Executive irrevocably assigns to the
Company all of the Executive's right, title and interest in and to all Inventions of the Company and all such Inventions shall
be the sole and absolute property of the Company and the Company shall be the sole and absolute owner thereof. The Executive agrees
that he will at all times keep all Inventions secret from everyone except the Company and such persons as the Board of Directors
may from time to time direct. The Executive shall, as requested by the Company at any time and from time to time, whether prior
to or after the expiration of the Employment Term, execute and deliver to the Company any instruments deemed necessary by the Company
to effect disclosure and assignment of the Inventions to the Company or its designees and any patent applications (United States
or foreign) and renewals with respect thereto, including any other instruments deemed necessary by the Company for the prosecution
of patent applications, the acquisition of letters patent and/or the acquisition of patents or copyrights in any and all countries
and to vest title thereto in the Company or its nominee.

 

6.            Representations and Warranties of the
Executive. The Executive represents and warrants to the Company that:

 

(i) The Executive's
employment by the Company as contemplated will not conflict with, and will not be constrained by, any prior or current employment,
consulting agreement or relationship, whether written or oral; and

 

    	6

    	 

    

 

(ii) The Executive
does not possess confidential information arising out of any employment, consulting agreement or relationship with any person or
entity other than the Company which could be utilized in connection with the Executive's employment by the Company.

 

7.             Binding Effect or Assignment. This Agreement
shall inure to the benefit of and be binding upon the parties and their respective heirs, executors, representatives, states, successors
and assigns, including any successor or assign to all or substantially all of the business and/or assets of the Company, whether
direct or indirect, by purchase, merger, consolidation, acquisition of stock, or otherwise; provided, however, that the Executive,
or any beneficiary or legal representative of the Executive, shall not assign all or any portion of the Executive's rights or obligations
under this Agreement without the prior written consent of the Company.

 

8.             Notices. All notices and other communications
given or made pursuant hereto shall be in writing and shall be deemed to have been duly given or made as of the date delivered,
mailed or transmitted, and shall be effective upon receipt.

 

9.             Amendment and Modification. No provision
of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and
signed by each of the Executive and the Company. No such waiver or discharge by either party hereto at any time or any waiver or
discharge of any breach by the other party hereto of, or compliance with, any condition or provision of this agreement to be performed
by such other party, shall be deemed a waiver or discharge of similar or dissimilar provisions or conditions, or a waiver or discharge
of any breach of any provisions, at the same or at any prior or subsequent time.

 

10.           Governing Law. This Agreement shall
be governed by and construed and enforced in accordance with the laws of Nevada without giving effect to the conflict of law principles
of that state.

 

11.           Severability. In the event that any
one or more of the provisions of this Agreement shall be held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other portion of this Agreement, and this Agreement shall be construed as if
such provision had never been contained herein.

 

12.           Withholding Taxes. Notwithstanding
anything contained herein to the contrary, all payments required to be made hereunder by the Company to the Executive, or his estate
or beneficiaries, shall be subject to the withholding of such amounts as the Company may reasonably determine it should withhold
pursuant to any applicable federal, state or local law or regulation.

 

13.           Arbitration of Disputes. The parties
hereto mutually consent to the resolution by arbitration of all claims and controversies arising out of or relating to this Agreement.

 

    	7

    	 

    

 

14.          Counterparts. This Agreement may be
executed in any number of counterparts, each of which shall be deemed to be an original, but all of which together shall constitute
one and the same instrument.

 

15.          Entire Agreement. This Agreement constitutes
the entire agreement between the parties and supersedes any and all prior agreements, written or oral, understandings and arrangements,
either oral or written, between the parties with respect to the subject matter, and shall, as of the date hereof, constitute the
only employment agreement between the parties.

 

16.          Further Assurances. Each party shall
do and perform, or cause to be done and performed, all further acts and things and shall execute and deliver all other agreements,
certificates, instruments, and documents as any other party reasonably may request in order to carry out the intent and accomplish
the purposes of this Agreement and the consummation of the transactions contemplated.

 

17.          Construction.
The headings in this Agreement are for reference purposes only and shall not limit or otherwise affect the meaning or interpretation
of this Agreement.

 

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

 

“Company”

Focus Gold Corporation

 

 

By: /s/ Gordon F. Lee

 

Name: Gordon F. Lee

Title: Chief Executive Officer

 

 

“Executive”

 

 

By: /s/ Gordon F. Lee

 

Name: Gordon F. Lee

 

 

    	8

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