Document:

ex101.htm

ACQUISITION AGREEMENT

 

between

 

HCI VIOCARE TECHNOLOGIES LIMITED

 

Centrum Offices, 38 Queen Street,

 

Glasgow, G1 3DX, Scotland UK

 

and

 

CHRISTOS KAPATOS

 

66 Stewarton Drive, Cambuslang,

 

Glasgow G72 8DG, Scotland, UK

 

  

1

CONTENTS

 

	  	
Claus

	
Page No.

	
1.

	
Definitions

	
3

	
2.

	
Commencement and Duration

	
6

	
3.

	
The Project

	
6

	
4.

	
Good Faith

	
6

	
5.

	
Company’s Representative

	
6

	
6.

	
Acquisition and Consideration

	
7

	
7.

	
Intellectual Property Rights

	
7

	
8.

	
Infringement

	
8

	
9.

	
Exploitation

	
9

	
10.

	
Warranties and Representations

	
9

	
11.

	
Indemnities and Limitation of Liability

	
10

	
12.

	
Confidentiality

	
10

	
13.

	
Statements

	
11

	
14.

	
Protection of Business Interests

	
11

	
15.

	
Termination

	
12

	
16.

	
Consequences of Termination

	
13

	
17.

	
Entire Agreement

	
13

	
18.

	
Variation

	
13

	
19.

	
Waiver

	
13

	
20.

	
Severability

	
13

	
21.

	
Assignation

	
13

	
22.

	
Force Majeure

	
13

	
23.

	
Notices

	
14

	
24.

	
Governing Law

	
14

	  	  	  
	  	
SCHEDULE

	  
	  	
Part 1 – Details of the Project

	
15

	  	
Part 2 – Individual’s Background IPR

	
16

 

  

2

 

ACQUISITION AGREEMENT

 

THIS AGREEMENT (the “Agreement”) dated February 12, 2014 (the “Effective Date”) is made by and between

 

HCI VIOCARE TECHNOLOGIES LIMITED, a company registered in the UK under number 467480, whose registered office is at Centrum Offices, 38 Queen Street, Glasgow, G1 3DX, Scotland UK (the “Company”); and

 

CHRISTOS KAPATOS, resident of 66 Stewarton Drive, Cambuslang, Glasgow G72 8DG, Scotland UK (the “Individual”)

 

WHEREAS:

 

(A)             The Individual is the proprietor of the Individual’s Background IPR, which the Company wishes to acquire in order to undertake the Project;

 

(B)             the Individual is willing to assign the Individual’s Background IPR to the Company for the purposes of the Project and to enable the Exploitation of the results of the Project; and

 

(C)             the Parties wish to record in writing the terms on which they have agreed to collaborate in the Project and in the Exploitation of the results of the Project.

 

NOW THEREFORE, it is hereby agreed as follows:

 

	
1.

	
Definitions

 

	
1.1.

	
In this Agreement, unless the context requires otherwise, the following words and phrases shall have the meanings set opposite them:

 

	
“Agreement”

	
means this Agreement together with the Schedule and recitals;

 

	
“Commencement Date”

	
means 16 January, 2014, notwithstanding the date or dates of execution of this Agreement;

 

	
“Confidential Information”

	
means any and all confidential and proprietary information of any of the parties, including, but not limited to, information relating to the business, finances, transactions and affairs of any of the parties, and any other information which is designated as confidential by a Party or which, because of its character or the circumstances or manner of its disclosure is evidently confidential;

 

	
“Consideration”

	
means the consideration as defined under Section 6.1 herein

 

 

  

3

  

	
“Documentation”

	
means all papers relating to the Individual’s Background IPR, their applications, designs, drawings, research production, prototypes and formulation details;

 

	
“Exploitation”

	
means  the  commercial  exploitationofthe Individual's Background IPR, the Foreground IPR, and/or any Patent, and "Exploit" shall be construed accordingly;

 

	
“Exploitation Proceeds”

	
means any and all proceeds generated from the Exploitation of the  Individual's Background  IPR,  the Foreground  IPR and/or any Patent by way of licensing to a third party other than a Spin-out Company, which are received by the Company, whether in money or money's worth, including, for the avoidance of doubt, cash, or shares in a company other than a Spin-out Company;

 

	
“Foreground IPR”

	
means all and any IPR arising, created or developed in the course of and relating to the Project but excluding all the Individual’s Background IPR;

 

	
“Group Company”

	
means any undertaking which from time to time is: (a) a subsidiary of the Company; (b) apparent undertaking of the Company; or (c) a subsidiary of any such parent undertaking where "subsidiary undertaking" and "parent undertaking" have the meanings given to them in the Companies Act 1985 section 258;

 

	
“Individuals Background IPR”

	
means any and all IPR owned or available for use by the Individual, acquisition of which the Company determines is necessary or desirable for the purposes of the Project, including but not limited to that which is set out in Part 2 of the Schedule;

 

	
“IPR”

	
means any and all intellectual property or industrial rights of any description anywhere in the world including without limitation to the foregoing generality any patents, trademarks, domain names, registered designs,  copyright (including without limitation to the foregoing generality rights in computers  software, object and source code), rights in the nature of copyright, database rights, semi-conductor topography rights, unregistered design rights, rights in and to trade names, business names, product names and logos, inventions, databases, discoveries, specifications, formulae, processes, know how, trade secrets, confidential information and any analogous or similar right in any jurisdiction (whether any such rights referred to in this definition are registered, unregistered, registerable or not), and any  applications or rights to apply for registration of any of them together with any registered rights resulting from any such applications or rights to apply for registration;

 

	
“Knowhow”

	
means all knowhow relating to the Individual’s Background IPR and the Project;

 

	
“New Individual IPR”

	
shall have the meaning given to it in Clause 6.3;

 

	
“Parties”

	
means the Company and the Individual and "Party" shall be construed accordingly;

 

	
“Patent(s)”

	
means any and all patent applications filed by the Parties in accordance with Clause 7.3 and any patents granted pursuant to such applications;

 

	
“Permitted Costs”

	
means those incurred by the Company and arising from the following:

a)the filing, prosecution, procurement and maintenance of any Patent(s) after the commencement of Exploitation;

b)proceedings before the Patent Office or other appropriate forum, including any appeals;

c)professional advice (including consultant’s and advisers’ fee) on the Patent(s) and other intellectual property matters relating to the Individual's Background IPR or the Patent(s) or the Foreground IPRs;

d)proceedings by or against the Company in any court or tribunal for the enforcement or defence of any Patent or for revocation of or opposite onto any such Patent or for any other cause relating to the Individual's Background IPR or the Foreground IPRs (including any costs or sums awarded against the Company in any such proceedings);

e)agents’ commission;

f)marketing and public relations activities in relation to the Individual's Background IPR, the Patent(s) and/or any Foreground IPRs;

g)establishing and managing any Spin-out Company;

h)negotiating and managing any licence of the Individual's Background IPR, the Patent(s) and/or any Foreground IPRs;

i)arranging  and maintaining any intellectual property insurance in respect of the Individual's Background IPR, the Patent(s) and/or any Foreground IPRs;

j)any  tax, charges, duties, deductions or withholdings which the Company is required to pay or make by law; and

k)any other expenditure which may be agreed from time to time by the Individual and the Company;

 

 

  

4

  

	
“Project”

	
means  the  final  development of the technology entitled ‘Socket Fit’ for the Company to take it to the market, and the funding of any ongoing and/or further development for the purposes of the Project, as more generally described in Part 1 of the Schedule;

 

	
“Schedule”

	
means the schedule in two (2) Parts annexed to this Agreement which shall be deemed incorporated herein;

 

	
“Spin-out Company”

	
means any separate legal entity established by the Company as a vehicle to Exploit the Foreground IPRs;

 

 

	
1.2.

	
In this Agreement:

 

	
  

	
1.2.1.

	
the use of the singular includes the plural and vice versa;

 

	
  

	
1.2.2.

	
references to gender include references to all genders;

 

	
  

	
1.2.3.

	
unless otherwise stated, any reference to a Clause or Schedule is to the relevant Clause or Schedule of or to this Agreement and any reference to a sub

 

	
  

	
1.2.4.

	
clause or paragraph is to the relevant sub-clause or paragraph of the Clause or Schedule in which it appears;

 

	
  

	
1.2.5.

	
the Clause headings are for reference only and will not affect the construction or interpretation of this Agreement; and

 

	
  

	
1.2.6.

	
references to statutes, any statutory instrument, regulation or order will be construed as a reference to such statute, statutory instrument, regulation or order as amended or re-enacted from time to time.

 

	
1.3.

	
In this Agreement, except where the context otherwise requires, any reference to:

 

	
  

	
1.3.1.

	
another agreement or any deed or other instrument or document will be construed as a reference to that other agreement, deed or other instrument or document as the same may have been, or may from time to time be, amended, varied, supplemented or notated;

 

	
  

	
1.3.2.

	
the words “include” or "including" are to be construed as meaning without limitation;

 

	
  

	
1.3.3.

	
a “day” means a period of 24 hours (or such other number of hours as may be relevant in the case of changes for daylight saving) ending at 12.00 midnight;

 

	
  

	
1.3.4.

	
a "week" means a period of 7 consecutive days;

 

	
  

	
1.3.5.

	
a "month" means a calendar month; and

 

	
  

	
1.3.6.

	
a "person" includes any individual, partnership, firm, company, corporation, joint venture, trust, association, organisation or other entity, in each case whether or not having a separate legal personality.

 

  

5

 

	
2.

	
Commencement and Duration

 

This Agreement shall commence on the Commencement Date and shall continue unless terminated in accordance with the provisions of this Agreement.

 

	
3.

	
The Project

 

	
3.1.

	
The Project will be undertaken by the Company.

 

	
3.2.

	
The Individual will at all times during the period of this Agreement use his best endeavours to promote the interests of the Company.

 

	
3.3.

	
The Individual warrants that he will not, as a consequence of entering into and performing his obligations under this Agreement, be in breach of any terms express or implied (whether concerning confidentiality, non-competition or otherwise) of any contract, agreement or other arrangement with, or any obligation to, any third party binding upon the Individual and that the Individual is under no obligation, covenant or restriction which would or might give rise to any conflict of interest between the Individual and the Company or any Group Company.

 

	
4.

	
Good Faith

 

	
4.1.

	
Subject to sub-clauses 4.2 and 4.3, the Individual may have a financial interest in or advise or act as a consultant to any business provided that the Individual will not during the period of his involvement in the Project (unless with the prior written consent of the Company) undertake any other activities or accept other engagements which may interfere with or detract from the Individual's obligations, whether as specified in this Agreement or otherwise. In the event of a conflict between the Individual's foregoing obligations and the Individual's obligations to any third party, the Individual’s foregoing obligations to the Company or any Group Company shall take precedence.

 

	
4.2.

	
The Individual will not use or otherwise turn to the Individual's advantage the Individual's knowledge of any connection or contact with any of the manufacturers used by customers of, or suppliers to the Company or any Group Company or any prospective manufacturers, customers or suppliers in a manner that is detrimental to the interests of the Company or any Group Company.

 

	
4.3.

	
The Individual will not receive or obtain directly or indirectly any discount, rebate, commission or other benefit in respect of any goods or services supplied to or acquired by the Company or any other business transacted by it and, if the Individual does receive any such discount, rebate, commission or other benefit, the Individual will account to the Company for it.

 

	
5.

	
Company’s Representative:

 

The person within the Company who will act as the main contact point and channel of communication for the Project during the period of this Agreement is Sotirios Leontaritis. The Company will inform the Individual of any change in the identity of such person.

 

  

6

  

	
6.

	
Acquisition and Consideration

 

	
6.1.

	
In consideration for the acquisition, the Company shall cause the issuance of a total of five hundred thousand (500,000) common shares of the common stock of China Northern Medical Device, Inc., the parent corporation of the Company, to the Individual, which shares shall be issued on the execution of this Agreement and shall be subject to such restrictions as may be required by the requisite regulatory authorities (the “Consideration Shares”).

 

	
6.2.

	
The Individual hereby assigns exclusive, perpetual, irrevocable, transferable, royalty free, worldwide ownership of the Individual’s Background IPR and Knowhow to the Company for the purposes of using it to the extent necessary or desirable to further develop and exploit the Individual’s Background IPR, and to create, develop and exploit the Foreground IPR.

 

	
6.3.

	
The Individual shall, to the extent he has not already done so, disclose all of the Individual’s Background IPR to the Company and deliver all Documentation to the Company.

 

	
6.4.

	
If, following the Commencement Date, the Individual undertakes any research and development work based on or relating to the Individual’s Background IPR and IPR is created or arises as a result of such research and development work ("New Individual

 

	
6.5.

	
IPR") then from the date of its creation, such New Individual IPR shall form part of Individual’s Background IPR and shall be the Company’s exclusive property pursuant to Clause 6.1. The Individual shall disclose all such New Individual IPR to the Company promptly after its creation or arising.

 

	
6.6.

	
The Individual shall, at the request and expense of the Company, promptly execute any further document and perform any further action which may be reasonably required by the Company to provide the full benefit of this Clause 6 to the Company and to give full effect to the intention of the Parties to this Agreement.

 

	
7.

	
Intellectual Property Rights

 

	
7.1.

	
Subject to Clause 7.4, the Parties hereby acknowledge and agree that any and all Foreground IPR arising or created out of the Project shall be the exclusive property of the Company, and the Individual hereby agrees that he shall not acquire any right to any Foreground IPR.

 

	
7.2.

	
The Parties hereby acknowledge and agree that the Company shall be solely responsible for all decisions relating to the preparation, filing, and maintenance of any Patent comprised with the Individual’s Background IPR and/or the Foreground IPR.

 

	
7.3.

	
The Company shall procure that any Patent comprised within the Individual's Background IPR and/or the Foreground IPR shall be filed in the joint names of the Company and the Individual, and that the Individual shall be named as inventor in any such Patent.

 

	
7.4.

	
The Individual hereby assigns to the Company exclusive, perpetual, irrevocable, transferable, royalty free, worldwide ownership of the Individual’s rights in, to, and under any Patent.

 

	
7.5.

	
All costs, fees and expenses relating to the prosecution and maintenance of any Patent application (or application for other intellectual property) shall be borne by the Company.

 

  

7

 

	
8.

	
Infringement

 

	
8.1.

	
Each party shall promptly and fully notify the other of:

 

	
8.1.1.

	
any actual, threatened or suspected infringement which comes to its notice of any of the Individual’s Background IPR or of any Foreground IPR or of any of the Company’s Patents irrespective of when such infringement occurred; and

 

	
8.1.2.

	
any proceedings threatened or commenced against it in which the validity of any Individual’s Background IPR or of any Foreground IPR or any of the Company’s Patents is challenged irrespective of when such challenge arose.

 

	
8.2.

	
As soon as practicable after any such notification has been given pursuant to Clause 8.1, the Company shall notify the Individual whether or not it has decided that the proceedings shall be defended in the circumstances referred to in Clause 8.1.2 limited to any of the Individual’s Background IPR.

 

	
8.3.

	
In the event that the Company notifies the Individual that it has decided not to defend any proceedings pursuant to Clause 8.2., the Individual shall be entitled to take such action as it sees fit subject to informing the Company of its proposed action and advising the Company of the outcome.

 

	
8.4.

	
Any action taken pursuant to Clause 8.2 will be at the Company's sole expense and any action taken pursuant to Clause 8.3 will be at the Individual’s sole expense.

 

	
8.5.

	
As exclusive owner the Company shall be free to take such actions as contemplated by Clause 8.2 above (and irrespective of when the challenge occurred) in its own name provided that it consults reasonably with the Individual in this regard prior to such action being taken.

 

	
8.6.

	
Where the Company takes action as provided for in 8.2 above, any award, damages or settlement monies awarded shall accrue to the benefit of the Company, provided that any reasonable and properly validated costs incurred by the Individual in a court action shall be fully reimbursed by the Company.

 

	
8.7.

	
If for any reason (other than lack of funds) the Company cannot take such action as is contemplated by Clause 8.2 above but does wish to defend or commence proceedings or if the Company, as  exclusive owner, is  unable to  pursue  any proceedings unless the Individual is joined as a pursuer or defender, the Company  can require the Individual to take such action in the Individual’s own name, subject to the following:

 

	
8.7.1.

	
the costs reasonably and necessarily incurred by the Individual shall  be met by the Company as they fall due (and the Individual shall keep the Company fully advised of the extent and nature of all such costs as soon as the Individual becomes aware of the same);and

 

	
8.7.2.

	
any award, damages or settlement monies awarded to the Individual shall accrue to the benefit of the Company and, if received by the Individual, shall be held by the Individual as agent for the Company. For the avoidance of doubt, if the Individual takes such action pursuant to Clause 8.3., any award, damages, or settlement monies awarded to the Individual as a result of such action shall accrue to the benefit of the Individual.

 

	
8.8.

	
The Individual shall do all such things and execute all such documents as may reasonably be required of it by the Company for the purpose of assisting the Company in bringing or defending any proceedings as contemplated by Clause 8.2, and the Company shall bear the cost of the provision of such assistance.

 

	
8.9.

	
For the avoidance of doubt, in no circumstances can the Individual agree to the settlement of any such action as contemplated by Clause 8.2 above, without the prior written consent of the Company.

 

  

8

 

	
9.

	
Exploitation

 

	
9.1.

	
The Parties hereby acknowledge and agree that the Company shall be solely responsible for all decisions relating to the Exploitation of the Individual's Background IPR, the Foreground IPR and/or any Patent.

 

	
9.2.

	
In the event that the Individual's Background IPR, the Foreground IPR and/or any Patent is exploited by way of the Company establishing a Spin-out Company:

 

	
  

	
9.2.1.

	
the Company shall procure that the Spin-out Company is granted a licence or sub-licence of the Individual’s Background IPR, the Foreground IPR and any  Patent on such terms as may be negotiated with the Spin-out Company;

 

	
  

	
9.2.2.

	
if required by the Spin-out Company or its prospective investors, the Company shall assign the Individual’s Background IPR to the Spin-out Company;

 

	
10.

	
Warranties and Representations

 

	
10.1.

	
The Individual represents and warrants to the Company that:

 

	
10.1.1.

	
to the best of his knowledge and belief, the Individual is the true and sole owner of the Individual’s Background IPR and there are and will be no liens, charges, encumbrances or restrictions which affect the Company’s ability to acquire the Individual’s Background IPR in accordance with this Agreement;

 

	
10.1.2.

	
the Individual has not assigned property or granted any licence of the Individual’s Background IPR to any other person, company or undertaking;

 

	
10.1.3.

	
the Individual is not aware that any third party owns or claims that it owns any rights which would be infringed by the acquisition of the Individual’s Background IPR by the Company in accordance with the provisions of this Agreement;

 

	
10.1.4.

	
to the best of the Individual’s knowledge and belief, no third party has infringed or threatened to infringe or is infringing or threatening to infringe the Individual’s Background IPR; and

 

	
10.1.5.

	
the Individual has full power and authority to enter into and perform his obligations under this Agreement without being in breach of any obligation or undertaking to any third party.

 

	
10.2.

	
The Company represents and warrants to the Individual that:

 

	
10.2.1.

	
the Company is a corporation duly organized, validly existing, and in good standing under the laws of Scotland, with full corporate power, authority and capacity to conduct its business as presently conducted, to own or use the properties and assets that it purports to own or use, and to perform all its obligations under any applicable contracts;

 

	
10.2.2.

	
the Company has all requisite corporate power and authority to execute and deliver the Agreement to be signed by the Company and to perform its obligations hereunder and to consummate the Acquisition.  The execution and delivery of the Agreement by the Company and the consummation of the Acquisition have been duly authorized by the board of directors of the Company.  Other than as set out in this Agreement, no other corporate or shareholder proceedings on the part of the Company are necessary to authorize the Agreement or to consummate the Acquisition.  This Agreement has been, and the Consideration when issued and delivered by the Company as contemplated by this Agreement will be, duly executed and delivered by the Company and this Agreement is a valid and binding obligation of the Company enforceable in accordance with its respective terms; and

 

	
10.2.3.

	
the Consideration Shares to be issued to the Individual pursuant to this Agreement will, upon issuance, have been duly and validly authorized and, the Consideration Shares when so issued in accordance with the terms of this Agreement, will be duly and validly issued, fully paid and non-assessable shares in the capital of China Northern Medical Device Inc.

 

  

9

  

 

	
11.

	
Indemnities and Limitation of Liability

 

	
11.1.

	
The Company shall indemnify the Individual on demand in respect of all loss, damages, costs, claims, demands and expenses (including all legal and other professional fees and expenses on a full indemnity basis but always excluding all indirect losses) suffered or incurred by the Individual as a result of any breach by the Company of this Agreement or as a result of any negligent act or omission of the Company in connection with this Agreement.

 

	
11.2.

	
The Individual shall indemnify the Company on demand in respect of all loss, damages, costs, claims, demands and expenses (including all legal and other professional fees and expenses on a full indemnity basis but always excluding all indirect losses) suffered or incurred by the Company or any Group Company as a result of any breach by the Individual of this Agreement or as a result of any negligent act or omission of the Individual in connection with this Agreement.

 

	
11.3.

	
Subject to Clause 11.4, the aggregate liability of each Party to the other, whether in contract, delict (including negligence or breach of statutory duty) or otherwise arising in connection with this Agreement shall not exceed five (5) years.

 

	
11.4.

	
Nothing in Clause 11.3 shall exclude or limit the liability of a Party for death or personal injury caused by that Party's negligence, nor for any matter, in respect of which it would be illegal for that Party to exclude or limit, or attempt to exclude or limit, its liability.

 

	
12.

	
Confidentiality

 

	
12.1.

	
The Parties agree and undertake that during the term of this Agreement and thereafter they will keep confidential and will not use for their own purposes except for the performance of this Agreement nor, without the prior written consent of the Party who discloses the relevant Confidential Information, disclose to any third party any Confidential Information provided to them, unless:

 

	
12.1.1.

	
the receiving Party can show such information is public knowledge or already known to the receiving Party at the time of disclosure, or subsequently becomes public knowledge other than by breach of this Agreement; or

 

	
12.1.2.

	
the receiving Party can show that such information subsequently comes lawfully into the possession of the receiving Party from a third party without an obligation of confidentiality; or

 

	
12.1.3.

	
Clause 12.3 applies to such information, to the extent only as permitted by these Clauses.

 

	
12.2.

	
Any Confidential Information disclosed by any Party to any other Party prior to the execution of this Agreement and/or the Commencement Date shall be considered as having been disclosed under this Agreement.

 

	
12.3.

	
Any party may disclose Confidential Information to the extent it is required to do so by a statutory, legal, regulatory or parliamentary obligation placed upon the Party making the disclosure (including in the case of the Company, its obligations to Audit Scotland and any successor body to Audit Scotland), provided, to the extent practicable, that the Party obliged to make the disclosure will provide the Party to whom the Confidential Information belongs with a reasonable opportunity to make representations to the body compelling such disclosure as to the nature and extent of

 

	
12.4.

	
the disclosure required and the procedures for maintaining confidentiality of the Confidential Information to be disclosed.

 

  

10

 

	
13.

	
Statements

 

The Individual, will not at any time whether during the term of this Agreement or at any time thereafter make any public statement in relation to the Company or its businesses,  affairs, customers or clients or officers and employees except when both the making of and terms of any such statement have been approved by the Company.

 

	
14.

	
Protection of Business Interests

 

	
14.1.

	
Since the Individual is likely, in the course of the Project, to have access to Confidential Information and dealings with the customers, clients and suppliers and other contacts of the Company or any Group Company, he hereby agrees, in order to safeguard such Confidential Information and the good will of the Company and any such Group Company that, in the event of the termination of this Agreement he shall not for a period of five (5) years (except where expressly stated otherwise in this Clause 14.1) from the date of such termination:

 

	
14.1.1.

	
in competition with the Company, entice or solicit, or endeavour to entice or solicit, away from the Company or any  Group Company, the custom or business of any person, company or other undertaking, who or which is or has been a customer or client of the Company or such Group Company, and with whom or which the Individual has regularly dealt at any time during the five (5) years immediately prior to the date of such termination in the course of the Project or by reason of services rendered to or offices held by him in or his employment by the Company or any Group Company; or

 

	
14.1.2.

	
in competition with the Company, accept any business from any person, company, or other undertaking, who or which is or has been a customer or client of the Company or any Group Company and with whom or which the Individual has regularly dealt at any time during the five (5) years immediately prior to the date of such termination in the course of the Project or by reason of services rendered to or offices held by him in or his employment by the Company or any such Group Company, provided that this restriction shall not prohibit the Individual from having business dealings with or accepting business from any such person, company or other undertaking in respect of any business which is not in competition with the Company or any such Group Company as at the date of such termination and in which the Individual was concerned to a material extent during the five (5) years immediately prior to the date of such termination; or

 

	
14.1.3.

	
without the prior written consent of the Company, be engaged, interested or concerned in any business carried on, or about to be carried on, by any person, company or other undertaking which is in competition with any business carried on by the Company or any Group Company as at the date of such termination in any territory in which such business was carried on, provided that this restriction shall not prohibit (i) the Individual from being engaged, interested or concerned in any such business, company or other undertaking so

 

	
14.1.4.

	
far as his/her involvement therein or duties in connection therewith shall relate exclusively to work of a kind or nature with which the Individual was not concerned to a material extent during the five (5) years immediately prior to the date of such termination; or (ii) the Individual from being beneficially interested in any class of securities in any company, if such class of securities is listed or dealt in a recognized stock exchange where the Individual (together with his spouse and children) neither holds nor is interested in more than five percent (5%) of any single class of securities in that company; or

 

	
14.1.5.

	
entice or solicit, or endeavour to entice or solicit, away from the employment of the Company or any Group Company any person who was senior employer or consultant at anytime in the five (5) year period prior to the date of the termination of the Agreement and with whom the Individual regularly dealt or had contact in the course of the Project or by reason of services rendered to or offices held by him in or his employment by the Company or any such Group Company; or

 

	
14.1.6.

	
employ or engaged any person who was a senior employee of or consultant to the Company or any Group Company or any employee or consultant who has Confidential Information about a customer or client (as defined in Clause 5.1) of the Company or any Group Company for a period of five (5) years from the date on which this Agreement terminates; or

 

	
14.1.7.

	
at any time after the date of termination of this Agreement carry on business or trade under a name which is identical or similar to any name used by the Company or any Group Company; or

 

	
14.1.8.

	
at any time after the termination of the Agreement do or say anything which might reasonably be expected to be harmful to the reputation of the Company or any Group Company or which may lead any person to cease to do business with the Company or any Group Company on substantially the same terms to those previously offered or at all.

 

  

11

The restrictions set out in this Clause 14.1 shall apply to any action taken by the Individual in any capacity (whether as principal, agent, representative, partner, director, party to a joint venture, consultant or otherwise).

 

	
14.2.

	
On the termination of this Agreement (how so ever caused), the Individual shall not, at any time thereafter, represent himself still to be connected with the Company or any Group Company, except with the prior consent, or at the request, of the Company or to the extent that he shall be so connected as a result of being a shareholder or director of the Company or any Group Company.

 

	
14.3.

	
The Individual acknowledges and agrees that each of sub-paragraphs 14.1.1 to 14.1.7 (inclusive) of Clause 14.1 constitutes an entirely separate and independent restriction on him and that the duration, extent and application of each of such restrictions are no greater than is necessary for the protection of the legitimate interests of the Company and any Group Company for which he is required to perform duties.

 

	
14.4.

	
While the restrictions set out in sub-paragraphs 14.1.1 to 14.1.7 (inclusive) of Clause 14.1 are considered by the Parties to be reasonable in all the circumstances, it is acknowledged that restrictions of such a nature may fail or become invalid for

 

	
14.5.

	
technical reasons unforeseen or because of changing circumstances and, accordingly, the Parties agree that, if any of such restrictions shall adjudged to be void or ineffective as going beyond what is reasonable in all the circumstances for the protection of the interests of the Company or for any other reason but would be valid and effective if part of the wording thereof was deleted and/or any period or are a referred to therein reduced in time or scope, such restrictions shall apply with such deletions or modifications as may be necessary to make them valid and effective.

 

	
15.

	
Termination

 

	
15.1.

	
This Agreement may be terminated by written notice with immediate effect in any of the following events:

 

	
15.1.1.

	
by the Individual in the event of the liquidation (except for the purposes of a solvent reconstruction or amalgamation) or receivership of the Company or the appointment of an administrator of the Company or its ceasing or threatening to cease trading; or

 

	
15.1.2.

	
by the Individual or the Company in the event of the material breach by the other(s) of any of its or their obligations hereunder which is irremediable or if it can be remedied, remains without remedy on the expiry of thirty (30) days after receipt by the Party in breach of written notice from the Party serving notice specifying the breach and the action required to remedy same; or

 

	
15.1.3.

	
by the Company if the Individual is in breach of any of the warranties set out in Clause 11; or

 

	
15.1.4.

	
by the Company if it decides at any point to terminate the Project for any reason.

 

	
15.2.

	
Termination of this Agreement shall not affect any rights or obligations of the Parties in respect of the period up to the date of termination nor shall it affect any rights or obligations of the Parties which, due to the nature thereof, are due to be performed or observed following such termination, including but not limited to Clauses 4.2, 4.3, 6.1, 6.2, 6.4, 6.5, 7, 8.8, 8.9, 9.1, 10, 11, 12, 13, 15, 16 and 24.

 

  

12

  

	
16.

	
Consequences of Termination

 

In the event of termination of this Agreement by the Individual under Clause 15.1.1 or by the Company under Clause 15.1.4, the Company shall in good faith negotiate with the Individual a renunciation of the ownership of IPR assigned to the Company under this Agreement and an assignation of the Company’s interest in the Foreground IPR and any Patent(s).

 

	
17.

	
Entire Agreement

 

This Agreement constitutes the entire agreement and understanding between the Parties with respect to the subject matter hereof and cancels, terminates and supersedes any prior agreement or understanding entered into between the Parties, provided that nothing in this Clause 17 shall have effect to exclude liability of any Party for fraud or fraudulent misrepresentation.

 

	
18.

	
Variation

 

None of the provisions of this Agreement may be varied, waived, extended or modified except expressly in writing and signed by both Parties.

 

	
19.

	
Waiver

 

Any omission by either Party to exercise any right or remedy available to that Party under the terms of this Agreement shall not be taken to signify acceptance of the event giving rise to the right to exercise such right or remedy and shall be without prejudice to the future exercise of any such right or remedy and/or to the rights or remedies of either Party which may arise in the future.

 

	
20.

	
Severability

 

If any provision of this Agreement is declared to be void or unenforceable by any judicial or administrative authority in any jurisdiction in which this Agreement is effective, such provision will be deemed to be severable and the validity and force of the remainder of the provisions of this Agreement shall not be affected thereby.  The Parties shall each use their reasonable endeavours in good faith to modify this Agreement so that the intent of the void and/or unenforceable provision of this Agreement can be carried out legally.

 

Any void or unenforceable provision shall be construed as per the Governing law defined hereinafter.

 

	
21.

	
Assignation

 

	
21.1.

	
Subject to Clauses 6.1, 7.3, and 21.2, neither Party shall be entitled to assign the benefit or burden of this Agreement without the prior written consent of the other (such consent not to be unreasonably withheld or delayed).

 

	
21.2.

	
The Company shall be entitled to assign or transfer any of its rights or obligations under this Agreement to any Spin-out Company or Group Company.

 

	
22.

	
Force Majeure

 

Neither of the Parties shall be liable to the other nor be held to be in breach of this Agreement to the extent that they are prevented, hindered or delayed in the performance or observance of their obligations hereunder by any cause or contingency whatsoever beyond their reasonable control.

  

13

  

 

	
23.

	
Notices

 

Any notices required to be given pursuant to this Agreement shall be in writing and shall be hand delivered or sent by certified e-mail (return receipt requested) and by confirming letter sent by first class registered mail (or its equivalent) posted within twenty four (24) hours of the said e-mail to the address (and e-mail address) and for the attention of the relevant Party, as set out below (or otherwise notified). Any such notice shall be deemed to have been received twenty-four (24) hours after the time of dispatch to the e-mail in question.

	
The Company:

	
For the attention of: Sotirios Leontaritis

Centrum Offices, 38 Queen Street,

Glasgow, G1 3DX, Scotland UK

 

E-mail: leosot@viocare.eu

	
 

The Individual:

	
 

For the attention of: Christos Kapatos

66 Stewarton Drive, Cambuslang,

Glasgow G72 8DG, Scotland UK

 

E-mail: c.kapatos@healthcare-innovations.com

 

 

	
24.

	
Governing Law

 

This Agreement shall be governed by, and is to be construed in accordance with, the law of Scotland, and the Scottish Courts will have exclusive jurisdiction to deal with any dispute which has arisen or may arise out of or in connection with this Agreement.

 

IN WITNESS whereof the Parties have caused this Agreement to be signed as follows:

 

HCi VIOCARE TECHNOLOGIES LIMITED

 

By:/s/ Nikolaos Kardaras                                                                                              /s/ Christos Kapatos

 

Name: Nikolaos Kardaras                                                                                                CHRISTOS KAPATOS

 

Title:    Attorney-in-Fact

  

14

  

SCHEDULE

 

PART 1

 

Details of the Project

 

The number of amputees world-wide is estimated to be 20 million, and for most amputees finding a well fitted prosthesis is far from easy. Traditional methods of design, manufacture and fitting of a prosthetic socket are typically carried out by “artisan” techniques but unfortunately often result in ill-fitting devices that make wearing a prosthesis almost intolerable for a large number of amputees.

 

A prosthetic socket is a custom-made “cone” that connects the rest of the prosthesis (foot, shank and knee) to an amputee’s residual limb. Sockets generally need to be replaced once or twice a year.  While many significant technological advances have been made with the design and manufacture of prosthetic components, such as electronic knee assemblies and feet, socket design has not kept up. Over the past 20 years a great deal of research has been undertaken to automate the process of socket design and manufacturing, but it has met with limited success. Most sockets continue to be created with hand-sculpted plaster moulds made by the Prosthetist or a technician hours or days after examining the amputee. The result is that, typically, one in four sockets are discarded because of their poor fit.

 

Many prosthetists, (if not all), are frustrated by the lack of an objective method that would ensure an optimum fit of the socket. This ‘need’ for assistance instigated the advent of industrial sector technologies to be taken up in the field, even though these systems, in reality, lack the necessary ‘ingredient’ to allow the optimum socket to be produced. They merely attempt to replicate current practices in a digital manner (CAD-CAM systems), without taking into account the biomechanical or anatomical characteristics of the residual limb.

 

The key element of the project is work done by Dr. Christos Kapatos to improve the nature of the data used in socket modeling software. Finite element analysis has been used widely in a variety of applications, including prosthetics. But its prosthetics applications have suffered from the fact that only external boundary data and limited information on the nature of the internal tissue was provided. The results were not promising. By including far more data on the nature of the internal anatomy as well as, for the first time ever (to our knowledge) data on the bio-mechanical properties of the tissue to the FEA, a system can be created that enables prosthetists to build a socket that evenly distributes weight, provides enhanced comfort, and raises the bar across the industry on socket creation.

 

SocketFit is a digital system for assessing an amputee’s residual limb and for the production of truly functional and comfortable prosthetic sockets. It takes account of the external and internal geometry of the amputee’s stump, the biomechanical properties of the each individual soft tissue layer i.e. skin, fat, muscle and bone, and the boundary and loading conditions of a complete prosthesis to generate a virtual 3D model of the residual limb. It is then possible to produce an accurate, functional and comfortable prosthetic socket.

  

15

PART 2

 

Individual’s Background IPR

 

Existing techniques of socket production can neither provide information relating to the internal geometry of the residual limb nor offer information on the biomechanical properties of living tissue. The introduction of a system that is capable of providing the Prosthetist with on-line information concerning a detailed mapping of the residual limb and the pressure distribution at the stump/socket interface, as well as the maximum stresses in the tissue, is an innovation in this field and offers the following key advantages over existing techniques:

 

	
  

	
·

	
Provides optimally fitted prosthesis.

 

	
  

	
·

	
Provides the Prosthetist with on-line information concerning the detailed mapping of the residual limb (external and internal geometry and structure).

 

	
  

	
·

	
Real diagnosis of residual limb problems.

 

	
  

	
·

	
Accelerates the rehabilitation of the patient.

 

	
  

	
·

	
Improves the quality of prosthetic socket design.

 

	
  

	
·

	
Reduces costs by reducing the number of visits to the Prosthetist by the patient.

 

	
  

	
·

	
Reduces costs by reducing materials and time wastage due to poor fitted prostheses.

 

	
  

	
·

	
Improves the physical and mental well-being of the patients and therefore increase the usage of their prosthesis as they will be more satisfied and feel more comfortable wearing them.

 

	
  

	
·

	
The system requires minimum training and familiarisation by the Prosthetists.

 

	
  

	
·

	
Compact, mobile, and cost-effective.

 

Dr Christos Kapatos has carried out extensive research in designing a new system to aid the creation of sockets for prosthetic limbs. This research differed from other research as it aimed to acquire and utilise not only the external shape of a residual limb but also:

 

	
  

	
·

	
The internal anatomy of the limb.

 

  

16

  

	
  

	
·

	
Bio-mechanical properties of each individual tissue layer of the residual limb.

 

	
  

	
·

	
Known boundary conditions (i.e. socket template information and the effects of internal and external forces on the residual limb).

 

SocketFit is a digital system for assessing an amputee’s residual limb and for the production of truly functional and comfortable prosthetic sockets. It takes account of the external and internal geometry of the amputee’s stump, the biomechanical properties of the each individual soft tissue layer i.e. skin, fat, muscle and bone, and the boundary and loading conditions of a complete prosthesis to generate a virtual 3D model of the residual limb. It is then possible to produce an accurate, functional and comfortable prosthetic socket. By minimising the time and cost of socket production and by reducing the number of faulty sockets (it has been reported that a quarter of all prostheses are currently rejected due to poor fit), there will be a reduction in costs incurred by health services and insurance companies worldwide as well as great benefits to the amputee.

 

Socket-Fit consists out of three modules:

 

	
  

	
1.

	
The Ring -  a device to scan the residual limb and export data

 

	
  

	
2.

	
Data Tools – software to analyse and collate the data into intelligible information.

 

	
  

	
3.

	
Socket Modelling – FEA simulation procedures that combine scanned information with known boundary conditions to create a model of a socket for the specific amputee.

 

The system consists of a “ring” attached on a vertical axis, capable of moving vertically along this axis as well as spinning, with the use of a stepper motor and a liner stepper slider. The “ring” is equipped with ultrasound transducers and load transducers as well as with rotary position sensors. An ultrasound transducer and a load transducer are placed on top of each other at the tip of a protruding (spring-supported) arm at the internal side of the ring. A rotary position sensor is also attached on the base of the arm. Two such arms are present on the device.

 

The external geometry of the medium under examination, is acquired by the position data from the stepper instruments and the use of the rotary position sensors; as the ring moves vertically, spinning at the same time, the spring-supported arms comes in contact with the entire residual limb, mapping every detail and transmitting it to a PC.

 

The internal geometry is acquired with the use of the on-board ultrasound transducers. Information on the mechanical properties of the tissues are also been captured.

 

All the data are telemeter to the control box for onward transmission to the PC. Software generates a 3D image of the stump’s external and internal geometry. FEA and optimisation software generate the optimum design for the socket in order to obtain the best pressure distribution, and therefore the most comfortable prosthesis for the amputee. (Figures 1 and 2).

 

Figure 1, Basic elements of the SocketFit System.

 

 

  

17

  

Figure 2, Schematic diagram of the system.

 

 

The software

 

Automation software that controls the hardware, and collects and pre-processes the data.

 

The automation software calibrates all the sensors and initialises them, controls the motion of both the stepper motor and the slider and acquires the scanning data. These are then saved in a series of ASCI format files and are passed to the appropriate analysis software.

 

The 1D ultrasonic data are processed by dedicated signal analysis software, which by incorporating a number of advanced analysis methods, such as deconvolution, spectral analysis and speckle registration, produces 2D images/maps of the medium under investigation.  It also calculates the displacement caused to the different tissue layers inside the medium by the load applied by the contact “arms”.

 

  

18

  

The displacement data supplied by the ultrasonic analysis software, together with the pressure data collected by the pressure sensor, are fed in a custom made bio-mechanical properties calculation software. The data, in the form of stress vs. strain are processed and the bio-mechanical properties of the tissue layers in the medium under examination calculated.

 

The final step of the analysis is the Finite Elements Analysis software, or FEA.

 

A 3D geometry is generated by the 2D images supplied by the ultrasonic analysis software and the appropriate bio-mechanical properties are input into the FE model. The FEA software then generates the shape a prosthetic socket that applies even pressure at the entire surface of the specific medium, residual limb, apart of course from specific points that cannot take any pressure.

 

The final data from the FEA analysis will be transferred, by means of email or uploaded on data cloud to a 3D carver or a 3D printer where the prosthetic socket, or in the case of a carver the negative mould, will be created. The amputee will then wear the prosthesis and continue with his/her way of living.

 

1. Control and Acquisition Software

 

The vertical and rotational movement of the Ring is controlled by the control software. Based upon thorough testing of the device the optimum resolution for rotational movement was calculated to be 1 degree and for vertical movement 1 mm.

 

The software then acquires and saves the scanning data for later use in the Ultrasonic Analysis and Bio-mechanical Properties Software.  Data is saved in a series of ASCI format files and then passed to the appropriate analysis software. Stored data includes:

 

	
  

	
·

	
pressure data

 

	
  

	
·

	
displacement data

 

	
  

	
·

	
positional data

 

	
  

	
·

	
coordinates data

 

	
  

	
·

	
ultrasound data

 

  

19

  

 

2. Ultrasonic Analysis Software

 

The Ultrasonic Analysis Software is a set of signal and image processing algorithms that have been combined to analyse and process the scanned data.

 

The algorithms were initially developed and used very successfully in the seismic exploration industry.  The algorithms are been adapted and optimised to work with Ultrasound for the first time.

 

The 1D ultrasonic data derived from the scan is processed by dedicated signal analysis software, which by incorporating a number of advanced analysis methods, such as deconvolution, spectral analysis and speckle registration, produces 2D images/maps of the medium under investigation.

 

Additionally it also calculates the displacement caused to the different tissue layers inside the medium by the load applied by the contact “arms”.

 

2D Images will only include the following anatomical information:

 

	
  

	
·

	
Bones (including exact positional information)

 

	
  

	
·

	
Fat (note we are only interested in the fat surrounding the muscle and not any fat in between muscles in the centre of the leg)

 

	
  

	
·

	
Other Materials (all other materials will be grouped together as one, i.e. different muscle groups, etc.)

 

The displacement data supplied by the ultrasonic analysis software, together with the pressure data collected by the pressure sensor, are fed to a custom-made bio-mechanical properties calculation software.

 

3. Volume Rendering

 

This module will take each of the 2D slices and generate a 3D representation of the limb.   This representation will be fed into the Socket Modeling module.

 

There is still some debate around the best tools to use for this module.   Options include:

 

	
  

	
·

	
developing a bespoke application

 

	
  

	
·

	
use an existing application

 

	
  

	
·

	
use existing facilities within FEA

 

  

20

  

 

4. Bio-Mechanical Tools

 

The Bio-Mechanical Tools are a set of algorithms that use Bio-Mechanical data derived from the scans to generate stress-strain curves for the tissue within the limb.

 

This software can predict the stress distribution at any point inside the residual limb, by just knowing the surface pressure applied. The calculated stress, together with the known strain that is calculated by the ultrasonic analysis software from tissue displacement data, produce actual stress vs. strain curves which characterise the tissue layers derived from.

 

This information will also be fed into the Socket Modelling module.

 

Socket Modelling

 

The final step of the analysis is the Finite Elements Analysis software, or FEA. The FEA module incorporates all the information output from the Data Tools (external and internal geometry and bio-mechanical properties) against known Boundary Information to create a model of a customised “uniform pressure” socket for the amputee.

 

Boundary Information will include:

 

	
  

	
1.

	
Standard Socket Information – template sockets exist which are modified to suit individuals.

 

	
  

	
2.

	
Information regarding the impact of external and internal forces (e.g. weight of the amputee).

 

The FEA software then generates the shape a prosthetic socket that applies even pressure at the entire surface of the specific medium, residual limb, apart of course from specific points that cannot take any pressure.

 

The final data from the FEA analysis will be transferred, by means of email, CDs or any other media, to a 3D carver or a 3D printer where the prosthetic socket, or in the case of a carver the negative mould, will be created. The amputee will then wear the prosthesis and continue with his/her way of living.ex109.htm

SECURITIES PURCHASE AGREEMENT

This SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of January 30, 2014, by and between SOLO INTERNATIONAL, INC., a Nevada corporation, with headquarters located at 871 Coronado Center Drive - Suite 200, Henderson, NV 89052 (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 $15,000.00 (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 February 3, 2014, 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.

  

1

  

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, (ii) as a result of the events described in Sections 1.3 and 1.4(g) of the Note or (iii) in payment of the Standard Liquidated Damages Amount (as defined in Section 2(f) below) pursuant to this Agreement, such shares of Common Stock being collectively referred to herein as the “Conversion Shares” and, collectively with the Note, the “Securities”) for its own account and not with a present view towards the public sale or distribution thereof, except pursuant to sales registered or exempted from registration under the 1933 Act; provided, however, that by making the representations herein, the Buyer does not agree to hold any of the Securities for any minimum or other specific term and reserves the right to dispose of the Securities at any time in accordance with or pursuant to a registration statement or an exemption under the 1933 Act.

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

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

 

d. Information.  The Buyer and its advisors, if any, have been, and for so long as the Note remain outstanding will continue to be, furnished with all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Securities which have been requested by the Buyer or its advisors.  The Buyer and its advisors, if any, have been, and for so long as the Note 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 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).  Notwithstanding the foregoing or anything else contained herein to the contrary, the Securities may be pledged as collateral in connection with a bonafide margin account or other lending arrangement.

  

2

  

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 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.  NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.”

The legend set forth above shall be removed and the Company shall issue a certificate 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:

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

  

3

  

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) 900,000,000 shares of Common Stock, $0.001 par value per share, of which 288,200,000 shares are issued and outstanding; and (ii) there are no authorized shares of Preferred Stock; no shares are reserved for issuance pursuant to the Company’s stock option plans, no shares are reserved for issuance pursuant to securities (other than the Note and two (2) prior convertible promissory notes in favor of the Buyer:

	
(a)  

	
Prior convertible promissory note in favor of the Buyer dated September 18, 2013 in the amount of $37,500.00 for which 189,500,000 shares of Common Stock are presently reserved and

	
(b)  

	
Prior convertible promissory note in favor of the Buyer dated December 18, 2013 in the amount of $22,500.00 for which 356,500,000 shares of Common Stock are presently reserved and

exercisable for, or convertible into or exchangeable for shares of Common Stock and 56,000,000 shares are 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 Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Note or the Conversion Shares.  The Company has furnished to the Buyer true and correct copies of the Company’s Certificate of Incorporation as in effect on the date hereof (“Certificate of Incorporation”), the Company’s By-laws, as in effect on the date hereof (the “By-laws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto.  The Company shall provide the Buyer with a written update of this representation signed by the Company’s Chief Executive on behalf of the Company 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.

  

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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 Subsidiaries has taken any action or failed to take any action that would give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any of its Subsidiaries is a party or by which any property or assets of the Company or any of its Subsidiaries is bound or affected, except for possible defaults as would not, individually or in the aggregate, have a Material Adverse Effect. The businesses of the Company and its Subsidiaries, if any, are not being conducted, and shall not be conducted so long as the Buyer owns any of the Securities, in violation of any law, ordinance or regulation of any governmental entity.  Except as specifically contemplated by this Agreement and as required under the 1933 Act and any applicable state securities laws, the Company is not required to obtain any consent, authorization or order of, or make any filing or registration with, any court, governmental agency, regulatory agency, self regulatory organization or stock market or any third party in order for it to execute, deliver or perform any of its obligations under this Agreement, 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 in violation of the listing requirements of the Over-the-Counter Bulletin Board (the “OTCBB”) and does not reasonably anticipate that the Common Stock will be delisted by the OTCBB 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.  The Company has timely filed all reports, schedules, forms, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “1934 Act”) (all of the foregoing filed prior to the date hereof and all exhibits included therein and financial statements and schedules thereto and documents (other than exhibits to such documents) incorporated by reference therein, being hereinafter referred to herein as the “SEC Documents”).  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.  As of their respective dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.  None of the statements made in any such SEC Documents is, or has been, required to be amended or updated under applicable law (except for such statements as have been amended or updated in subsequent filings prior the date hereof).  As of their respective dates, the financial statements of the Company included in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto.  Such financial statements have been prepared in accordance with United States generally accepted accounting principles, consistently applied, during the periods involved  and fairly present in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments).  Except as set forth in the financial statements of the Company included in the SEC Documents, the Company has no liabilities, contingent or otherwise, other than (i) liabilities incurred in the ordinary course of business subsequent to September 30, 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.

  

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h. Absence of Certain Changes.  Since September 30, 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.  The Company and each of its Subsidiaries owns or possesses the requisite licenses or rights to use all patents, patent applications, patent rights, inventions, know-how, trade secrets, trademarks, trademark applications, service marks, service names, trade names and copyrights (“Intellectual Property”) necessary to enable it to conduct its business as now operated (and, as presently contemplated to be operated in the future); there is no claim or action by any person pertaining to, or proceeding pending, or to the Company’s knowledge threatened, which challenges the right of the Company or of a Subsidiary with respect to any Intellectual Property necessary to enable it to conduct its business as now operated (and, as presently contemplated to be operated in the future); to the best of the Company’s knowledge, the Company’s or its Subsidiaries’ current and intended products, services and processes do not infringe on any Intellectual Property or other rights held by any person; and the Company is unaware of any facts or circumstances which might give rise to any of the foregoing.  The Company and each of its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of their Intellectual Property.

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

 

m. Certain Transactions.  Except for arm’s length transactions pursuant to which the Company or any of its Subsidiaries makes payments in the ordinary course of business upon terms no less favorable than the Company or any of its Subsidiaries could obtain from third parties and other than the grant of stock options disclosed on Schedule 3(c), none of the officers, directors, or employees of the Company is presently a party to any transaction with the Company or any of its Subsidiaries (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any corporation, partnership, trust or other entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner.

  

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

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.  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 September 30, 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.

(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.

  

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

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

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

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.

x. Solvency.  The Company (after giving effect to the transactions contemplated by this Agreement) is solvent (i.e., its assets have a fair market value in excess of the amount required to pay its probable liabilities on its existing debts as they become absolute and matured) and currently the Company has no information that would lead it to reasonably conclude that the Company would not, after giving effect to the transaction contemplated by this Agreement, have the ability to, nor does it intend to take any action that would impair its ability to, pay its debts from time to time incurred in connection therewith as such debts mature.  The Company did not receive a qualified opinion from its auditors with respect to its most recent fiscal year end and, after giving effect to the transactions contemplated by this Agreement, does not anticipate or know of any basis upon which its auditors might issue a qualified opinion in respect of its current fiscal year.

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.

  

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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.

d. Right of First Refusal.  Unless it shall have first delivered to the Buyer, at least seventy two (72) hours prior to the closing of such Future Offering (as defined herein), written notice describing the proposed Future Offering (“ROFR Notice”), including the terms and conditions thereof, identity of the proposed purchaser and proposed definitive documentation to be entered into in connection therewith, and providing the Buyer an option during the seventy two (72) 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 (or debt with an equity component) financing in an amount less than $100,000 (“Future Offering(s)”) during the period beginning on the Closing Date and ending six (6) months following the Closing Date.  Notwithstanding anything contained herein to the contrary, the Company shall not consummate any Future Offering with an investor, or an affiliate of such investor (collectively “Prospective Investor”), identified on an ROFR Notice whereby the Buyer exercised its Right of First Refusal for a period of forty (45) days following such exercise; and any subsequent offer by a Prospective Investor is subject to this Section 4(d) and the Right of First Refusal. 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 thereafter shall have an option during the seventy two (72) 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 Company stock option or restricted stock plan approved by the shareholders of the Company.

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.  When possible, the Company must pay these fees directly, otherwise the Company must make immediate payment for reimbursement to the Buyer for all fees and expenses immediately upon written notice by the Buyer or the submission of an invoice by the Buyer. The Company’s obligation with respect to this transaction is to reimburse Buyer’ expenses shall be $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.

g. [INTENTIONALLY DELETED]

  

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h. Listing.  The Company shall promptly secure the listing of the Conversion Shares upon each national securities exchange or automated quotation system, if any, upon which shares of Common Stock are then listed (subject to official notice of issuance) and, so long as the Buyer owns any of the Securities, shall maintain, so long as any other shares of Common Stock shall be so listed, such listing of all Conversion Shares from time to time issuable upon conversion of the Note.  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 OTCBB or any equivalent replacement exchange, 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 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 OTCBB 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 OTCBB, 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; and the Company shall continue to be subject to the reporting requirements of the 1934 Act.

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 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.  Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Section 5 may be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Section, that the Buyer shall be entitled, in addition to all other available remedies, to an injunction restraining any breach and requiring immediate transfer, without the necessity of showing economic loss and without any bond or other security being required.

  

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

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

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

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

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

7. Conditions to The Buyer’s Obligation to Purchase.  The obligation of the Buyer hereunder to purchase the Note 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.

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 Conversion Shares shall have been authorized for quotation on the OTCBB and trading in the Common Stock on the OTCBB shall not have been suspended by the SEC or the OTCBB.

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

  

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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 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:

  

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If to the Company, to:

SOLO INTERNATIONAL, INC.

871 Coronado Center Drive - Suite 200

Henderson, NV 89052

Attn: MICHAEL JACOB COOPER SMITH, Chief Executive Officer

facsimile: [enter fax number]

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

[enter name of law firm]

Attn: [attorney name]

[enter address line 1]

[enter city, state, zip]

facsimile: [enter fax number]

                        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.

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.

  

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

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

 

SOLO INTERNATIONAL, INC.

By:________________________________

       MICHAEL JACOB COOPER SMITH

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: 	 $15,000.00	 
	 	 	 
	 Aggregate Purchase Price:	 $15,000.00	 

                                                          

3906(3)  1-30-14

michaeljacobcoopersmith@gmail.com

  

14

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