Document:

EPOD Solar Inc.: Exhibit 10.1 - Filed by newsfilecorp.com

Exhibit 10.1

STOCK PURCHASE AGREEMENT 

 This STOCK PURCHASE AGREEMENT (the “Agreement”), is made as of this 18th day of August, 2010, by and among Nanotech Industries International Inc., a corporation organized under the laws of the state of Nevada,
(“Nanotech”), Joseph Kristul (“Kristul”), in his own capacity and on behalf of all of the holders of capital stock of Nanotech, (individually the “Seller” and collectively the “Sellers”), and EPOD Solar Inc.,
a Nevada publicly traded corporation (“EPOD” or the “Buyer”) (each party to this Agreement individually referred to as the “Party” and collectively referred to as the “Parties”).

W I T N E S S E T H : 

WHEREAS, the Parties have agreed that the Transaction shall consist of the purchase by EPOD of all of the shares outstanding of Nanotech in exchange for shares of EPOD;

 WHEREAS, Buyer wishes to purchase or acquire all of the issued and outstanding shares of capital stock of Nanotech, from their respective holders (“Nanotech Shareholders”) as set forth in Schedule A , all for the
consideration and upon the terms and subject to the conditions hereinafter set forth;

WHEREAS in order to induce the Nanotech Shareholders to sell the Nanotech Shares (as defined below) to EPOD, certain holders of common stock of EPOD (“EPOD Shareholders”) have agreed to surrender for cancellation certain shares of
common stock of EPOD held by them, as set forth in
Schedule B; and  

 WHEREAS, pursuant to certain powers of attorney and other contractual agreements (the “POA’s”), Kristul has the authority to execute this agreement on behalf of the Nanotech Shareholders and cause all of the issued and
outstanding shares of capital stock of Nanotech, including the shares which are not owned by him in his personal capacity, to be transferred and assigned to the Buyer;

 NOW, THEREFORE, the Parties hereto, in consideration of the mutual promises and other consideration set forth below, the receipt and adequacy of which is hereby acknowledged, and intending to be legally bound hereby, do represent, warrant,
covenant and agree as follows: 

SECTION 1 

DEFINITIONS 

1.01. “Affiliate” means, as applied to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with that Person. For the purposes of this definition, “control” (including
with correlative meanings, the terms “controlling”, “controlled by” and “under common control with”) as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction
of the management and policies of that Person, whether through ownership of voting securities or by contract or otherwise. 

1.02.  “Buyer Indemnified Parties” shall have the meaning set forth in Section 6.02(a) . 

1.03. “Claim” shall mean any and all administrative or judicial actions, suits, arbitrations, orders, claims, Liens, notices, notices of violations, investigations, complaints, requests for information, proceedings, or other
communication (written or oral), whether criminal or civil. 

1.04. “Closing” and “Closing Date” shall have the respective meanings assigned to them in Section 4.01 hereof. 

1.05.  “Environmental Law” means all federal, state, local and foreign environmental, health and safety Laws, common law orders, decrees, judgments, codes and ordinances and all rules and regulations promulgated thereunder, civil or
criminal, including, without limitation, Laws relating to emissions, discharges, releases or threatened releases of Hazardous Material, pollutants, contaminants, chemicals, or industrial, toxic or hazardous substances or wastes into the environment
or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Material, pollutants, contaminants, chemicals, or industrial, solid, toxic or hazardous substances or wastes.

1.06.  “Governmental or Regulatory Authority” means any court, tribunal, arbitrator, authority, agency, commission, official or other instrumentality of the United States and Canada, any foreign country or any domestic or foreign
state, county, city or other political subdivision, and shall include, without limitation, the Securities and Exchange Commission, and the various federal, state and foreign securities regulators and taxation authorities. 

1.07. “Hazardous Material” means (i) any petroleum or petroleum products, radioactive materials, asbestos in any form that is or could become friable, urea formaldehyde foam insulation and transformers or other equipment that
contain dielectric fluid containing levels of polychlorinated biphenyls (PCBs); (ii) any chemicals, materials, substances or wastes which are now defined as or included in the definition of “hazardous substances”, “hazardous
wastes,” “hazardous materials,” “extremely hazardous wastes,” “restricted hazardous wastes,” “toxic substances,” “toxic pollutants” or words of similar import, under any Environmental Law; and
(iii) any other chemical, material, substance or waste, exposure to which is now prohibited, limited or regulated by any Governmental or Regulatory Authority. 

1.08. “Indebtedness” of any Person means all obligations of such Person (i) for borrowed money, (ii) evidenced by notes, bonds, debentures or similar instruments, (iii) for the deferred purchase price of goods or services (other
than trade payables or accruals incurred in the ordinary course of the Business), (iv) under capital leases and (v) in the nature of guarantees of the obligations described in clauses (i) through (iv) above of any other Person. 

1.09. “Indemnified Party” shall have the meaning set forth in Section 6.02(c) . 

1.10. “Indemnifying Party” shall have the meaning set forth in Section 6.02(c) . 

1.11. “Knowledge” means the actual knowledge of a Person with respect to any fact, event or condition, as well as the knowledge that such party reasonably would be expected to have acquired in the ordinary course of business and the
prudent management of its own affairs. Such definition shall include any form of such term, such as knows, known, etc., whether or not capitalized, as used in this Agreement with respect to a party’s awareness of the presence or absence of a
fact, event or condition.

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1.12. “Laws” means all laws, statutes, rules, regulations, ordinances and other pronouncements having the effect of law in Canada, the United States, any foreign country or any domestic or foreign state, province, county, city or
other political subdivision or of any Governmental or Regulatory Authority. 

1.13. “Liability” or “Liabilities” means all Indebtedness, obligations and other liabilities (or contingencies that have not yet become liabilities) of a Person (whether absolute, accrued, contingent (or based upon
any contingency), fixed or otherwise, or whether due or to become due). 

1.14. “License” means any license, permit, certificate of authority, authorization, approvals, registration, franchise and similar consent granted or issued by any Governmental or Regulatory Authority. 

1.15. “Liens” means claims, pledges, security interests, mortgages, conditional sales agreement, liens, charges, restrictions, consignments or conditional sales agreements, or other encumbrances of whatever nature, whether created
by statute, Contract, process of law or otherwise, and whether or not recorded or otherwise perfected. 

1.16. “Loss” means any and all damages, fines, fees, penalties, deficiencies, diminution in value of investment, losses and expenses, including without limitation, interest, reasonable expenses of investigation, court costs,
reasonable fees and expenses of attorneys, accountants and other experts or other expenses of litigation or other proceedings or of any claim, default or assessment (such fees and expenses to include without limitation, all fees and expenses,
including, without limitation, fees and expenses of attorneys, when and as incurred in connection with (i) the investigation or defense of any Third Party Claims, or (ii) asserting or disputing any rights under this Agreement against any Party
hereto or otherwise).

1.17. “Material Adverse Effect” means any change or effect of any event or circumstance which, individually or when taken together with all other changes, effects, events or circumstances, is or could reasonably be expected to be,
materially adverse to the assets, financial condition, business or results of operation of a Person; excluding, however, any adverse effect due to changes, after the date of this Agreement, in conditions affecting the economy generally or the
general market addressed by such Person’s products and/or services. 

1.18. “Person” means any natural person, corporation, general or limited partnership, limited liability company or partnership, proprietorship, other business organization, estate, trust, union, association or Governmental or
Regulatory Authority. 

1.19.  “Purchase Price” shall have the meaning set forth in Section 3.01. 

1.20. “Seller Indemnified Parties” shall have the meaning set forth in Section 6.02(b) . 

1.21. “Tax” or “Taxes” means any and all federal, state, local or foreign taxes, fees, levies, duties, tariffs, imposts and other governmental charges of any nature (together with any interest, penalties and
additions to tax) including, without limitation, taxes or other charges on, or with respect to, income, gross receipts, property, sales, use, capital or net worth. 

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1.22. “Tax Return” means any return, report or statement (including any information return) required to be filed for purposes of a particular Tax. 

1.23. “Third Party” shall mean any Person who is not a party to this Agreement, nor is an Affiliate of any Party to this Agreement.

1.24. “Third Party Claim” shall mean a Claim asserted by a Third Party. 

SECTION 2 

PURCHASE OF STOCK OF NANOTECH 

 Section 2.01. Purchase of Shares of Nanotech.  At the Closing, each of the Nanotech Shareholders respectively, will sell, convey, transfer and deliver to Buyer, and Buyer will purchase from the Nanotech Shareholders, for the consideration
hereinafter set forth, 33,810,035 (thirty-three million eight hundred and ten thousand and thirty-five) common shares of Nanotech held by the Nanotech Shareholders as of the Closing Date, which represents all of the issued and outstanding shares of
capital stock of Nanotech (collectively, the “Nanotech Shares”).  All Nanotech Shares shall be transferred or otherwise conveyed by each of the Nanotech Shareholders, through duly executed POA’s to Buyer free and clear of all
Liabilities, obligations, Liens, Claims (including Third Party Claims). 

SECTION 3 

PURCHASE PRICE 

3.01. Amount and Payment of the Purchase Price.  In consideration for the Nanotech Shares, Buyer shall issue to the Nanotech Shareholders an aggregate amount of 3,381,003 (three million three hundred and eighty-one thousand and three) validly
issued, fully paid and non-assessable new shares of common stock, $0.001 par value per share (the “Common Stock”), of the Buyer (the “Purchase Price”) on the Closing Date as set out in Schedule A herein.

 3.01a. In addition, the EPOD Shareholders and EPOD agree to cause the cancellation at Closing of a total of 1,028,000 (one million twenty-eight thousand) shares of common stock of EPOD (“Cancellation Shares”) held by the EPOD Shareholders
as set out in Schedule B. 

 3.02. Allocation of Purchase Price. The Parties agree to allocate the Purchase Price in a manner which causes the least Liabilities for Taxes under applicable Law, and will collectively execute, prepare, file (or cause to have prepared and
filed) all applicable forms, notices and filings as are required by applicable Law.

 3.03. Employees. The employees of Nanotech shall remain employed following the Closing Date, upon such terms and conditions as are in effect immediately prior to the Closing Date. Sellers hereby jointly authorize Buyer to offer employment to
their respective employees, waive any rights they may have prohibiting such employees from being employed by Buyer, and shall not offer employment to any employees who have accepted employment with Buyer. Nothing in this Section 4.03 shall be deemed
to be a contract for the benefit of any employee. Sellers shall use their respective best efforts to assist Buyer in obtaining the services of all current employees of Sellers that Buyer wishes to so retain. 

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SECTION 4 

CLOSING 

4.01. Closing. The closing of the purchase and sale of the Nanotech Shares (the “Closing”) shall be held at the offices of the Buyer or remotely via the exchange of documents and signatures or at such other time and place as the
Parties mutually may agree, on the first day in which the conditions set forth in this Section 4 have been satisfied or waived, but in any event no later than 90 (ninety days from the signing of this Agreement, unless mutually extended in writing by
the Parties (the “Closing Date”).

4.02. Deliveries of Sellers. Each Seller, as applicable, shall deliver or cause to be delivered to Buyer at the Closing: 

 (a) A certified copy of resolutions, duly adopted by the Boards of Directors and stockholders of Nanotech, authorizing the transactions contemplated hereby; 

(b) Such certificates issued by the appropriate Governmental or Regulatory Authority as required to evidence the legal existence and good standing of such Seller; 

(c) Nanotech shall deliver or cause to be delivered to Buyer the following with respect to Nanotech Shares:  (i) stock powers duly endorsed by Nanotech, and otherwise in form acceptable for transfer of Nanotech Shares on the books of Nanotech, to
Buyer; (ii) certificates representing Nanotech Shares; and (iii) any approvals or consents required with respect to the transfer of Nanotech Shares to Buyer; and 

(d) Such other closing documents and instruments as Buyer reasonably may require. 

4.03. Deliveries of Buyer.  Buyer shall deliver or cause to be delivered to Sellers at the Closing:

(a) The aggregate amount of 3,381,003 (three million three hundred and eighty-one thousand and three) shares of Common Stock issued to the Nanotech Shareholders;

 (b) A certificate, executed by Buyer’s Secretary certifying the resolutions of Buyer’s Board of Directors approving the transactions contemplated hereby; and 

(c) A certificate executed on behalf of Buyer by its President, certifying as to Buyer’s satisfaction of the conditions set forth in Section 4.05(a) and (b). 

4.04. Conditions to the Buyer’s Obligations. The obligation of the Buyer to consummate the transactions to be performed by it in connection with the Closing will be subject to the satisfaction (or waiver by the Buyer, in whole or in
part, in writing) of the following conditions as of the time of the Closing: 

 (a) Each representation and warranty set forth in Section 5 will be true and correct in all material respects at and as of the time of the Closing as though then made, except for changes expressly
required by this Agreement and except for any representation or warranty that expressly relates to a specific prior date; 

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 (b) Sellers will have performed and complied in all material respects with all of the covenants and agreements (considered collectively), and each of the covenants and agreements (considered individually), required to be performed by the Sellers
under this Agreement or any other agreements, documents and instruments to be entered into by the Sellers in connection with the transactions contemplated hereby at or prior to the Closing; 

 (c) There shall be no proceeding commenced or threatened against the Buyer or Sellers involving this Agreement or the transactions contemplated herein or any judgment, decree, injunction or order which prohibits the consummation of the transactions
contemplated by this Agreement; 

 (d) Sellers shall have delivered the Nanotech Shares to the Buyer, free and clear of all Liabilities, obligations, Liens, Claims (including Third Party Claims, whether private, governmental or otherwise) and encumbrances, excepting only Assumed
Liabilities;

 (e) There shall have been no material adverse change in the condition (financial or otherwise), results of operations, properties, assets, or Liabilities of Sellers; 

 (f) Buyer shall have: (i) obtained shareholder approval for the consummation of the transaction set forth herein; (ii) obtained any and all other requisite approvals for the consummation of the transaction set forth herein (iii) made all necessary
filings with the SEC;

(g) The pro forma consolidated financial statements of the Buyer shall have been completed in accordance with the Exchange Act, and the rules and regulations promulgated thereunder, and the report of independent auditors with respect to such
financial statements completed and submitted; and 

 (h) Sellers shall have delivered to the Buyer the items set forth in Section 4.02. 

4.05. Conditions to the Sellers’ Obligations.  The obligation of Sellers to consummate the transactions to be performed by it in connection with the Closing is subject to the satisfaction (or waiver by EPOD in writing) of the following
conditions as of the Closing Date: 

 (a) Each of the representations and warranties set forth in Section 6 will be true and correct in all material respects at and as of the time of the Closing as though then made, except for changes expressly required by this Agreement and except for
any representation or warranty that expressly relates to a specific prior date; 

 (b) The Buyer will have performed and complied in all material respects with all of the covenants and agreements required to be performed by the Buyer under this Agreement at or prior to the Closing; 

 (c) There shall be no proceeding commenced or threatened against the Buyer or Sellers involving this Agreement or the transactions contemplated herein or any judgment, decree, injunction or order which prohibits the consummation of the transactions
contemplated by this Agreement. 

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 (d) The pro forma consolidated financial statements of the Buyer shall have been completed in accordance with the Exchange Act (as defined below), and the rules and regulations promulgated thereunder, and the report of independent auditors with
respect to such financial statements completed and submitted. 

 (e) Buyer shall have: (i) obtained shareholder approval for the consummation of the transaction set forth herein; (ii) obtained any and all other requisite approvals for the consummation of the transaction set forth herein (iii) made all necessary
filings with the SEC;

 (f) The Buyer shall have delivered to the Sellers the items set forth in Section 4.03. 

 (g) The Buyer and the EPOD Shareholders shall have surrendered the Cancellation Shares to EPOD and shall cause the Cancellation shares to be cancelled. 

 4.06. Pre-Closing Covenants.

 (a) Operations and Maintenance of the Business. From and after the date hereof and prior to the Closing, unless the Buyer otherwise consents in writing or except as set forth expressly herein, Nanotech will conduct its business only in the
ordinary course of business as conducted by it consistent with past practice.

 Furthermore, except as may otherwise be required under this Agreement, Nanotech shall do any of the following, without the prior written consent of the Buyer: 

  (i) enter into any Contract, agreement or transaction, or incur or permit to be incurred, any obligation or other Liabilities with respect to or materially affecting its business and shall not enter into any Contract, agreement or transaction, or
incur or permit to be incurred, any obligation or other Liabilities with respect to Nanotech Shares;

  (ii) remove any of its assets (other than cash and cash equivalents) used in its business by way of dividend, distribution, withdrawal or any other means;

  (iii) permit to be incurred any Lien on any of its assets used in its business; 

  (iv) increase the compensation payable or to become payable to any of its employees retained in connection with its business, or otherwise enter into or alter any employment or consulting agreement; 

  (v) commence, enter into, or alter any profit sharing, deferred compensation, bonus, option or purchase plan for its interests or other equity securities, pension, retirement or incentive plan or any fringe benefit plan for its employees retained
in connection with its business; 

  (vi) terminate the employment of any of its employees retained in connection with its business or hire or engage any employees or consultants in connection with its business, except in the ordinary course of its business; 

  (vii) cancel or waive any of its Claims or rights, with respect to or materially affecting its business, outside the ordinary course of its business and consistent with past practice; 

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  (viii) change any accounting methods used by it in connection with its business, except and solely to the extent required by applicable generally accepted accounting principles or Law; 

  (ix) pay or incur any obligation or Liability, absolute or contingent, with respect to or materially affecting its business other than obligations or Liabilities incurred in the ordinary course of its business and consistent with past practice or
purchase any asset other than in the ordinary course of its business; 

  (x) make any Tax election or settle or compromise any Tax Liability which could reasonably be expected to have an adverse impact on the Taxes payable by Buyer; 

  (xi) enter into any joint venture, partnership or other similar arrangement or form any other material arrangement for the operation of its business; and 

  (xii) enter into any binding commitment to do any of the foregoing. 

 (b) Consents.  Sellers shall use their respective best efforts to obtain all consents and approvals of Third Parties necessary and required (including Third Party Claims, whether private, governmental or otherwise) for the consummation of
the transactions contemplated herein. 

 (c)    Pre-Closing Filings. Buyer shall make all SEC required filings pertaining to the consummation of this transaction. 

 (d) Information. From time to time at the Buyer’s request, upon reasonable prior notice and at reasonable times during normal business hours, subject to requirements of Law, the Sellers will provide to representatives of the Buyer and
its agents, employees and accounting, tax, legal and other advisors (collectively, including the Buyer, the “Investigating Parties”) access to each Seller’s premises, properties, operations and books and records, and will cause each
of the Sellers respective officers, employees, representatives, agents and accounting, tax, legal and other advisors to furnish to Buyer and the Investigating Parties such financial and operating data and other such information with respect to the
Business and the properties of such Seller as the Investigating Parties shall request. 

 (e) Undertaking to Close.  Each Party undertakes to cause the conditions to Buyer’s and Sellers’ respective obligations to consummate the transactions contemplated by this Agreement to be satisfied including the preparation,
execution and delivery of all agreements and instruments contemplated hereunder to be executed and delivered by such Party in connection with or prior to the Closing. 

 (f) Schedules.  The Sellers shall promptly (and in any event prior to the Closing) advise Buyer, orally and in writing, of any change or event having, or which would have (insofar as can be reasonably foreseen), a Material Adverse Effect or
would constitute, or with the passage of time would constitute, a breach of any representation or warranty of the Sellers contained in this Agreement. Sellers agree that, with respect to their representations and warranties made in this Agreement,
each of them will have a continuing obligation to supplement or amend the schedules hereto with respect to any matter hereafter arising or discovered which, if existing or known at the date of this Agreement, would have been required to be set forth
or described in the schedules hereto; provided, however, that neither the supplementing or amending of any schedules by Sellers, nor the discovery of any matters by Buyer in the course of its investigations, shall be deemed to cure any breach of any
representation or warranty made in this Agreement or to have been disclosed as of the date of this Agreement. 

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 (g) Competitive Offers. Sellers shall not, directly or indirectly, and will cause Nanotech’s officers, employees and Affiliates not to, solicit or initiate the submission of proposals from, or solicit, encourage, entertain or enter into
arrangements, agreements or understandings with, or discuss with or furnish information to, any Person (other than the Buyer and the Investigating Parties) with respect to the acquisition in whatever form of all or any portion of the Nanotech
Shares. 

 4.07 Change in Control of the Buyer. Upon the signing of this Agreement, the Parties agree to take the necessary steps to effect any and all changes to the Officers of EPOD so that the following individuals shall constitute the officers of
EPOD,  effective at Closing: (i) Joseph Kristul shall be appointed as President, CEO and Treasurer, and (ii) Darin Nellis shall be appointed as Secretary.

In addition, following the Closing, the parties will take such steps as may be necessary, including the filing of an information statement pursuant to Section 14(f) of the Exchange Act and Rule 14f-1 thereunder, to effect any and all changes to the
Directors of EPOD, so that the following individuals shall constitute the directors of EPOD effective as soon as possible following the Closing: 

	
 	
Joseph Kristul
		
Director
	
	
 	
Alex Trossman
		
Director
	
	
 	
Tim Simpson
		
Director
	

 4.08. Effect of Failure to Close. If the Closing of the transactions contemplated herein does not occur for any reason, then the rights and obligations of the Parties hereunder shall terminate without any Liability of any Party to any other
Party.

SECTION 5 

REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLERS 

 Sellers hereby represent and warrant to the Buyer as follows:

 5.01. Nanotech is a corporation duly organized, validly existing and in good standing under the laws of the state of its incorporation. Nanotech has the power and the authority and all Licenses and permits required by Governmental or Regulatory
Authorities to own and operate its assets and carry on the Business as now being conducted.

5.02. The Nanotech Shares held by the Nanotech Shareholders respectively are owned by each of the Nanotech Shareholders as the beneficial and recorded owners with good and marketable title thereto, and all of the Nanotech Shares are free and
clear of all mortgages, liens, charges, security interests, adverse claims, pledges, encumbrances and demands whatsoever. Kristul, pursuant to the POA’s has the requisite power and authority to execute and perform this Agreement and all other
agreements, documents and instruments to be entered into on behalf of each of the Nanotech Shareholders, as applicable, in connection with the transactions contemplated hereby.

 5.03. The Nanotech Shareholders constitute all of the stockholders of Nanotech. The execution, delivery and performance of this Agreement and all other agreements to be entered into in connection with the transactions contemplated hereby have been
duly authorized by the board of directors of
Nanotech, and do not violate or conflict with any provisions of the organizational documents of Nanotech or any agreement, instrument, Law, order or regulation to which Nanotech is a party or by which is bound. All corporate action required to be
taken by Nanotech to authorize the execution, delivery and performance of this Agreement and all other agreements to be entered into by Nanotech in connection with the transactions contemplated hereby has been taken, and such execution, delivery and
performance do not violate or conflict with any provisions of the organizational documents of Nanotech or any agreement, instrument, Law, order or regulation to which Nanotech is a party or by which Nanotech is bound. No consent, approval or
authorization of, or filing with or notification to, any lender, security holder, Governmental or Regulatory Authority or other person or entity is required by Nanotech or in connection with the execution, delivery and performance by Nanotech of
this Agreement and the consummation of the transactions contemplated hereby. 

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 5.04. Nanotech has all requisite corporate power and authority to execute and deliver this Agreement and all other agreements to be entered into in connection with the transactions contemplated hereby to which it is a party, and to perform its
obligations hereunder and thereunder. This Agreement has been, and upon execution and delivery thereof, each of the other agreements to be entered into in connection with the transactions contemplated hereby to which the Sellers are a party will be,
duly and validly executed and delivered by the Sellers and the valid and binding obligations of each Seller, enforceable against such Seller in accordance with their terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws from time to time in effect affecting the enforcement of creditors’ rights generally, and except as enforcement of remedies may be limited by general equitable principles.

 5.05. No Seller has any Knowledge of any action, suit, litigation or proceeding pending or threatened against it or otherwise, nor does such Seller know of any basis for any such action, or of any governmental investigation relating to its
business. 

 5.06. No Seller has Knowledge of any order, writ, injunction or decree that has been issued by, or requested of, any court or Governmental or Regulatory Authority which is against, or binding on such Seller. 

 5.07. Each Seller has obtained all required approvals or authorizations of this Agreement and any other agreements to be entered into in connection with the transactions contemplated hereby which are required by applicable Laws or otherwise in
order to make this Agreement or any other agreements entered into in connection with the transactions contemplated hereby binding upon Seller. 

 5.08. There are no Liens for any federal, state, county or local franchise, income, excise, property, business, sales, commercial rent, employment or other Taxes upon Nanotech. Nanotech has timely filed all federal, foreign, state, county and local
franchise, income, excise, property, business, sales, commercial rent and employment and other Tax Returns which are required to be filed through the Closing Date, and has paid, or will pay, all Taxes which are due and payable on or before the
Closing Date.

 5.09 Nanotech, in all material respects, complied and is in compliance with all applicable Laws, orders and regulations of any Governmental or Regulatory Authority applicable to it , its operation of the business, assets or property or its
operations including, without limitation, applicable Laws relating to zoning, building codes, antitrust, occupational safety and health, Environmental Law, consumer product safety, product liability, hiring, wages, hours, employee benefit plans and
programs, collective bargaining and withholding and social security taxes.

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5.10. The representations and warranties of each Seller
contained in this Agreement will be true and correct on and as of the Closing
Date with the same force and effect as though such representations and
warranties had been made on and as of the Closing Date. 

5.11. With respect to the Common Stock being issued to the
Nanotech Shareholders, said shares are being acquired for investment purposes
only and not with a view towards resale or distribution. Sellers have had an
opportunity to ask questions of Buyer and have done so. The shares of Common
Stock are restricted securities that have not been registered for re-sale
pursuant to the Securities Act. Sellers understand that the Common Stock may not
be sold, transferred, assigned or hypothecated or otherwise distributed to its
stockholders as a dividend or otherwise, absent the effectiveness of a
registration statement covering the sale of such Common Stock or an exemption
from the registration requirements the Securities Act.

5.12. No Seller has any Liability or obligation to pay any fees
or commissions to any broker, finder or agent with respect to the transactions
contemplated by this Agreement or any other agreements to be entered into in
connection with the transactions contemplated hereby. 

5.13. The Nanotech Shareholders constitute all of beneficial
holders of Nanotech Shares, and Nanotech Shares constitute all of the issued and
outstanding shares of capital stock of Nanotech and, each has no other rights to
purchase, acquire or receive any additional shares of Nanotech’s capital stock.
Nanotech Shares represent all of the issued and outstanding shares of capital
stock of Nanotech. There is no restriction affecting the ability of any of the
Nanotech Shareholders to transfer the title and ownership of Nanotech Shares to
Buyer, and upon delivery of the certificates for Nanotech Shares to Buyer
pursuant to the terms of this Agreement and payment of the Purchase Price at the
Closing, Buyer will acquire record and legal title to such Nanotech Shares, free
and clear of all Liabilities, obligations, Liens, Claims (including Third Party
Claims) and encumbrances. 

5.14 The officers and directors of Nanotech are as follows:

	 	Joseph Kristul 	President, Director 
	 	Alex Trossman 	Director 

SECTION 6 

REPRESENTATIONS AND WARRANTIES OF BUYER 

Except as disclosed by Buyer on Buyer’s reports, statements,
schedules, prospectuses, and other documents filed with the Securities and
Exchange Commission (the “SEC”) in accordance with the Securities and Exchange
Act of 1934, as amended, and the rules and regulations promulgated thereunder
(the “Exchange Act”) (collectively, as amended and/or supplemented to date, the
“Securities Filings”), Buyer represents and warrants to the Sellers as follows:

6.01. Buyer is a corporation duly organized, validly existing
and in good standing under the laws of the State of Nevada. 

6.02. Buyer is duly qualified to conduct business under the
laws each jurisdiction where such qualification is necessary, except where the
failure to be so qualified would not have a Material Adverse Effect.

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6.03. Subject to Section 4.04 (f) a herein, Buyer has all other
requisite corporate power and authority to execute and deliver this Agreement
and all other agreements to be entered into in connection with the transactions
contemplated hereby to which it is a party, and to perform its obligations
hereunder and thereunder. The execution and delivery by Buyer of this Agreement
and all other agreements to be entered into in connection with the transactions
contemplated hereby to which it is a party, and the performance by Buyer of its
obligations hereunder and thereunder, shall be duly and validly authorized by
all necessary corporate action on the part of Buyer, including any vote of
stockholders. This Agreement has been, and upon execution and delivery thereof,
each of the other agreements to be entered into in connection with the
transactions contemplated hereby to which Buyer is a party will be, duly and
validly executed and delivered by Buyer and the valid and binding obligations of
Buyer, enforceable against Buyer in accordance with their terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws from time to time in effect affecting the
enforcement of creditors’ rights generally, and except as enforcement of
remedies may be limited by general equitable principles.

6.04 The Cancellation Shares held by the EPOD
Shareholders respectively are owned by each of the EPOD Shareholders as the
beneficial and recorded owners with good and marketable title thereto, and all
of the EPOD Shares are free and clear of all mortgages, liens, charges, security
interests, adverse claims, pledges, encumbrances and demands whatsoever. Each of
the EPOD Shareholders has the requisite power and authority to cause the
Cancellation Shares to be cancelled at Closing. 

6.05. Except as otherwise stated in this Agreement, there is no
additional requirement applicable to Buyer to make any filing with, or to obtain
any permit, authorization, consent or approval of, any governmental entity as a
condition to the lawful consummation by Buyer of the transactions contemplated
pursuant to this Agreement. The execution, delivery and performance of this
Agreement by Buyer does not, and the consummation of the transactions
contemplated hereby will not (with or without the giving of notice, the lapse of
time or both), (i) conflict with or result in any breach of any provision of the
Articles of Incorporation or Bylaws of Buyer, or (ii) violate any applicable
Law, rule, regulation, order, writ, judgment, ordinance, injunction or decree of
any governmental entity to which Buyer is a party or is bound.

6.06 The authorized capital of Buyer consists of 75,000,000
shares of Common Stock, of which 2,849,000 shares are issued and outstanding as
of the date of the signing of this Agreement. All of the outstanding shares of
common stock have been duly authorized, are fully paid and nonassessable and
were issued in compliance with all applicable federal and state securities laws.
Buyer holds no treasury stock and no shares of common stock in its treasury. The
rights, privileges and preferences of the common stock are as stated in Buyer’s
Articles of Incorporation and as provided by the general corporation law of the
jurisdiction of the Buyer’s incorporation.

6.07. The officers and Directors of EPOD are as follows:

	 	Michael Matvieshen 	CEO and sole Director 
	 	Satpal Sidhu 	President, Chief Operating Officer and
      Secretary 
	 	Gordon McKenzie 	Treasurer 

6.07 The shares of Common Stock to be issued to the Nanotech
Shareholders in accordance with Section 3.01 will at the time of issuance be,
duly authorized, validly issued and fully paid and non-assessable in all
respects, free from any pre-emptive or other rights, and the issuance thereof
will, at the
time of issuance, not violate any agreement or trigger the anti dilution, right of first refusal, co-sale or similar provisions of any agreement to which the Buyer is bound. Buyer shall reserve a sufficient number of shares of Common Stock for
issuance to the Nanotech Shareholders. Upon issuance in accordance with the terms of this Agreement, such shares will be duly authorized, validly issued, fully paid and non-assessable in all respects, free from any pre-emptive or other rights (other
than as entered into after the date of Closing), and the issuance thereof will not violate any agreement or trigger the anti-dilution, right of first refusal, co-sale or similar provisions of any agreement to which Buyer is bound. 

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 6.08. All Securities Filings required to be filed by Buyer with the SEC pursuant to the Exchange Act, along with all exhibits to such annual, quarterly and other reports as available on the SEC’s EDGAR database website, are true, correct and
complete in all material respects as of the date of filing thereof, and said reports do not, as of the date of filing thereof, fail disclose or omit any material fact, agreement or matter relating to the Buyer. 

 6.09 There is no claim, action, suit, proceeding, arbitration, complaint, charge or investigation pending or to Buyer’s Knowledge, currently threatened against Buyer or, to the best of Buyer’s Knowledge, threatened against any officer or
director of Buyer, that questions the validity of this Agreement or the right of Buyer to enter into it, or to consummate the transactions contemplated hereby, or could have or reasonably be expected to have, either individually or in the aggregate,
a material adverse effect upon the Business. Neither Buyer nor, to the best of Buyer’s Knowledge, any of its officers or directors, is a party or is named as subject to the provisions of any order, writ, injunction, judgment or decree of any
court or government agency or instrumentality (in the case of officers or directors, such as would affect Buyer). There is no action, suit, proceeding or investigation by Buyer pending or which Buyer intends to initiate. The foregoing includes,
without limitation, actions, suits, proceedings or investigations pending or threatened in writing (or any basis therefore known to Buyer) involving the prior employment of any of Buyer’s employees, their services provided in connection with
the Business, or any information or techniques allegedly proprietary to any of their former employers, or their obligations under any agreements with prior employers. 

 6.10. Except as expressly set forth in this Section 6, Buyer makes no other representation or warranty with respect to the transactions contemplated by this Agreement or other agreements to be entered into in connection with the transactions
contemplated hereby. 

SECTION 7 

SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION 

 7.01 Survival of Representations and Warranties.  All of Buyer’s representations and warranties in this Agreement or in any other agreements to be entered into in connection with the transactions contemplated hereby to which it is a
party, and all of Sellers’ representations and warranties in this Agreement, in any other agreements to be entered into in connection with the transactions contemplated hereby, or in any instrument delivered pursuant hereto or thereto, shall
survive the Closing Date and continue until the date which is 12 (twelve) months after the Closing Date; provided, however, that (i) any claim based on fraud shall survive indefinitely, (ii) any claim for violation of the representations and
warranties with respect to Taxes, employee matters or Environmental Law shall survive until the expiration of the applicable statute of limitations applicable to any claim or right of action related thereto, (iii) the covenants and agreements
contained in this Agreement and the other agreements to be entered into in connection with the transactions contemplated hereby and to be performed at the Closing Date will survive until fully performed in accordance with their terms, and (iv) any
claim for indemnity asserted pursuant to Section 7.02 shall, if made within the applicable time
period set forth above with respect to an accrued Liability, survive indefinitely. However, no claim for indemnity may be asserted under Section 7.02 unless notice of such claim is given to Nanotech or Buyer, as the case may be, prior to the
appropriate period(s) specified in the preceding sentence. 

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7.02 Indemnification. 

 (a) EPOD agrees, from and after the Closing Date, for the appropriate period(s) specified in Section 7.01, above, to indemnify and hold Buyer and its officers, directors, agents or Affiliates and their respective successors and assigns (the
“Buyer Indemnified Parties”), harmless from and against any Loss incurred by any Buyer Indemnified Party, directly or indirectly, resulting from (i) noncompliance with any applicable bulk sales or transfer Law, (ii) any Liability or
Contract of, or Claim against, a Seller, whether contingent or absolute, direct or indirect, known or unknown, matured or unmatured (including but not limited to Liabilities for Taxes), (iii) any Liability or Claim arising in any way from any
service rendered, or action taken by, or relating to the operations of, a Seller prior to the Closing Date, (iv) any Liability or Claim under any Environmental Laws relating to any event, action or failure to act which occurred prior to the Closing
Date, or (v) the breach or inaccuracy of or failure to comply with, or the existence of any facts resulting in the inaccuracy of, any of the warranties, representations, conditions, covenants or agreements of a Seller contained in this Agreement or
in any agreement or document delivered pursuant hereto or in connection herewith, or arising out of the consummation of the transactions contemplated hereby. 

 (b) Buyer agrees from and after the Closing Date, for the appropriate period(s) specified in Section 7.01, above, to indemnify and hold Sellers and their respective  Affiliates, successors and assigns (the “Seller Indemnified Parties”)
harmless from and against any Loss incurred by any Seller Indemnified Party directly or indirectly resulting from (i) any Liability or Claim arising in any way from any service rendered, or action taken by, or relating to the operations of, Buyer
after the Closing Date, (ii) any Liability or Claim under any Environmental Laws relating to any event, action or failure to act which occurs after the Closing Date, or (iii) any Claim arising out of Buyer’s breach, failure to fully repay and
satisfy, default in or failure to comply with the terms of, the Assumed Liabilities or any breach of any warranties, representations, conditions, covenants or agreements of Buyer contained in this Agreement to which the Buyer is a party, or in any
other agreement, certificate or document delivered pursuant to or in connection with this Agreement or arising out of the Closing of the transactions contemplated hereby. 

 (c) If any Third Party shall notify any party (the “Indemnified Party”) with respect to any matter which may give rise to a claim for indemnification against any other party (the “Indemnifying Party”) under this Section 7, then
the Indemnified Party shall notify each Indemnifying Party thereof promptly; provided, however, that no delay on the part of the Indemnified Party in notifying any Indemnifying Party shall relieve the Indemnifying Party from any Liability or
obligation hereunder unless (and then solely to the extent) the Indemnifying Party thereby is materially damaged. In the event any Indemnifying Party notifies the Indemnified Party within thirty (30) days after the Indemnified Party has given notice
of the matter that the Indemnifying Party is assuming the defense thereof, (i) the Indemnifying Party will defend the Indemnified Party against the matter with counsel of its choice reasonably satisfactory to the Indemnified Party, (ii) the
Indemnified Party may retain separate co-counsel (at its cost), (iii) the Indemnified Party will not consent to the entry of any judgment or enter into any settlement with respect to the matter without the written consent of the Indemnifying Party
(not to be withheld unreasonably), and (iv) the Indemnifying Party will not consent to the entry of any judgment with respect to the matter, or enter into any settlement which does not include a provision whereby the plaintiff or claimant in the
matter releases the Indemnified Party from all Liability with
respect thereto, without the written consent of the Indemnified Party (not to be withheld unreasonably). In the event the Indemnifying Party fails to assume the defense of the matter as provided herein within thirty (30) days after the Indemnified
Party has given notice thereof, the Indemnified Party may defend against, or enter into any settlement with respect to, the matter in any manner it reasonably may deem appropriate. 

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 (d) After the Closing Date, the right of indemnification under this Section 7 shall be the sole and exclusive remedy available to any Party for any claim or cause of action arising under this Agreement or other agreements to be entered into in
connection with the transactions contemplated hereby in connection with any breach of any representation, warranty, covenant or provision of this Agreement this Agreement, other agreements to be entered into in connection with the transactions
contemplated hereby or otherwise; provided, however, that this exclusive remedy does not preclude a Party from bringing an action for specific performance or other equitable remedy to require a party to perform its obligations under this Agreement.
Each Party expressly waives any rights it may have to make a claim against the other pursuant to any constitutional, statutory, or common law authorities.  The provisions of this Section 7.02(d) shall not apply to claims arising out of or relating
to the fraud, gross negligence or willful misconduct of the Parties. 

SECTION 8 

PRESERVATION OF BOOKS AND RECORDS 

 8.01 For a period of 3 (three) years after the Closing date, Buyer shall preserve the books and records of Nanotech delivered to Buyer; and Sellers shall similarly make available to Buyer any records which Buyer permits Sellers to retain; each
Party will make such books and records available to the other Party at all reasonable times and permit the other Party to make extracts from or copies of all such records. 

SECTION 9 

CERTAIN OTHER COVENANTS AND AGREEMENTS 

 9.01.  Further Assurances. Upon the request of either Party hereto, the other Party will execute and deliver to the requesting Party, or such Party’s nominee, all such instruments and documents of further assurance or otherwise, and
will do any and all such acts and things as may reasonably be required to carry out the obligations of such Party hereunder and to more effectively consummate the transactions contemplated hereby, including, without limitation, submitting
information required by a Governmental or Regulatory Authority, obtaining all consents and approvals from Third Parties, under leases, agreements and other Contracts. 

 9.02. Quotation. Buyer shall use its best efforts to maintain the eligibility for quotation of the Common Stock on the over the counter bulletin board. 

9.03. SEC Reports.  Buyer shall file with the SEC all reports that are required to be filed pursuant to the Exchange Act with respect to this Agreement and the transactions contemplated hereby. 

 

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SECTION 10 

MISCELLANEOUS 

10.01. Governing Law. This Agreement shall be construed
and interpreted in accordance with the laws of the State of Nevada shall be
enforceable exclusively in the courts thereof.

10.02. Modification. This Agreement may be modified or
amended, and the requirements of any provision hereof may be waived, with the
mutual consent of Sellers and Buyer by written instrument signed by them or
their respective successors or assigns in any manner deemed necessary or
appropriate by them. 

10.03. Binding Nature. This Agreement shall be binding
unto the Parties and may only be terminated by: (i) the Buyer in the event of a
breach of any of the obligations of the Sellers under Sections 4.02 and 4.04
herein, or (ii) by Nanotech in the event of a breach of any of the obligations
of the Buyer under Sections 4.04 and 4.05 herein. 

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

10.05. Notices. Any notice or other communication
hereunder may be sent by any means (including facsimile or email or other
electronic means, provided that receipt thereof is acknowledged and confirmed by
the recipient) and shall be effective upon receipt; except that, if sent via
domestic certified mail or via international overnight courier such as Federal
Express, said notice shall be conclusively deemed to have been received by a
Party hereto and be effective on the earlier of (a) the actual date of receipt,
or, if earlier, (b) the third business day following the date given to the post
office or courier for delivery. In addition to such notices and communications
as shall be addressed to such Party at the address set forth at the outset of
this Agreement (or such other address as such Party shall specify to the other
Party in writing), mandatory copies, sent in such manner, shall be delivered to
the additional addressees set forth below: 

	As to Sellers: 	Nanotech Industries International Inc. 
	  	950 John Daly blvd, Suite 260 
	  	Daly City, CA 94015 
	 	 
	  	Joseph Kristul 
	  	C/O Nanotech Industries International Inc.
  
	  	950 John Daly blvd, Suite 260 
	  	Daly City, CA 94015 
	 	 
	As to Buyer: 	EPOD Solar Inc 
	  	5 – 215 Neave Road 
	  	Kelowna British Columbia, Canada V1V 2L9 
	  	Attn: Michael Matvieshen, President
  

10.06. Entire Agreement. This Agreement, together with
its schedules, exhibits and the other agreements to be entered into in
connection with the transactions contemplated hereby, constitutes the entire
understanding among the Parties and supersedes all other understandings and
agreements, oral or written, with respect to the subject matter hereof. 

15 

 10.07. Headings.  The descriptive headings of the several sections and paragraphs of this Agreement are inserted for convenience only and do not constitute a part of this Agreement. 

 10.08. Equitable Remedies. In the event that any Party to this Agreement shall default in the performance of any obligation, covenant or agreement hereunder, the other Parties to this Agreement shall, in addition to all other remedies which
may be available to it, be entitled to injunctive and equitable relief, including without limitation specific performance, and shall be entitled to recover from the defaulting Party or Parties its costs and expenses (including reasonable
attorneys’ fees) incurred by it in securing such injunctive or equitable relief. 

 10.09. Severability. In the event that any provision of this Agreement shall be held to be invalid or unenforceable by a court of competent jurisdiction, the remainder of this Agreement should remain in full force and effect and be
interpreted as if such invalid or unenforceable provision had not been a part hereof; provided, however, if any particular portion of this Agreement shall be adjudicated invalid or unenforceable by reason of the length of time or scope of
applicability provided for herein, this Agreement shall be deemed amended to diminish such time and/or reduce such scope to the longest enforceable time and the broadest enforceable scope of applicability. 

 10.10. Assignment. Buyer shall be entitled to assign all or part of its rights, title and interest under this Agreement to an Affiliate; provided that such Affiliate shall assume the corresponding obligations of Buyer under this Agreement. A
copy of any assignment made hereunder shall be promptly forwarded to EPOD. Sellers may not assign all or any part of their respective rights, title and interest under this Agreement without the prior written consent of Buyer. 

 10.11. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Parties herein and their successors and permitted assigns. 

 10.12. Publicity. No Party shall not issue nor cause the publication of any press release or other announcement with respect to this Agreement or the transactions contemplated hereby without the consent of the other Parties, which consent
shall not be unreasonably withheld, except where such release or announcement is required by applicable Law or the rules of any stock exchange, stock market or Governmental or Regulatory Authority having authority over any Party.

(Signature page follows.) 

 16 

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

SELLERS: 

NANOTECH INDUSTRIES INTERNATIONAL INC.

By: /s/Joseph Kristul   

Name: Joseph Kristul   

Its: Chief Executive Officer  

 

JOSEPH KRISTUL

/s/Joseph Kristul 

 

BUYER: 

EPOD SOLAR INC.

By: /s/ Michael Matvieshen 

Name: Michael Matvieshen 

Its: President 

SCHEDULE A 

Nanotech Shareholders and Share Exchanges 

SCHEDULE B 

EPOD Shareholders 

	
NAME OF HOLDER 	
SHARES
      HELD 	SHARES TO BE
      
CANCELLED 	SHARES HELD
      POST 
CANCELLATION 

	Michael Matvieshen 	                 
               408,000 	408,000 	0 
	M124
      BC Ltd. 	                 
               200,000 	125,000 	75,000 
	Doug
      Sereda 	                 
               165,000 	165,000 	0 
	Peter Schriber 	                 
               165,000 	165,000 	0 
	Satpal Sidhu 	                 
               165,000 	165,000 	0f8k081310ex10i_feelgolf.htm

Exhibit 10.1

 

NEITHER THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

	
August 13, 2010

	
$11,000

FEEL GOLF COMPANY INC.

15% Convertible Debenture

Due August 13, 2012

FOR VALUE RECEIVED, FEEL GOLF CO., INC., a California corporation (hereinafter called the “Borrower” or the “Company”), hereby promises to pay to Long Side Ventures LLC , a Florida limited liability company  (the “Holder”), or order, without demand, the sum of ELEVEN THOUSAND Dollars ($11,000), with simple interest accruing at the rate described below, on August 13, 2012 (the "Maturity Date").

NOW THEREFORE, the following terms shall apply to this Note:

ARTICLE I

GENERAL PROVISIONS

1.1           Payments. The entire unpaid principal amount due under this Note (the “Principal”) shall be due and payable on the Maturity Date. Interest on this Note (the “Interest”) will be payable on the Maturity Date. Interest shall be payable in cash or, at the Holder’s option, in shares of the Company’s common stock, par value $0.0001 per share (the "Common Stock").

           Upon any conversion in part by the Holder in accordance with Article II, the Holder and the Borrower shall in good faith recalculate the outstanding principal balance. Upon any full conversion by the Holder in accordance with Article II of all of the Interest and the Principal due hereunder, all of the Borrower's payment obligations shall terminate. All payments in respect of the indebtedness evidenced hereby shall be applied in the following order: to accrued Interest, Principal, and charges and expenses owing under or in connection with this Note.

           If any payment of interest is paid in Common Stock, the number of shares issuable will be determined utilizing the conversion ratio as set forth in Article II. Notwithstanding the foregoing, the Company’s right to pay this Note, including any Interest due thereunder, in shares of Common Stock upon the Maturity Date is subject to the condition that: (i) the Common Stock is trading on the Pink Sheets, OTC Bulletin Board, American Stock Exchange or Nasdaq; and (ii) there is an effective Registration Statement on the Maturity Date or the shares are otherwise eligible for resale pursuant to Rule 144.

1.2           Interest.  Interest shall accrue on the outstanding principal balance hereof at an annual rate equal to fifteen percent (15%) from the date Principal was advanced in connection with this Note.  Interest shall be calculated on the basis of a 360-day year and the actual number of days elapsed,  to the extent permitted by applicable  law.  Interest hereunder will be paid to the Holder or its assignee in whose name this Note is registered on the records of the Borrower regarding registration and transfers of Notes  (the “Note Register”).  However, should the Company fail to timely file its periodic reports pursuant to the Securities Exchange Act of 1934, the interest rate shall increase to 20% per annum for that period when the Company’s filings are not up-to-date.

 

  

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1.3           Payment Grace Period. From and after the 10th day after an Event of Default under Section 3.1, the Interest Rate applicable to any unpaid amounts owed hereunder shall be increased to eighteen percent (18%) per annum.

1.4           Conversion Privileges. The conversion privileges set forth in Article II shall remain in full force and effect immediately from the date hereof and until the Note is paid in full regardless of the occurrence of an Event of Default. This Note shall be payable in full on the Maturity Date, unless previously converted into Common Stock in accordance with Article II hereof; provided, that if an Event of Default has occurred, the Holder may elect to extend the Maturity Date by the amount of days of the pendency of the Event of Default.

1.5           Corporate Existence.  So long as this Note remains outstanding, the Company shall not directly or indirectly consummate any merger, reorganization, restructuring, reverse stock split, consolidation, sale of all or substantially all of the Company's assets or any similar transaction or related transactions (each such transaction, a “Fundamental Change”) where the Company is not the surviving entity unless, prior to the consummation a Fundamental Change, the Company shall have given the Holder not less than fourteen (14) days prior written notice to the Holder.  In any such case, the Company grant the Holder the right to put this Note to the Company up to the time of the effectiveness of the Fundamental Change at 125% of the then outstanding Principal plus any unpaid and accrued Interest.

1.6.           Collateral.  The Company has previously put into Escrow 30,000,000 shares of Company common stock in accordance with the Escrow Agreement attached hereto as Exhibit B.

This Note is subject to the following additional provisions:

ARTICLE II

CONVERSION RIGHTS AND REDEMPTION RIGHTS

The Holder shall have the right to convert the principal and accrued and unpaid interest due under this Note into Shares of the Borrower's Common Stock as set forth below.

2.1           Conversion into the Borrower's Common Stock.

(a)           The Holder shall have the right from and after the date of the issuance of this Note and then at any time until this Note is fully paid, to convert any outstanding and unpaid principal portion of this Note, and accrued Interest, at the election of the Holder (the date of giving of such notice of conversion being a "Conversion Date") into fully paid and non-assessable shares of Common Stock as such stock exists on the date of issuance of this Note (such shares, the “Conversion Shares”), or any shares of capital stock of Borrower into which such Common Stock shall hereafter be changed or reclassified (the “Other Securities”), at the conversion price as defined in Section 2.1(b) hereof (the "Conversion Price"), determined as provided herein. Upon delivery to the Borrower of a completed Notice of Conversion, a form of which is attached hereto as Exhibit A, Borrower shall issue and deliver to the Holder within three (3) business days from the Conversion Date (such third day being the “Delivery Date”) that number of Conversion Shares for the portion of the Note converted in accordance with the foregoing. At the election of the Holder, the Borrower will deliver accrued but unpaid interest on the principal amount of the Note being converted in the manner provided in Section 1.1 through the Conversion Date directly to the Holder on or before the Delivery Date. The number of Conversion Shares to be issued upon each conversion of this Note shall be determined by dividing that portion of the principal of this Note and accrued interest to be converted, by the Conversion Price.

(b) Subject to adjustment as provided in Section 2.1(c) hereof, the Conversion Price per share shall be the higher of: (i) 50% of the average of the five lowest closing prices for the Company’s stock during the previous 15 trading days: or (ii) $0.0001.

 

  

2

  

 

(c)            The Conversion Price and number and kind of shares or other securities to be issued upon conversion determined pursuant to Section 2.1(a), shall be subject to adjustment from time to time upon the happening of the following certain events while this conversion right remains outstanding:

                                A.           Reorganization, Consolidation, Merger, etc.; Reclassification.  In case at any time or from time to time, the Company shall, subject to Section 1.5 hereof, effect a Fundamental Change, then, in each such case, as a condition to the consummation of such a transaction, proper and adequate provision shall be made by the Company whereby the Holder of this Note, on the conversion hereof as provided in Article II, at any time after the consummation of such Fundamental Change, shall receive, in lieu of the Conversion Shares (or Other Securities) issuable on such conversion prior to such consummation or such effective date, the stock and other securities and property (including cash) to which such Holder would have been entitled upon such consummation of a Fundamental Change if such Holder had so converted this Note, immediately prior thereto, all subject to further adjustment thereafter as provided in Section 2.1(c)(E).

                                           If the Borrower at any time shall, by reclassification or otherwise, change the Common Stock into the same or a different number of securities of any class or classes that may be issued or outstanding, this Note, as to the unpaid principal portion thereof and accrued interest thereon, shall thereafter be deemed to evidence the right to purchase an adjusted number of such securities and kind of securities as would have been issuable as the result of such change with respect to the Common Stock immediately prior to such reclassification or other change.

                                B.           Dissolution. In the event of any dissolution of the Company following the transfer of all or substantially all of its properties or assets, the Company, prior to such dissolution, shall at its expense deliver or cause to be delivered the stock and other securities and property (including cash, where applicable) receivable by the Holder of this Note after the effective date of such dissolution pursuant to this Article II to a bank or trust company (a “Trustee”) having its principal office in New York, NY, as trustee for the Holder of the Notes.

                                C.           Continuation of Terms. Upon any Fundamental Change or transfer (and any dissolution following any transfer) referred to in this Article II, this Note shall continue in full force and effect and the terms hereof shall be applicable to the Other Securities and property receivable on the conversion of this Note after the consummation of such Fundamental Change or transfer or the effective date of dissolution following any such transfer, as the case may be, and shall be binding upon the issuer of any other securities, including, in the case of any such transfer, the person acquiring all or substantially all of the properties or assets of the Company, whether or not such person shall have expressly assumed the terms of this Note as provided in Section 2.1(c)(E). In the event this Note does not continue in full force and effect after the consummation of the transaction described in this Article II, then only in such event will the Company's securities and property (including cash, where applicable) receivable by the Holder of this Note be delivered to the Trustee as contemplated by Section 2.1(c)(B).

                                D.           Share Issuance.  If at any time this Note is outstanding the Company shall offer, issue or agree to issue any common stock or securities convertible into or exercisable for shares of common stock (or modify any of the foregoing which may be outstanding) to any person or entity at a price per share or conversion or exercise price per share which shall be less than the then applicable Conversion Price in respect of the Shares, without the consent of the Holders of this Note, except with respect to Excepted Issuances, then the Company shall issue, for each such occasion, additional shares of Common Stock to each Holder so that the average per share purchase price of the shares of Common Stock issued to the Holder (of only the Conversion Shares still owned by the Holder) is equal to such other lower price per share and the Conversion Price shall automatically be reduced to such other lower price per share.  For the purposes hereof, "Excepted Issuances" means any offer, issuance or agreement to issue any common stock or securities convertible into or exercisable for shares of common stock (or modify any of the foregoing which may be outstanding) in connection with (i) full or partial consideration in connection with a strategic merger, consolidation or purchase of substantially all of the securities or assets of corporation or other entity, (ii) the Company’s issuance of securities in connection with strategic license agreements and other partnering arrangements so long as such issuances are not for the purpose of raising capital, (iii) the Company’s issuance of Common Stock or the issuance or grants of options to purchase Common Stock pursuant to the Company’s stock option plans and employee stock purchase plans, (iv) the conversion of any of the Notes, (v) the payment of any interest on the Notes, and (vi) as has been 

 

  

3

  

 

described in the Reports filed with the Commission or delivered to the Holder prior to the issuance of this Note (collectively, the “Excepted Issuances”).  The delivery to the Holder of the additional shares of Common Stock shall be not later than the closing date of the transaction giving rise to the requirement to issue additional shares of Common Stock.  For purposes of the issuance and adjustment described in this paragraph, the issuance of any security of the Company carrying the right to convert such security into shares of Common Stock or of any warrant, right or option to purchase Common Stock shall result in the issuance of the additional shares of Common Stock upon the issuance of such convertible security, warrant, right or option and again at any time upon any subsequent issuances of shares of Common Stock upon exercise of such conversion or purchase rights if such issuance is at a price lower than the Conversion Price in effect upon such issuance.  The rights of the Holder set forth in this Section 2.1 (c)(D), are in addition to any other rights the Holder has pursuant to this Note, any Transaction Document and any other agreement referred to or entered into in connection herewith.

                                E.           Extraordinary Events Regarding Common Stock. In the event that the Company shall (a) issue additional shares of the Common Stock as a dividend or other distribution on outstanding Common Stock, (b) subdivide its outstanding shares of Common Stock, or (c) subject to Section 1.5 hereof, combine its outstanding shares of the Common Stock into a smaller number of shares of the Common Stock, then, in each such event, the Conversion Price shall, simultaneously with the happening of such event, be adjusted by multiplying the then Conversion Price by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such event and the denominator of which shall be the number of shares of Common Stock outstanding immediately after such event, and the product so obtained shall thereafter be the Conversion Price then in effect. The Conversion Price, as so adjusted, shall be readjusted in the same manner upon the happening of any successive event or events described herein in this Section 2.1(c)(E). The number of Conversion Shares that the Holder of this Note shall thereafter, on the conversion hereof as provided in Article II, be entitled to receive shall be adjusted to a number determined by multiplying the number of Conversion Shares that would otherwise (but for the provisions of this Section 2.1(c)(E)) be issuable on such conversion by a fraction of which (a) the numerator is the Conversion Price that would otherwise (but for the provisions of this Section 2.1(c)(E)) be in effect, and (b) the denominator is the Conversion Price in effect on the date of such conversion.

                                F.           Certificate as to Adjustments. In each case of any adjustment or readjustment in the shares of Common Stock (or Other Securities) issuable on the conversion of the Notes, the Company at its expense will promptly cause its Chief Financial Officer or other appropriate designee to compute such adjustment or readjustment in accordance with the terms of the Note and prepare a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based, including a statement of (a) the consideration received or receivable by the Company for any additional shares of Common Stock (or Other Securities) issued or sold or deemed to have been issued or sold, (b) the number of shares of Common Stock (or Other Securities) outstanding or deemed to be outstanding, and (c) the Conversion Price and the number of Conversion Shares to be received upon conversion of this Note, in effect immediately prior to such adjustment or readjustment and as adjusted or readjusted as provided in this Note. The Company will forthwith mail a copy of each such certificate to the Holder of the Note and any transfer agent of the Company.

2.2           Method of Conversion. This Note may be converted by the Holder in whole or in part as described in Section 2.1(a) hereof and the Subscription Agreement. Upon partial conversion of this Note, a new Note containing the same date and provisions of this Note shall, at the request of the Holder, be issued by the Borrower to the Holder for the principal balance of this Note and interest which shall not have been converted or paid.

2.3           Issuance Below Par.  The Parties hereto agree that the Delaware General Corporations Law allows for the issuance of conversion shares under this section even if such conversion price is less than the shares’ stated par value, and that such shares shall be issued in response to a Conversion Request regardless of Conversion Price.

2.4           Intentionally Left Blank.

2.5           Conversion of Note.

 

  

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(a)           Upon the conversion of this Note or part thereof, the Company shall, at its own cost and expense, take all necessary action, including obtaining and delivering, an opinion of counsel to assure that the Company's transfer agent shall issue stock certificates in the name of Holder (or its nominee) or such other persons as designated by Holder and in such denominations to be specified at conversion representing the number of Conversion Shares issuable upon such conversion. The Company warrants that no instructions other than these instructions have been or will be given to the transfer agent of the Company's Common Stock and that, unless waived by the Holder, the Conversion Shares will be free-trading, and freely transferable, and will not contain a legend restricting the resale or transferability of the Conversion Shares provided the Conversion Shares are being sold pursuant to an effective registration statement covering the Conversion Shares or are otherwise exempt from registration.

(b)           Subscriber will give notice of its decision to exercise its right to convert this Note or part thereof by telecopying an executed and completed Notice of Conversion (a form of which is attached as Exhibit A to the Note) to the Company via confirmed telecopier transmission or overnight courier or otherwise pursuant to Section 4.2 of this Note. The Subscriber will not be required to surrender this Note until this Note has been fully converted or satisfied, with each date on which a Notice of Conversion is telecopied to the Company in accordance with the provisions hereof shall be deemed a Conversion Date (as defined above). The Company will itself or cause the Company’s transfer agent to transmit the Company's Common Stock certificates representing the Conversion Shares issuable upon conversion of this Note to the Subscriber via express courier for receipt by such Subscriber on or before the Delivery Date (as defined above). In the event the Conversion Shares are electronically transferable, then delivery of the Conversion Shares must be made by electronic transfer provided request for such electronic transfer has been made by the Subscriber and the Subscriber has complied with all applicable securities laws in connection with the sale of the Common Stock, including, without limitation, the prospectus delivery requirements.  A Note representing the balance of this Note not so converted will be provided by the Company to the Subscriber if requested by Subscriber, provided the Subscriber delivers the original Note to the Company.

(c)           The Company understands and agrees that a delay in the delivery of the Conversion Shares in the form required pursuant to Section 2.5(a) hereof, after the Delivery Date (as hereinafter defined) could result in economic loss to the Holder. As compensation to the Holder for such loss, the Company agrees to pay (as liquidated damages and not as a penalty) to the Holder for late issuance of Conversion Shares upon Conversion of the Note in the amount of $500 per business day after the Delivery Date for each $10,000 of Note principal amount being converted of the corresponding Conversion Shares which are not timely delivered. The Company shall pay any payments incurred under this Section in immediately available funds upon demand. Furthermore, in addition to any other remedies which may be available to theHolder, in the event that the Company fails for any reason to effect delivery of the Conversion Shares by the Delivery Date the Holder will be entitled to revoke all or part of the relevant Notice of Conversion  by delivery of a notice to such effect to the Company whereupon the Company and the Holder shall each be restored to their respective positions immediately prior to the delivery of such notice, except that the liquidated damages described above shall be payable through the date notice of revocation or rescission is given to the Company.

(d)           Nothing contained herein or in any document referred to herein or delivered in connection herewith shall be deemed to establish or require the payment of a rate of interest or other charges in excess of the maximum permitted by applicable law. In the event that the rate of interest or dividends required to be paid or other charges hereunder exceed the maximum permitted by such law, any payments in excess of such maximum shall be credited against amounts owed by the Company to the Holder and thus refunded to the Company.

2.6           Injunction Posting of Bond. In the event a Holder shall elect to convert a Note or part thereof in whole or in part, the Company may not refuse conversion based on any claim that such Holder or any one associated or affiliated with such Holder has been engaged in any violation of law, or for any other reason, unless an injunction from a court, on notice, restraining and or enjoining conversion of all or part of such Note shall have been sought and obtained by the Company and the Company has posted a surety bond for the benefit of such Holder in the amount of 120% of the amount of the Note, which bond shall remain in effect until the completion of arbitration/litigation of the dispute and the proceeds of which shall be payable to such Holder to the extent Holder obtains judgment.

 

  

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2.7           Optional Redemption.

(a)           Provided that the Company has a number of authorized but unissued shares of Common Stock sufficient for the issuance of all Conversion Shares underlying the remaining principal amount of this Note, such Common Stock is listed or quoted (and is not suspended from trading) on the Principal Market and such shares of Common Stock are approved for listing on such Principal Market upon issuance if applicable, such Common Stock is registered for resale under the Registration Statement and the prospectus under such Registration Statement is available for the sale of all Registrable Securities held by the Subscriber, such issuance would be permitted in full without violating Section 2.3 herein or the rules or regulations of any trading market on which such Common Stock may be listed or quoted, and both immediately before and after giving effect thereto, no Event of Default under the Subscription Agreement or this Note shall or would exist, the Borrower will have the option of prepaying the outstanding principal amount of this Note ("Optional Redemption"), in whole or in part, together with interest accrued thereon, by paying to the Holder a sum of money equal to one hundred fifty percent (150%) of the principal amount to be redeemed, together with accrued but unpaid interest thereon and interest that will accrue until the actual repayment date and any and all other sums due, accrued or payable to the Holder arising under the Note, the Subscription Agreement or any Transaction Document (the "Redemption Amount") on the day written notice of redemption (the "Notice of Redemption") is given to the Holder. The Notice of Redemption shall specify the date for such Optional Redemption (the "Redemption Payment Date"), which date shall be not less than five (5) business days after the date of the Notice of Redemption (the "Redemption Period"). A Notice of Redemption shall not be effective with respect to any portion of this Note for which the Holder has a pending election to convert, or for Conversion Notices given by the Holder prior to the Redemption Payment Date. On the Redemption Payment Date, the Redemption Amount shall be paid in good funds to the Holder. In the event the Borrower fails to pay the Redemption Amount on the Redemption Payment Date as set forth herein, then (i) such Notice of Redemption will be null and void, (ii) Borrower will have no further right to deliver another Notice of Redemption, and (iii) Borrower’s failure may be deemed by Holder to be a non-curable Event of Default.

2.8           Mandatory Redemption at Subscriber’s Election.  In the event the Company is prohibited from issuing Conversion Shares, or fails to timely deliver Shares on a Delivery Date, or upon the occurrence of any other Event of Default (as defined in this Note or in the Subscription Agreement) or for any reason other than pursuant to the limitations set forth in Section 2.3 hereof, then at the Subscriber's election, the Company must pay to the Subscriber ten (10) business days after request by the Subscriber, at the Subscriber's election, a sum of money in immediately available terms equal to the greater of (i) the product of the outstanding principal amount of the Note designated by the Subscriber multiplied by 120%, or (ii) the product of the number of Conversion Shares otherwise deliverable upon conversion of an amount of Note principal and/or interest designated by the Subscriber (with the date of giving of such designation being a “Deemed Conversion Date”) at the then Conversion Price that would be in effect on the Deemed Conversion Date multiplied by the average of the closing bid prices for the Common Stock for the five consecutive trading days preceding either: (1) the date the Company becomes obligated to pay the Mandatory Redemption Payment, or (2) the date on which the Mandatory Redemption Payment is made in full, whichever is greater, together with accrued but unpaid interest thereon and any liquidated damages then payable (“Mandatory Redemption Payment”).  The Mandatory Redemption Payment must be received by the Subscriber on the same date as the Company Shares otherwise deliverable or within ten (10) business days after request, whichever is sooner (“Mandatory Redemption Payment Date”).  Upon receipt of the Mandatory Redemption Payment, the corresponding Note principal and interest will be deemed paid and no longer outstanding. Liquidated damages calculated pursuant to Section 2.5(c) hereof, that have been paid or accrued for the twenty (20) day period prior to the actual receipt of the Mandatory Redemption Payment by the Subscriber shall be credited against the Mandatory Redemption Payment.

2.9           Buy-In.  In addition to any other rights available to the Subscriber, but without any duplicative recovery by the Subscriber, if the Company fails to deliver to the Subscriber the Conversion Shares issuable upon conversion of this Note by the Delivery Date and if after five (5) business days after the Delivery Date the Subscriber purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by such Subscriber of the Common Stock which the Subscriber was entitled to receive upon such conversion 

 

  

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(a “Buy-In”), then the Company shall pay in cash to the Subscriber (in addition to any remedies available to or elected by the Subscriber) the amount by which (A) the Subscriber's total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (B) the aggregate principal and/or interest amount of the Note for which such conversion was not timely honored, together with interest thereon at a rate of 15% per annum, accruing until such amount and any accrued interest thereon is paid in full (which amount shall be paid as liquidated damages and not as a penalty).  For example, if the Subscriber purchases shares of Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted conversion of $10,000 of note principal and/or interest, the Company shall be required to pay the Subscriber $1,000, plus interest.  The Subscriber shall provide the Company written notice indicating the amounts payable to the Subscriber in respect of the Buy-In.

2.10           Reservation. During the period the conversion right exists, Borrower will reserve from its authorized and unissued Common Stock a number of shares of Common Stock equal to 150% of the amount of Common Stock issuable upon the full conversion of this Note. Borrower represents that upon issuance, such shares will be duly and validly issued, fully paid and non-assessable. Borrower agrees that its issuance of this Note shall constitute full authority to its officers, agents, and transfer agents who are charged with the duty of executing and issuing stock certificates to execute and issue the necessary certificates for shares of Common Stock upon the conversion of this Note.

2.11           Maximum Conversion

 

(a) Notwithstanding anything to the contrary contained herein, the number of Conversion Shares that may be acquired by the Holder upon conversion of this Note (or otherwise in respect hereof) shall be limited to the extent necessary to ensure that, following such conversion (or other issuance), the total number of shares of Common Stock then beneficially owned by such HOlder and its affiliates and any other persons whose beneficial ownership of Common Stock would be aggregated with the Holder’s for purposes of Section 13(d) of the 1934 Act, does not exceed 4.999% of the total number of issued and outstanding shares of Common Stock (including for such purpose the shares of Common Stock issuable upon such conversion). For such purposes, beneficial ownership shall be determined in accordance with Section 13(d) of the 1934 Act and the rules and regulations promulgated thereunder. By written notice to the Company, a Subscriber may waive the provisions of this Section 2.3(a) as to itself but any such waiver will not be effective until the 61st day after delivery thereof and such waiver shall have no effect on any other Subscriber.

(b)           Notwithstanding anything to the contrary contained herein, the number of Conversion Shares that may be acquired by the Holder upon conversion of this Note (or otherwise in respect hereof) shall be limited to the extent necessary to ensure that, following such conversion (or other issuance), the total number of shares of Common Stock then beneficially owned by such Holder and its affiliates and any other persons whose beneficial ownership of Common Stock would be aggregated with the Holder’s for purposes of Section 13(d) of the 1934 Act, does not exceed 9.999% of the total number of issued and outstanding shares of Common Stock (including for such purpose the shares of Common Stock issuable upon such conversion). For such purposes, beneficial ownership shall be determined in accordance with Section 13(d) of the 1934 Act and the rules and regulations promulgated thereunder. This provision may not be waived.

2.12           Short sales.  The Holder shall not sell short the common shares of the Company without first having sent a conversion request to the Company or having such shares available to cover such short sale prior to entering into such short sale.

ARTICLE III

EVENTS OF DEFAULT

An “Event of  Default,”  wherever  used  herein, means any one of the following events  (whatever  the reason and  whether it shall be voluntary  or involuntary or effected by operation of law or pursuant to any judgment,  decree or order of any court, or any order, rule or regulation of any administrative or governmental body):

3.1           Failure to Pay Principal or Interest. The Borrower fails to pay any installment of Principal, Interest or other sum due under this Note when due.

 

  

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3.2           Breach of Covenant. The Borrower breaches any other covenant or other term or condition of the Subscription Agreement or this Note in any material respect and such breach, if subject to cure, continues for a period of ten (10) business days after written notice to the Borrower from the Holder.

3.3           Breach of Representations and Warranties. Any representation or warranty of the Borrower made herein, in the Subscription Agreement, or in any agreement, statement or certificate given in writing pursuant hereto or in connection therewith shall be false or misleading in any material respect as of the date made and the Closing Date.

3.4           Receiver or Trustee. The Borrower shall make an assignment for the benefit of creditors, or apply for or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business; or such a receiver or trustee shall otherwise be appointed.

3.5           Judgments. Any money judgment, writ or similar final process shall be entered or filed against Borrower or any of its property or other assets for more than $1,000,000, and shall remain unvacated, unbonded or unstayed for a period of thirty (30) days.

3.6           Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings or relief under any bankruptcy law or any law, or the issuance of any notice in relation to such event, for the relief of debtors shall be instituted by or against the Borrower and if instituted against Borrower are not dismissed within thirty (30) days of initiation.

3.7           Non-Payment.  A default by the Borrower under any one or more obligations in an aggregate monetary amount in excess of $200,000 for more than forty-five (45) days after the due date.

3.8           Stop Trade. An SEC or judicial stop trade order or Principal Market trading suspension that lasts for five or more consecutive trading days.

3.9           Failure to Deliver Common Stock or Replacement Note. Borrower's failure to timely deliver Common Stock to the Holder pursuant to and in the time required by this Note.

3.10           Failure to Timely File. Borrower’s failure to timely file its periodic reports required pursuant to the Securities Exchange Act of 1934 (including such additional time as allowed under rule 12b-25) shall be a default hereunder and shall trigger an increase in the annual interest rate as setforth above.

3.11           Reverse Splits.  The Borrower effectuates a reverse split of its Common Stock without the prior written consent of at least two-thirds (2/3rds) of the Holders.

3.12           Reservation Default.  Failure by the Borrower to have reserve for issuance upon conversion of the Note the amount of Common stock as set forth in the Subscription Agreement.

3.13           Cross Default. A default by the Borrower of a material term, covenant, warranty or undertaking of any other agreement to which the Borrower and Holder are parties.

3.14           Change in Control. A change in control of the Company without at least fourteen (14) days prior written notice to Holder. A change in control shall mean that more than 30% of the shares of common stock are consolidated in one person or entity so that the person or entity (other than any one or more of the Holders) may control the election of the board of directors or the passage of a proposal that would normally require a shareholder vote without such shareholder vote and that such person or entity was not a holder of shares of the Company at the date of execution hereof.

3.15           Asset Sales.  Any instance, undertaken without written consent  of the Holder, whereby the Company or any of its subsidiaries, sells, transfers, leases or otherwise disposes (including pursuant to a merger) of substantially all of the Company’s assets, including any asset constituting an equity interest in any other person, except sales, transfers, leases and other dispositions of inventory, used, obsolete or surplus equipment or other property, in each case in the ordinary course of the Company’s business and consistent with past practice.

 

  

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3.16           Delisting.  Delisting of the Common Stock from the American Stock Exchange or such other Principal Market, including the Over-the-Counter Bulletin Board, on which the Common Stock is then listed or quoted for trading.

                      During the time that any portion of this Note is outstanding,  if any Event of Default has occurred,  the remaining principal amount of this Note, together with interest and other amounts owing in respect   hereof,  to the date of  acceleration  shall become, at the  Holder's  election,  immediately  due and payable in cash,  provided  however,  the Holder may request  (but shall have no obligation  to request)  payment of such amounts in Common Stock of the Borrower. In addition to any other remedies,  the Holder shall have the right (but not the obligation)  to convert this Note at any time after (x) an Event of Default or (y) the Maturity Date at the Conversion Price then in- effect. The Holder need not provide and the Borrower hereby waives any  presentment,  demand,  protest or other notice of any kind, and the Holder may immediately and without  expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law. Such declaration may be rescinded and annulled by Holder at any time prior to payment hereunder. No such rescission or annulment  shall affect any subsequent  Event of Default or impair any right  consequent  thereon.  Upon an Event of Default,  notwithstanding  any other provision of this Note or any Transaction Document,  the Holder shall have no obligation to comply with or adhere to any  limitations,  if any, on the conversion of this Note or the sale of the Conversion Shares, Shares or Other Securities.

ARTICLE IV

MISCELLANEOUS

4.1           Failure or Indulgence Not Waiver. No failure or delay on the part of Holder hereof in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege. All rights and remedies existing hereunder are cumulative to, and not exclusive of, any rights or remedies otherwise available.

 

4.2           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: (i) if to the Borrower to: Feel Golf Company Inc., 1354-T Dayton Street Salinas, CA, telecopier number: (___) ___-____, and (ii) if to the Holder, to Long Side Ventures LLC, attention Ben Kaplan, 1800 S. Ocean Dr., PH2, Hallandale Beach, FL 33009, with a copy to Jonathan D. Leinwand PA, 17501 Biscayne Blvd., Suite 430, Aventura, FL 33160, Telecopier (954) 252-4265.

4.3           Amendment Provision. The term "Note" and all reference thereto, as used throughout this instrument, shall mean this instrument as originally executed, or if later amended or supplemented, then as so amended or supplemented.

4.4           Assignability. This Note shall be binding upon the Borrower and its successors and assigns, and shall inure to the benefit of the Holder and its successors and assigns.

 

  

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4.5           Cost of Collection. If default is made in the payment of this Note, Borrower shall pay the Holder hereof reasonable costs of collection, including reasonable attorneys' fees.

4.6           Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of Florida. 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 Florida or in the federal courts located in the state of Florida located in Broward County, Florida. Both parties and the individual signing this Agreement on behalf of the Borrower agree to submit to the jurisdiction of such courts. The prevailing party shall be entitled to recover from the other party its reasonable attorney's fees and costs.

4.7           Maximum Payments. Nothing contained herein shall be deemed to establish or require the payment of a rate of interest or other charges in excess of the maximum permitted by applicable law. In the event that the rate of interest required to be paid or other charges hereunder exceed the maximum permitted by such law, any payments in excess of such maximum shall be credited against amounts owed by the Borrower to the Holder and thus refunded to the Borrower.

4.8 Waiver of Jury Trial. THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION DOCUMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES' ACCEPTANCE OF THIS AGREEMENT.

4.9           Redemption. This Note may not be redeemed or paid without the consent of the Holder except as described in this Note or in the Subscription Agreement.

4.10           Shareholder Status. The Holder shall not have rights as a shareholder of the Borrower with respect to unconverted portions of this Note. However, the Holder will have all the rights of a shareholder of the Borrower with respect to the shares of Common Stock to be received by Holder after delivery by the Holder of a Conversion Notice to the Borrower.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOLLOWS]

 

  

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IN WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by an authorized officer as of the _______th day of ____________, 2010.

 

 

	 	FEEL GOLF COMPANY INC.	 
	 	 	 	 
	
 

	
By: 

	/s/ 	 
	 	 	Name:	 
	 	 	Title: CEO	 
	 	 	 	 

 

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