Document:

matechexh10_68.htm

    
      

    

    Exhibit
10.68

     

    THE
SECURITIES REPRESENTED BY THIS DOCUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (“THE ACT”), OR THE SECURITIES LAWS OF ANY
STATE, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT AND ANY APPLICABLE STATE LAWS, (ii) TO THE EXTENT APPLICABLE, RULE
144 UNDER THE ACT (OR ANY SIMILAR RULE UNDER THE ACT RELATING TO THE DISPOSITION
OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF SUCH OPINION SHALL BE
REASONABLY SATISFACTORY TO COUNSEL TO THE ISSUER, THAT AN EXEMPTION FROM
REGISTRATION UNDER THE ACT AND APPLICABLE STATE LAW IS AVAILABLE.

     

    CLASS
A COMMON STOCK WARRANT AGREEMENT

     

    MATECH
CORP.,

    a
Delaware corporation (the “Company”)

     

    THIS IS
TO CERTIFY that, for value received, Palisades Capital, LLC, a Nevada limited
liability company, or its assigns (collectively, the “Holder”) is entitled,
subject to the terms and conditions set forth herein, to purchase, 10,000,000
shares of Class A common stock of the Company (the “Warrant Shares”) upon
exercise at a purchase price of the lesser of (i) $0.001 per share, or (ii) 50%
of market price (the “Warrant Price”).  This Warrant is issued under
and in accordance with the Settlement Agreement and General Release, dated June
16, 2008, between the Holder and the Company and is subject to the terms and
provisions contained therein, all of which are incorporated herein by this
reference.

     

    1.           TERM.  Subject
to the terms of this Warrant, the Holder shall have the right, at any time
during the period commencing at 9:00 a.m., Pacific Time, on the 17th day of
October, 2008 and ending at 5:00 p.m., Pacific Time, on the 16th day of October,
2015 (the “Termination Date”), to purchase from the Seller the Warrant Shares
upon payment to the Seller of the Warrant Price.

     

    Notwithstanding
anything to the contrary contained in this Warrant or otherwise, the Holder
shall not be required, although it shall have the right, to exercise this
Warrant.  It is further agreed that the Warrant Shares are stated
after giving effect to a one for one-thousand reverse stock split completed in
October 2008.

     

    2.           MANNER
OF EXERCISE.  Payment of the aggregate Warrant Price shall be
made as described below.  Upon the payment of all or a portion of the
Warrant Price and delivery of the Election to Purchase, a form of which is
attached hereto, the Company shall issue and cause to be delivered with all
reasonable dispatch to or upon the written order of the Holder, and in such name
or names as the Holder may designate, a certificate or certificates for the
number of full Warrant Shares so purchased upon each exercise of the
Warrant.  Such certificate or certificates shall be deemed to have
been issued and any person so designated to be named therein shall
be

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    deemed to
have become a holder of record of such securities as of the date of surrender of
the Warrant (or if less than the entire Warrant is exercised, upon the delivery
of the new Warrant described below) and payment of the Warrant Price, as
aforesaid, notwithstanding that the certificate or certificates representing
such securities shall not actually have been delivered or that the stock
transfer books of the Company shall then be closed.  The Warrant shall
be exercisable, at the election of each Holder, either in full or from time to
time in part and, in the event that a certificate evidencing the Warrant is
exercised in respect of less than all of the Warrant Shares specified therein at
any time prior to the Termination Date, a new certificate evidencing the
remaining portion of the Warrant shall be issued by the Company to such
Holder.

     

    Payment
of the Warrant Price may be made by either of the following, or a combination
thereof, at the election of Holder:

     

    (i)          Cash
Exercise: cash, bank or cashiers check, or wire transfer;

     

    (ii)         Cashless
Exercise:
surrender of the Election to Purchase form at the principal office of the
Company (by mail or facsimile) together with notice of cashless election, in
which event the Company shall issue Holder a number of shares of common stock
computed using the following formula:

     

      X
= Y (A-B)/A

     

    where:  X
= the number of shares of common stock to be issued to Holder.

     

    Y = the
number of shares of common stock for which this Warrant is being
exercised.

     

    A = the
Market Price of one share of common stock (for purposes of this Section 3(ii),
the “Market Price” shall be defined as the average closing price of the common
stock for the five trading days prior to the date of exercise of this Warrant
(the “Average Closing Price”), as reported by the OTC Bulletin or in any
over-the-counter market, provided, however, that if the common stock is listed
on a stock exchange, the Market Price shall be the Average Closing Price on such
exchange for the five trading days prior to the date of exercise of the
Warrants.  If the common stock is/was not traded during the five
trading days prior to the date of exercise, then the closing price for the last
publicly traded day shall be deemed to be the closing price for any and all (if
applicable) days during such five trading day period.

     

    B = the
Exercise Price.

     

    For
purposes of Rule 144 and sub-section (d)(3)(ii) thereof, it is intended,
understood and acknowledged that the common stock issuable upon exercise of this
Warrant in a cashless exercise transaction shall be deemed to have been acquired
at the time this Warrant was issued.  Moreover, it is intended,
understood and acknowledged that the holding period for the common stock
issuable upon exercise of this Warrant in a cashless exercise transaction shall
be deemed to have commenced on the date this Warrant was
issued.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    (iii)         Net
Issuance:  through a special sale and remittance procedure
(“Net Issuance Procedure”) pursuant to which the Holder (or any other person or
persons exercising the Warrant) shall concurrently provide irrevocable
instructions (a) to a Company-approved brokerage firm to effect the immediate
sale of the purchased shares and remit to the Company, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
Warrant Price payable for the purchased shares plus all applicable Federal,
State and local income and employment taxes required to be withheld by the
Company by reason of such exercise and (b) to the Company to deliver the
certificates for the purchased shares directly to such brokerage firm in order
to complete the sale.

     

    Notwithstanding
the foregoing, in no event shall Holder be entitled to exercise any portion of
the Warrant to the extent that, after such exercise, the sum of (1) the number
of shares of common stock beneficially owned by the Holder, and (2) the number
of shares of common stock issuable upon the full or partial exercise of the
Warrant with respect to which the determination of this sentence is being made,
would result in beneficial ownership by Holder of more than 4.99% of the
outstanding shares of the Company’s common stock (after taking into account the
shares to be issued to Holder upon such exercise).  For purposes of
the immediately preceding sentence, beneficial ownership shall be determined in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended
(the “1934 Act”) ”), and Rule 13d-3 promulgated thereunder.  The
Holder further agrees that if the Holder transfers or assigns any of the Warrant
to any affiliate of such Holder, such transfer or assignment shall be made
subject to the transferee’s or assignee’s specific agreement to be bound by the
provisions of this provision.

     

    3.           NO
STOCKHOLDER RIGHTS.  Unless and until this Warrant is
exercised, this Warrant shall not entitle the Holder hereof to any voting rights
or other rights as a stockholder of the Company, or to any other rights
whatsoever except the rights herein expressed, and, no dividends shall be
payable or accrue in respect of this Warrant.

     

    4.           RECAPITALIZATION.  Subject
to any required action by the stockholders of the Company, the number of Warrant
Shares covered by this Warrant, and the price per Share thereof, shall be
proportionately adjusted for any increase or decrease in the number of issued
Warrant Shares resulting from a subdivision or consolidation of shares or the
payment of a stock dividend, or any other increase or decrease in the number of
such shares affected without receipt of consideration by the Company; provided
however that the conversion of any convertible securities of the Company shall
not be deemed having been “effected without receipt of consideration by the
Company.”

     

    In the
event of a proposed dissolution or liquidation of the Company, a merger or
consolidation in which the Company is not the surviving entity, or a sale of all
or substantially all of the assets of the Company, at the option of the Holder,
the Holder shall be kept in a position equal to the Warrant by retaining the
Warrant or by receiving a similar option in any successor to the Company or,
alternatively, at the election of the Holder, shall be treated as if the Holder
had exercised his right to purchase all or part of the Warrant Shares
immediately prior to the consummation of the subject
transaction.

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    Subject
to any required action by the stockholders of the Company, if the Company shall
be the surviving entity in any merger or consolidation, this Warrant thereafter
shall pertain to and apply to the securities to which a holder of shares equal
to the Warrant Shares subject to this Warrant would have been entitled by reason
of such merger or consolidation.

     

    In the
event of a change in the shares of the Company as presently constituted, which
is limited to a change of all of its authorized shares without par value into
the same number of shares with a par value, the shares resulting from any such
change shall be deemed to be the shares within the meaning of this
Agreement.

     

    To the
extent that the foregoing adjustments relate to shares or securities of the
Company, such adjustments shall be made by the Board, whose determination in
that respect shall be final, binding and conclusive.  Except as
hereinbefore expressly provided, Holder shall have no rights by reason of any
subdivision or consolidation of share of stock of any class or the payment of
any stock dividend or any other increase or decrease in the number of shares of
stock of any class, and the number and price of shares subject to this Warrant
shall not be affected by, and no adjustments shall be made by reason of, any
dissolution, liquidation, merger or consolidation, or any issue by the Company
of shares of stock of any class or securities convertible into shares of stock
of any class.

     

    The grant
of this Warrant shall not affect in any way the right or power of the Company to
make adjustments, reclassifications, reorganizations or changes in its capital
or business structure or to merge, consolidate, dissolve or liquidate or to sell
or transfer all or any part of its business or assets.

     

    5.           EXCHANGE.  This
Warrant is exchangeable upon the surrender hereof by the Holder to the Company
for new Warrants of like tenor representing in the aggregate the right to
purchase the number of securities purchasable hereunder, each of such new
Warrants to represent the right to purchase such number of securities as shall
be designated by the Holder at the time of such surrender.

     

    Upon
receipt by the Company of evidence reasonably satisfactory to it of the loss,
theft, destruction or mutilation of this Warrant, and, in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it and
reimbursement to the company of all reasonable expenses incidental thereto, and
upon surrender and cancellation hereof, if mutilated, the Company will make and
deliver a new warrant of like tenor and amount, in lieu hereof.

     

    6.           ELIMINATION
OF FRACTIONAL INTERESTS.  The Company shall not be required to
issue certificates representing fractions of securities upon the exercise of
this Warrant, nor shall it be required to issue scrip or pay cash in lieu of
fractional interests.  All fractional interests shall be eliminated by
rounding any fraction up to the nearest whole number of securities, properties
or rights receivable upon exercise of this Warrant.

     

    7.           RESERVATION
AND LISTING OF SECURITIES.  The Company shall at all times
reserve and keep available out of its authorized shares of common stock or other
securities, solely for the purpose of issuance upon the exercise of this
Warrant, such number of shares of

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    common
stock or other securities, properties or rights as shall be issuable upon the
exercise hereof.  The Company covenants and agrees that, upon exercise
of this Warrant and payment of the Warrant Price, all shares of common stock and
other securities issuable upon such exercise shall be duly and validly issued,
fully paid, non-assessable and not subject to the preemptive rights of any
stockholder.

     

    8.           NOTICE.  Any
notice, request, instruction, or other document required by the terms of this
Warrant, or deemed by any of the Parties hereto to be desirable, to be given to
any other party hereto shall be in writing and shall be given by personal
delivery, overnight delivery, mailed by registered or certified mail, postage
prepaid, with return receipt requested, or sent by facsimile transmission to the
addresses of the Parties as follows:

     

    
      	 	
              To:

            	
              “Company”

            	
              Material
      Technologies, Inc.

              Attn:
      Robert M. Bernstein, Chief Executive Officer

              11661
      San Vicente Boulevard, Suite 707

              Los
      Angeles, California 90049

              Fax:
      (310) 473-3177

            
	 	 	 	 
	 	To:	“Holder”	
              c/o
      Corporate Legal Services, LLP

              2224
      Main Street

              Santa
      Monica, CA 90405

              Fax:
      310 396 3290

            

    

     

    The
persons and addresses set forth above may be changed from time to time by a
notice sent as aforesaid.  If notice is given by personal delivery or
overnight delivery in accordance with the provisions of this Section, such
notice shall be conclusively deemed given at the time of such delivery provided
a receipt is obtained from the recipient.  If notice is given by mail
in accordance with the provisions of this Section, such notice shall be
conclusively deemed given upon receipt and delivery or refusal.  If
notice is given by facsimile transmission in accordance with the provisions of
this Section, such notice shall be conclusively deemed given at the time of
delivery if during business hours and if not during business hours, at the next
business day after delivery, provided a confirmation is obtained by the
sender.

     

    9.           AMENDMENTS.  This
Warrant may be amended only by a written agreement executed by all of the
Parties hereto.

     

    10.         COUNTERPARTS.  This
Warrant may be executed in any number of counterparts with the same effect as if
all signatories had signed the same document.  All counterparts shall
be construed together and constitute the same instrument.

     

    11.         HEADINGS.
The headings and captions used in this Warrant are used for convenience only and
are not to be considered in construing or interpreting this
Warrant.

     

    12.         EXCLUSIVE
JURISDICTION AND VENUE.  The Parties agree that the Courts of
the County of Los Angeles, State of California shall have sole and exclusive
jurisdiction and venue for the resolution of all disputes arising under the
terms of this Agreement and the transactions contemplated herein

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    13.         SUCCESSORS.  All
the covenants and provisions of this Warrant shall be binding upon and inure to
the benefit of the Company, the Holder and their respective legal
representatives, successors and assigns.

     

    14.         WAIVER.  Neither
Party shall be deemed, by any act or omission, course of conduct or otherwise,
to have waived any of its rights or remedies hereunder unless such waiver is in
writing and signed by the waiving Party, and then only to the extent
specifically set forth in such writing.  A waiver with reference to
one event shall not be construed as continuing or as a bar to or waiver of any
right or remedy as to a subsequent event.

     

    15.         ATTORNEYS’
FEES.  If any legal action or any other proceeding, including
arbitration or action for declaratory relief is brought for the interpretation
or enforcement of this Warrant, the prevailing party shall be entitled to
recover reasonable attorneys’ fees and other costs incurred in that action or
proceeding, in addition to any other relief to which it may be
entitled.  “Prevailing Party” shall include without limitation (a) a
Party who dismisses an action in exchange for sums allegedly due; (b) the Party
who receives performance from the other Party of an alleged breach or a desired
remedy that is substantially equivalent to the relief sought in an action or
proceeding; or (c) the Party determined to be the prevailing Party by an
arbitrator or a court of law.

     

    16.         GOVERNING
LAW.  This Warrant shall be governed, construed and interpreted
under the laws of the state of California, without giving effect to the rules
governing conflicts of law.

     

    17.         NOTICE
OF RIGHT TO COUNSEL.  Each of the Parties has had the
opportunity to, and has had, this Warrant reviewed by their respective
attorney.  Each of the Parties affirms to the other that they have
apprised themselves of all relevant information giving rise to this Warrant and
has consulted and discussed with their independent advisors the provisions of
this Warrant and fully understands the legal consequences of each
provision.  Each Party further affirms to the other that they have
not, and do not, rely upon any representation of advice from the other or from
the other Parties’ counsel.

     

    18.         REPRESENTATIONS
OF HOLDER.

     

     
(a)           Holder
acknowledges that both the Warrant and the Warrant Shares will initially be
“restricted securities” (as such term is defined in Rule 144 promulgated under
the Securities Act of 1933, as amended) (“Rule 144”) and that the certificates
evidencing the Warrant Shares will include this legend:

     

    THE
SHARES (OR OTHER SECURITIES) REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933.  THE SHARES MAY NOT BE
SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL
THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    Holder
further acknowledges that the Warrant Shares cannot be sold unless registered
with the United States Securities and Exchange Commission and qualified by
appropriate state securities regulators, or unless Holder obtains written
consent from the Company and otherwise complies with an exemption from such
registration and qualification (including, without limitation, compliance with
Rule 144).

     

     
(b)           Holder has
adequate means of providing for current needs and contingencies, has no need for
liquidity in the investment, and is able to bear the economic risk of an
investment in the Warrant Shares offered by Company of the size
contemplated.  Holder represents that Holder is able to bear the
economic risk of the investment and at the present time could afford a complete
loss of such investment.  Holder has had a full opportunity to inspect
the books and records of the Company and to make any and all inquiries of
Company officers and directors regarding the Company and its business as Holder
has deemed appropriate.

     

      (c)           Holder
is an “Accredited Investor” as defined in Regulation D of the Securities Act of
1933 (the “Act”) or Holder, either alone or with Holder’s professional advisers
who are unaffiliated with, have no equity interest in and are not compensated by
Company or any affiliate or selling agent of Company, directly or indirectly,
has sufficient knowledge and experience in financial and business matters that
Holder is capable of evaluating the merits and risks of an investment in the
Warrant Shares offered by Company and of making an informed investment decision
with respect thereto and has the capacity to protect Holder’s own interests in
connection with Holder’s proposed investment in the Warrant
Shares.

     

      (d)           Holder
is acquiring the Warrant Shares solely for Holder’s own account as principal,
for investment purposes only and not with a view to the resale or distribution
thereof, in whole or in part, and no other person or entity has a direct or
indirect beneficial interest in such Warrant Shares.

     

      (e)           Holder
will not sell or otherwise transfer the Warrant Shares without registration
under the Act or an exemption therefrom and fully understands and agrees that
Holder must bear the economic risk of Holder's purchase for an indefinite period
of time because, among other reasons, the Warrant Shares have not been
registered under the Act or under the securities laws of any state and,
therefore, cannot be resold, pledged, assigned or otherwise disposed of unless
they are subsequently registered under the Act and under the applicable
securities laws of such states or unless an exemption from such registration is
available.

     

    IN
WITNESS WHEREOF, intending to be legally bound, the Parties hereto have
executed this Warrant Agreement on the 17th day of October,
2008.

     

    
      
        	 COMPANY: 	 	 	 HOLDER:	 
	 	 	 	 	 
	
                 MATECH
      CORP.,  

                a
      Delaware corporation 

              	 	 	
                 PALISADES CAPITAL,
      LLC

                a
      Nevada limited liability company

              	 
	 	 	 	 	 
	
                /s/
      Robert M. Bernstein 

              	 	 	
                 

              	 
	
                By:
      Robert M. Bernstein

              	 	 	
                By:
      Reid Breitman

              	 
	
                Its:
      Chief Executive Officer 

              	 	 	
                Its:
      President

              	 

      

    

                                                                                     

     

    
      
        
           

        

        
          7

          
            

          

        

        
           

        

      

    

     

    FORM
OF ELECTION TO PURCHASE

     

    Matech
Corp.

    11661 San
Vicente Boulevard, Suite 707

    Los
Angeles, CA  90049

     

    (1)                   o           The
undersigned hereby elects to purchase ________ shares of the Common Stock of
Matech Corp (the “Company”) pursuant to the terms of the attached Warrant and
tenders herewith payment of the exercise price in full, together with all
applicable transfer taxes, if any.

     

    o           The
undersigned hereby elects to purchase ________ shares of the Common Stock of the
Company pursuant to the terms of the cashless exercise or net issuance
provisions set forth in Section 2(ii) and 2(iii) of the attached Warrant, and
shall tender payment of all applicable transfer taxes, if any.

     

    (2)           Please
issue a certificate or certificates representing said shares of Common Stock in
the name of the undersigned or in such other name as is specified
below:

     

    ________________________

    (Name)

    ________________________

    ________________________

    (Address)

     

    
      	
              _______________________________________

              (Date)

            	
              ________________________________________________

              (Signature)

               

              ________________________________________________

              (Print
      name)

            

    

     

     

     

     

     

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    
AMENDMENT
DATED DECEMBER 2, 2008 TO

    
      SETTLEMENT
AGREEMENT AND GENERAL RELEASE

       

      The
following provisions (the “Amendment”) are hereby incorporated into, and are
hereby made a part of, that certain Settlement Agreement and General Release,
dated June 16, 2008 (the “Agreement”), by and between Matech Corp., a Delaware
corporation (“Company”), and Palisades Capital, LLC (“Palisades”), and such
provisions are effective retroactively to the date of the Agreement (the
“Effective Date”).  All capitalized terms in this Amendment, to the
extent not otherwise defined herein, shall have the meanings assigned to such
terms in the Agreement.

       

      
        	1. 	Section
      3(a)(i) of the Agreement is hereby deleted in its entirety.
	 	 
	2. 	Section
      3(a)(ii) of the Agreement is hereby deleted in its entirety.
	 	 
	
                3.

              	
                The
      Warrant Agreement issued pursuant to the Agreement, dated October 17,
      2008, by and between the Company and Palisades is hereby canceled in its
      entirety as if it never existed.

              
	 	 
	4. 	All
      other provisions of the Agreement shall remain
  unchanged.

      

       

      IN
WITNESS WHEREOF, the Parties have caused this Amendment to be duly
executed and delivered as of December 2, 2008.

       

      
        
          	COMPANY:    	 	 	PALISADES:	 
	 	 	 	 	 
	
                  MATECH
      CORP.,  

                  a
      Delaware corporation

                	 	 	PALISADES
      CAPITAL, LLC,	 
	 	 	 	 	 
	
                   

                	 	 	
                   

                	 
	
                  By:  Robert
      M. Bernstein  

                	 	 	
                  By:

                	 
	
                  Its:  Chief
      Executive Officer  

                	 	 	
                  Its:

                	 

        

         

         

         

      

      
        
           

        

        
          9THIS
SUBSCRIPTION AGREEMENT RELATES TO AN OFFERING OF SECURITIES IN AN OFFSHORE
TRANSACTION TO PERSONS WHO ARE NOT U.S. PERSONS (AS DEFINED HEREIN) PURSUANT TO
REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
“1933 ACT”).

     

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

     

    SUBSCRIPTION
AGREEMENT

     

    (Offshore
Subscribers)

     

     

    
      	
              TO:

            	
              Qnective,
      Inc. (the “Company”)

            

    

     

    c/o
Qporter (Schweiz) AG

    Thurgauerstrasse
54, CH-8050, Zurich, Switzerland

     

     

    
      Purchase of
Shares

    

     

    
      	
              Whereas,
      the Company and the Subscriber (as hereinafter defined) entered into an
      agreement (the “Agreement") for the purchase of a 15% convertible
      debenture (the "Debenture") on September 4,
  2008;

            

    

     

    
      	
              Whereas,
      pursuant to the Debenture the Subscriber loaned the principal amount of
      Two Million and 00/100 U.S. Dollars ($2,000,000.00) to the Company (the
      "Loan"); and

            

    

     

    
      	
              Whereas,
      the Company and the Subscriber have agreed to terminate the Agreement and
      the Debenture upon the terms and conditions of a Termination Agreement
      dated as of December 8, 2008.

            

    

     

    
      	
              1.

            	
              Subscription

            

    

     

    On the
basis of the representations and warranties and subject to the terms and
conditions set forth herein, Mrs. Thea Kunz (the “Subscriber”) hereby
irrevocably subscribes for and agrees to accept the issuance to the Subscriber
of 1,000,000 shares of the Company’s common stock (“Common Stock”), par value
$0.001 per share (each a “Share” and collectively the “Shares”) (the subscription
and agreement to purchase being the “Subscription”), in lieu of
repayment of, and in satisfaction of all obligations under the Agreement, the
Loan and the Debenture having a principal amount of  TWO MILLION
DOLLARS (US$2,000,000.00) (collectively, the “Subscription
Proceeds”).

     

    A.    The
Shares may also be hereafter referred to, collectively, as the “Securities”.

     

    B.    On the
basis of the representations and warranties and subject to the terms and
conditions set forth herein, the Company hereby irrevocably agrees to sell the
Shares to the Subscriber.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    C.    Subject to the
terms hereof, the Subscription will be effective upon its acceptance by the
Company.

     

    
      	
              2.

            	
              Payment

            

    

     

    The
Company hereby acknowledges that it has, as of the date of this Subscription
Agreement, received all of the Subscription Proceeds pertaining to the purchase
of the Shares by the Subscriber.

     

    
      	
              3.

            	
              Documents
      Required from Subscriber

            

    

     

    The
Subscriber must complete, sign and return to the Company an executed copy of
this Subscription Agreement.

     

    A.    The
Subscriber shall complete, sign and return to the Company as soon as possible,
on request by the Company, any documents, questionnaires, notices and
undertakings as may be required by regulatory authorities, the Financial
Industry Regulatory Authority Over the Counter Bulletin Board (the “OTCBB”) and
applicable law.

     

    
      	
              4.

            	
              Closing

            

    

     

    The sale
of the Shares shall be completed (the “Closing”) on the date this
Subscription Agreement is executed by the parties hereto (the “Closing Date”) or such other
date as the parties may agree upon.

     

    A.    At the
Closing, or promptly thereafter, the Company will deliver a certificate for the
Shares registered as provided in this Subscription Agreement.

     

    
      	
              5.

            	
              Acknowledgements
      of Subscriber

            

    

     

    The
Subscriber acknowledges and agrees that:

     

    
      	
               
      

            	
              i.

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

            

    

     

    
      	
               
      

            	
              ii.

            	
              the
      Company has not undertaken, and will have no obligation, to register any
      of the Securities under the Securities Act or any other securities
      legislation;

            

    

     

    
      	
               
      

            	
              iii.

            	
              it
      has received and carefully read this Subscription
    Agreement;

            

    

     

    
      	
               
      

            	
              iv.

            	
              the
      decision to execute this Subscription Agreement and purchase the Shares
      agreed to be purchased hereunder has not been based upon any oral or
      written representation as to fact or otherwise made by or on behalf of the
      Company and such decision is based entirely upon a review of any public
      information which has been filed by the Company with the Securities and
      Exchange Commission (“Commission”) in
      compliance, or intended compliance, with applicable securities
      legislation;

            

    

     

    
      	
               
      

            	
              v.

            	
              it
      and its advisor(s) have had a reasonable opportunity to ask questions of
      and receive answers from the Company in connection with the sale of the
      Shares hereunder, and to obtain additional information, to the extent
      possessed or obtainable by the Company without unreasonable effort or
      expense;

            

    

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              vi.

            	
              the
      books and records of the Company were available upon reasonable notice for
      inspection, subject to certain confidentiality restrictions, by the
      Subscriber during reasonable business hours at its principal place of
      business and that all documents, records and books in connection with the
      sale of the Securities hereunder have been made available for inspection
      by it and its attorney and/or
advisor(s);

            

    

     

    
      	
               
      

            	
              vii.

            	
              all
      information which the Subscriber has provided to the Company is correct
      and complete as of the date the Subscription Agreement is signed, and if
      there should be any change in such information prior to this Subscription
      Agreement being executed by the Company, the Subscriber will immediately
      provide the Company with such
information;

            

    

     

    
      	
               
      

            	
              viii.

            	
              the
      Company is entitled to rely on the representations and warranties of the
      Subscriber contained in this Subscription Agreement and the Subscriber
      will hold the Company harmless from any loss or damage it may suffer as a
      result of the Subscriber’s failure to correctly complete this Subscription
      Agreement;

            

    

     

    
      	
               
      

            	
              ix.

            	
              the
      Subscriber has been advised to consult the Subscriber’s own legal, tax and
      other advisors with respect to the merits and risks of an investment in
      the Securities and with respect to applicable resale restrictions, and it
      is solely responsible (and the Company is not in any way responsible) for
      compliance with:

            

    

     

    
      	
               
      

            	
              any
      applicable laws of the jurisdiction in which the Subscriber is resident in
      connection with the distribution of the Securities hereunder,
      and

            

    

     

    
      	
               
      

            	
              applicable
      resale restrictions;

            

    

     

    
      	
               
      

            	
              x.

            	
              none
      of the Securities are listed on any stock exchange or automated dealer
      quotation system and no representation has been made to the Subscriber
      that any of the Securities will become listed on any stock exchange or
      automated dealer quotation system, except that currently certain market
      makers make a market in the common shares of the Company on the OTCBB
      operated by the Financial Industry Regulatory Authority, Inc.
      (“FINRA”);

            

    

     

    
      	
               
      

            	
              xi.

            	
              none
      of the Securities may be offered or sold by the Subscriber to a U.S.
      Person (as defined in Section 6.2, below), or for the account or benefit
      of a U.S. Person (other than a distributor) prior to the end of the
      Distribution Compliance Period (as defined
  herein);

            

    

     

    
      	
               
      

            	
              xii.

            	
              the
      Company will refuse to register any transfer of the Securities not made in
      accordance with the provisions of Regulation S, pursuant to an effective
      registration statement under the Securities Act or pursuant to an
      available exemption from the registration requirements of the Securities
      Act and in each case in accordance with applicable state securities
      laws;

            

    

     

    
      	
               
      

            	
              xiii.

            	
              neither
      the Commission nor any other securities commission or similar regulatory
      authority has reviewed or passed on the merits of the
      Securities;

            

    

     

    
      	
               
      

            	
              xiv.

            	
              no
      documents in connection with the sale of the Shares hereunder have been
      reviewed by the Commission or any state securities
      administrators;

            

    

     

    
      	
               
      

            	
              xv.

            	
              there
      is no government or other insurance covering any of the
      Securities;

            

    

     

    
      	
               
      

            	
              xvi.

            	
              the
      issuance and sale of the Securities to the Subscriber will not be
      completed if it would be unlawful or if, in the discretion of the Company
      acting reasonably, it is not in the best interests of the
      Company;

            

    

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              xvii.

            	
              the
      Subscriber is purchasing the Securities pursuant to an exemption from the
      registration and the prospectus requirements of applicable securities
      legislation on the basis that the Subscriber is not a resident of the
      United States and, as a
consequence:

            

    

     

    
      	
               
      

            	
              is
      restricted from using most of the civil remedies available under
      securities legislation,

            

    

     

    
      	
               
      

            	
              may
      not receive information that would otherwise be required to be provided
      under securities legislation, and

            

    

     

    
      	
               
      

            	
              the
      Company is relieved from certain obligations that would otherwise apply
      under securities legislation;

            

    

     

    
      	
            	
              xviii.

            	
              the
      statutory and regulatory basis for the exemption claimed for the offer and
      sale of the Securities, although in technical compliance with Regulation
      S, would not be available if the offering is part of a plan or scheme to
      evade the registration provisions of the Securities Act;
    and

            

    

     

    
      	
               
      

            	
              xix.

            	
              this
      Subscription Agreement is not enforceable by the Subscriber unless it has
      been accepted by the Company.

            

    

     

    
      	
              6.

            	
              Representations,
      Warranties and Covenants of the
Subscriber

            

    

     

    
      	
              6.1 

            	
              The
      Subscriber hereby represents and warrants to and covenants with the
      Company (which representations, warranties and covenants shall survive the
      Closing) that:

            

    

     

    
      	
               
      

            	
              i.

            	
              the
      Subscriber is not a U.S. Person;

            

    

     

    
      	
               
      

            	
              ii.

            	
              the
      Subscriber is not acquiring the Securities for the account or benefit of,
      directly or indirectly, any U.S.
Person;

            

    

     

    
      	
               
      

            	
              iii.

            	
              the
      Subscriber is resident in the jurisdiction set out on the signature page
      of this Subscription Agreement and the sale of the Securities to the
      Subscriber as contemplated in this Subscription Agreement complies with or
      is exempt from the applicable securities legislation of the jurisdiction
      of residence of the Subscriber;

            

    

     

    
      	
               
      

            	
              iv.

            	
              the
      Subscriber has the legal capacity and competence to enter into and execute
      this Subscription Agreement and to take all actions required pursuant
      hereto and, if the Subscriber is a corporation, it is duly incorporated
      and validly subsisting under the laws of its jurisdiction of incorporation
      and all necessary approvals by its directors, shareholders and others have
      been obtained to authorize execution and performance of this Subscription
      Agreement on behalf of the
Subscriber;

            

    

     

    
      	
               
      

            	
              v.

            	
              if
      the Subscriber is a corporation or other entity, the entering into of this
      Subscription Agreement and the transactions contemplated hereby do not and
      will not result in the violation of any of the terms and provisions of any
      law applicable to, or the outstanding documents of, the Subscriber or of
      any agreement, written or oral, to which the Subscriber may be a party or
      by which the Subscriber is or may be
bound;

            

    

     

    
      	
               
      

            	
              vi.

            	
              the
      Subscriber is acquiring the Securities as principal for its own account
      for investment purposes only and not for the account of any other person
      and not for distribution, assignment or resale to others, and no other
      person has a direct or indirect beneficial interest in such Securities,
      and it has not subdivided its interest in the Securities with any other
      person;

            

    

     

    
      	
               
      

            	
              vii.

            	
              the
      Subscriber is outside the United States when receiving and executing this
      Subscription Agreement and is acquiring the Securities as principal for
      the Subscriber’s own account for investment purposes only, and not with a
      view to, or for, resale, distribution or fractionalisation thereof, in
      whole or in part, and no other person has a direct or indirect beneficial
      interest in the Securities;

            

    

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              viii.

            	
              the
      Subscriber is aware that an investment in the Company is speculative and
      involves certain risks, including the possible loss of the entire
      investment and it has carefully read and considered the matters set forth
      under the heading “Risk Factors” appearing in the Company’s Form 10-KSB,
      and the Company’s Form 10-Q, Form 8-K and any other periodic filings filed
      from time to time with the
Commission;

            

    

     

    
      	
               
      

            	
              ix.

            	
              the
      Subscriber has made an independent examination and investigation of an
      investment in the Securities and the Company and has depended on the
      advice of its legal and financial advisors and agrees that the Company
      will not be responsible in any way whatsoever for the Subscriber’s
      decision to invest in the Securities and the
  Company;

            

    

     

    
      	
               
      

            	
              x.

            	
              the
      Subscriber (i) has adequate net worth and means of providing for its
      current financial needs and possible personal contingencies, (ii) has no
      need for liquidity in this investment, and (iii) is able to bear the
      economic risks of an investment in the Securities for an indefinite period
      of time;

            

    

     

    
      	
               
      

            	
              xi.

            	
              the
      Subscriber understands and agrees that the Company and others will rely
      upon the truth and accuracy of the acknowledgements, representations and
      agreements contained in this Subscription Agreement and agrees that if any
      of such acknowledgements, representations and agreements are no longer
      accurate or have been breached, the Subscriber shall promptly notify the
      Company;

            

    

     

    
      	
               
      

            	
              xii.

            	
              the
      Subscriber has the legal capacity and competence to enter into and execute
      this Subscription Agreement and to take all actions required pursuant
      hereto;

            

    

     

    
      	
               
      

            	
              xiii.

            	
              the
      Subscriber has duly executed and delivered this Subscription Agreement and
      it constitutes a valid and binding agreement of the Subscriber enforceable
      against the Subscriber in accordance with its
  terms;

            

    

     

    
      	
               
      

            	
              xiv.

            	
              the
      Subscriber is not an underwriter of, or dealer in, the Common Stock of the
      Company, nor is the Subscriber participating, pursuant to a contractual
      agreement or otherwise, in the distribution of any of the
      Securities;

            

    

     

    
      	
               
      

            	
              xv.

            	
              the
      Subscriber understands and agrees that none of the Securities have been or
      will be registered under the Securities Act or under any state securities
      or “blue sky” laws of any state of the United States and, unless so
      registered, may not be offered or sold in the United States or directly or
      indirectly to U.S. Persons, except in accordance with the provisions of
      Regulation S (“Regulation “S” promulgated under the Securities Act,
      pursuant to an effective registration statement under the Securities Act,
      or pursuant to an exemption from, or in a transaction not subject to, the
      registration requirements of the Securities Act and in each case only in
      accordance with applicable state securities
  laws;

            

    

     

    
      	
               
      

            	
              xvi.

            	
              the
      Subscriber understands and agrees that offers and sales of any of the
      Securities prior to the expiration of a period of six months after the
      date of original issuance of the Securities (the six month period
      hereinafter referred to as the “Distribution Compliance
      Period”) shall only be made in compliance with the safe harbor
      provisions set forth in Regulation S, pursuant to the registration
      provisions of the Securities Act or an exemption therefrom, and that all
      offers and sales after the Distribution Compliance Period shall be made
      only in compliance with the registration provisions of the Securities Act
      or an exemption therefrom and in each case only in accordance with
      applicable state securities laws;

            

    

     

    
      	
               
      

            	
              xvii.

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

            

    

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    
      	
            	
              xviii.

            	
              the
      Subscriber agrees not to engage in any hedging transactions involving any
      of the Securities unless such transactions are in compliance with the
      provisions of the Securities Act and in each case only in accordance with
      applicable state securities laws;

            

    

     

    
      	
               
      

            	
              xix.

            	
              the
      Subscriber understands and agrees that the Company will refuse to register
      any transfer of the Securities not made in accordance with the provisions
      of Regulation S, pursuant to an effective registration statement under the
      Securities Act or pursuant to an available exemption from the registration
      requirements of the Securities Act;

            

    

     

    
      	
               
      

            	
              xx.

            	
              the
      Subscriber (i) is able to fend for itself in the Subscription; (ii) has
      such knowledge and experience in financial and business matters as to be
      capable of evaluating the merits and risks of its investment in the
      Securities and the Company; and (iii) has the ability to bear the economic
      risks of its prospective investment and can afford the complete loss of
      such investment;

            

    

     

    
      	
               
      

            	
              xxi.

            	
              the
      Subscriber is not aware of any advertisement of any of the Securities and
      is not acquiring the Securities as a result of any form of general
      solicitation or general advertising including advertisements, articles,
      notices or other communications published in any newspaper, magazine or
      similar media or broadcast over radio or television, or any seminar or
      meeting whose attendees have been invited by general solicitation or
      general advertising; and

            

    

     

    
      	
               
      

            	
              xxii.

            	
              no
      person has made to the Subscriber any written or oral
      representations:

            

    

     

    
      	
               
      

            	
              that
      any person will resell or repurchase any of the
  Securities,

            

    

     

    
      	
               
      

            	
              that
      any person will refund the purchase price of any of the
      Securities,

            

    

     

    
      	
               
      

            	
              as
      to the future price or value of any of the Securities,
  or

            

    

     

    
      	
               
      

            	
              that
      any of the Securities will be listed and posted for trading on any stock
      exchange or automated dealer quotation system or that application has been
      made to list and post any of the Securities of the Company on any stock
      exchange or automated dealer quotation system, except that currently the
      Company’s Common Stock is quoted on the Over-The-Counter Bulletin Board
      (“OTCBB”) operated by FINRA.

            

    

     

    
      	
              6.2 

            	
              In
      this Subscription Agreement, the term “U.S. Person” shall have the meaning
      ascribed thereto in Regulation S.

            

    

     

    7.    Representations,
Warranties and Covenants of the Company

     

    7.1           Except
as set forth or incorporated by reference into the reports required to be filed
by the Company during the two years preceding the date hereof (the “SEC
Reports”) under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), the Company hereby makes the following representations and warranties to
the Subscriber:

     

    
      	
               
      

            	
              (a)

            	
              Organization, Good Standing and
      Qualification.  The Company is a corporation duly
      organized, validly existing and in good standing under the laws of the
      State of Nevada and has full corporate power and authority to conduct its
      business as currently conducted.  The Company is duly qualified
      to do business as a foreign corporation and is in good standing in all
      jurisdictions in which the character of the property owned or leased or
      the nature of the business transacted by it makes qualification necessary,
      except where any failure to be so qualified would not, individually or in
      the aggregate, have a material adverse effect on (i) the business,
      properties, financial condition or results of operations of the Company or
      (ii) the transactions contemplated hereby or by the agreements and
      instruments to be entered into in connection herewith or therewith or on
      the ability of the Company to perform its obligations hereunder (a
      “Material Adverse Effect”).

            

    

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              (b)

            	
              Issuance of
      Shares.  The issuance of the Shares has been duly and
      validly authorized by all necessary corporate action and no further action
      is required by the Company or its stockholders in connection
      therewith.  The Shares, when issued and paid for pursuant to
      this Agreement, will be validly issued, fully paid and non-assessable
      shares of Common Stock of the
Company.

            

    

     

    
      	
               
      

            	
              (c)

            	
              Authorization;
      Enforceability.  The Company has all corporate right,
      power and authority to enter into this Agreement and to consummate the
      transactions contemplated hereby.  All corporate action on the
      part of the Company necessary for the authorization, execution, delivery
      and performance of this Agreement by the Company has been taken and no
      further action is required by the Company or its stockholders in
      connection therewith.  This Agreement has been (or upon delivery
      will have been) duly executed by the Company and, when delivered in
      accordance with the terms hereof, will constitute the legal, valid and
      binding obligation of the Company, enforceable against the Company in
      accordance with its terms except as limited by (i) applicable bankruptcy,
      insolvency, reorganization, moratorium and other laws of general
      application affecting enforcement of creditors' rights generally, (ii)
      laws relating to the availability of specific performance, injunctive
      relief or other equitable remedies, and (iii) laws, or public policy
      underlying such laws, relating to indemnification and
      contribution.

            

    

     

    
      Representations
and Warranties will be Relied Upon by the Company

    

     

    The
Subscriber acknowledges that the representations and warranties contained herein
are made by it with the intention that such representations and warranties may
be relied upon by the Company and its legal counsel in determining the
Subscriber’s eligibility to purchase the Securities under applicable securities
legislation.  The Subscriber further agrees that by accepting delivery
of the certificates representing the Shares, it will be representing and
warranting that the representations and warranties contained herein are true and
correct as at the Closing Date with the same force and effect as if they had
been made by the Subscriber on the date of this Subscription Agreement and that
they will survive the purchase by the Subscriber of the Shares and will continue
in full force and effect notwithstanding any subsequent disposition by the
Subscriber of such Securities.

     

    
      	
              7.

            	
              Resale
      Restrictions

            

    

     

    The
Subscriber acknowledges that the Shares are not transferable and that any resale
of any of the other Securities will be subject to resale restrictions contained
in the securities legislation applicable to each Subscriber or proposed
transferee.  The Subscriber acknowledges that the Securities have not
been registered under the Securities Act or the securities laws of any state of
the United States and that none of the Securities may be offered or sold in the
United States unless registered in accordance with United States federal
securities laws and all applicable state securities laws or exemptions from such
registration requirements are available.

     

    A.    The
Subscriber acknowledges that restrictions on the transfer, sale or other
subsequent disposition of the Securities by the Subscriber may be imposed by
securities laws in addition to any restrictions referred to in Section 0 above, and, in particular, the Subscriber
acknowledges and agrees that none of the Securities may be offered or sold to a
U.S. Person or for the account or benefit of a U.S. Person (other than a
distributor) prior to the end of the Distribution Compliance
Period.

     

    
      	
              8.

            	
              Acknowledgement
      and Waiver

            

    

     

    The
Subscriber has acknowledged that the decision to purchase the Securities was
solely made on the basis of information available to the Subscriber on the EDGAR
database maintained by the Commission at www.sec.gov.  The
Subscriber hereby waives, to the fullest extent permitted by law, any rights of
withdrawal, rescission or compensation for damages to which the Subscriber might
be entitled in connection with the distribution of the Securities.

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    
      	
              9.

            	
              Legending
      of Subject Securities

            

    

     

    The
Subscriber hereby acknowledges that that upon the issuance thereof, and until
such time as the same is no longer required under the applicable securities laws
and regulations, the certificates representing any of the Securities will bear a
legend in substantially the following form:

     

    
      	
               
      

            	
              “THESE
      SECURITIES WERE ISSUED IN AN OFFSHORE TRANSACTION TO PERSONS WHO ARE NOT
      U.S. PERSONS (AS DEFINED HEREIN) PURSUANT TO REGULATION S (“REGULATION S”)
      UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933
      ACT”).  ACCORDINGLY, NONE OF THE SECURITIES TO WHICH THIS
      CERTIFICATE RELATES HAVE BEEN REGISTERED UNDER THE 1933 ACT, OR ANY U.S.
      STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, NONE MAY BE OFFERED OR
      SOLD IN THE UNITED STATES OR, DIRECTLY OR INDIRECTLY, TO U.S. PERSONS (AS
      DEFINED IN REGULATION S) EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
      STATEMENT OR PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT
      SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE
      ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION,
      HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS
      IN ACCORDANCE WITH THE 1933 ACT.”

            

    

     

    A.    The
Subscriber hereby acknowledges and agrees to the Company making a notation on
its records or giving instructions to the registrar and transfer agent of the
Company in order to implement the restrictions on transfer set forth and
described in this Subscription Agreement.

     

    
      	
              10.

            	
              Costs

            

    

     

    The
Subscriber acknowledges and agrees that all costs and expenses incurred by the
Subscriber (including any fees and disbursements of any special counsel retained
by the Subscriber) relating to the purchase of the Shares shall be borne by the
Subscriber.

     

    
      	
              11.

            	
              Governing
      Law

            

    

     

    This
Subscription Agreement is governed by the laws of the State of New York
applicable to agreements made and to be performed solely within such state
without reference to, or application of, principles of conflicts of
law.

     

    
      	
              12.

            	
              Survival

            

    

     

    This
Subscription Agreement, including without limitation the representations,
warranties and covenants contained herein, shall survive and continue in full
force and effect and be binding upon the parties hereto notwithstanding the
completion of the purchase of the Securities by the Subscriber pursuant
hereto.

     

    
      	
              13.

            	
              Assignment

            

    

     

    This
Subscription Agreement is not transferable or assignable.

     

    
      	
              14.

            	
              Severability

            

    

     

    The
invalidity or unenforceability of any particular provision of this Subscription
Agreement shall not affect or limit the validity or enforceability of the
remaining provisions of this Subscription Agreement.

     

    
      	
              15.

            	
              Entire
      Agreement

            

    

     

    Except as
expressly provided in this Subscription Agreement and in the agreements,
instruments and other documents contemplated or provided for herein, this
Subscription Agreement contains the entire agreement between the parties with
respect to the sale of the Securities and there are no other terms, conditions,
representations or warranties, whether expressed, implied, oral or written, by
statute or common law, by the Company or by anyone else.

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    
      	
              16.

            	
              Notices

            

    

     

    All
notices and other communications hereunder shall be in writing and shall be
deemed to have been duly given if mailed or transmitted by any standard form of
telecommunication.  Notices to the Subscriber shall be directed to the
address on the signature page of this Subscription Agreement and notices to the
Company shall be directed to it at Qnective, Inc., c/o Qporter (Schweiz) AG.,
Thurgauerstrasse 54, CH-8050, Zurich, Switzerland, Attention:
President.

     

    
      	
              17.

            	
              Counterparts
      and Electronic Means

            

    

     

    This
Subscription Agreement may be executed in any number of counterparts, each of
which, when so executed and delivered, shall constitute an original and all of
which together shall constitute one instrument.  Delivery of an
executed copy of this Subscription Agreement by electronic facsimile
transmission or other means of electronic communication capable of producing a
printed copy will be deemed to be execution and delivery of this Subscription
Agreement as of the date hereinafter set forth.

     

    
      	
              18.

            	
              Delivery
      Instructions

            

    

     

    The
Subscriber hereby directs the Company to deliver any certificates representing
the Shares issued pursuant to this Subscription Agreement to:

    MRS. THEA
KUNZ

     

    A.    The
Subscriber hereby directs the Company to cause any certificates representing the
Shares issued pursuant to this Subscription Agreement to be registered on the
books of the Company as follows:

    MRS. THEA
KUNZ

     

    B.    The
undersigned hereby acknowledges that it will deliver to the Company all such
additional completed forms in respect of the Subscriber’s purchase of the
Securities as may be required for filing with the appropriate securities
commissions and regulatory authorities.

     

    IN WITNESS WHEREOF the
Subscriber has duly executed this Subscription Agreement as of the date of
acceptance by the Company.

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              	 
      	
                                      THEA
      KUNZ
      
                                        
      

                                    
	 
      	
                                      (Name
      of Subscriber – Please type or print)

                                    
	 	 
	 
      	
                                      /s/
      Thea Kunz

                                    
	 	 
	 
      	
                                      (Signature
      and, if applicable, Office)

                                    
	 	 
	 
      	
                                      Arlesheim

                                    
	 	 
	 
      	
                                      (Address
      of Subscriber)

                                    
	 	 
	 
      	
                                      CH-4144

                                    
	 	 
	 
      	
                                      (City,
      State or Province, Postal Code of Subscriber)

                                    
	 	 
	 
      	
                                      Switzerland

                                    
	 	 
	 
      	
                                      (Country
      of
Subscriber)

                                    

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    ACCEPTANCE

     

    The
above-mentioned Subscription Agreement in respect of the Shares is hereby
accepted by Qnective, Inc.

     

     

    DATED at
Zurich, Switzerland as of the    8th     day
of December, 2008.

     

    QNECTIVE,
INC.

    

     

    
      	
              By: 

            	
              /s/ Oswald
      Ortiz

            

    

    Oswald Ortiz

    Chief Executive Officer

     

    
      
         

      

      
        10

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00150-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00150-of-00352.parquet"}]]