Document:

Exhibit 10.1

PURCHASE AND SALE AGREEMENT

This Purchase and Sale Agreement (“Agreement”), effective as of April 13, 2018 (the “Effective Date”), is made and entered into by and between Security Devices International Inc., a Delaware corporation, having its principal place of business at 107 Audubon Road, Wakefield, Massachusetts 01880 (“the Company”) and Andre Buys of South Africa (“AB”).  The Company and AB may hereinafter be referred to collectively as the “Parties” and individually as a “Party” when convenient.

RECITALS

WHEREAS, the Company develops, manufactures and sells solutions for security situations that require the use of less lethal force;

 

WHEREAS, AB has developed registered patents and designs, provisional patents and designs, drawings, testing results, moulds, prototype products and other intellectual property for less lethal security devices and related products; and

 

WHEREAS, the Company wishes to acquire from AB, and AB wishes to sell to the Company, certain registered patents and designs, provisional patents and designs, drawings, testing results, moulds, prototype products and other intellectual property in exchange for cash and/or stock in the Company, as well as a stream of royalty payments to AB.

NOW, THEREFORE, in consideration of the foregoing and the terms and provisions contained herein and other good and valuable consideration, the receipt, adequacy, and sufficiency of which are hereby acknowledged, the Parties agree as follows:

AGREEMENT

1.             DEFINITIONS

For the purpose of this Agreement, the following terms, whether in singular or in plural form, when used with a capital initial letter shall have the respective meanings as follows:

1.1           “Affiliate” means, with respect to any Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under the common control of the Person in question; provided, however, that in any country where the local law or regulation does not permit foreign equity participation of more than fifty percent (50%), an “Affiliate” shall include any Person in which the Person in question owns or controls, directly or indirectly, the maximum percentage of such outstanding stock or voting rights permitted by such local law or regulation.  For purposes of the foregoing, “control,” including the terms “controlling,” “controlled by” and “under common control with,” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

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1.2           “Assigned Intellectual Property” has the meaning set forth in Section 2.2.

1.3           “Cash Payment” has the meaning set forth in Section 2.3.

1.4           “Closing” has the meaning set forth in Section 3.1.

1.5           “Closing Payment” has the meaning set forth in Section 2.3.

1.6           “Intellectual Property Assignment” has the meaning set forth in Section 2.1.

1.7           “Inventions” has the meaning set forth in Section 2.2.

1.8           “Net Sales Price” means the total gross amount of monies or cash equivalent or other consideration paid by unaffiliated third parties to and collected by the Company and/or any of its Affiliates for the sale of a product, less the sum of the following: (a) discounts and deductions; (b) tariff duties, sales and use taxes and any other taxes directly associated with sales of the product; (c) outbound transportation prepaid or allowed; (d) commissions, finder’s fees or facilitation fees; and (d) amounts allowed or credited on returns.

1.9           “Person” means any natural person, corporation, company, partnership, association, sole proprietorship, trust, joint venture, non-profit entity, institute, governmental authority, trust association or other form of entity not specifically listed herein including, without limitation, AB or the Company or any of their Affiliates.

1.10         “Registered Intellectual Property” means the patents, patent applications, registered designs and registered design applications listed in Exhibit A hereto; and (a) all extensions, renewals, reissues, and reexaminations of the issued patents or registered designs of the Registered Intellectual Property and (b) all applications claiming any right of priority to or through the patent applications or design applications of the Registered Intellectual Property (and all patents and designs issuing on such applications), filed or applied for by the Company, by any of the Company’s Affiliates or by any subsequent successors to, or assigns of, any of the same in any country after the Effective Date.

1.11         “Second Payment” has the meaning set forth in Section 2.3.

1.12         “Second Payment Date” has the meaning set forth in Section 2.3.

1.13         “Stock Payment” has the meaning set forth in Section 2.3.

2.             PURCHASE AND SALE OF INTELLECTUAL PROPERTY

2.1           Registered Intellectual Property.  As of the Effective Date and subject to the fulfillment of the Parties’ obligations set forth in Section 3.2 below, AB hereby sells, assigns, transfers, and sets over unto the Company his entire right, title and interest in and to all of the Registered Intellectual Property, for the Company's own use and for the use of its assigns, successors, and legal representatives, to the full end of the term of each of the Registered Intellectual Property.  To evidence the assignment of the Registered Intellectual Property, AB shall execute a confirmatory intellectual property assignment document for each item of Registered Intellectual Property in substantially the form as set forth in Exhibit B hereto (the “Intellectual Property Assignment”).  If there is any inconsistency between such Intellectual Property Assignment and the terms and conditions of this Agreement, the terms and conditions of this Agreement shall prevail. For the avoidance of doubt, Intellectual Property relating to CO2 pistols, and which is in the process of being registered, shall for the purpose of this Agreement be deemed to form part of the Registered Intellectual Property, and shall be subject to the same royalty payment regime as mentioned in Section 2.5.

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2.2           Inventions.  As of the Effective Date and subject to the fulfillment of the Parties’ obligations set forth in Section 3.2 below, AB hereby sells, assigns, transfers, and sets over unto the Company, for the Company’s own use and for the use of its assigns, successors, and legal representatives, its entire right, title and interest in and to any invention, modification, discovery, design, drawing, development, improvement, process, software program, work of authorship, documentation, formula, data, technique, know-how, trade secret, testing results, molds, prototype produces or intellectual property right or physical property whatsoever or any interest therein (whether or not patentable or registerable under copyright, trademark or similar statutes or subject to analogous protection) in any way related to security devices and related products which fall within the product focus and portfolio of the Company, including but not limited to air and/or CO2 fired long guns or pistols, including pump action launchers as well as the munitions used with these pistols and long guns including the self-stabilizing shaped or “finned” rounds, including rounds for the application of insecticides and other medication to animals, as well as the application of herbicides and fungicides to plants, trees and shrubs, including without limitation, any derivative or evolutionary patents or Inventions, whether realized or not at the time of this Agreement, as well as during the term of AB’s employment pursuant to Section 5, and all logs, records, notes and other work papers related thereto (herein called “Inventions,” and together with the Registered Intellectual Property, the “Assigned Intellectual Property”).  For the avoidance of doubt, the assignment of Assigned Intellectual Property under this Agreement includes the assignment of all patents, intellectual property and Inventions used in connection with “Simunition” products, such as rounds to be used with air-fired replica guns for training purposes as well as “wads” designed to allow the shaped rounds to be fired from a 12g shotgun.

2.3           Purchase Price.  In consideration of the assignment of the Assigned Intellectual Property, the Company hereby agrees to pay to AB pursuant to the terms set forth in Section 3.2.2, the non-refundable sum of One Hundred Thousand and 00/100 United States Dollars ($100,000.00) (the “Closing Payment”).  The Company will also pay AB, at AB’s discretion, either (a) an additional Five Hundred Thousand and 00/100 United States Dollars ($500,000.00) (the “Cash Payment”) or (b) stock of the Company having a value at the time of issuance of Seven Hundred Fifty Thousand and 00/100 United States Dollars ($750,000.00) (the “Stock Payment,”; the Stock Payment or the Cash Payment, as applicable, is referred to hereinafter as the “Second Payment”).  The Second Payment may be made any time within two (2) years from the Effective Date (the “Second Payment Date”), at the sole discretion of the Company.  In the event that AB elects to receive the Stock Payment and not the Cash Payment, the Company shall issue to AB the applicable number of Company shares based on the average closing price for the twenty (20) trading days preceding the Second Payment Date.

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2.4           Failure to Make the Second Payment.  In the event that the Company fails to make the Second Payment by the Second Payment Date, AB’s sole remedy and recourse shall be that ownership of the Assigned Intellectual Property shall revert to AB; provided, however, that the Company shall (a) have and retain a perpetual, irrevocable, exclusive license to use the “tailfin” technology for 40mm rounds, and (b) have and retain a perpetual, irrevocable, non-exclusive license to use the Assigned Intellectual Property related to any and all products that AB or the Company has developed within two (2) years of the Effective Date.  In such event, the Company (i) shall continue to pay the royalty fees for products using the exclusively licensed “tailfin” technology for 40mm rounds under the terms set forth in Section 2.5(b)-(d), and (ii) shall pay AB a royalty fee equal to ten percent (10%) of the Net Sales Price for products that incorporate the non-exclusively licensed Assigned Intellectual Property for as long as the applicable patent is in force and which shall be payable in accordance with Section 2.5(d) hereto. The exclusivity of the license in the 40mm rounds as per Section 2.4(a) is dependent on the Company commercializing the 40mm rounds within 3 (three) years of the Effective Date, failing which, the license shall become non-exclusive at the expiry of said 3 (three) year period.

2.5           Royalty Fees.  Until the earlier of (1) the second anniversary of the Effective Date or (2) the date on which the Second Payment is made, the Company will pay AB a royalty fee of ten percent (10%) of the Net Sales Price of any products sold that incorporate the Registered Intellectual Property.

(b) After the date on which the Second Payment is made, the Company shall pay AB a royalty fee based on the following percentages of Net Sales Price of any products sold that incorporate the Registered Intellectual Property during the following time periods:

	
i)

	
Four percent (4%) between the date of the Second Payment and the sixth anniversary of the Effective Date;

	
ii)

	
Three percent (3%) between the sixth anniversary of the Effective Date and the eighth anniversary of the Effective Date;

	
iii)

	
Two percent (2%) between the eighth anniversary of the Effective Date and the last expiration date of any of the Registered Intellectual Property.

(c) The royalty fee payments paid pursuant to this Section 2.5 shall cease on the last expiration date of any of the Registered Intellectual Property.

(d) Royalty fees shall be payable for all sales of products incorporating the Registered Intellectual Property, irrespective of whether any intellectual property is registered in respect of the products in the countries where the products are sold.

(e) Royalty fees due and payable under this Agreement shall be paid within thirty (30) days of the end of each financial quarter in which applicable product sales are made by the Company. Upon written request by AB, the Company shall provide records showing the calculation of the applicable royalty fee payment and Net Sales Price used to determine the royalty fee payment.

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(f) Over and above all payments provided for herein, and effective one (1) year from Closing, or alternatively, upon AB’s relocation to Boston, whichever is earlier, the Company guarantees that a minimum payment of Twenty Five Thousand and 00/100 United States Dollars ($25,000.00) shall be paid to AB every year until such time that the annual Royalty Fees accruing to AB exceeds Twenty Five Thousand and 00/100 United States Dollars ($25,000.00) per year, which minimum payment shall be payable at a rate of Two Thousand and Eighty Three and 33/100 United States Dollars ($2,083.33) per month. If the total annual Royalty Fees payable to AB during any year falls below Twenty Five Thousand and 00/100 United States Dollars ($25,000.00), the Company guarantees to further pay AB the difference between Twenty Five Thousand and 00/100 United States Dollars ($25,000.00) and the actual Royalty Fees paid to AB during such year. The payments provided for in this Section shall not be affected should AB not be able to move to Boston within twelve (12) months, or at any stage, following the Effective Date.  The guaranteed minimum payment set forth in this Section 2(f) shall apply for so long as AB is employed by the Company.

(g) As security for the Company’s obligations to pay and perform under Sections 2.3, 2.4 and 2.5, the Company hereby grants to AB a continuing security interest in and to the Assigned Intellectual Property.  The Company covenants to execute and deliver to AB such documents, instruments and agreements as may be necessary or desirable to evidence and perfect such security interest.  AB agrees to, upon Company request from time to time, subordinate the foregoing security interest to a provider of debt financing to the Company.

3.             CLOSING AND DELIVERABLES

3.1           Closing.  The transactions described under this Agreement shall be consummated on the Effective Date at the offices of the Company or any other alternate location mutually agreed upon by the Parties (the “Closing”).

3.2           Closing Deliverables.  At the Closing, the Parties shall execute and/or deliver the following documents:

 

3.2.1     Intellectual Property Assignments.  AB shall obtain Exchange Control approval from the South African Reserve Bank for the assignment of each item of Registered Intellectual Property, whereafter, within five (5) days of obtaining such exchange control approval, AB shall execute and deliver to the Company an Intellectual Property Assignment for each item of Registered Intellectual Property in substantially the form as that set forth in Exhibit B hereto.

 

3.2.2     Delivery of Closing Payment.  At the Closing, the Company shall deliver or cause to be delivered to AB the Closing Payment by wire transfer of immediately available funds to such bank account or accounts as AB may specify in writing.

3.3           Survival.  In addition to those provisions which are by their nature intended by the Parties to survive the Closing, the following provisions shall survive the Closing: Sections 1, 2 and 4 – 8.

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4.             COVENANTS, REPRESENTATIONS AND WARRANTIES

4.1           Intellectual Property Registration Fees.  AB is responsible for the payment of all filing, maintenance and annuity fees relating to the Registered Intellectual Property due on or before the Effective Date, and the Company shall be responsible for the payment of all such fees due after the Effective Date (unless and until the ownership of the Assigned Intellectual Property reverts to AB pursuant to Section 2.4), including approximately Forty Six Thousand Seven Hundred and 00/100 United States Dollars ($46,700.00) to be used solely in connection with the certain filing fees for European registrations, and further including all fees relating to the registration of Intellectual Property in the CO2 pistols.

4.2           No Licenses.  AB warrants and represents that, as of the Effective Date, there are no agreement(s) between AB and any Person pursuant to which AB has licensed or granted any rights whatsoever, or is obligated to license or grant any rights in, the Assigned Intellectual Property to the Person.

4.3           Assigned Intellectual Property.   AB represents and warrants that, as of the Effective Date, (a) AB is the sole and lawful owner of the entire right, title and interest in and to the Assigned Intellectual Property, (b) all such Assigned Intellectual Property is free from all liens and security interests, (c) subject to obtaining Exchange Control approval from the South African Reserve Bank, AB has good and full right and lawful authority to sell and convey the Assigned Intellectual Property in the manner herein set forth, (d) to the best of AB’s knowledge, the Assigned Intellectual Property does not infringe upon any third party’s intellectual property rights anywhere in the world, and (e) to the best of AB’s knowledge, there is nothing that will materially affect the validity and enforceability of the Registered Intellectual Property.

4.4           Litigation.  With the exception of the possible claim that GI Sportz may have on the patent for the “pump action launcher”, and subject to obtaining exchange control approval from the South African Reserve Bank, AB represents and warrants that, as of the Effective Date, there is no litigation, claim or governmental or administrative proceeding or investigation pending or, to the knowledge of AB, threatened, involving the Assigned Intellectual Property or which could prevent or hinder the consummation of the transactions contemplated by this Agreement.

4.5           Authority.  AB represents and warrants that, as of the Effective Date, AB has all requisite authority, right, power and capacity to enter into this Agreement and each agreement, document and instrument to be executed and delivered by AB pursuant to or as contemplated by this Agreement and to carry out the transactions contemplated hereby and thereby.  This Agreement and each agreement, document and instrument to be executed and delivered by AB pursuant to or as contemplated by this Agreement constitute, or when executed and delivered will constitute, valid and binding obligations of AB enforceable in accordance with their respective terms.  The execution, delivery and performance by AB of this Agreement and each such agreement, document and instrument:

(a)        does not and will not violate any laws of the United States, or any state or other jurisdiction applicable to AB or require AB to obtain any approval, consent or waiver of, or make any filing with, any person or entity (governmental or otherwise) that has not been obtained or made; and

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(b)        does not and will not result in a breach of, constitute a default under, accelerate any obligation under or give rise to a right of termination of any agreement, instrument,  permit, authorization, order, writ, judgment, decree, determination or arbitration award to which AB is a party or by which the property of AB is bound or affected.

4.6           Full Disclosure.  The representations, warranties and statements contained in this Agreement and in the certificates, exhibits and schedules delivered by AB or the Company pursuant to this Agreement do not contain any untrue statement of a material fact and do not omit to state a material fact required to be stated therein or necessary in order to make such representations, warranties or statements not misleading in light of the circumstances under which they were made.

5.             EMPLOYMENT

5.1           Employment Position.  In consideration of the assignment of the Assigned Intellectual Property, the Company agrees to hire AB as its Chief Technology Officer and Head of Product Development, commencing on the first business day after the day of the Closing. This position will report directly to the Chief Executive Officer of the Company.  In this position, AB shall dedicate his full working time to the Company and will be responsible for the design, development and commercialization of all new products for the Company.  The starting salary shall be Ten Thousand and 00/100 United States Dollars ($10,000.00) per month.  In the event that AB is employed for only a portion of a given month, AB’s salary for such month shall be prorated for the number of days employed in such month. AB shall be entitled to participate in the Company’s medical insurance plan once he relocates to the United States.  The Company shall reimburse AB for all ordinary and reasonable costs of relocation, including the cost of immigration counsel; provided, however, that such reimbursement shall not exceed Fifteen Thousand and 00/100 United States Dollars ($15,000.00) not including the cost of immigration counsel. Within twelve (12) months of the Effective Date, and subject to AB’s continued employment with the Company, it is expected that AB shall move to the greater Boston area.

5.2           New Product Development; Commercialization of New Products by the Company.

a.             As an employee of the Company, AB will be encouraged to develop new security related products (with the approval of senior management of the Company).  AB acknowledges and agrees that all writings, works of authorship, technology, inventions, discoveries, ideas and other work product of any nature whatsoever, that are created, prepared, produced, authored, edited, amended, conceived, or reduced to practice by AB individually or jointly with others during the period of his employment by the Company and relating in any way to the business or contemplated business, research, or development of the Company (regardless of when or where the Work Product is prepared or whose equipment or other resources is used in preparing the same) and all printed, physical, and electronic copies, all improvements, rights, and claims related to the foregoing, and other tangible embodiments thereof (collectively, "Work Product"), as well as any and all rights in and to copyrights, trade secrets, trademarks (and related goodwill), patents, and other intellectual property rights therein arising in any jurisdiction throughout the world and all related rights of priority under international conventions with respect thereto, including all pending and future applications and registrations therefor, and continuations, divisions, continuations-in-part, reissues, extensions, and renewals thereof, shall be the sole and exclusive property of the Company.  AB agrees to and hereby irrevocably does assign to Company, for no additional consideration, AB’s entire right, title, and interest in and to all Work Product and intellectual property rights therein, including the right to sue, counterclaim, and recover for all past, present, and future infringement, misappropriation, or dilution thereof, and all rights corresponding thereto throughout the world.

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b.             If the Company decides to pursue patent protection, and obtains a patent, for Work Product developed primarily by AB, AB will be entitled to a royalty fee of two and one half percent (2.5%) of the Net Sales Price of such products for seven (7) years from the date of first sale, which shall be payable in accordance with Section 2.5(d) hereto. .Where AB develops a new product which the Company successfully commercializes and in terms of which a patent or other intellectual property is not registered, AB will be entitled to a royalty fee of one and one half percent (1.5%) of the Net Sales Price of such products for seven (7) years from the date of first sale, which shall be payable in accordance with Section 2.5(d) hereto.  The Company agrees to actively pursue patents and other registered intellectual property rights for all patentable or otherwise protectable inventions that AB develops during his employment with the Company if such inventions (a) are in the Company’s product focus and (b) are, in the Company’s reasonable good faith belief, commercially exploitable.

c.             Any writings, works of authorship, technology, inventions, discoveries, ideas and other work product of any nature whatsoever, that are created, prepared, produced, authored, edited, amended, conceived, or reduced to practice by AB individually or jointly with others which do not relate to the business or contemplated business, research, or development of the Company, and all printed, physical, and electronic copies, all improvements, rights, and claims related to the foregoing, and other tangible embodiments thereof shall, provided that AB did not utilize any resources of the Company in the development or preparation of the foregoing, be owned by, and belong to AB.

5.3           Warrants.   In order to more closely align AB’s interest with that of the Company, within one hundred twenty (120) days of the Effective Date, the Company will issue options or warrants with a strike price equal to the Company’s stock price on the Effective Date.  The vesting of the options or warrants will be triggered by the stock price as shown below:

	
500,000 options/warrants

	
Trigger price:    USD $0.30

	
Strike Price (est):   USD $0.16

	
500,000 options/warrants

	
Trigger price:    USD $0.50

	
Strike Price (est):   USD $0.16

	
500,000 options/warrants

	
Trigger price:    USD $1.00

	
Strike Price (est):   USD $0.16

The Company’s stock price must close above the trigger price for twenty (20) trading days in order for the options/warrants to be triggered.  The options/warrants shall have a seven-year (7) life from the date of grant and AB must remain employed by the Company for a period of three (3) years in order for the options/warrants to vest.  The Company agrees that it will not terminate AB except for cause prior to the end of the three year vesting period for the options or warrants granted under this agreement.

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6.             ADDITIONAL OBLIGATIONS

 

6.1           After Closing.  The Company shall, at its expense, apply for the recordation and other perfection of the Registered Intellectual Property with all relevant government agencies. AB shall use commercially reasonable efforts to assist the Company with respect to such recordation and perfection and transferring ownership of the Registered Intellectual Property.

6.2           Further Assurances.  Each of the Parties agrees to use commercially reasonable efforts to assist and cooperate with the other Parties in doing all things necessary to consummate the transactions contemplated by this Agreement.  At any time and from time to time after the Closing, AB, at the request of the Company, and without further consideration, shall execute and deliver such further instruments or documents and take all such further action as the Company may reasonably request in order to evidence or otherwise facilitate and implement the consummation of the transactions contemplated by this Agreement.

6.3           Costs incidental to this Agreement: The Company shall be liable to reimburse AB for all reasonable costs incurred towards the conclusion of this Agreement, which costs shall include: attorney fees, filing fees and other expenses relating to the obtaining of Exchange Control Approval from the South African Reserve Bank, costs incurred in the negotiation and conclusion of this Agreement, and any other agreements specifically occasioned by the conclusion of this Agreement; provided that the Company shall have no obligation to reimburse AB for costs in excess of Ten Thousand and 00/100 United States Dollars ($10,000.00) pursuant to this Section 6.3. 

7.             CONFIDENTIALITY.

None of the Parties shall itself, or shall permit any of their respective Affiliates to, disclose the terms and conditions of this Agreement to any third party at any time without obtaining the prior written consent of all other Parties, except that a Party may disclose this Agreement: (a) in response to a subpoena issued by any governmental body or judicial entity or as otherwise may be required by law; (b) as may be necessary for the enforcement of the terms and conditions of this Agreement; (c) as may be necessary for the enforcement of the Assigned Intellectual Property in a court of law or other official proceeding; (d) as may be necessary under the rules of any stock exchange listing of the Company’s securities; and (e) to legal counsel, auditors or accountants for the Parties having a need to review such information.  In the case of disclosure, the disclosing Party shall require each recipient to receive and hold the information on a confidential basis.  In the event of disclosure pursuant to subsection (a), (b) or (c) above where this Agreement is required to be disclosed to a court of law or other official proceeding, the disclosing Party shall promptly notify the other Parties of such disclosure and requirement, and the Parties shall cooperate with each other and use commercially reasonable efforts to obtain a protective order.  Notwithstanding the above, the assignment of the Assigned Intellectual Property may be disclosed by any of the Parties to any Person.

8.             GENERAL PROVISIONS

8.1           Assignability of This Agreement.  The Company shall have the right to assign this Agreement or any Assigned Intellectual Property with the Company’s respective rights and obligations under this Agreement relating to each such Assigned Intellectual Property to any third-party that agrees to assume the Company’s rights and obligations under this Agreement or those respective rights and obligations under this Agreement relating to the applicable Assigned Intellectual Property.  AB shall not be entitled to assign this Agreement to any Person without the prior written consent of the Company.

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8.2           Onsale of Assigned Intellectual Property.  In the event that the Company elects to sell all or any part of the Assigned Intellectual Property to a third party, prior to the last expiration date as per section 2.5 above, such a sale shall be subject to either the Royalty Fees dispensation provided for in this Agreement continuing and forming part of the terms of such a sale, or AB’s election to waive any future royalties, in which case AB shall be entitled to fifty percent (50%) of the gross selling price, which gross selling price shall be market related and confirmed by an independent valuation, should AB not be satisfied with the gross selling price.

8.3           Retention of Royalty Fees. It is agreed that AB’s entitlement to Royalty fees as provided for herein shall not be affected by any factor, including his employment by the Company. In the event that AB’s employment with the Company ceases for whatsoever reason, his entitlement to Royalty fees shall remain unaffected. Should AB not be able to collect his Royalty Fees due to death or disablement, the Company shall pay Royalty fees and all other payments due to AB to his estate for as long as such Royalties shall be due.

8.4           Sublicensing of the Assigned Intellectual Property.  In the event that the Company elects to sublicense all or any part of the assigned Intellectual Property to a third party, prior to the last expiration date as per section 2.5 above, AB’s royalty income as provided for in this agreement shall not be prejudiced by such sublicensing.

8.5           Entire Agreement.  This Agreement, together with each Registered Intellectual Property Assignment and all its exhibits thereto, constitutes the entire agreement between the Parties relating to the subject matter hereof, and supersedes all prior agreements, proposals, discussions, agreements, representations, and other communications between the Parties with respect to the subject matter hereof.

8.6           Amendment and Waiver.  No change in the terms, conditions, or provisions of this Agreement shall be binding on any Party unless in writing and signed by all Parties hereto.  The failure or delay of any Party in exercising any of its rights hereunder, including any rights with respect to a breach or default by the other Party, shall in no way operate as a waiver of such rights or prevent the assertion of such rights with respect to any later breach or default by the other Party.

8.7           Binding Nature & No Third Party Beneficiaries.  This Agreement is binding upon and shall inure to the benefit of the Parties, and their respective, permitted legal successors and assigns of this Agreement, and this Agreement is made solely for such Persons' benefit.  Other than as expressly provided in this Section 8.4, no other Person shall have any rights, interest or claims hereunder or be entitled to any benefits under or on account of this Agreement as a third-party beneficiary or otherwise.

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8.8           Severability.  Should any term, condition, or provision of this Agreement be held unenforceable by an authority of competent jurisdiction, such ruling shall not affect the validity and enforceability of the remaining terms, conditions, and provisions of this Agreement.  To the extent that any such provision is found to be invalid, illegal or unenforceable, the Parties shall act in good faith to substitute for such provision, to the extent possible and as necessary, a new provision with content and purpose as close as possible to the provision so determined to be invalid, illegal or unenforceable.

8.9           Governing Law.  This Agreement shall be governed by and construed under the laws of the Commonwealth of Massachusetts without reference to its conflict of laws or choice of law principles.  The Parties hereby submit to the jurisdiction of the Middlesex County in the Commonwealth of Massachusetts in any litigation arising under this Agreement.

8.10         Expenses.  If any action or other proceeding relating to the enforcement or interpretation of any provision of this Agreement is brought by a Party, the prevailing Party shall be entitled to recover reasonable attorneys’ fees, costs and disbursements (in addition to any other relief to which the prevailing party may be entitled).

8.11         Counterparts.  This Agreement may be executed in counterparts, each of which shall constitute an original and all of which taken together shall constitute one and the same instrument. A facsimile or an electronic copy of such originals or counterparts transmitted to the other Party is effective as if the actual originals or counterparts were sent to the other Party.

8.12         Construction.  The Parties acknowledge that their respective legal counsel have reviewed this Agreement and that any rule of construction to the effect that any ambiguity is to be resolved against the drafting party shall not be applicable in the interpretation of this Agreement. The headings used herein are for reference and convenience only, and shall not be used in the interpretation of this Agreement.

8.13         Notices.  All notices and other communications given or made pursuant hereto shall be in writing and shall be deemed to have been duly given or made as of: (a) in the case of personal delivery, when actually delivered, (b) in the case of delivery by prepaid overnight courier with guaranteed next day delivery, the day designated for delivery by such courier, or (c) in the case of delivery by registered or certified mail, postage prepaid, return receipt requested, five (5) days after deposit in the mails, and in each case shall be addressed as follows:

If to AB (and/or his Affiliate), to:

André Buys

27 Helderkruin Crescent

Woodhill Estate

Pretorius Park, Pretoria, South Africa, 0181

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With a copy (which shall not constitute notice to AB), to:

KISCH IP

Third Floor, Menlyn Corner Building

87 Frikkie de Beer Street, Menlyn, Pretoria, South Africa, 0181

Attention: Jaco Theunissen

Email: jacot@kisch-ip.com

If to the Company, to:

Security Devices International Inc.

107 Audubon Road

Wakefield, Massachusetts 01880

Attn: Dean Thrasher, CEO

With a copy (which shall not constitute notice to the Company), to:

Hinckley, Allen & Snyder, LLP

50 Kennedy Plaza, Suite 1500

Providence, Rhode Island 02903

Attention: David Hirsch, Esq.

[Signatures Appear on the Following Page]

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IN WITNESS WHEREOF, the Parties hereto by their fully authorized representatives have executed this Agreement as of the Effective Date indicated above.

AB:

 

	
 

		
/s/ André Buys

	
 

	 	 
	
 

	
André Buys

	
 

	 	 
	 	 	 	 	 	 
	
 

	
 

	
Date: April 13, 2018

	
 

	 	 
	
 

		
 

	
 

	 	 
	
 

	
 

	
Republic of South Africa

	
 

	 	 
	
 

	
 

	
Gauteng Province

	
 

	 	 
	
 

	
 

	
Pretoria

	
 

	 	 
	
 

	
 

	
 

	
 

	 	 
	
 

	
 

	
On this 13th day of April, 2018, before me personally came André Buys to me known to be the individual described in and who executed the foregoing instrument, and acknowledged execution of the same.

	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	Notary Public 	 

THE COMPANY:

 

	
 

	
SECURITY DEVICES INTERNATIONAL INC.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
By:

	
/s/ Dean Thrasher

	
 

	
 

	
 

	
 

	
Name: 

	
Dean Thrasher

	
 

	
 

	
 

	
 

	
Title:

	
Chief Executive Officer

	
 

	
 

	
 

 

	
 

	
 

	
Date: April 13, 2018

	
 

	 	
 

	
 

	
 

	
 

	
 

	
 

	 	
 

	
 

	
 

	
 

	
Canada

	
 

	
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Province of Ontario

	
 

	
 )

	
 

	
 

	
 

	
 

	Region of Halton	
 

	
 )

	
 

	
 

	
 

	
 

	
 

	
 

	 	
 

	
 

	
 

	
 

	
 

	
 

	 	
 

	
 

	
 

	
 

	
On this 13th day of April, 2018, before me personally came Dean Thrasher, Chief Executive Officer of Security Devices International Inc., to me known to be the individual described in and who executed the foregoing instrument, and acknowledged execution of the same.

	
 

	
 

	
 

	
 

	 	
 

	
 

	
 

	
 

	
 

	
 

	 	
 

	
 

	
 

	
 

	
 

	
 

	 	
 

	
 

	
 

	
 

	
 

	
 

	 	
 

	
 

	
 

	
 

	
 

	
 

	 	Notary Public	
 

 

 

Exhibit A

REGISTERED INTELLECTUAL PROPERTY

 

  

  

 

Exhibit B

FORM OF INTELLECTUAL PROPERTY ASSIGNMENT

 

 

 

 

 

 

 

 

INTELLECTUAL PROPERTY ASSIGNMENT AGREEMENT

This Intellectual Property Assignment Agreement (this “Agreement”), dated as of ________ ____, 2018 (the “Effective Date”), is entered into between Andre Buys, an individual (“Assignor”), and Security Devices International Inc., a Delaware corporation (the “Assignee”).  Assignor and Assignee are referred to herein individually as a “Party” and together, as the “Parties.”  Capitalized terms not otherwise defined herein shall have the respective meanings ascribed to them in the Purchase Agreement (as defined below).

RECITALS

A.            Assignor and Assignee are parties to that certain Purchase and Sale Agreement, dated as of April 13, 2018 (the “Purchase Agreement”), pursuant to which Assignee is acquiring all of the Assigned Intellectual Property, from AB upon the terms and subject to the conditions of the Purchase Agreement; and

B.             Pursuant to the Purchase Agreement, Assignor is selling and assigning to Assignee all right title and interest in and to the Assigned Intellectual Property.

NOW, THEREFORE, in consideration of the foregoing premises and mutual promises contained herein, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties agree as follows:

1.             Assignment.  Assignor hereby irrevocably sells, assigns, transfers, conveys and delivers to Assignee, and Assignee hereby accepts from Assignor, all of Assignor’s right, title and interest, in and to the following (the “Assigned IP”) (a) the patents, patent applications, registered designs and/or registered design applications set forth in Schedule 1, and all issuances, divisions, continuations, continuations-in-part, reissues, extensions, reexaminations, and renewals thereof; (b) all rights of any kind whatsoever of Assignor accruing under any of the foregoing provided by applicable law of any jurisdiction, by international treaties and conventions, and otherwise throughout the world; (c) any and all royalties, fees, income, payments, and other proceeds now or hereafter due or payable with respect to any and all of the foregoing; and (d) any and all claims and causes of action with respect to any of the foregoing, whether accruing before, on, or after the date hereof, including all rights to and claims for damages, restitution, and injunctive and other legal and equitable relief for past, present, and future infringement, dilution, misappropriation, violation, misuse, breach, or default, with the right but no obligation to sue for such legal and equitable relief and to collect, or otherwise recover, any such damages.

2.             Further Assurances.  From time to time after the date of this Agreement, Assignor agrees to reasonably assist Assignee and its successors and assigns, upon Assignee’s written request, to evidence, record, and perfect the assignment in Section 1 hereof and to provide such other reasonable assistance as might be required in connection with Assignee’s efforts to secure, enforce, maintain, and defend the assigned rights.  Assignor agrees that Assignor will not be entitled to any additional compensation for providing any of the services in this Section 2, but Assignee shall reimburse Assignor for any actual expenses in connection with Assignor’s performance of such services.

3.             Terms of Purchase Agreement. The Parties hereto acknowledge and agree that this Intellectual Property Assignment Agreement is entered into pursuant to the Purchase Agreement, to which reference is made for a further statement of the rights and obligations of Assignor and Assignee with respect to the Assigned IP. The representations, warranties, covenants, agreements, and indemnities contained in the Purchase Agreement shall not be superseded hereby but shall remain in full force and effect to the full extent provided therein. In the event of any conflict or inconsistency between the terms of the Purchase Agreement and the terms hereof, the terms of the Purchase Agreement shall govern.

4.             Partial Invalidity.  The invalidity or unenforceability of any particular provision of this Agreement (or the application of such provision to any Person or circumstance) shall not affect the other provisions hereof, and this Agreement shall be construed in all respects as if such invalid or unenforceable provisions were omitted.

5.             Governing Law; Venue.  All issues and questions concerning the construction, validity, interpretation and enforceability of this Agreement, and all claims, controversies and disputes arising hereunder or thereunder or in connection herewith or therewith, whether purporting to be sound in contract or tort, or at law or in equity, shall be governed by, and construed in accordance with, the laws of the Commonwealth of Massachusetts including its statutes of limitations, without regard to any conflicts-of-law principles that would cause the application of the laws of any jurisdiction other than the Commonwealth of Massachusetts.  In furtherance of the foregoing, each of the parties hereto (a) agrees the foregoing courts are the appropriate, exclusive, and convenient forum for, and will have exclusive jurisdiction over any claim, controversy, or dispute arising from or in connection with this Agreement, (b) waives the defense of inconvenient forum, (c) agrees not to commence any suit, action or other proceeding arising out of this Agreement or any transactions contemplated hereby other than in such foregoing courts, and (d) agrees that a final judgment in any such suit, action or other proceeding shall be conclusive and may be enforced in any other jurisdiction by suit or judgment or in any other manner provided by Law.

6.             Counterparts; Delivery by Facsimile or Electronic PDF.  This Agreement may be executed simultaneously in two counterparts (including facsimile and electronic copies (e.g., PDF)) each of which shall be deemed an original and all of which together shall constitute but one and the same instrument.  This Agreement or any related agreement, certificate or other instrument, to the extent signed and delivered by means of a facsimile machine or by electronic pdf, shall be treated in all manner and respects as an original contract and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person.

[Signature Pages Follow]

IN WITNESS WHEREOF, the Parties have duly caused the execution of this Agreement to be effective as of the date written in the first paragraph above.

	
 

	
ASSIGNOR:

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	ANDRE BUYS

 

	STATE OF	
)

	
 

	
 

	
)

	
  SS:

	COUNTY OF	
)

	
 

 

On this ___day of ________, 2018, before me personally came Andre Buys to me known to be the individual described in and who executed the foregoing instrument, and acknowledged execution of the same.

 

	
 

	
 

	
 

	
 

	
Notary Public:

	
 

	
 

	My commission expires:	
 

 

 

	
 

	
ASSIGNEE:

	
 

	
SECURITY DEVICES INTERNATIONAL, INC.

	
 

	
 

	 	
 

	
 

	
 

	 	
 

	
 

	
 

	 	
 

	
 

	
 

	 	
 

	
 

	
By:

	 	
 

	
 

	
 

	
Name: 

	
 

	
 

	
 

	
Title: 

	
 

 

	STATE OF	
)

	
 

	
 

	
)

	
  SS:

	COUNTY OF	
)

	
 

 

On this ____ day of _________, 2018, before me personally came _________________, to me known to be the individual described in and who executed the foregoing instrument, and acknowledged execution of the same.

 

	
 

	
 

	
 

	
 

	
Notary Public:

	
 

	
 

	My commission expires:	
 

 

SCHEDULE 1

ASSIGNED IP

[All patents, patent applications, registered designs and registered design applications as set forth on the attached Exhibit A to the Agreement.]EXCHANGE
OF SHARES AGREEMENT

 

by,
between and among

 

E-motion
Apparel, Inc.

 

&

 

12
ReTech Corporation,

 

and

 

Hubert
J. (“Hub”) Blanchette

 

 

 

This
Exchange of Shares Agreement (“Agreement”) is entered into as of the Effective Date by, between and among,
defined below, BUYER, TARGET, and SELLER. The parties to this Agreement are sometimes hereinafter referred to individually as
a “Party” and collectively as the “Parties.”

 

 RECITALS

 

WHEREAS,
SELLER owns the number of shares of common stock of TARGET set forth on Schedule A attached hereto which represent 100%
of the capital stock issued and outstanding of TARGET (the “TARGET Shares”);

 

WHEREAS,
BUYER has authorized for issuance the number of shares of common stock of BUYER (the “BUYER Shares”) set forth
on Schedule B hereto; and

 

WHEREAS,
SELLER wishes to sell, and BUYER wishes to purchase, 100% of TARGET Shares in exchange for the BUYER Shares, designated for SELLER
on the Schedules A AND C by way of exchange of shares;

 

NOW,
THEREFORE, in consideration of the mutual terms and covenants set forth herein, the Parties approve and adopt this Agreement and
mutually covenant and agree with each other as follows:

 

 DEFINITIONS

 

“ACTION”
means any action, suit, proceeding, investigation or governmental approval process.

 

“AGREEMENT”
has the meaning set forth on the first page hereof.

 

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“Affiliate”
means a Person that directly or indirectly through
one or more intermediaries, controls or is controlled by, or is under common control with, the Person specified, such as directors,
officers, and, as to any Person that is an individual, such individual’s spouse, parents, grandparents, siblings, and lineal
descendants.

 

“BUYER”
means 12 ReTech Corporation, a corporation organized in the state of Nevada, USA that is publicly listed under the symbol: RETC.

 

“BUYER
INDEMNIFIED PARTIES” means BUYER and each officer, director, employee, agent, partner, shareholder, and Affiliate of BUYER.

 

“BUYER
SHARES” means those shares of the common stock of BUYER identified on Schedule B.

 

“BREACH”
means any material breach of the terms of this Agreement or any ancilliary agreements between the Parties.

 

“BREACHING
OR BREAKING EVENT” means specifically those events that would cause a breach or break in the Stand By Period.

 

“CLOSING”
means the Closing Date.

 

“CLOSING
DATE” means the date that this Agreement and all exhibits are executed.

 

“CONDITION”
means a Party’s business, properties, operations, earnings, assets, liabilities, condition (financial or otherwise).

 

“CONTRACT”
means any contract, agreement, note, instrument, franchise, lease, license, commitment, arrangement, or understanding, written
or oral.

 

“EFFECTIVE
DATE” shall be upon the execution of this agreement.

 

“ESCROW
AGENT” shall mean Belmont Acquisitions Corp. (“Belmont”).

 

“ESCROW
SHARES” means all of the TARGET SHARES and all of the BUYER SHARES delivered as part of this Exchange of Shares Agreement.

 

“FUNDS”
means for the purposes of this Agreement the monies that remained in TARGET at closing that are by the terms of this Agreement
the property of SELLERS.

 

“GAAP”
means generally accepted accounting principles consistently applied.

 

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“GOVERNMENTAL
AUTHORITY” means any court or governmental authority, department, commission, board, bureau, agency, or instrumentality,
domestic or foreign.

 

“INDEMNIFIED
COSTS” means: (a) any and all damages, losses, claims and other liabilities of any and every kind, including, without limitation,
judgments, and costs of settlement, and (b) any and all out-of-pocket costs and expenses of any and every kind, including, without
limitation, reasonable fees, and disbursements of counsel.

 

“INTELLECTUAL
PROPERTY” means all: (a) trademarks, service marks, trade dress, logos, trade names, and corporate names, together with
all translations, adaptations, derivations, and combinations thereof and including all goodwill associated therewith, and all
applications, registrations, and renewals in connection therewith; (b) copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith; (c) trade secrets and confidential business information (including ideas,
research and development, knowhow, formulas, compositions, manufacturing and production processes and techniques, technical data,
designs, drawings, specifications, pricing and cost information, and business and marketing plans and proposals); (d) other proprietary
rights; and (e) copies and tangible embodiments thereof (in whatever form or medium).

 

“INTELLECTUAL
PROPERTY LICENSE” means any Contract to use any Intellectual Property.

 

“LAW”
means any law, statute, treaty, ordinance, rule, regulation, or policy, domestic or foreign, of any Governmental Authority

 

“LEGAL
OPINION” means the written opinion of legal counsel representing BUYER that allows the removal of a restrictive legend on
a stock certificate that relies upon an exemption to registration under regulation D as promulgated by the SEC.

 

“LEGAL
TITLE” means the ownership of the common shares of the TARGET and/or BUYER as such may apply.

 

“LETTER
OF INTENT or LOI” No LOI was executed between the Parties in regards to this transaction.

 

“LIABILITY(IES)”
means any obligation, indebtedness, commitment, guaranty, or any other item, whether direct or indirect, absolute, accrued, contingent
or otherwise, and whether due or to become due.

 

“LIENS”
means all liens, claims, pledges, charges, agreements, and encumbrances of any kind whatsoever.

 

“MICRO-BRAND(S)”
means any acquisition of a company having its own products or “brand” that has $50 million or less in annual revenue.

 

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“NON-BINDING
LETTER OF INTENT” There was no Non-Binding Letter of Intent executed between the Parties in reference to this transaction

 

“ORDER”
means any order, injunction, writ, compliance agreement, decree, ruling or decision of a Governmental Authority.

 

“PERMIT”
means any license, permit, order, certificate, authorization, or approval of a Governmental Authority.

 

“PERSON”
means any individual, partnership, corporation, unincorporated organization or association, limited liability company, trust,
or other entity.

 

“RETURN(S)”
means any foreign or domestic, federal, state, city, county, or local income, franchise, sales, use or value added tax return
and report, or any other tax return, report, and statement required to be filed by a Party in any jurisdiction.

 

“SEC”
means the United States Securities and Exchange Commission.

 

“SECURITIES
ACT” means the Securities Act of 1933, as amended, supplemented, modified or restated from time to time.

 

“SELLER”
means Hubert J. (“Hub”) Blanchett who owns 100% of the outstanding equity (shares) of Target.

 

“SELLER
INDEMNIFIED PARTIES” means TARGET and SELLER, each Affiliate of Target and Seller, and each officer, director, employee,
and agent of TARGET.

 

“STANDBY
PERIOD” means that period of time defined in this Agreement (Section 9) whereby the BUYER can “claw-back” their
shares due to non-performance of SELLER.

 

“TARGET”
means E-motion Apparel, Inc. a corporation organized in the state of California, USA together with all wholly owned subsidiaries
or controlled subsidiaries to include but not be limited to: Lexi-Luu Designs, Inc ( a Nevada Corporation), Punkz Gear, Inc. (a
Wyoming Corporation), Cleo VII, Inc. (a Nevada Corporation) and Skipjack Dive & Dance Wear, Inc. (a Nevada Corporation)..

 

“TARGET
FINANCIAL STATEMENTS” The Parties acknowledge receipt of the financials.

 

“TARGET
Shares” are those shares of the common stock of TARGET identified on Schedule A.

 

“TARGET
Subsidiaries” shall mean: Lexi-Luu Designs, Inc ( a Nevada Corporation), Punkz Gear, Inc. (a Wyoming Corporation), Cleo
VII, Inc. (a Nevada Corporation) and Skipjack Dive & Dance Wear, Inc. (a Nevada Corporation).

 

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“TAXES”
means any tax, assessment, fee, interest, penalties, and other charge of kind whatsoever imposed by any Governmental Authority.

 

“UP-LIST”
means the action of BUYER being approved to move up to a listing on either the NASDAQ or NYSE AME exchange(s) which as one of
its requirements is the need to have a $4.00 market share price.

 

1.
AGREEMENTS

 

	1.	Recitals
                                         and Schedules. The Recitals set forth in this Agreement, along with the schedules and
                                         exhibits attached hereto, are incorporated into this Agreement as though fully set forth
                                         in this Section 1.

 

2.
SHARES ACQUIRED AND SCHEDULES AND CLOSING

 

	2.1	As
    of the Closing or Closing Date, for consideration and in reliance on the representations, warranties, and agreements of the
    Parties herein, on the Closing Date, BUYER shall sell and transfer the BUYER Shares, to SELLER, free and clear of LIENS, and
    SELLER shall sell and transfer to BUYER, the TARGET Shares, free and clear of all LIENS. The transaction shall take the form
    of an exchange of shares pursuant to the terms and conditions of this Agreement.
	 	 
	2.2	TARGET
    Shares shall represent all of the issued and outstanding capital stock of TARGET. 
	 	 
	2.3	A
    detailed list assets and liabilities of TARGET have been provided to BUYER on exhibit C and the liabilities consist only of
    a 10 year obligation of Bitzio Corp and the capital needed to reinstate the corporate charters of the subsidiaries.
	 	 
	2.4	A
    summary of TARGET’s Material Contracts is provided in Schedule E. 
	 	 
	2.5	SELLER
    and TARGET represent and warrant that the items and information contained in Schedules A and C through G are
    accurate and complete as of the date of this Agreement and will remain accurate and complete through the Closing Date with
    the exception of changes in the ordinary course of business that are not material
	 	 
	2.6	The
    Closing of this Agreement, being the Closing Date, shall be the date that this agreement is executed and all contingencies
    excepting those in Section 9 are met, unless SELLER and BUYER extend such date by written consent. 

 

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3.
CONSIDERATION.

 

3.1       For
consideration and in reliance on the representations, warranties, and agreements of the Parties herein, on the Closing Date, BUYER
shall sell and transfer the BUYER Shares, to SELLER, free and clear of LIENS, and SELLER shall sell and transfer to BUYER, the
TARGET Shares, free and clear of all LIENS.

 

4.
REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF SELLER AND TARGET.

 

SELLER
and TARGET, as of the Effective Date and as of the Closing Date, jointly and severally hereby represent and warrant to, and agree
for the benefit of, BUYER as follows, (a) except as expressly otherwise disclosed in this Agreement or on any attached Schedule
to the contrary; and (b) with the understanding that certain representations are being made to the best knowledge of SELLER.

 

4.1       Organization,
Good Standing, and Qualification. TARGET is a corporation duly organized, validly existing and in good standing under the
laws of California. TARGET has all requisite power and authority to carry on its business as now conducted and as proposed to
be conducted. TARGET is duly qualified to transact business and is in good standing in each jurisdiction in which the failure
so to qualify could have a material adverse effect on Target’s Condition. However, Target needs to reinstate the TARGET
SUBSIDIARIES within 30 days of closing.

 

4.2       Capitalization.
The TARGET Shares have been duly and validly issued, are fully paid and non-assessable.

 

4.2.1       TARGET
does not have outstanding any securities convertible into or exchangeable for its capital stock or outstanding any rights to subscribe
for or to purchase, or any options for the purchase of, or any agreements providing for the issuance (contingent or otherwise)
of, or any calls, commitments or claims of any character relating to, its capital stock.

 

4.2.2       There
are no agreements to which SELLER is a party with respect to the voting or transfer of the TARGET Shares and there are no preemptive
rights, except as are identified on Schedule A.

 

4.2.3       Schedule
A hereto includes the correct name of SELLER and the correct number of TARGET Shares owned by SELLER, and the liens on those
Shares.

 

4.2.4       At
Closing there will be no outstanding security, option, warrant, right, agreement, understanding or commitment of any kind entitling
any person or entity to acquire any of the TARGET Shares.

 

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4.2.5       The
TARGET Shares have not been registered with the SEC or any state regulatory authority. Neither the TARGET nor SELLER has granted
any options or other rights to others to acquire equity interests in TARGET or in SELLER’s equity interest in TARGET.

 

	4.3	Authority;
                                         Execution and Delivery; Requisite Consents, Non-violation.

 

4.3.1       SELLER
and TARGET have, and, at the Closing will have, all requisite power and authority to execute, deliver and perform this Agreement
and each other document or instrument executed by any of them, or any of TARGET’s officers, in connection herewith or therewith
or pursuant hereto or thereto and to consummate the transactions contemplated hereby and thereby. The execution, delivery and
performance of this Agreement and the consummation of the transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary action on the part of TARGET.

 

4.3.2       This
Agreement is duly executed and delivered by the Parties and is the legal, valid, and binding obligation of each, enforceable against
each in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, moratorium,
or other similar laws affecting the enforceability of creditors’ rights in general or by general principles of equity.

 

4.3.3       The
execution, delivery and performance of this Agreement, the consummation by SELLER and TARGET of the transactions contemplated
hereby and thereby (including, without limitation, the offer, sale and delivery by SELLER of the TARGET Shares), to the best knowledge
of SELLER and TARGET: (a) will not require the consent, license, permit, waiver, approval, authorization or other action of, by
or with respect to, or registration, declaration or filing with, any Governmental Authority or any Person; (b) contravene: (i)
any requirement of law to which it is subject, including without limitation the securities laws of any jurisdiction or the rules
or regulations of any governmental entity or self-regulatory body; nor (ii) any judgment, decree, franchise, order or demand applicable
to it; (c) conflict or be inconsistent with or result in any breach of the terms, covenants, conditions or provisions of, or constitute
a default under, or result in the creation or imposition of (or the obligation to create or impose) any Lien upon any of its properties
or assets pursuant to the terms of any indenture, mortgage, deed of trust agreement or other instrument to which it is a party
or bound or to which it may be subject or violate any provision of its organization documents; or (d) will not require the satisfaction
of any secured creditors.

 

4.3.4       To
the best knowledge of SELLER and TARGET, neither TARGET nor SELLER is in default with respect to any Law which is likely to adversely
affect its ability to perform its obligations hereunder and entering into this Agreement will not violate any of them.

 

4.3.5       TARGET
does not presently own or control, directly or indirectly, any interest in any corporation, association, or other business entity.
TARGET is not a participant in any joint venture, partnership, or similar arrangement.

 

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4.4       Financial
Information. Schedule C contains the TARGET Financial Statements as of the date indicated in Schedule C. in detail, format
and time period, acceptable to BUYER. The TARGET Financial Statements are materially true, accurate and complete, and fairly present
the financial position of TARGET and of the results of operations and or cash flows for the periods then ended as presented and
are consistent with the books and records of TARGET. There are no material changes in the financial condition of TARGET, other
than in ordinary course of business. As of the Closing Date, TARGET and SELLER shall reconfirm the statements herein about the
TARGET Financial Statements.

 

4.5       Certain
Changes or Events. As to TARGET between Effective Date and the Closing:

 

4.5.1       there
will have been no change in the Condition of TARGET, except for changes which have not been, in the aggregate, materially adverse
to TARGET;

 

4.5.2       there
will be no revocation or change in any Contract or Permit or right to do business, and no other event or occurrence of any character,
whether insured against, which results, or could reasonably be expected to result, in a material adverse change in the Condition
of TARGET;

 

4.5.3       TARGET
will not authorize or made any distributions, or declare or pay any dividends, upon or with respect to any of its capital stock,
nor will TARGET have redeemed, purchased, or otherwise acquired, or issued or sold, any of its capital stock;

 

4.5.4       TARGET
will have not entered into any material Contract, other than in the ordinary course of business (in this Agreement, ordinary course
of business means ordinary course and consistent with past practice);

 

4.5.5       TARGET
will have not incurred any indebtedness for borrowed money or made any loans or advances to any Person, other than as disclosed
on the TARGET Financial Statements;

 

4.5.6       there
will have been no waiver by TARGET of a material right or of a material debt owed to TARGET;

 

4.5.7       TARGET
will not have failed to satisfy or discharge any Lien, except in the ordinary course of business and which is not material to
the Condition of TARGET; and

 

4.5.8       there
will not have been any material change in any compensation, arrangement or agreement with any employee, director, shareholders,
or Affiliate of TARGET.

 

4.5.9
       the Parties acknowledge that TARGET is in the process of moving its production facility
from California to the Salt Lake City Area to reduce costs and at the time of the execution of the Agreement production has ceased
while the TARGET is executing minimal sales from inventory.

 

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4.6       Title
to Assets. TARGET has good and marketable title to all of its assets and properties, free and clear of any Liens, except the lien
to Bitzio Corp on Exhibit G. With respect to any assets or properties TARGET leases, TARGET holds a valid and subsisting leasehold
interest therein, free and clear of any Liens, is in compliance, in all material respects, with the terms of the applicable lease,
and enjoys peaceful and undisturbed possession under such lease. All of the assets and properties of TARGET that are necessary
for the conduct of TARGET’s business as presently conducted or as proposed to be conducted by TARGET are in good operating
condition and repair, subject to ordinary wear and tear.

 

4.7       Contracts.
TARGET is not a party to, nor is any of TARGET’s assets or properties bound by, or subject to, any Contract of the following
types, except for those identified in Schedule E:

 

4.7.1       any
Contract pursuant to which TARGET, or another party thereto, is obligated to pay in excess of $10,000;

 

4.7.2       any
Contract pursuant to which TARGET acquired the right to use any Intellectual Property or information that is material to or necessary
in the business of TARGET, or pursuant to which TARGET has granted to others the right to use, or which otherwise relates to,
TARGET’s Intellectual Property;

 

4.7.3       any
Contract (other than advances of expenses to employees in the ordinary course of business) involving loans, loan agreements, debt
securities, mortgages, deeds of trust, security agreements, suretyships or guarantees;

 

4.7.4       
any Contract between TARGET and SELLER or an Affiliate of SELLER, except as described on Schedule E;

 

4.7.5       any
deferred compensation agreements, bonus, pension, profit sharing, stock option and incentive plans or arrangements, hospitalization,
medical and insurance plans, agreements and policies, retirement and severance plans and other employee compensation policies
and agreements affecting employees of TARGET;

 

4.7.6       any
Contract with any labor union affecting employees of TARGET;

 

4.7.7       any
Contract that restricts TARGET from freely engaging in business or competing anywhere; or

 

4.7.8       any
Contract that is otherwise material to the Condition of TARGET.

 

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4.8
       Enforceability. TARGET’s Contracts are; (a) in full force and effect; and (b)
constitute legal, valid, and binding obligations of TARGET. Each other party thereto, has performed in all material respects all
obligations required to be performed by that party on or before the Closing date hereof under the Contracts. No violation exists
in respect of a Contract on the part of TARGET or any other party thereto. None of the Contracts is currently being renegotiated.
The validity, effectiveness and continuation of all Contracts will not be materially adversely affected by the transactions contemplated
by this Agreement. except as described on Schedule E.

 

4.9
       Intellectual Property. Set forth on Schedule F hereto is a true, correct, and
complete list of TARGET’s Intellectual Property.

 

4.9.1       TARGET
is the sole and exclusive owner, free and clear of all Liens except Lien to secured lender, and has all right, title and interest
in all of the Intellectual Property and has secured duly authorized assignment of rights from all employees and independent contractors
confirming that all Intellectual Property which they may have directly or indirectly worked on is owned by TARGET.

 

4.9.2       With
respect to any Intellectual Property or trade secret necessary to conduct its business, TARGET owns or has the exclusive right
to use such Intellectual Property or trade secret in its business.

 

4.9.3       TARGET
owns or possesses sufficient licenses or other rights to use all Intellectual Property covered that are necessary to conduct the
business of TARGET as now being conducted and as proposed to be conducted by TARGET.

 

4.10
       Intellectual Property Licenses. Each of TARGET’s Intellectual Property Licenses
is in full force and effect and constitutes a legal, valid, binding, and enforceable obligation in accordance with its terms against
TARGET, and each other party thereto. TARGET has performed all obligations imposed upon TARGET under each of the Intellectual
Property Licenses. Neither TARGET nor any other party thereto is in default thereunder, nor is there any event that with notice
or lapse of time, or both, would constitute a default thereunder. TARGET has not received any notice that any other party to any
of the Intellectual Property Licenses intends to cancel, terminate, or refuse to renew the same or to exercise or decline to exercise
any option or other right thereunder. No licenses, sublicenses, covenants, or agreements have been granted or entered into by
TARGET in respect of any of the Intellectual Property or any trade secret material of TARGET, except the Intellectual Property
Licenses. No director, officer, shareholder, employee, or other Affiliate of TARGET owns, directly or indirectly, in whole or
in part, any of the Intellectual Property or any trade secret material of TARGET. None of the officers, employees, consultants,
distributors, agents, representatives, or advisors of TARGET have entered into any agreement relating to TARGET’s business
regarding know-how, trade secrets, assignment of rights in inventions, or prohibition or restriction of competition or solicitation
of customers, or any other similar restrictive agreement or covenant, whether written or oral, with any Person other than TARGET.
The consummation of the transactions contemplated hereby will not alter or impair the rights of TARGET to any of the Intellectual
Property, any trade secret material to TARGET, or under any of the Intellectual Property Licenses. Each item of Intellectual Property
owned or used by TARGET immediately prior to the Closing hereunder will be owned or available for use by BUYER on identical terms
and conditions immediately subsequent to the Closing, though it may be through ownership of TARGET and not directly. Neither TARGET
nor SELLER, nor any Affiliates, officers, shareholders, directors, or employees of each of them has disclosed any proprietary
information relating to the Intellectual Property or the Intellectual Property Licenses to any person other than BUYER and the
employees, consultants, accountants, lawyers, and other advisors of the Companies. Each of TARGET, SELLER and their Affiliates,
officers, shareholders, directors, or employees has disclosed trade secrets to other Persons solely as required for the conduct
of TARGET’s business and solely under nondisclosure agreements that are enforceable by TARGET. TARGET is not under any contractual
or other obligation to disclose any proprietary information relating to the Intellectual Property, any trade secret material of
TARGET or the Intellectual Property Licenses, nor is any other party to the Intellectual Property Licenses under any such obligation
to disclose proprietary information included in or relating to Intellectual Property, any trade secret material to TARGET or the
Intellectual Property Licenses to any Person, and no event has taken place, including the execution and delivery of this Agreement
and the transactions contemplated hereby or any related change in the business activities of TARGET, that would give rise to such
obligation. TARGET has not interfered with, infringed upon, misappropriated, or otherwise come into conflict with any Intellectual
Property rights of third parties. None of SELLER or TARGET has ever received any charge, complaint, claim, demand, or notice alleging
any such interference, infringement, misappropriation, or violation (including any claim that TARGET must license or refrain from
using any Intellectual Property rights of any third party). No item of Intellectual Property: (a) is subject to any outstanding
injunction, judgment, order, decree, ruling, or charge; or (b) is the subject of any pending or threatened action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand which challenges the legality, validity, enforceability, use, or ownership
of the item of Intellectual Property. TARGET has never agreed to indemnify any person for or against any interference, infringement,
misappropriation, or other conflict with respect to the item.

 

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4.11.
       Labor Relations; Employees. Schedule G contains the names and titles of
the employees of TARGET.

 

4.11.1       
TARGET, to best of SELLERS knowledge, is not in violation of material federal, state, or other applicable Law respecting employment,
social security or employment practices relating to TARGET’s own employees.

 

4.11.2       TARGET,
to best of SELLERS knowledge, is not delinquent in payments to any of TARGET’s employees for any wages, salaries, commissions,
bonuses, or other direct compensation for any services performed by the employees of TARGET to the date hereof or amounts required
to be reimbursed to such employees. There is no unfair labor practice complaint against TARGET pending before any Governmental
Authority. There is no labor strike, dispute, slowdown, or stoppage actually pending or threatened against or involving TARGET.
TARGET is not a party to or bound by any collective bargaining agreement and neither any grievance nor any arbitration proceeding
arising out of or under a collective bargaining agreement is pending and no such claim has been asserted. No labor union currently
represents the employees of TARGET and no labor union has taken any action with respect to organizing the employees of TARGET.
No key employee has informed TARGET that such employee will or may terminate his or her employment or engagement with TARGET,
except as otherwise described to BUYER on Schedule G, or if occurring after the Effective Date, as described in written
notice from TARGET to BUYER prior to Closing. There are no payments of benefits to the employees of TARGET above or different
from the statutory benefits corresponding under the applicable labor law. TARGET has filed or caused to be filed all Returns required
by any Governmental Authority.

 

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4.12
       Litigation. There is no Action pending or known as threatened against TARGET.
Neither TARGET nor any of TARGET’s respective assets or properties, nor, in connection with TARGET’s business, nor
any shareholder, director, officer or employee of TARGET, is subject to any Order which is material to the Condition of TARGET.
There is no Action by TARGET currently pending or which TARGET intends to initiate, which is material to the Condition of TARGET.

 

4.13       Compliance
with Laws; Permits. TARGET has not violated or failed to comply with, in any material respect, any Law to which TARGET or
any of TARGET’s properties or assets is subject. TARGET has all Permits that are necessary for the conduct of its business
as presently conducted except to the extent the failure to have any such Permit would not materially adversely affect the Condition
of TARGET. All Permits are, and as of the Closing will be, in full force and effect. No violation or notice of failure to comply
have been issued or recorded in respect of any Permit. There are no proceedings pending or threatened to revoke, suspend, or limit
any such Permit, nor is there any reasonable basis therefor.

 

4.14
       Taxes. All Returns required to be filed by TARGET have been timely filed. All
such Returns are true, correct, and complete in all material respects. All Taxes due or claimed to be due from TARGET have been
paid except to the extent properly reserved against on the TARGET Financial Statements. No Return of TARGET is under audit by
any Governmental Authority There are in effect no waivers of the applicable statute of limitations for Taxes in any jurisdiction
for TARGET for any period.

 

4.15       Books
and Records. The books of account, ledgers and records of TARGET accurately and completely reflect in all material respects
the Condition of TARGET. The minute books of TARGET fully set forth all material action taken by the Board of Directors, shareholders
and, if any, executive board (or other committee thereof) of TARGET.

 

4.16       Transactions
with Affiliates. Except as described on Schedule E, TARGET does not have any obligation to or claim against any past
or present owner of TARGET, and no such Person has any obligation to or claim against TARGET. No past or present owner of TARGET
has any direct or indirect interest of any kind in any business or entity, which is competitive with TARGET.

 

4.17       Brokers
or Finders. SELLER has not engaged a Broker in regards to the this transaction. BUYER is not obligated for same in any way.

 

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4.18       Employment
of Officers, Employees, and Consultants. BUYER affirms and consents to the employment agreement(s) of Hubert J. (“Hub”)
Blanchette attached hereto as Exhibits A.

 

4.19       Insurance.
TARGET presently maintains and has maintained in effect since its formation all the insurance policies required by Law or reasonably
appropriate in connection with the operation of its business as presently conducted.

 

4.20       Absence
of Undisclosed Liabilities. TARGET does not have any Liability under GAAP, except as disclosed on the TARGET Financial Statements.

 

4.21       Disclosure.
In connection with the purchase of the TARGET Shares by BUYER, TARGET and SELLER have disclosed to BUYER all material facts and
information concerning TARGET, its Condition, and the TARGET Shares, and have not made any untrue statement of a material fact
or omitted to state any material fact necessary in order to make the statements contained herein not misleading. There is no fact
or circumstance which has, or is reasonably likely to have, an adverse effect on TARGET which has not been disclosed herein and
known by SELLER and or TARGET.

 

4.22       Security
Matters. The BUYER Shares are received by SELLER for investment purposes for SELLER’s own account, and not with the
view to, or for resale in connection with, any distribution thereof. SELLER understands that BUYER Shares have not been registered
under the Securities Act, or under the securities laws of various states, by reason of a specified exemption from the registration
provisions thereunder. SELLER acknowledges that the BUYER Shares must be held indefinitely unless the BUYER Shares are subsequently
registered under the Securities Act and under applicable state securities laws or an exemption from such registration is available.
SELLER has been advised or is aware of the provisions of Rule 144 promulgated under the Securities Act which permits limited resale
of the securities purchased in a private placement subject to the satisfaction of certain conditions including, among other things,
the availability of certain current public information about BUYER and compliance with applicable requirements regarding the holding
period, the amount of securities to be sold, and the manner of sale. SELLER is a sophisticated investor with knowledge and experience
in business and financial matters and is able to bear the economic risk and lack of liquidity inherent in owning the BUYER Shares.
SELLER understands and acknowledges that no Governmental Authority has been asked to rule on nor has it ruled on the tax or other
consequences of the transactions contemplated hereby. SELLER represents and covenants that SELLER is an “Accredited Investor”
as defined in Rule 501(a) of Regulation D under the Securities Act. SELLER understands that all certificates for BUYER Shares
shall bear a legend in substantially the following form:

 

“THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT, OR QUALIFIED UNDER ANY STATE SECURITIES LAWS. THE SECURITIES MAY
NOT BE OFFERED, SOLD TRANSFERRED OR OTHERWISE DISPOSED OF WITHOUT SUCH REGISTRATION OR THE DELIVERY TO THE ISSUER OF AN OPINION
OF COUNSEL, SATISFACTORY TO THE ISSUER, THAT SUCH DISPOSITION WILL NOT REQUIRE REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES
ACT, AS AMENDED, OR ANY STATE SECURITIES LAWS.”

 

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5.
REPRESENTATIONS, WARRANTIES, AND AGREEMENTS OF BUYER.

 

BUYER,
hereby represents and warrants to, and agrees to the benefit of TARGET and SELLER as follows, (a) except as expressly otherwise
disclosed in this Agreement or any attached Schedule to the contrary; or (b) with the understanding that certain representations
are being made to the best knowledge of BUYER

 

5.1       Organization,
Good Standing, and Qualification. BUYER is a corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of formation. BUYER has all requisite power and authority to carry on its business as now conducted and as
proposed to be conducted. BUYER is duly qualified to transact business and is in good standing in each jurisdiction in which the
failure so to qualify could have a material adverse effect on its Condition.

 

5.2       Capitalization.
The authorized capital stock of BUYER BUYER is identified on Schedule B. All the outstanding shares have been duly and
validly issued, are fully paid and non-assessable. BUYER does not have outstanding any securities convertible into or exchangeable
for its capital stock or outstanding any rights to subscribe for or to purchase, or any options for the purchase of, or any agreements
providing for the issuance (contingent or otherwise) of, or any calls, commitments or claims of any character relating to, its
capital stock. There are no agreements among the shareholders of BUYER with respect to the voting or transfer of the capital stock
of BUYER. None of BUYER’ s shareholders have preemptive rights. Schedule B hereto includes a complete and correct
list, as of immediately prior to the Closing, of the name of each of BUYER’ s shareholders and the number of shares of stock
owned by such shareholder and the holders of any options or warrants. There is no outstanding security, option, warrant, right,
agreement, understanding or commitment of any kind entitling any person or entity to acquire any of BUYER’ s common stock.
BUYER’ s common stock has not been registered with the SEC or any state regulatory authority.

 

5.3.
       Authority; Execution and Delivery; Requisite Consents, Non-violation. BUYER has,
and at the Closing will have, all requisite power and authority to execute, deliver and perform this Agreement and each other
document or instrument executed by any of them, or any of its officers, in connection herewith or therewith or pursuant hereto
or thereto and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized by all
necessary action on the part of BUYER. This Agreement is duly executed and delivered by BUYER and is the legal, valid, and binding
obligation of BUYER, enforceable against BUYER in accordance with its terms, except as the enforceability thereof may be limited
by bankruptcy, insolvency, moratorium, or other similar laws affecting the enforceability of creditors’ rights in general
or by general principles of equity. The execution, delivery and performance of this Agreement, the consummation of the transactions
contemplated hereby and thereby (including the issuance of the Common Stock) will not require, to the BUYER’s best knowledge:
(a) the consent, license, permit, waiver, approval, authorization or other action of, by or with respect to, or registration,
declaration or filing with, any Governmental Authority or any other Person; (b) contravene: (i) any Law to which BUYER is subject;
nor (ii) any judgment, decree, franchise, order or demand applicable to BUYER; (c) conflict or be inconsistent with or result
in any breach of the terms, covenants, conditions or provisions of, or constitute a default under, or result in the creation or
imposition of (or the obligation to create or impose) any Lien upon any of BUYER’ s properties or assets pursuant to the
terms of any indenture, mortgage, deed of trust agreement or other instrument to which BUYER is a party or bound or to which BUYER
may be subject or violate any provision of BUYER’s organization documents. BUYER, is not in default with respect to any
applicable Law which is likely to adversely affect BUYER’s ability to perform BUYER’s obligations hereunder and entering
into this Agreement will not violate any Law.

 

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5.4       Financial
Information. The BUYER is a public company and all financial information is timely filed with the SEC.

 

5.5
       Certain Changes or Events. As to BUYER:

 

5.5.1       there
will have been no change in the Condition of BUYER, except for changes which have not been, in the aggregate, materially adverse
to BUYER;

 

5.5.2       there
will be no revocation or change in any Contract or Permit or right to do business, and no other event or occurrence of any character,
whether insured against, which results, or could reasonably be expected to result, in a material adverse change in the Condition
of BUYER;

 

5.5.3       
BUYER will not authorize or made any distributions, or declare or pay any dividends, upon or with respect to any of its capital
stock, or other equity interests, nor will BUYER have redeemed, purchased, or otherwise acquired, or issued or sold, any of its
capital stock or other equity interests except as may benefit all shareholders and as disclosed to the SEC.;

 

5.5.4       
BUYER is a public company engaged in acquiring a number of Micro-Brands a well as deploying its proprietary technology under license
to other retailers. This transaction is consistent with the purpose of the BUYER.

 

5.5.5       
BUYER will have not incurred any indebtedness for borrowed money or made any loans or advances that encumber the Target without
the express permission of SELLERS now or during the Standby Period;

 

5.5.6       there
will have been no waiver by BUYER of a material right or of a material debt owed to BUYER;

 

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5.5.7       
BUYER will not have failed to satisfy or discharge any Lien, except in the ordinary course of business and which is not material
to the Condition of BUYER; and

 

5.5.8       there
has been no material change in any compensation, arrangement or agreement with any employee, director, shareholders, or Affiliate
of BUYER that effects SELLER or TARGET.

 

5.6       Title
to Assets. BUYER has title to all its assets- see filings with the SEC..

 

5.7       Contracts.
BUYER’s Contracts are; (a) in full force and effect; and (b) constitute legal, valid and binding obligations of BUYER. Each
other party thereto, has performed in all material respects all obligations required to be performed by it on or before the date
hereof under the Contracts. No violation exists in respect of a Contract on the part of BUYER or any other party thereto. None
of the Contracts is currently being renegotiated. The validity, effectiveness and continuation of all Contracts will not be materially
adversely affected by the transactions contemplated by this Agreement.

 

5.8
       Intellectual Property. BUYER has title to all its intellectual property including
three patents, the specificity of which is part and parcel of BUYER’s filings with the SEC.

 

5.9
       Labor Relations; Employees. BUYER to best of Management’s knowledge, is
not in violation of material federal, state, or other applicable Law respecting employment, social security or employment practices
relating to BUYER’s own employees.

 

5.9.1       BUYER,
to best of Management’s knowledge, is not delinquent in payments to any of BUYER’s employees for any wages, salaries,
commissions, bonuses, or other direct compensation for any services performed by the employees of BUYER to the date hereof or
amounts required to be reimbursed to such employees. There is no unfair labor practice complaint against BUYER pending before
any Governmental Authority. There is no labor strike, dispute, slowdown, or stoppage actually pending or threatened against or
involving BUYER. BUYER is not a party to or bound by any collective bargaining agreement and neither any grievance nor any arbitration
proceeding arising out of or under a collective bargaining agreement is pending and no such claim has been asserted. No labor
union currently represents the employees of BUYER and no labor union has taken any action with respect to organizing the employees
of BUYER. No key employee has informed BUYER that such employee will or may terminate his or her employment or engagement with
BUYER that may affect SELLER or TARGET. TARGET has filed or caused to be filed all Returns required by any Governmental Authority.

 

5.10
       Litigation. There is no Action pending or known as threatened against BUYER.
Neither BUYER nor any of its respective assets or properties, nor, in connection with its business, nor any shareholder, director,
officer or employee of BUYER, is subject to any Order which is material to the Condition of BUYER. There is no Action by BUYER
currently pending or which BUYER intends to initiate, which is material to the Condition of BUYER.

 

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5.11       Compliance
with Laws; Permits. BUYER has not violated or failed to comply with, in any material respect, any Law to which BUYER or any
of BUYER’ s properties or assets is subject. BUYER has all Permits that are necessary for the conduct of its business as
presently conducted except to the extent the failure to have any such Permit would not materially adversely affect the Condition
of BUYER. All Permits are, and as of the Closing will be, in full force and effect. No violation or notice of failure to comply
have been issued or recorded in respect of any Permit. There are no proceedings pending or threatened to revoke, suspend, or limit
any such Permit, nor is there any reasonable basis therefor.

 

5.12
       Taxes. All Returns required to be filed by BUYER have been timely filed. All
such Returns are true, correct, and complete in all material respects. All Taxes due or claimed to be due from BUYER have been
paid except to the extent properly reserved against on the BUYER Financial Statements. No Return of BUYER is under audit by any
Governmental Authority. There are in effect no waivers of the applicable statute of limitations for Taxes in any jurisdiction
for BUYER for any period.

 

5.13       Books
and Records. The books of account, ledgers, and records of BUYER accurately and completely reflect in all material respects
the Condition of BUYER. The minute books of BUYER fully set forth all material action taken by the Board of Directors, shareholders
and, if any, executive board (or other committee thereof) of BUYER.

 

5.14       Transactions
with Affiliates. BUYER does not have any obligation to or claim against any past or present owner of BUYER, or any of such
owner’s Affiliates, associates, or relatives, and no such Person has any obligation to or claim against BUYER that would
affect this transaction.

 

5.14.1
BUYER currently has 4 subsidiaries an routinely has transactions between the subsidiaries: 12 Hong Kong, Ltd., 12 Japan, 12 Europe,
A.G., 12 Retail, Inc

 

5.14.2
BUYER has announced that it has signed “Non-Binding Letter’s of Intent” with 3 potential acquisition targets
of which TARGET is not one. BUYER intends to acquire each of these acquisition targets and others.

 

5.15       Brokers
or Finders. BUYER has not entered into an agreement to pay finders or broker fees to any party as a result of this transaction.

 

5.16       Insurance.
BUYER does not have any insurance polices, each of its subsidiaries maintains any and all insurances its requires, if any, for
its business. 

 

5.17       Absence
of Undisclosed Liabilities. BUYER does not have any Liability under GAAP, except as disclosed on the BUYER Financial Statements
files with the SEC.

 

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5.18       Disclosure.
In connection with the purchase of the BUYER Shares by SELLER, BUYER has disclosed to SELLER all material facts and information
concerning BUYER, its Condition and the BUYER Shares, and has not made any untrue statement of a material fact or omitted to state
any material fact necessary in order to make the statements contained herein not misleading per BUYER’s filings with the
SEC. There is no fact or circumstance which has, or is reasonably likely to have, an adverse effect on SELLER which has not been
disclosed herein and known by SELLER.

 

5.20       Security
Matters. The TARGET Shares received by BUYER are for investment purposes for BUYER’ s own account, and not with the
view to, or for resale in connection with, any distribution thereof. BUYER understands that the TARGET Shares have not been registered
under the Securities Act, or under the securities laws of various states, by reason of a specified exemption from the registration
provisions thereunder. BUYER acknowledges that the TARGET Shares must be held indefinitely unless the TARGET Shares are subsequently
registered under the Securities Act and under applicable state securities laws or an exemption from such registration is available.
BUYER has been advised or is aware of the provisions of Rule 144 promulgated under the Securities Act which permits limited resale
of the securities purchased in a private placement subject to the satisfaction of certain conditions including, among other things,
the availability of certain current public information about TARGET and compliance with applicable requirements regarding the
holding period and the amount of securities to be sold and the manner of sale. BUYER is a sophisticated investor with knowledge
and experience in business and financial matters and is able to bear the economic risk and lack of liquidity inherent in owning
the TARGET Shares. BUYER has received and carefully reviewed, if available and applicable: (a) TARGET’s most recent SEC
filings, and (b) all other information filed by TARGET pursuant to the Securities Act or the Securities Exchange Act of 1934,
as amended; and (c) information supplied otherwise that otherwise supplies adequate material information. BUYER understands and
acknowledges that no Governmental Authority has been asked to rule on nor has it ruled on the tax or other consequences of the
transactions contemplated hereby. BUYER represents and covenants that BUYER is an “Accredited Investor” as defined
in Rule 501(a) of Regulation D under the Securities Act. BUYER understands that all certificates for the TARGET Shares shall bear
a legend in substantially the following form:

 

“THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT, OR QUALIFIED UNDER ANY STATE SECURITIES LAWS. THE SECURITIES MAY
NOT BE OFFERED, SOLD TRANSFERRED OR OTHERWISE DISPOSED OF WITHOUT SUCH REGISTRATION OR THE DELIVERY TO THE ISSUER OF AN OPINION
OF COUNSEL, SATISFACTORY TO THE ISSUER, THAT SUCH DISPOSITION WILL NOT REQUIRE REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES
ACT, AS AMENDED, OR ANY STATE SECURITIES LAWS.”

 

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6.
CONDITIONS OF BUYER’ S OBLIGATIONS AT CLOSING.

 

The
obligation of BUYER to purchase the TARGET Shares at Closing is subject to the fulfillment, to BUYER’ S satisfaction, prior
to or at the Closing, of each of the following conditions:

 

6.1       Representations
and Warranties. The representations and warranties of TARGET and SELLER contained in this Agreement shall be true and correct
in all material respects on the Effective Date and as of the Closing Date, as if made on and as of each such date.

 

6.2       Performance.
SELLER and TARGET shall have performed and complied in all material respects with all agreements and conditions required by this
Agreement to be performed or complied with by SELLER and/or TARGET prior to or at the Closing.

 

6.3       Stock
Certificates, Etc. Within 10 days of the Closing, SELLER shall have tendered to BUYER a certificate representing the TARGET
Shares, together with a stock power, in accordance with this Agreement. All certificates delivered by SELLER shall be in form
and substance satisfactory to BUYER and sufficient to transfer to and vest in BUYER good and valid title to the TARGET Shares,
free and clear of any Lien.

 

6.4       No
Material Adverse Change. There shall not have occurred any material adverse change in the Condition of TARGET since the date
hereof.

 

6.5       Consents.
TARGET and SELLER shall have obtained all consents, approvals, or waivers from Governmental Authorities and third Persons necessary
for the execution, delivery and performance of this Agreement and the transactions contemplated hereby and thereby, all without
material cost or other adverse consequences to BUYER.

 

6.5       No
Actions. No action, proceeding, investigation, regulation or legislation shall have been instituted, threatened, or proposed
before any court, governmental agency or authority or legislative body to enjoin, restrain, prohibit, or obtain substantial damages
in respect of, this Agreement or the consummation of the transactions contemplated by this Agreement.

 

6.6       Proceedings
and Documents. All proceedings in connection with the transactions contemplated hereby and all documents and instruments incident
to such transactions shall be reasonably satisfactory in substance and form to BUYER and its counsel, and BUYER shall have received
all such counterpart originals or certified or other copies of such documents as BUYER may reasonably request.

 

6.7       Additional
Documents. At Closing, the Parties shall cause an additional agreement or agreements as contained under any schedule or exhibit
hereto, to be executed and delivered by those named therein.

 

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7.
CONDITIONS OF SELLER’ S OBLIGATIONS AT CLOSING.

 

The
obligations of SELLER to BUYER under this Agreement are subject to the fulfillment, to SELLER’s reasonable satisfaction,
prior to or at the Closing, of each of the following conditions:

 

7.1       Representations
and Warranties. The representations and warranties of BUYER contained in this Agreement shall be true and correct in all material
respects on the Effective Date and as of the Closing Date, as if made on and as of each such date.

 

7.2       Performance.
BUYER shall have performed and complied in all material respects with all agreements and conditions required by this Agreement
to be performed or complied with by it prior to or at the Closing.

 

7.3       Stock
Certificates, Etc. Within 10 days of Closing, BUYER’s Stock Transfer Agent shall have tendered to SELLER a certificate
representing the BUYER Shares in accordance with this Agreement. All certificates delivered by BUYER shall be in form and substance
reasonably satisfactory to SELLER and sufficient to transfer to and vest in SELLER good and valid title to the BUYER Shares, free
and clear of any Lien. At Closing the Parties will enter into an unconditional Letter of Instruction to the BUYER’s Stock
Transfer Agent (Exhibit C) authorizing the issuing of the BUYER shares indicated on Exhibit A.

 

7.4       No
Material Adverse Change. Not Applicable.

 

7.5       No
Actions. No action, proceeding, investigation, regulation or legislation shall have been instituted, threatened, or proposed
before any court, governmental agency or authority or legislative body to enjoin, restrain, prohibit, or obtain substantial damages
in respect of, this Agreement or the consummation of the transactions contemplated by this Agreement.

 

7.6       Proceedings
and Documents. All proceedings in connection with the transactions contemplated hereby and all documents and instruments incident
to such transactions shall be reasonably satisfactory in substance and form to BUYER and its counsel, and BUYER shall have received
all such counterpart originals or certified or other copies of such documents as BUYER may reasonably request.

 

7.7       Additional
Documents. At Closing, SELLER, TARGET, and BUYER shall cause any additional agreement or agreements as contained under any
schedule or exhibit hereto, to be executed and delivered by those named therein.

 

7.8       Post
Closing Matters. The following actions shall become effective on Closing, with the exception as stated under “Post-Closing
Matters” below: Target’s Board of Directors will be increased to three board members and initially comprised of: 2
representatives selected by BUYER and Hubert J. Blanchette shall remain as Chief Executive Officer and a Secretary will be appointed
by BUYER. All other officers and directors, if applicable, resign.

 

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8.
INDEMNIFICATION AND SURVIVAL.

 

8.1       Indemnification
by TARGET and SELLER. TARGET and SELLER, jointly and severally, agree to indemnify the BUYER Indemnified Parties for, and
hold each BUYER Indemnified Party harmless from and against the Indemnified Costs, in each case, arising out of or suffered or
incurred in connection with any of the following: (a) any misrepresentation or any breach of any warranty made by TARGET and or
SELLER herein or in any documents related hereto; (b) any breach or non-fulfillment of any covenant or agreement made by TARGET
and or SELLER herein, and (c) any claim relating to or arising out of a violation of applicable federal or state securities laws
by TARGET and or SELLER in connection with the TARGET Shares.

 

8.2       Indemnification
by BUYER. BUYER agrees to indemnify the SELLER Indemnified Parties for, and hold the SELLER Indemnified Party harmless from
and against any Indemnified Costs arising out of or suffered or incurred in connection with any of the following: (a) any misrepresentation
or any breach of any warranty made by BUYER herein or in any documents related hereto; (b) any breach or non-fulfillment of any
covenant or agreement made by BUYER herein, and (c) any claim relating to or arising out of a violation of applicable federal
or state securities laws by BUYER in connection with the BUYER Shares.

 

8.3       Survival.
All representations, warranties, covenants and agreements contained in or made pursuant to this Agreement or contained in any
certificate delivered pursuant to this Agreement, shall remain operative and in full force and effect, regardless of any investigation
made by or on behalf of any party hereto, and shall survive the transfer of the common stock and the consummation of the transactions
contemplated hereby for a period of 12 months, unless a claim is made prior thereto; provided, however, that neither a BUYER Indemnified
Party nor a SELLER Indemnified Party shall be entitled to make any claim relating to this Agreement unless the aggregate amount
of all Indemnified Costs or the claim incurred by such party as a result of all misrepresentations and breaches of the other party(ies)
hereto is equal to or greater than $10,000 in which case the BUYER Indemnified Party or SELLER Indemnified Party will be entitled
to the amount of its claim in excess of $10,000.

 

9.
POST-CLOSING MATTERS.

 

This
Section 9 shall become effective immediately upon the Closing of this Agreement including completion of the transfers of the TARGET
Shares and the BUYER Shares so that the following shall apply and shall control from and after that date. After the Closing, in
the event of a conflict between the provisions of this Section 9 and any other provisions of this Agreement, this Section 9 shall
control.

 

9.1       Standby
Period: The Parties agree that there shall be a “Stand By Period whereby certain objectives or conditions need to be
met as indicated below, They are;

 

9.1.1
       BUYER shall intends within 12 months of the execution of this Agreement petition to
have its common shares up-listed to a national recognized exchange such as the NASDAQ or NYSE/AMEX Exchange(s) who’s minimum
requirement for listing includes, among other things, a requirement of a minimum $4.00 stock price quotation (“UP-LIST”);
and

 

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9.1.2       BUYER
shall invest at least $50,000 into Target within 60 days of the closing of this transaction to facilitate moving the TARGET production
facility to the Salt Lake City, Utah area and the costs for the reinstatement of the TARGET subsidiaries.; and,

 

9.1.3       BUYER
shall invest a further minimum of $150,000 in Target during the first 12 months after closing ; and,

 

9.1.4       BUYER
may invest a further $200,000 in TARGET in the 13 to 24 month period following closing if TARGET meets certain financial requirements
in the first 12 month period per 9.1.5 herein below;

 

9.1.5       Financial
objectives: Subsequent to Closing SELLER shall submit to BUYER and BUYER will approve the operating Budget for each of the two
periods below. And upon approval and subject to funding by BUYER, SELLER represents that TARGET will meet or exceed the following
financial milestones.

 

9.1.5.1
Subject to the investment by BUYER of $150,000 in capital pursuant to 9.1.3 TARGET shall have 12 month revenue of $1.4 million
dollars and an EBITDA of $300,000.

 

9.1.5.2
Subject to the investment by BUYER of an additional $200,000 in capital pursuant to 9.1.4 TARGET shall in the 13 to 24 month period
have revenue of at least $3 million dollars and earn an EBITDA of $750,000.

 

9.1.6       Exemption
to registration. Upon the 6 month anniversary of the closing of this transaction BUYER will deliver to SELLER or SELLER’s
attorney the opinion of BUYER’s counsel relying upon an exemption to registration under Regulation D as promulgated by the
SEC to remove the restrictive legend on the BUYER stock certificates that were delivered to SELLER pursuant to this Agreement
(LEGAL OPINION).

 

9.1.7
       Until the conclusion of the Standby Period is met the following Standby Provisions shall
apply;

 

9.1.7.1      BUYER
Shares shall not be sold, assigned, transferred, or subjected to an lien; and

 

9.1.7.2      During
the Standby Period 600,000 of the BUYER shares that are part of the exchange price shall be held in escrow pending SELLER’s
achieving the objectives set in 9.1.5.1 and 9.1.5.2.

 

9.1.7.3      there
shall not be any material change or action or inaction outside the ordinary course of the business of TARGET without written
agreement of BUYER.

 

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9.1.7.4SELLER
shall be entitled to receive up to 200,000 of the Escrow Shares or prorata amount based on EBITDA during the first 12
months; and,

 

 

9.1.7.5SELLER
shall be entitled to receive up to 400,000 of the Escrow Shares or prorata amount based on EBITDa during the 13 to 24
month period based; and;

 

9.1.7.6SELLER
is entitled to receive all of the remaining Escrow shares in the event that BUYER does not make the required funding identified
herein.

 

9.1.7.7At
the conclusion of the 24 month standby period any ESCROW SHARES not released to the SELLER shall be returned to the BUYER
as part of a “claw-back” provision and shall be accounted for at the then market price of the shares.

 

9.1.8       During
the Standby Period, the Parties shall reasonably cooperate including executing additional reasonable documentation as needed.

 

9.1.9       Unless
and to the extent otherwise confirmed in writing, it is the intentions of the Parties that no particular personal shall be deemed
to be a member of a control group as such term is defined with reference to SEC related laws, regulations and statements.

 

9.2
Escrow. To insure compliance with the Stand By period conditions The BUYER shares shall be held subject to an Escrow Agreement
between the Parties, the form of which is attached hereto as Exhibit C. A default by BUYER of this Agreement shall be deemed also
a default of the Escrow Agreement and all Escrowed shares shall be immediately tendered to the SELLER. The Escrow Agreement shall
appoint Belmont Acquisitions Corp. (“Belmont”) as the Escrow Agent and shall contain all of the following terms:

 

9.2.1       At
Closing BUYER and SELLER will each pay to Belmont no fee for Belmont’s services as Escrow Agent.

 

9.2.2       Omit.

 

9.2.3       In
all cases of a breach or break of the conditions contained in the Stand By period the ESCROW AGENT will supply the breaching or
breaking party with written notice of the breach or break which notice shall contain a 30-day cure period.

 

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9.2.4       Breaching
or Breaking Events. The injured Party will notify the ESCROW AGENT of the breaching of breaking event in writing. The following
would constitute a breaching or breaking event;

 

 

9.2.4.1
Failure by BUYER to invest an aggregate of at least $400,000 in TARGET within 24 months of Closing per the schedule herein
above

 

9.2.4.2
Failure by BUYER to provide SELLER with a LEGAL OPINION to release the legends on SELLER’s stock certificates as
requested in writing by SELLERS after the conclusion of the required 6 month holding period.

 

9.2.5       Actions
of ESCROW AGENT in the case of a Breaching or Breaking Event. In the event that ESCROW AGENT receives written notice from SELLER
that there is a breaching or breaching event the ESCROW AGENET will provide written notice to BUYER providing the BUYER with evidence
of the breaching or breaking event and issuing a 30-day cure notice.

 

9.2.5.1
Upon the expiration of the cure period indicated above if the BUYER has not resolved the breaching or breaking event, and
has not received a written extension from SELLER than ESCROW AGENT shall immediately release to SELER the ESCROW SHARES.

 

9.2.5.2
Upon return of the ESCROW SHARES the ESCROW is terminated and the ESCROW AGENT has no further duties to any Party by way of
the ESCROW AGREEMENT.

 

9.2.5.3
The ESCROW AGENT will be fully indemnified by all Parties to this Agreement for following the instructions contained in
the ESCROW AGREEMENT.

 

9.2.6       Effect
of the release of ESCROW SHARES and duties of the Parties. Upon the release of the ESCROW SHARES the Escrow Agreement shall be
terminated.

 

9.2.7       Automatic
termination and/or satisfaction of the Standby Period. In the event of an automatic termination and/or satisfaction of the Standby
Period conditions the ESCROW is automatically terminated with the SELLER receiving the shares held in ESCROW. The Stand By period
will be satisfied and/or terminated upon the first of any of the following events occurring;

 

9.2.7.1       ALL
conditions of section 9.1 have been met.

 

9.2.7.2       BUYER
and SELLER agree in writing to terminate the StandBy Period.

 

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10.
GENERAL

 

10.1       Successors
and Assigns. This Agreement is not assignable without the written consent of the Parties..

 

10.2       Entire
Agreement. This Agreement, including the Exhibits and Schedules, is the complete agreement of the Parties. This Agreement supersedes
all prior discussions, negotiations, agreements, and understandings between the Parties with respect to its subject matter and
any such are merged herein and barred hereby.

 

10.3       Amendments.
This Agreement may not be amended except by a written instrument duly executed by all Parties.

 

10.4       No
Waiver. The failure or delay of any Party at any time or times to require performance of any provision or to exercise its rights
with respect to any provision hereof, shall in no manner operate as a waiver of or affect such Party’s right at a later
time to enforce the same. No waiver is valid unless in writing signed by the Party making the waiver.

 

10.5       Headings.
The captions, section and paragraph headings contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretations of this Agreement.

 

10.6       Severability.
The invalidity of any term or terms of this Agreement shall not affect any other term of this Agreement, which shall remain in
full force and effect.

 

10.7       Notices.
Any notice, communication, request, reply or advice in this Agreement provided or permitted to be given, shall be made or be served
by delivering same by overnight mail or by delivering the same by a hand-delivery service. Such notice shall be deemed given when
so delivered. For all purposes of Notice, the addresses of the Parties herein shall be the address set forth in their respective
signature blocks to this Agreement.

 

10.8       Captions.
Captions herein are for the convenience of the parties and shall not affect the interpretation of this Agreement.

 

10.9       Counterpart
Execution. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument and may be signed by fax.

 

10.10       Parties
in Interest. Provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the Parties
and their heirs, executors, administrators, other permitted successors and assigns, if any.

 

10.11       Laws,
Venue, Construction. This Agreement shall be governed by the laws of the State of Arizona without reference to conflict of laws
principles and the sole and exclusive venue for any action, claim or dispute in respect of this Agreement shall be such court
of competent jurisdiction as is located in the City of Scottsdale, State of Arizona. The Parties agree and acknowledge that each
Party has reviewed this Agreement and the normal rule of construction that agreements are to be construed against the drafting
party shall not apply in respect of this Agreement given the Parties have mutually negotiated and drafted this Agreement.

 

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10.12       Cooperation.
The Parties agree to cooperate with one another concerning the performance of this Agreement, including reviewing and executing
any document necessary for the performance of this Agreement, to comply with Law or as reasonably requested by any party hereto.

 

10.13       Independent
Legal Counsel. Each Party has retained independent legal counsel in connection with the preparation of this Agreement.

 

10.14       Dispute
Resolution. If, prior to the application of Section 9, there arises a material dispute between BUYER and any of TARGET and SELLER,
the Parties to this Agreement agree to immediately meet at a promptly determined mutually acceptable date, time, and place, in
an effort to try and resolve the dispute, before moving to any formal legal action.

 

10.15       Basket
and Grace Period, Default. Notwithstanding anything to contrary contained in this Agreement, if any breach of this Agreement does
not involve, in any singular circumstance or related circumstances a total amount of at least $3,000, the same shall not be treated
as a material breach. If the breach relates to a non-monetary default for which money damages are inadequate, the breach is material.
In the event of a material breach of this Agreement happens, a Party may claim a default of this Agreement only if first that
Party supplies to the other Party written notice of default detailing the breach and a 10-business day opportunity to cure. If
such Party does cure the breach, no breach is applicable.

 

This
Exchange of Shares Agreement has been duly executed and delivered by the parties hereto on _____________________.

 

TARGET:

E-motion
Apparel, INC.

A
California corporation

 

By:
______________________________

Hubert
J. Blanchette Chief Executive Officer

Address
of Corporate Headquarters:

_____________________________________

_____________________________________

 

BUYER:

12
RETECH CORPORATION

A
Nevada corporation

____________________________________

 

By:
Angelo Ponzetta, Chief Executive Officer

Address
Corporate Headquarters:

7135
E. Camelback Road Suite 230

Scottsdale,
AZ 85252

 

SELLER:

Hubert
J. Blanchette

_________________________

Hubert
J. (“Hub”) an individual owning 100% of TARGET

Address
the same as TARGET

 

[BALANCE
OF PAGE INTENTIONALLY LEFT BLANK]

 

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SCHEDULE
AND EXHIBITS

 

Schedule
A – details of the Target Shares and the BUYER Shares

 

Schedule
B – details of the BUYER Shares

 

Schedule
C – Target Financial Statements

 

Schedule
D – Target Balance Sheet

 

Schedule
E – Target Material Contracts

 

Schedule
F – Target Intellectual Property

 

Schedule
G – Target Employees- omitted

 

Exhibit
A – Form of Employment Agreement of Hubert J. (“Hub”) Blanchette

 

Exhibit
B – Form of Escrow Agreement

 

Exhibit
C - Transfer Agent Instruction Letter

 

 

    	SCHEDULES and EXHIBITS
 
Exchange of Shares Agreement re: E-motion Apparel Inc. Btwn: 12 ReTech & Blanchette March 2018

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