Document:

exhibit10_1.htm

Exhibit 10.1

 

PURCHASE CONTRACT

THIS AGREEMENT made as of January 15, 2015.

BETWEEN:

JTB REAL ESTATE LLLP a limited liability limited partnership formed in accordance with the laws of State of Arizona, and represented by its General Partner, TBJ LLC, an Arizona limited liability corporation

 (the “Seller”)

 

OF THE FIRST PART

AND:

MEDICAN ENTERPRISES, INC. a company duly incorporated under the laws of Delaware and having its office at 3440 E Russell Road, Las Vegas, NV 89120

 (the “Buyer”)

OF THE SECOND PART

WHEREAS:

	
A.

	
The Seller is the owner of fee simple title to an industrial building being approximately 7200 sq. ft. on approximately .83 acres of land in Phoenix, county of Maricopa in the State of Arizona, and having a civic address at 10040 N. Metro Parkway W., Phoenix, Arizona, 85051 and legally described as Lot 3, of METROCENTER TRACT 10, according to the plat of record in the office of the Country Recorder of Maricopa County, Arizona, recorded in Book 797 Maps, page 15 (the “Premises”); and

 

	
B.

	
The Seller has agreed to sell and the Buyer has agreed to purchase all of the Seller’s right, title, and interest in and to the Premises and all of the Seller’s right title and interest in the leasehold improvements owned by the Seller which are used in association with and are located on or about the Premises as at the Closing Date (defined herein), on the terms and conditions set out in this Agreement.

NOW THEREFORE, in consideration of US$100.00 and other good and valuable consideration now paid by each of the parties to the other (the receipt and sufficiency of which is acknowledged) and of the mutual covenants and agreements contained in this Agreement, the parties agree as follows:

  

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1.           DEFINITIONS AND INTERPRETATION

1.1           Definitions

The parties agree that the following terms shall have the following meanings in this agreement:

“Cash Portion of Purchase Price” means the sum of US$2,250,000.00;

“Closing” means the closing of the purchase and sale of the Purchased Property pursuant to this Agreement, and as more particularly described in paragraph 7.2;

“Closing Date” means a date on or before January 30, 2015;

“Conditions Precedent” has the meaning ascribed to it in paragraph 5.1;

“Deposit” means the US$10,000.00 cash deposit and the US$850,000.00 cash or cash equivalent deposit payable pursuant to paragraph 2.3(1) and (2) herein;

“Escrow” has the meaning ascribed to it in paragraph 2.3(3);

“Escrow Holder” means First American Title Insurance Company;

“Existing Leases” has the meaning ascribed to it in paragraph 5.1(3);

“Lease” means the Commercial Lease Agreement for the lease of the Premises between the Seller as Landlord, and Dreem Green LLC, as tenant, dated August 22, 2013;

“Material Loss” means any loss or damage to the Premises or the assets being conveyed with the Purchased Property occurring prior to the passing of risk which cannot be substantially repaired or replaced within sixty (60) days;

“Other Agreements” means any agreements, other than the Lease, in which the Seller is a party and which are required in order for the Buyer to receive the full benefit of ownership of the Purchased Property;

“Percentage Rent Portion of the Purchase Price” means an amount equal to 50% of any Percentage Rent (or Additional rent as the term is used in paragraph 6.3 of the Lease) (the “Percentage Rent”) actually collected by the Buyer, net of any legal or other costs directly incurred by the Buyer in order to effect payment of the Percentage Rent, in respect of Percentage Rent accrued but unpaid for the period of the Lease term arising prior to the Closing Date, provided that after a date which is three (3) years from the Closing Date, the Buyer shall no longer be obligated to pay any amounts to the Seller on account of the Percentage Rent Portion of the Purchase Price;

“Permitted Encumbrances” means all liens, charges, and encumbrances listed in attached Schedule A;

“Possession Date” means 12:01 a.m., on the Closing Date, or such other date as the parties may agree upon in writing;

 

  

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“Property Information Sheet” has the meaning ascribed to it in paragraph 5.1(1);

“Purchase Price” means the aggregate of the Cash Portion of the Purchase Price and the Percentage Rent Portion of the Purchase Price;

“Purchased Property” has the meaning ascribed to it in paragraph 2.1;

“Seller’s Knowledge” means a statement of the Seller’s present and actual knowledge of the facts or circumstances to which such phrase relates;

“Title Commitment” has the meaning ascribed to it in paragraph 5.1(2); and

“Underlying Documents” has the meaning ascribed to it in paragraph 5.1(2);

any other terms defined within the text of this Agreement will have the meanings so ascribed to them.

2.           PURCHASE AND SALE

2.1           The Purchased Property

The Buyer agrees to purchase from the Seller, and the Seller agrees to sell to the Buyer, on the terms and conditions contained in this Agreement, the following:

	
(1)

	
good and marketable fee simple title to the Premises; and

	
(2)

	
good and marketable title in and to the leasehold improvements owned by the Seller which are used in association with and are located on the Premises as at the Closing Date, including any electrical distribution systems (power panel, bus ducting, disconnects, lighting fixtures), telephone distribution systems (lines, jacks and connections), space heaters, heating, ventilating, air conditioning equipment (HVAC), air lines, fire sprinkler systems, security and fire detection systems, carpets, and owned by the Seller which are used in association with and are located on the Premises;

(collectively, the “Purchased Property”), free and clear of all liens, charges, and encumbrances, except for the Permitted Encumbrances.

2.2           The Purchase Price

The Buyer agrees to pay the Purchase Price to the Seller for the Purchased Property, subject to the adjustments described in this Agreement and shall be exclusive of any transfer taxes.

2.3           Payment of the Purchase Price

Subject to the adjustments described in this Agreement, the Purchase Price shall be payable by the Buyer as follows:

  

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(1)

	
as to US$10,000.00, by way of a non-refundable deposit payable to the Seller on execution of this Agreement payable directly to the Seller;

	
(2)

	
as to US$850,000.00, by way of a convertible debenture in the form attached hereto as Schedule “A” delivered to the Seller on Closing;

	
(3)

	
as to the balance of the Cash Portion of the Purchase Price, as adjusted pursuant to paragraph 2.4, by way of payment (the “Escrow”) to the Escrow Holder, on the Closing Date, by way of wire transfer or bank draft, or as otherwise agreed by the Escrow Holder; and

	
(4)

	
as to the Percentage Rent Portion of the Purchase Price, payable to the Sellers directly by way of cheque or wire transfer, as the Seller may direct the Buyer from time to time, and payable within thirty (30) days of receipt of any amounts received by the Seller in respect of the Percentage Rent.

Notwithstanding the obligations of the Purchaser at paragraph 2.3(4), if within nine (9) months of the Closing Date the Buyer has not collected the full amount of the Percentage Rent Portion of the Purchase Price and:

	
(5)

	
has not commenced legal proceedings to effect collection of such amount, or

	
(6)

	
are not using commercially reasonable efforts to collect the Percentage Rent Portion of the Purchase Price; or

	
(7)

	
for business reasons, has elected not to pursue payment of the Percentage Rent Portion of the Purchase Price, then

the Buyer shall remit payment to the Seller of 50% of the then outstanding balance of the Percentage Rent Portion of the Purchase Price remaining outstanding in full satisfaction of the payment obligations owed pursuant to paragraph 2.3(4).  For greater certainty, when and if the Buyer collects any Percentage Rent it shall have no further obligations to remit any amounts to the Seller.

2.4           Allocation of the Purchase Price

The parties agree that the Purchase Price shall be allocated as follows:

	
Description or Assets

	 	
Value

	 
	  	 	 	 
	
Land

	 	$	1,680,000.00	 
	
Building

	 	$	580,000.00	 
	
TOTAL

	 	$	2,250,000.00	 

Any further amounts paid to the Seller on account of the Percentage Rent Portion of the Purchase Price shall be allocated to the value of the Land, as applicable.

  

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2.5           Adjustments

All adjustments with respect to:

	
(1)

	
basic rents, including arrears in basic rent, , and prepaid rents;

	
(2)

	
recoveries and reserves paid by tenants on account of taxes and other operating cost recharges (on an equal per diem basis for the application recovery period); and

	
(3)

	
applicable real property taxes and special assessment bonds as of the Closing Date, based upon the latest tax bill available (the parties agree to prorate as of the Closing Date any taxes assessed against the Premises by supplemental bill levied by reason of events occurring prior to the Closing Date with payment of the prorated amount to be made promptly in cash upon receipt of a copy of any supplemental bill),

and all other items normally adjusted between a Seller and Buyer on the sale of similar Premises shall be made with respect to the Purchased Property to and including the Closing Date (except for interest on any mortgages of the Seller to be discharged).  For greater certainty any accrued but unpaid rent determined based on the performance of the tenant’s business shall not be adjusted on the Closing, but shall be assigned from the Vendor to the Buyer entitling the Buyer to make claim for any such unpaid amounts, together with the unpaid basic rent payable by such tenant (adjusted pursuant to 2.5(1) herein).

The Buyer shall receive all income and pay all expenses relating to the Purchased Property from and including the Closing Date.  Any tenant recharges to be adjusted which are not finally determined at the Closing Date shall be based upon reasonable estimates supplied by the Seller, and any readjustments will promptly be made following the final determination of such amounts.

2.6           Discharge of Encumbrances

The Escrow Holder will not release any part of the Cash Portion of the Purchase Price to the Seller unless the Escrow Holder holds back in trust sufficient funds to payout any builders lien registered on title at Closing and until adequate provision has been made for the discharge and satisfaction of any encumbrances against the Purchased Property and the Premises.

The Escrow Holder will holdback in trust from the Purchase Price the sum of $100,000.00 (the ”Holdback”) as security for the discharge of the lien registered on title to the Purchased Property in favour of CSL Builders LLC in the principal sum of $86,397.07 (the “CSL Lien”).  The Escrow Holder shall hold the Holdback in trust until such time as the CSL Lien is discharged from the Purchased Property, or may use all or a portion of the Holdback to satisfy the CSL Lien,  and in any event if the CSL lien is not discharged from the Purchased Property within 120 days from the Closing Date the Escrow Holder shall forthwith pay the Holdback into court in order to have the CLS Lien discharged from title to the Purchased Property.

 

  

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3.           REPRESENTATIONS AND WARRANTIES

3.1           Seller’s Representations and Warranties

The Seller represents and warrants to the Buyer, with the intent that the Buyer shall rely on them in entering into this Agreement and in concluding the purchase and sale contemplated in this Agreement, that as of the date of the Agreement (unless otherwise specified) and as of the Closing Date (unless this Agreement is earlier terminated):

	
(1)

	
Status of the Seller:

	
  

	
(a)

	
the Seller is the registered and beneficial owner of the Purchased Property;

	
  

	
(b)

	
Except as disclosed by the Seller to the Buyer, there is no claim or litigation pending or, to the knowledge of the Seller, threatened with respect to the Seller, the Purchased Property, or use of the Purchased Property by the Seller which could affect the right of the Buyer to own,  and obtain revenue from the Purchased Property or the ability of the Seller to perform its obligations under this Agreement; and

	
  

	
(c)

	
neither the execution of this Agreement nor its performance by the Seller will result in a breach by the Seller of any term or provision or constitute a default under any indenture, mortgage, deed of trust, or any other agreement to which it is bound.

	
(2)

	
Title to the Purchased Property:

	
  

	
(a)

	
on the Closing Date, the Seller shall have good and marketable title to the Purchased Property free and clear of all liens, charges, and encumbrances except for the Permitted Encumbrances; and

	
  

	
(b)

	
Except as disclosed by the Seller to the Buyer, no lien under any mechanics or materialmen’s liens or other liens exists or is claimed with respect to the Purchased Property nor any part of the Purchased Property.

	
(3)

	
The Premises:

	
  

	
(a)

	
the Purchaser acknowledges and agrees that it is purchasing the Property “As Is Where Is”, subject only to the following representations concerning the Premises;

	
  

	
(b)

	
neither the Premises nor its use violates any zoning applicable to it and the Seller has not received any notice of any impending or intended rezoning of the Premises;

	
  

	
(c)

	
to the Seller’s Knowledge, the Premises are zoned in a manner which permits its present use and occupation and to the Seller’s Knowledge, no charges or violations have been filed, served, made or threatened against or relating to the Purchased Property as a result of any violation or alleged violation of any of the aforesaid;

 

  

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(d)

	
there are no outstanding work orders or other requirements or notices relating to any of the Purchased Property issued by any governmental authority or any board of fire underwriters or any insurer, and the Seller is not in discussion with any such governmental authority, board of fire underwriters or insurer relating to work orders or other requirements or notices and to the Seller’s Knowledge, there are no pending or threatened requests, applications or proceedings to alter or restrict the zoning or other restrictions applicable to the said properties or changes or events which might curtail or interfere with the current use of any of the Purchased Property;

	
  

	
(i)

	
to the Seller’s Knowledge, all hydro, water, sewer, gas, electric, telephone, drainage and other utility equipment, facilities and services and all mechanical systems (as aforesaid), are installed, connected and operated in compliance with applicable laws;

	
  

	
(ii)

	
the Seller has not received any notice from any insurance carrier of defects or inadequacies respect to the Purchased Property which, if not corrected, could result in termination of insurance coverage;

	
  

	
(iii)

	
the Seller has not received any notice with respect to any by-law change affecting the Purchased Property nor any notice relating to any threatened or pending condemnation or expropriation of any of the said properties from any governmental authority, and the Seller is not aware of any pending or threatened requests, applications or proceedings to alter or restrict the zoning or other use restrictions applicable to the Purchased Property;

	
  

	
(iv)

	
no amounts including, without limitation, taxes, local improvement taxes, levies or assessments are owing by the Seller in respect of the Purchased Property to any governmental entity or public utility, other than current accounts which are not in arrears and there are no outstanding appeals on assessments which have been issued or raised by any governmental authority or by the Seller concerning any realty, business or other taxes with respect to the Purchased Property;

	
  

	
(e)

	
Lease:

	
  

	
(i)

	
the term of the Lease expires as at August 31, 2018;

	
  

	
(ii)

	
the amount of the outstanding Monthly rent, as contemplated at sections 1.10, 6.1 and 6.2 of the Lease is as set out in Schedule “B” attached hereto;

	
  

	
(iii)

	
as at the current date and as at the Closing Date the tenant under the Lease has not paid any amount on account of Additional Rent, as contemplated at sections 1.10 and 6.3 of the Lease;

	
  

	
(iv)

	
the tenant under the Lease is not currently providing the Seller with any information concerning their gross revenues;

 

  

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(v)

	
The Seller has provided to the Buyer true and complete copies of the Lease, including supplements, amendments and modifications thereof a copy of which is attached hereto as Schedule B.  Except as set out in Schedule B hereto, the Lease has not been nor is it being further modified or amended or assigned.  The tenant is in arrears of Rent as set out in Schedule B hereto and the tenant under the Lease, has not entered into or agreed to enter into any subleases, licences or concessions with respect to the Lease; and

	
(4)

	
Premises Taxes:

	
  

	
(a)

	
there are no local improvement charges or special levies against the Premises of which the Seller has Knowledge nor has the Seller received any notice of any such proposed local improvement charges or special levies; and

	
  

	
(b)

	
all municipal taxes, rates, levies, and assessments with respect to the Premises are paid in full or will be adjusted as provided in paragraph 2.5 and there is no pending appeal or other proceedings in existence with respect to any such taxes, rates, levies, and assessment.

	
(5)

	
General:

	
  

	
(a)

	
neither the Premises, nor any part of the Premises, has been expropriated or condemned, nor has the Seller received any notice of any proposed expropriation or condemnation;

	
  

	
(b)

	
this Agreement constitutes a legal, valid and binding obligation of the Seller enforceable against the Seller in accordance with the terms herein;

	
  

	
(c)

	
the Seller carries all insurance which would be carried by a prudent owner of the Premises and the Seller has not have been refused any insurance by any insurance carrier to which either of them have applied for insurance during the past five (5) years; and

3.2           Survival of Seller’s Representations and Warranties

The representations and warranties contained in paragraph 3.1 shall survive the Closing Date and shall continue in full force and effect for the benefit of the Buyer for a period of one year after the Closing Date.

3.3           Seller’s Indemnity

The Seller covenants to indemnify and hold harmless the Buyer from and against any losses, claims, actions, liability, damages and costs, arising from:

	
(1)

	
any of the representations and warranties of the Seller set forth in this Article 3 being incorrect or breached, or any of the covenants set forth in this Agreement being breached;

 

  

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(2)

	
any and all liabilities of the Seller relating to the Purchased Property, whether accrued, absolute, contingent or otherwise, existing on the Possession Date and which the Buyer has not agreed to assume pursuant to this Agreement; and

	
(3)

	
any and all actions, lawsuits, proceedings, demands, assessments, judgments, costs and legal and other expenses incidental to the foregoing.

3.4           Buyer’s Representations and Warranties

The Buyer hereby represents and warrants as representations and warranties that will be true as of the Closing Date as follows:

	
(1)

	
the Buyer is a body corporate duly incorporated and existing under the laws of the State of Delaware and duly qualified to purchase and own the Purchased Property and the Buyer has full power, authority and capacity to enter into this Agreement and carry out the transactions contemplated herein;

	
(2)

	
there is no action or proceeding pending or to the Buyer’s knowledge threatened against the Buyer before any court, arbiter, arbitration panel, administrative tribunal or agency which, if decided adversely to the Buyer, might materially affect the Buyer’s ability to perform its obligations hereunder; and

	
(3)

	
neither the Buyer entering into this Agreement nor the performance of its terms will result in the breach of or constitute a default under any term or provision of any indenture, mortgage, deed of trust or other agreement to which the Buyer is bound or subject.

4.           COVENANTS

4.1           Seller’s Covenants

The Seller covenants with the Buyer to:

	
(1)

	
permit the Buyer and its representatives on reasonable notice to the Seller and with the Seller present to enter onto the Premises and carry out such inspections, tests, studies, appraisals, surveys and investigations of the Premises as the Buyer may reasonably require;

	
(2)

	
cause the Purchased Property to be maintained and repaired and to effect replacements to the Purchased Property as may be required before the Closing Date in the manner of a prudent owner,;

	
(3)

	
maintain insurance coverage with respect to the Purchased Property, in such amounts and on such terms as would a prudent owner;

	
(4)

	
not enter into or amend any contract with respect to the Purchased Property including before the Closing Date without the prior written approval of the Buyer, including the current lease of the Premises;

  

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(5)

	
provide the Buyer with continuing access to all records and other documents relating to the operation of the Purchased Property in the possession or control of the Seller which are not delivered to the Buyer on or before the Closing Date;

	
(6)

	
grant authorizations reasonably required by Buyer to authorize municipal and statutory authorities to release information confirming compliance with laws, bylaws and other statutory and governmental regulations and with respect to potential statutory liens;

	
(7)

	
pay when due any indebtedness of the Seller to any governmental authority which, by operation of law or otherwise, becomes a lien, charge, or encumbrance on the Premises from and after the Closing Date, including without limitation, corporation capital taxes and workers’ compensation payments; and

	
(8)

	
not modify, amend, or cancel any of the Permitted Encumbrances without the prior written approval of the Buyer.

5.           CONDITIONS

5.1           Buyer’s Conditions Precedent

The obligation of the Buyer to complete the purchase of the Purchased Property on the Closing Date is subject to the following conditions precedent being in effect or satisfied within the time herein provided:

	
(1)

	
on or before January 15, 2015, the Escrow Holder shall have caused a current commitment for title insurance ("Title Commitment") concerning the Purchased Property issued by the Title Company, as well as legible copies of all documents referred to in the Title Commitment ("Underlying Documents");

	
(2)

	
on or before January 15, 2015, the Seller shall have provided the Buyer with legible copies of all leases, subleases or rental arrangements (collectively, "Existing Leases") affecting the Purchased Property,

	
(3)

	
on or before January 15, 2015, the Buyer will have obtained financing on terms and conditions satisfactory to the Buyer; 

on or before January 15, 2015, the Buyer will have completed its due diligence of the Premises, , the Property Information Sheet, the Underlying Documents,

	
(4)

	
on or before the Closing Date, the Buyer having entered into a consulting agreement with Timothy Donald commencing on the Closing Date on mutually agreeable terms to be determined between the parties;

	
(5)

	
on or before the Closing Date, there shall not have occurred a destruction of, or damage or loss to, the Purchased Property or any portion thereof, from any cause whatsoever, which would cost more than $10,000.00 to repair or cure and if the cost of repair or cure is $10,000.00 or less, the Seller shall repair or cure the loss prior to the Closing Date, provided that the Buyer shall have the option, within ten (10) days after receipt of written notice of a loss costing more than $10,000.00 to repair or cure, to either terminate this Agreement or to purchase the Purchased Property notwithstanding such loss, but without deduction or offset against the Purchase Price, but provided further that if the cost to repair or cure is more than $10,000.00, and the Buyer does not elect to terminate this Agreement, the Buyer shall be entitled to any insurance proceeds applicable to such loss; and

 

  

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(6)

	
on the Closing Date, the representations and warranties of the Seller as set forth in Article 3 herein will be materially true and the Seller will have reasonably complied with all material obligations to be performed by it at or before the Closing Date,

(the “Conditions Precedent”).

IF BUYER FAILS TO NOTIFY ESCROW HOLDER, IN WRITING, OF THE DISAPPROVAL OF ANY OF SAID CONDITIONS WITHIN THE TIME SPECIFIED THEREIN, IT SHALL BE CONCLUSIVELY PRESUMED THAT THE BUYER HAS APPROVED SUCH ITEM, MATTER OR DOCUMENT.

The Seller acknowledges that all of the conditions specified in paragraph 5.1 are for the exclusive benefit of the Buyer and may be waived by the Buyer, in its sole discretion, and may be elsewhere herein referred to as "Conditions Precedent."

In consideration of the $10,000.00 non-refundable payment to be paid by the Buyer to the Seller and other good and valuable consideration, the receipt and sufficiency of which are acknowledged by the Seller, the Seller agrees not to revoke its acceptance of the Buyer’s offer contained herein while this Agreement remains subject to any of the foregoing conditions precedent.  The parties agree that this Agreement will become an unconditional contract for the sale and purchase of the Purchased Property forthwith upon the satisfaction or waiver of the foregoing conditions precedent.

5.2           Waiver

All of the conditions precedent set forth in paragraph 5.1 are for the Buyer’s sole benefit and each may be waived unilaterally by the Buyer, at the Buyer’s election.  If the Buyer does not give the Seller notice of the satisfaction or waiver of all of such conditions precedent within the time therein provided then the Buyer’s obligation to purchase the Purchased Property will be at an end.

6.           RISK/POSSESSION

6.1           The Passing of Risk

The Purchased Property shall be at the risk of the Seller until completion of the closing, under paragraph 7.

6.2           Material Loss or Damage

If there is any Material Loss prior to the passing of risk as stated in paragraph 7.1, the Buyer shall, within seven (7) days following such loss or damage, by notice in writing at its option either:

 

  

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(1)

	
terminate this Agreement, , and neither party shall be under any further obligation to the other; or

	
(2)

	
elect to complete the purchase, in which case the proceeds and the right to receive the proceeds of all insurance shall be assigned by the Seller to the Buyer on the Closing Date.

 

In the absence of delivery of such notice, the Buyer shall be deemed to have elected to complete the purchase.

6.3           Repair of Damage

The Seller shall diligently repair at its sole expense any damage caused to the Purchased Property while the Premises are at the risk of the Seller.  Subject to paragraph 6.2, the amount of any insurance proceeds for damage not required by the Seller shall be assigned to the Buyer on the Closing Date, and applied on account of such repair.  .

6.4           Possession

The Seller shall deliver vacant possession of the Purchased Property to the Buyer on the Closing Date, subject only to the Permitted Encumbrances upon completion of the sale and purchase of the Purchased Property and subject to the lease of the Premises by the current tenant.

7.           CLOSING PROCEDURE

7.1           Closing

The closing of the purchase and sale of the Purchased Property will commence at 12:00 noon on the Closing Date.  In the event of Material Loss under paragraph 6.2, the Closing Date shall be deferred for seven (7) days.  Closing will take place at, or at such other place as the parties may mutually agree.

7.2           Closing Procedure/ Escrow

	
(1)

	
Upon acceptance hereof by Seller, this Agreement, including any counteroffers incorporated herein by the Parties, shall constitute not only the agreement of purchase and sale between the Buyer and the Seller, but also instructions to the Escrow Holder for the consummation of the Agreement through the Escrow. The Escrow Holder shall not prepare any further escrow instructions restating or amending the Agreement unless specifically so instructed by the Parties. Subject to the reasonable approval of the Parties, the Escrow Holder may, however, include its standard general escrow provisions.

	
(2)

	
The Escrow Holder is hereby authorized and instructed to conduct the Escrow in accordance with this Agreement, applicable law and custom and practice of the community in which the Escrow Holder is located, including any reporting requirements of the Internal Revenue Code. In the event of a conflict between the law of the state where the Property is located and the law of the state where the Escrow Holder is located, the law of the state where the Property is located shall prevail.

  

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(3)

	
Subject to satisfaction of the Conditions Precedent herein described, the Escrow Holder shall close this escrow (the "Closing") by recording a special warranty deed and the other documents required to be recorded, together with an instrument of assignment of the Lease, and by disbursing the funds and documents in accordance with this Agreement.

	
(4)

	
The Buyer and the Seller shall each pay one-half (50%) of the Escrow Holder's charges and the Seller shall pay the usual recording fees and any required documentary transfer taxes. The Seller shall pay the premium for a standard coverage owner's policy of title insurance.

	
(5)

	
The Escrow Holder shall verify that all of Buyer’s Conditions Precedent have been satisfied or waived prior to Closing.

	
(6)

	
If this transaction is terminated for non-satisfaction and non-waiver of the Conditions Precedent, then neither of the parties shall thereafter have any liability to the other under this Agreement, except to the extent of a breach of any affirmative covenant or warranty in this Agreement. In the event of such termination, the Buyer shall be promptly refunded all funds deposited by the Buyer (other than the non-refundable deposit paid pursuant to paragraph 2.3(1) herein), with the Escrow Holder, and the Title Company and Escrow Holder cancellation fees and costs, all of which shall be the Buyer’s obligation. If this transaction is terminated as a result of the Seller’s breach of this Agreement then the Seller shall pay the Title Company and the Escrow Holder cancellation fees and costs.

	
(7)

	
The Closing shall occur on the Closing Date, or as soon thereafter as the Escrow is in condition for Closing; provided, however, that if the Closing does not occur by the Closing Date and said date is not extended by mutual instructions of the Parties, a Party not then in default under this Agreement may notify the other Party and the Escrow Holder, in writing that, unless the Closing occurs within five (5) business days following said notice, the Escrow shall be deemed terminated without further notice or instructions.

	
(8)

	
Except as otherwise provided herein, the termination of Escrow shall not relieve or release either Party from any obligation to pay the Escrow Holder's fees and costs or constitute a waiver, release or discharge of any breach or default that has occurred in the performance of the obligations, agreements, covenants or warranties contained therein.

	
(9)

	
If this sale of the Purchased Property is not consummated for any reason other than the Seller’s breach or default, then at the Seller’s request, and as a condition to any obligation to return the deposit, the Buyer shall within five (5) days after written request deliver to the Seller, at no charge, copies of all surveys, engineering studies, soil reports, maps, master plans, feasibility studies and other similar items prepared by or for the Buyer that pertain to the Purchased Property. Provided, however, that the Buyer shall not be required to deliver any such report if the written contract which the Buyer entered into with the consultant who prepared such report specifically forbids the dissemination or the report to others.

7.3           Seller’s Documents

Five (5) days prior to the Closing Date, the Escrow Holder shall obtain an updated Title Commitment concerning the Purchased Property from the Title Company and provide copies thereof to each of the Parties.  The Seller shall deliver to the Escrow Holder in time for delivery to Buyer at the Closing:

 

  

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(1)

	
special warranty deed, duly executed and in recordable form, conveying fee title to the Purchased Property to the Buyer;

	
(2)

	
the Existing Leases and Other Agreements together with duly executed assignments thereof by the Seller to the Buyer, with the assignment of Existing Leases being in the most recent Assignment and Assumption of Lessor's Interest in Lease form published by the AIR or its equivalent;

	
(3)

	
an affidavit executed by the Seller to the effect that Seller is not a “foreign person" within the meaning of Internal Revenue Code Section 1445 or successor statutes and if the Seller does not provide such affidavit in form reasonably satisfactory to the Buyer at least three (3) business days prior to the Closing the Escrow Holder shall at the Closing deduct from the Seller’s proceeds and remit to the Internal Revenue Service such sum as is required by applicable Federal law with respect to purchases from foreign sellers;

	
(4)

	
a bill of sale, duly executed, conveying title to any included personal property to the Buyer;

	
(5)

	
the Seller’s statement of adjustments; and

	
(6)

	
a duly executed resolution of the Seller authorizing the execution of this Agreement and the sale of the Purchased Property.

7.4           Buyer’s Documents

The Buyer shall deliver to the Seller through Escrow:

	
(1)

	
the balance of the Cash Portion of the Purchase Price pursuant to paragraph 2.3(3) and such additional sums as are required of the Buyer under this Agreement shall be deposited by the Buyer with the Escrow Holder, by federal funds wire transfer, or any other method acceptable to Escrow Holder in immediately collectable funds, no later than 2:00 P.M. on the business day prior to the Closing Date provided, however, that the Buyer shall not be required to deposit such monies into Escrow if at the time set for Closing the Seller is in default or has indicated that it will not perform any of its obligations hereunder;

	
(2)

	
the Assignment and Assumption of Lessor's Interest in the Lease in the form specified in paragraph 7.3(2) above, duly executed by the Buyer;

	
(3)

	
Assumptions duly executed by the Buyer of the obligations of the Seller that accrue after Closing under any Other Agreements; and

	
(4)

	
a duly executed corporate resolution authorizing the execution of this Agreement and the purchase of the Purchased Property.

  

14

  

 

7.5           Closing

At Closing, Escrow Holder shall cause to be issued to the Buyer a standard coverage or ALTA extended, owner's form policy of title insurance effective as of the Closing, issued by the Title Company in the full amount of the Purchase Price, insuring title to the Property vested in the Buyer, subject only to the exceptions approved by the Buyer.

7.6           Concurrent Requirements

It is a condition of this Agreement that all requirements of this Article 7 are concurrent requirements and it is specifically agreed that nothing will be completed on the Closing Date until everything required to be paid, executed and delivered on the Closing Date has been so paid, executed and delivered and until the Buyer’s solicitors have satisfied themselves as to the Buyer’s title.

7.7           Discharge of Seller’s Encumbrances

The Buyer acknowledges and agrees that if the Seller’s title to the Premises is subject to any financial encumbrance which is required to be discharged by the Seller, the Seller will not be required to clear title before the receipt of the net sales proceeds but will be obligated to do so within a reasonable time following closing and the Buyer will pay or cause its solicitors to pay the balance of the adjusted Purchase Price to the Seller’s solicitors in trust on their undertaking to discharge any such financial encumbrance.

7.8           Election

If on the Closing Date any of the representations or warranties made by the Seller are untrue in any material respect or the Seller is in default in any material respect under any of the covenants and agreements to be observed or performed by the Seller under this Agreement, the Buyer may elect not to complete the purchase of the Purchased Property under this Agreement or to complete the purchase of the Purchased Property under this Agreement, in either case without prejudice to any rights or remedies the Buyer may have in respect of the Seller’s breach or default.

8.           MISCELLANEOUS

8.1           Time

Time shall be of the essence of this agreement and the transactions contemplated in this Agreement notwithstanding the extension of any of the dates under this Agreement.

8.2           Tender

Any tender of documents or money may be made upon the party being tendered or upon its solicitors, and money may be tendered by bank draft or wire transfer.

  

15

  

 

8.3           Relationship of the Parties

Nothing in this Agreement shall be construed so as to make the Buyer a partner of the Seller or an owner of the Purchased Property for any purpose, until the Closing Date, and the Seller shall indemnify and save the Buyer harmless from any and all costs, expenses, damages, claims, or liabilities which may be incurred with respect to the Purchased Property before the Closing Date which the Buyer is not obligated to assume under this Agreement, and this provision shall survive the Closing Date or the termination of this Agreement.

8.4           Notice

Any notice required or permitted to be given under this Agreement shall be sufficiently given if delivered personally or if sent by prepaid registered mail as follows:

to the Buyer at:                     3440 E Russell Road,

Las Vegas, NV

89120

Attention:              Wayne Hansen

Email:                      whns42@gmail.com

to the Seller at:                      13401 108 Avenue

Surrey, BC

V3T 5T3

Attention:              Brent Stickland

Email:                      gbs@hdas.com

provided that any party shall be entitled to designate another address by giving notice of it to the other party in accordance with the terms of this Agreement.  Any notice so mailed shall be deemed to have been received, except during a period of interruption of normal postal service, on the fourth business day following the date of mailing.

8.5           Further Assurances

Each of the parties shall, at the expense of the other party, execute and deliver all such further documents and do such further acts and things as the other party may reasonably request from time to time to give full effect to this Agreement.

8.6           Assignment

The Buyer may assign its rights under this Agreement with the prior written consent of the Buyer, such consent not to be unreasonably withheld, provided that the Medican Enterprises, Inc. shall not be released from its obligations hereunder as a consequence of any such assignment.

  

16

  

 

8.7           Non-merger

None of the provisions of this Agreement shall merge in the transfer of the Premises or any other document delivered on the Closing Date, and the provisions of this Agreement shall survive the Closing Date.

8.8           Certificates

Wherever this Agreement provides for a certificate of a responsible officer of a party, that certificate shall state that the officer has made reasonable and prudent inquiries to determine the accuracy of the matter certified and that certificate shall be deemed to constitute a representation and warranty or a covenant, as the case may be, by the party whose officer signed the certificate.

8.9           Payment of Fees

Each party shall pay its own legal fees.  The Buyer shall be responsible for all registration fees payable in connection with registration of the transfer of land referred to in paragraph 7.2(3) and the Buyer’s Mortgage but the Seller shall be responsible for the costs of clearing title of any financial encumbrances.

 

8.10           Commission

The Seller and the Buyer acknowledge and agree that no real estate commissions are payable as a result of the purchase and sale of the Purchased Property.

8.11           Binding Effect

This Agreement shall enure to the benefit of and be binding upon the parties, their respective heirs, executors, administrators, and other legal representatives and, to the extent permitted in this Agreement, their respective successors and assigns.

8.12           Extended Meanings

Words importing the singular number include the plural and vice versa, and words importing the masculine gender include the feminine and neuter genders.

8.13           Headings

The headings are for convenience of reference only and shall not affect the construction or interpretation of this Agreement.

8.14           Applicable Law

This Agreement shall be interpreted in accordance with the laws of of the State of Arizona, USA in respect of conveyance of title to the Purchased Property to the Buyer.

  

17

  

8.15           Entire Agreement

This Agreement constitutes the entire agreement between the parties with respect to the subject matter of the Agreement and contains all of the representations, warranties, covenants and agreements of the respective parties, and may not be amended or modified except by an instrument in writing executed by all parties.  This Agreement supersedes all prior agreements, memoranda, and negotiations between the parties.

8.16           Schedules

The Schedules attached to this Agreement form part of this Agreement.

8.17           No Contra Proferentem

This Agreement will be interpreted neutrally, without regard to the party drafting this Agreement.

IN WITNESS WHEREOF the parties have executed this Agreement.

	
EXECUTED by MEDICAN ENTERPRISES, INC.

in the presence of:

 

 

___________________________________

Witness

	
 

	
MEDICAN ENTERPRISES, INC.

per:

 

 

/s/ Ken Williams

Authorized Signatory

	  	
 

	
JTB REAL ESTATE LLLP by its General Partner TBJ LLC

 

 

/s/__________________ 

Authorized Signatory

 

  

18

  

 

SCHEDULE A

Permitted Encumbrances

 

NIL

 

  

19

  

 

SCHEDULE B

Real Property Lease—Section 3.1(3)(g)

Outstanding Basic Rent as at January 31, 2015 $172,500.00

Collected Percentage Rent Nil

 

  

20

  

 

Exhibit A

 

THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (1) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, (II) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH REGULATION S UNDER THE 1933 ACT OR (III) IN COMPLIANCE WITH AN EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT; PROVIDED THAT, PRIOR TO ANY TRANSFER PURSUANT TO CLAUSES (II) OR (III) HEREOF, THE HOLDER HAS PROVIDED TO THE ISSUER AN OPINION OF COUNSEL, IN FORM SATISFACTORY TO THE ISSUER, TO THE EFFECT THAT ANY SUCH TRANSFER MAY BE MADE WITHOUT REGISTRATION UNDER THE 1933 ACT. HEDGING TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED HEREBY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE 1933 ACT.

 

UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THESE SECURITIES MUST NOT TRADE THE SECURITY BEFORE JUNE 1, 2015

UNLESS PERMITTED UNDER SECURITIES LEGISLATION THE SECURITIES REPRESENTED HEREBY MAY NOT BE SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE TRADED IN CANADA, OR TO OR FOR THE BENEFIT OF A CANADIAN RESIDENT HOLDER BEFORE JUNE 1, 2015

 

MEDICAN ENTERPRISES, INC.

 

SECURED CONVERTIBLE DEBENTURE

 

	
Lender:  JTB REAL ESTATE LLLP

	  	
Principal Amount: US$850,000.00

 

	
  

	
SECTION 1 - DEFINITIONS AND INTERPRETATION

 

In this Debenture, unless there is something in the context inconsistent therewith, the following words and phrases shall have the following meanings, respectively:

 

	
1.1

	
“1933 Act” means the United States Securities Act of 1933, as amended.

 

	
1.2

	
“Applicable Laws” means, in respect of any Person, property, transaction or event, all present or future applicable laws, statutes, decrees, regulations, treaties, ordinances, orders, writs, injunctions, judgments and decrees and all applicable official directives, rules, guidelines, orders and policies of any governmental or other regulatory bodies including, without limitation, stock exchanges, having authority over any of the foregoing.

 

	
1.3

	
“Business Day” means any day but excludes Saturday or Sunday and any other day which is a statutory holiday in British Columbia

 

	
1.4

	
“Closing Date” means January 31, 2015.

 

	
1.5

	
“Collateral” means the Land any and all personal property, assets and undertaking of the Corporation of whatsoever nature and kind charged by this Debenture.

 

	
1.6

	
“Common Share” means a common share in the capital of the Corporation.

 

	
1.7

	
Conversion Dates” means the earlier to occur of the dates set out below, as to the amount stated, and the Payment Date:

 

  

  

  

 

	
  

	
(a)

	
if the Market Price per Common Share at any time exceeds US$0.50, then US$250,000 of the Debenture may then or anytime thereafter be converted;

 

	
  

	
(b)

	
if the Market Price per Common Share at any time exceeds US$1.00, then US$100,000 of the Debenture may then or anytime thereafter be converted;

 

	
  

	
(c)

	
if the Market Price per Common Share at any time exceeds US$1.50, then US$200,000 of the Debenture may then or anytime thereafter be converted;

 

	
  

	
(d)

	
if the Market Price per Common Share at any time exceeds US$2,00, then US$300,000 of the Debenture may then or anytime thereafter be converted,

 

and for greater certainty if not all of the Debenture has been converted as at the Payment Date then the full amount of the Debenture then outstanding and all accrued but unpaid interest may be converted into Common Shares pursuant to the terms of this Agreement;

 

	
1.8

	
“Conversion Price per Common Share” means the Current Market Price for each Common Share multiplied by 0.60.

 

	
1.9

	
“Corporation” means Medican Enterprises, Inc., all subsidiaries and affiliates, and every Successor Corporation.

 

	
1.10

	
“Current Market Price” means the weighted average trading price per share for Common Shares for the twenty (20) consecutive trading days ending on the date such shares are converted.

 

	
1.11

	
“Date of Conversion” shall have the meaning ascribed to it in Section 5.4 hereof.

 

	
1.12

	
“Debenture” means this secured convertible debenture, as the same may be amended, varied, supplemented, restated, renewed or replaced at any time and from time to time.

 

	
1.13

	
“Event of Default” shall have the meaning ascribed to it in Section 7.1 hereof.

 

	
1.14

	
“Exchange” means the OTC Bulletin Board, or such other exchange in which the Common Shares are freely traded from time to time.

 

	
1.15

	
“Interest” shall have the meaning ascribed to it in Section 2.2 hereof.

 

	
1.16

	
“Land” shall have the meaning ascribed to it in Section 3.1 hereof.

 

	
1.17

	
“Lender” shall have the meaning first written above.

 

	
1.18

	
“Market Price per Common Share” means the trading price per share for Common Shares on any given date or time.

 

	
1.19

	
“Maturity Date” means Twelve (12) months (365 days) from the Closing Date, subject to the provisions of Section 2.1 herein.

 

	
1.20

	
“Parties” means the Lender and the Corporation and their successors and assignees.

 

	
1.21

	
“Payment Date” means August 1, 2015.

 

  

  

  

 

	
1.22

	
“Permitted Priority Encumbrances” means those Security Interests and other encumbrances or interests identified as Permitted Priority Encumbrances and set out in Schedule “A” attached hereto.

 

	
1.23

	
“Permitted Subordinated Encumbrances” means those Security Interests and other encumbrances or interests identified as Permitted Subordinated Encumbrances and set out in Schedule “A” attached hereto.

 

	
1.24

	
“Person” means any individual, partnership, limited partnership, joint venture, syndicate, sole proprietorship, company or corporation with or without share capital, unincorporated association, trust, trustee, executor, administrator or other legal personal representative, regulatory body or agency, government or governmental agency, authority or entity however designated or constituted.

 

	
1.25

	
“Principal Amount” shall have the meaning first written above.

 

	
1.26

	
“Securities” means all shares, options, warrants, rights or other equivalents (regardless of how designated) of or in a corporation or equivalent entity, whether voting or non-voting and including, for greater certainty, debt securities that are convertible into any of the above.

 

	
1.27

	
“Security Interest” means any mortgage, charge, lien, hypothec, encumbrance or other security arrangement of whatsoever nature or kind.

 

	
1.28

	
“Successor Corporation” means any corporation which is formed by the amalgamation, merger, restructuring or reorganization of the Corporation.

 

	
1.29

	
“Taxes” includes all present and future taxes, levies, imposts, stamp taxes, duties, charges to tax, fees, deductions, withholdings and any restrictions or conditions resulting in a charge to tax and all penalty, interest and other payments on or in respect thereof.

 

	
  

	
SECTION 2 - PROMISE TO PAY

 

	
2.1

	
Principal Amount.  The Corporation, in consideration for the receipt of the Principal Amount from the Lender, hereby acknowledges itself indebted to and covenants with the Lender to pay the Principal Amount on or before the Maturity Date, unless and except to the extent that such Principal Amount is repaid by conversion into Common Shares as provided for in Section 5 below.  Notwithstanding the foregoing, the Lender may make demand for repayment of the Principal Amount and all accrued but unpaid Interest at any time after the Payment Date, and after receipt of such demand the Corporation shall repay any outstanding amounts of Principal Amount and accrued but unpaid Interest within thirty (30) days of receipt of such demand.

 

	
2.2

	
Interest. Interest shall accrue and shall be payable on the Principal Amount, or so much thereof as remains outstanding from time to time before and after the Maturity Date, at a rate of 10.0% per annum compounded semi-annually, not in advance (“Interest”).  The Corporation agrees to pay Interest to the Lender monthly on the first day of each and every month after the Closing Date on the Principal Amount outstanding from time to time and upon repayment of the Principal Amount the Corporation in accordance with the terms of the Agreement shall pay all remaining outstanding and unpaid Interest.  For greater certainty, Interest shall accrue to, and be payable up to the date of any conversion of any portion of the Debenture, notwithstanding that such conversion may occur on a day that is not the Maturity Date.

 

  

  

  

 

	
2.3

	
Repayment by the Corporation.  The Corporation may repay the Principal Amount and any accrued and unpaid Interest, in whole or in part, at any time after July 31, 2015, provided that the Corporation shall provide the Lender with seven (7) days prior notice of its intention to prepay the Principal Amount, or such lesser amount as the Corporation intends to pay, during which time the Lender may exercise its conversion rights pursuant to Section 5.1 herein.

 

	
  

	
SECTION 3 - SECURITY

 

	
3.1

	
Mortgage Security.  As security for payment of the principal amount of the Principal Amount  and Interest and all other monies and liabilities from time to time payable pursuant to this Debenture and as security for the due performance by the Corporation of all of its other present and future obligations hereunder, the Corporation hereby grants to the Lender a 2nd charge and mortgage over that certain land located in Phoenix, county of Maricopa in the State of Arizona, and having a civic address at 10040 N. Metro Parkway W., Phoenix, Arizona, 85051 and legally described as Lot 3, of METROCENTER TRACT 10, according to the plat of record in the office of the Country Recorder of Maricopa County, Arizona, recorded in Book 797 Maps, page 15 (the “Land”) and all proceeds derived therefrom.

 

	
3.2

	
Priority of Security Interest.  The Security Interest granted by this Debenture shall rank in second priority behind the Security Interest granted pursuant to the Permitted Priority Encumbrance.  The Lender agrees to execute and deliver any priority agreements requested by the Corporation to confirm and evidence the priority of the Permitted Priority Encumbrances over the Security Interest granted by this Debenture.

 

	
3.3

	
Subsequent Act.  The Corporation shall, from time to time, execute and do or cause to be executed and done all things which in the opinion of the Lender or its appointed counsel may reasonably be required to evidence or protect the Security Interest created herein.

 

	
3.4

	
Registration of Mortgage.  The Corporation shall, at the Lender’s request and at the Corporation’s expense, register, file or record the Security Interests created herein in all offices where such registration, filing or recording is in the opinion of the Lender or the Lender’s appointed counsel, acing reasonably, necessary or of advantage to the creation or perfection of the Security Interest.  The Corporation shall deliver to the Lender on demand verification statements or certificates evidencing such registration, filing or recording, and will, at the Lender’s request, do, observe and perform all matters and things necessary or expedient to be done, observed and performed, for the purpose of creating, maintaining and preserving the Security Interest or creating, maintaining and preserving the priority thereof.

 

	
3.5

	
Exclusions.  The Security Interest granted herein does not apply or extend to:

 

	
  

	
(1)

	
the last day of any term created by any lease or agreement now held or later acquired by the Corporation but the Corporation will stand possessed of the reversion thereby remaining in the Corporation of any leasehold premises in trust for the Lender to assign and dispose of as the Lender or any purchaser of such leasehold premises directs;

 

	
  

	
(2)

	
if any lease or other agreement contains a provision which provides in effect that such lease or agreement may not be assigned, subleased, charged or encumbered without the leave, licence, consent or approval of the lessor, the application of the security interest created hereby to any such lease or agreement is conditional upon such leave, licence, consent or approval having been obtained and the security interest created hereby will attach to such lease or agreement as soon as such leave, licence, consent or approval is obtained; or

 

  

  

  

 

	
  

	
(3)

	
any consumer goods of the Corporation.

 

	
  

	
SECTION 4 - REPRESENTATIONS AND WARRANTIES OF THE CORPORATION

 

	
4.1

	
Representations and Warranties.  The Corporation represents and warrants to the Lender, all of which shall survive the execution and delivery of this Debenture, as follows:

 

	
  

	
(1)

	
Existence, Power and Conduct of Business.  The Corporation is a corporation duly incorporated, validly existing and in good standing in its jurisdiction of incorporation, is up to date in all filings required under Applicable Laws, has the requisite power and authority and all material governmental licenses, authorizations, consents and approvals necessary to own, operate and lease its properties and assets and to conduct its businesses in which it is presently engaged and to enter into and perform its obligations under this Debenture.

 

	
  

	
(2)

	
Corporate Power, Authorization and Enforceable Obligations.  The execution, delivery and performance by the Corporation of this Debenture, the creation of all Security Interests provided for herein and the issuance of the Common Shares contemplated herein: (i) are within the corporate power of the Corporation; (ii) have been duly authorized by all necessary corporate or other action of the Corporation; (iii) are not in contravention of, and will not conflict with or violate, any provision of the articles of incorporation or by-laws of the Corporation; and (iv) will not contravene, conflict with or violate any Applicable Laws.

 

	
  

	
(3)

	
No Event of Default.  No Event of Default has occurred and is continuing.

 

	
  

	
SECTION 5 - CONVERSION RIGHTS

 

	
5.1

	
Conversion Right.  Subject to Section 5.5 below, the parties agree that until the Principal Amount and any accrued and unpaid Interest have been fully repaid, on the Conversion Dates the Lender shall have the right to convert all or any portion of the then outstanding Principal Amount and accrued and unpaid Interest into Common Shares at the Conversion Price per Common Share.  Such conversion may be effected by the presentation of this Debenture at the offices of the Corporation, accompanied by a conversion notice (the “Conversion Notice”) signed by the Lender in the form attached as Schedule B notifying the Corporation as to the exercise of the right of conversion and specifying the amount of Principal Amount and Interest being converted and setting forth the name and address of the nominees of the Lender in whose name(s) the Common Shares issuable upon such conversion are to be registered.  For greater certainty, no conversion in part or in whole of the Principal Amount shall extinguish or satisfy, or relieve the Corporation of its obligation to pay, any interest on such principal amount, or interest on such interest, accruing up to but excluding the Date of Conversion.

 

	
5.2

	
Issuance of Common Shares on Conversion.  As promptly as practicable after the presentation of this Debenture for conversion pursuant to Section 5.1, but in no event later than five Business Days after such presentation of this Debenture for conversion, the Corporation shall issue to the Lender or its nominee(s) a certificate or certificates representing the number of Common Shares into which all or any portion of the Principal Amount and Interest have been converted and shall cause the Lender or its nominee to be entered in its books as of the Date of Conversion as the holder of the number of Common Shares into which the Principal Amount and Interest, or portion thereof being converted, is converted.  Common Shares issued upon such conversion shall be entitled to dividends (if any) declared in favour of holders of Common Shares of record on and after the Date of Conversion.  As of and from such applicable date, the Common Shares so issued shall for all purposes be and be deemed to be issued and outstanding as fully paid and non-assessable Common Shares.  In the event that any amounts remain outstanding under this Debenture after giving effect to such conversion, the Corporation shall acknowledge in writing the amount of remaining Principal Amount owing by the Corporation to the Lender, plus any accrued and outstanding Interest and shall issue a new Debenture to the Lender on the same terms and conditions as set out herein, for the amount then owing to the Lender within five (5) Business Days of the date of surrender of this Debenture to the Corporation.

 

  

  

  

 

	
 

	
so issued shall for all purposes be and be deemed to be issued and outstanding as fully paid and non-assessable Common Shares.  In the event that any amounts remain outstanding under this Debenture after giving effect to such conversion, the Corporation shall acknowledge in writing the amount of remaining Principal Amount owing by the Corporation to the Lender, plus any accrued and outstanding Interest and shall issue a new Debenture to the Lender on the same terms and conditions as set out herein, for the amount then owing to the Lender within five (5) Business Days of the date of surrender of this Debenture to the Corporation.

 

	
5.3

	
No Fractional Shares.  No fractional Common Share or other security shall be issued upon the conversion of all or any portion of the Principal Amount and Interest.  If the conversion of all or any portion of the Principal Amount and Interest would otherwise result in a fractional Common Share, the Corporation shall, in lieu of delivering any certificate representing such fractional interest, pay to the Lender an amount equal (computed to the nearest whole cent, with one half of a cent or more being rounded up) to the appropriate fraction of the value provided.

 

	
5.4

	
Effect of Conversion.  The conversion of the Principal Amount and Interest thereon or any portion thereof shall be deemed to have been made immediately prior to the close of business on the date on which this Debenture is surrendered for conversion (the “Date of Conversion”) in accordance with the provisions of this Section 5.  The Lender’s rights in respect of the converted portion shall terminate at the time of surrender, and the nominee of the Lender entitled to receive the Common Shares into which all or any portion of the Principal Amount is converted shall be treated, as between the Corporation and such person or persons, as having become the holder or holders of record of such Common Shares on that date, provided if this Debenture is surrendered for conversion on any day on which the register for Common Shares is closed, the Lender or its nominee entitled to receive Common Shares upon the conversion of this Debenture or a portion thereof shall become the holder of record of such Common Shares as of the date on which the register of Common Shares is next open.

 

	
5.5

	
Limit on Share Ownership.  The conversion and/or redemption rights provided for in this Debenture shall only be exercisable to the extent that Lender or its nominee may own, either directly or beneficially, a maximum of 9.99% of the issued and outstanding voting shares of the Corporation.

 

	
5.6

	
Transfer Restrictions.  The Common Shares issuable upon conversion may not be sold or transferred unless  (i) such shares are sold pursuant to an effective registration statement under the 1933 Act or (ii) the Corporation or its transfer agent shall have been furnished with an opinion of  counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions) to the effect that the Common Shares to be sold or transferred may be sold or transferred pursuant to an exemption from such registration or (iii) such Common Shares are sold or transferred pursuant to Rule 144 under the 1933 Act (or a successor rule) (“Rule 144”) or (iv) such shares are transferred to an “affiliate” (as defined in Rule 144) of the Lender who agrees to sell or otherwise transfer the shares only in accordance with this Section.  Except as otherwise provided in the Purchase Agreement (and subject to the removal provisions set forth below), until such time as the Common Shares issuable upon conversion have been registered under the 1933 Act or otherwise may be sold pursuant to Rule 144 without any restriction as to the number of securities as of a particular date that can then be immediately sold, each certificate for Common Shares issuable upon conversion of this Debenture that has not been so included in an effective registration statement or that has not been sold pursuant to an effective registration statement or an exemption that permits removal of the legend, shall bear a legend substantially in the following form, as appropriate:

 

  

  

  

 

“NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.  NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.”

 

The legend set forth above shall be removed and the Corporation shall issue to the Lender a new certificate therefore free of any transfer legend if (i) the Corporation or its transfer agent shall have received an opinion of counsel, in form, substance and scope customary for opinions of counsel in comparable transactions, to the effect that a public sale or transfer of such Common Shares may be made without registration under the 1933 Act, which opinion shall be accepted by the Corporation so that the sale or transfer is effected or (ii) in the case of the Common Shares issuable upon conversion of this Debenture, such security is registered for sale by the Lender under an effective registration statement filed under the 1933 Act or otherwise may be sold pursuant to Rule 144 without any restriction as to the number of securities as of a particular date that can then be immediately sold.

 

	
  

	
SECTION 6 - COVENANTS

 

	
6.1

	
Covenants.  The Corporation hereby covenants to the Lender that at all times while the Lender’s conversion rights are outstanding:

 

	
  

	
(1)

	
the Corporation shall reserve and there shall remain unissued out of its authorized capital a sufficient number of Common Shares to satisfy the obligations of the Corporation pursuant to this Debenture;

 

	
  

	
(2)

	
the Common Shares which may be issued upon the exercise of the conversion rights shall be validly issued as fully paid and non-assessable.  The issuance and delivery of said Common Shares shall not be subject to any liens, restrictions, claims or encumbrances, provided however that said Common Shares may be subject to restrictions on transfer under applicable securities laws;

 

	
  

	
(3)

	
the Corporation shall duly and punctually pay or cause to be paid to the Lender the principal of and interest accrued on this Debenture (including, in the case of default, interest on the amount in default) on the dates, at the places, in the currency, and in the manner provided for herein;

 

	
  

	
(4)

	
except as herein otherwise expressly provided, the Corporation shall at all times maintain its corporate existence;

 

  

  

  

 

	
  

	
(5)

	
the Corporation shall duly and punctually perform and carry out all of the acts or things to be done by it as provided in this Debenture;

 

	
  

	
(6)

	
the Corporation shall maintain, use and operate the Collateral and carry on and conduct its business in a lawful and business-like manner;

 

	
  

	
(7)

	
the Corporation shall defend the Collateral against all claims and demands respecting the Collateral made by all persons at any time and, except as otherwise provided herein, will keep the Collateral free and clear of all security interests and other encumbrances or interests except for those Permitted Priority Encumbrances and Permitted Subordinated Encumbrances or interest which may rank subordinate to the Mortgage;

 

	
  

	
(8)

	
the Corporation shall not change its name without first giving notice to the Lender of its new name and the date when such new name or amalgamation is to become effective.

 

	
  

	
SECTION 7 - DEFAULT

 

	
7.1

	
Events of Default.  The security hereby constituted shall become enforceable upon the occurrence of any of the following events of default (each, an “Event of Default”):

 

	
  

	
(1)

	
if the Corporation makes default in the observance or performance of any written covenant or undertaking given by the Corporation to the Lender and such default is not rectified within fifteen (15) Business Days of notice being delivered by the Lender to the Corporation;

 

	
  

	
(2)

	
if the Corporation makes default in payment of any indebtedness or liability of the Corporation to the Lender hereunder, when due, and such default is not remedied within five (5) days of notice being delivered by the Lender to the Corporation;

 

	
  

	
(3)

	
if a decree or order of a court of competent jurisdiction is entered adjudging the Corporation a bankrupt or insolvent or approving as properly filed a petition seeking the winding-up of the Corporation under the Companies’ Creditors Arrangement Act (Canada), the Bankruptcy and Insolvency Act (Canada), the Winding Up Act (Canada) or any other bankruptcy, insolvency or analogous laws or ordering the winding up or liquidation of its affairs, and any such decree, order, winding up or liquidation of its affairs, and any such decree, order, winding up or liquidation continues unstayed and in effect for a period of more than twenty (20) Business Days;

 

	
  

	
(4)

	
if the Corporation makes any assignment in bankruptcy or makes any other assignment for the benefit of creditors, makes any proposal under the Bankruptcy and Insolvency Act (Canada) or any comparable law, seeks relief under the Companies’ Creditors Arrangement Act (Canada ), the Winding Up Act (Canada) or any other bankruptcy, insolvency or analogous law, files a petition or proposal to take advantage of any act of insolvency, consents to or acquiesces in the appointment of a trustee, receiver, receiver and manager, interim receiver, custodian, sequestrator or other person with similar powers of itself or of all or any substantial portion of its assets, or files a petition or otherwise commences any proceeding seeking any reorganization, arrangement, composition, administration or readjustment under any applicable bankruptcy, insolvency, moratorium, reorganization or other similar law affecting creditors’ rights or consents to, or acquiesces in, the filing of such petition; and

 

  

  

  

 

	
  

	
(5)

	
if an encumbrancer takes lawful possession of any portion of the Collateral or any other property of the Corporation which is material to the Corporation taken as a whole, or if any process of execution is levied or enforced upon or against a material portion of the Collateral or other property of the Corporation and remains unsatisfied for such period as would permit any such Collateral or other property to be sold thereunder, unless the Corporation actively and diligently contests in good faith such process, but in that event the Corporation shall, if the Lender so requires, give security which, in the discretion of the Lender, is sufficient to pay in full the amount thereby claimed in case the claim is held to be valid.

 

	
7.2

	
Waiver.  The Lender may in writing waive any breach by the Corporation of any of the provisions contained herein or any default by the Corporation in the observance or performance of any covenant or condition required by the Lender to be observed or performed by the Corporation; provided always that no act or omission by the Lender in the premises shall extend to or be taken in any manner whatsoever to affect any subsequent breach or default or the rights resulting therefrom.

 

	
  

	
SECTION 8 - REMEDIES

 

	
8.1

	
Remedy Against Security.  Upon Default under this Agreement, the security constituted by this Agreement and granted pursuant to this Agreement shall immediately become enforceable. To enforce and realize on the security constituted by this Agreement and granted pursuant to this Agreement the Lender may take any action permitted by law or equity, as it may deem expedient, and without limiting the foregoing the Lender may proceed to realize the security hereby constituted and to enforce its rights by entry; or by the appointment by instrument in writing of a receiver or receivers of the subject matter of such security or any part thereof and such receiver or receivers may be any person or persons, whether an officer or officers or employee or employees of the Lender or not, and the Lender may remove any receiver or receivers so appointed and appoint another or others in his or their stead; or by proceedings in any court of competent jurisdiction for the appointment of a receiver or receivers or for sale of the subject matter of such security or any part thereof, or by any other action, suit, remedy or proceeding authorized or permitted hereby or by law or by equity, and may file such proofs of claim and other documents as may be necessary or advisable in order to have its claim lodged in any bankruptcy, winding-up or other judicial proceedings relative to the Corporation.  Any such receiver or receivers so appointed shall have all of the powers conferred on the Lender by this Debenture.  In exercising any powers any such receiver or receivers shall act as agent or agents for the Corporation and the Lender shall not be responsible for his or their actions.

 

	
8.2

	
Acceleration on Default  The Lender, in its sole discretion, may declare all or part of the Principal Amount and Interest accrued by unpaid immediately due and payable in the event of a Default.  The provisions of this paragraph do not and are not intended to affect in any way any rights of the Lender with respect to the Principal Amount and Interest that may be payable on demand.

 

	
  

	
SECTION 9 - MISCELLANEOUS

 

	
9.1

	
Renewals.  The Lender, without exonerating in whole or in part the Corporation, may grant time, renewals, extensions, indulgences, releases and discharges to, may take securities from and give the same and any or all existing securities up to, may abstain from taking securities from or from perfecting securities of, may accept compositions from, and may otherwise deal with the Corporation and all other persons and securities as the Lender may see fit.

 

  

  

  

 

	
9.2

	
Discharge on Payment.  Upon payment by the Corporation of the outstanding Principal Amount being secured and interest and all other obligations of the Corporation hereunder or secured hereby, the Lender shall upon request in writing by the Corporation delivered to the Lender’s office deliver up this Debenture to the Corporation and shall at the expense of the Corporation cancel and discharge the charge of this Debenture and execute and deliver to the Corporation such deeds or other instruments as shall be requisite to discharge the charge hereby constituted.

 

	
9.3

	
No Obligation to Advance.  Nothing herein shall obligate the Lender to make any advance or loan or further advance or loan or to renew any note or extend any time for payment of any indebtedness of the Corporation to the Lender.

 

	
9.4

	
No Merger.  This security is in addition to, not in substitution for and shall not be merged in any other agreement, security, document or instrument now or hereafter held by the Lender.

 

	
9.5

	
Waiver of Right to Jury Trial.  THE LENDER HEREBY IRREVOCABLY WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY AND ALL ACTIONS OR PROCEEDINGS BROUGHT WITH RESPECT TO ANY PROVISION OF THIS NOTE OR THE ENFORCEABILITY OR INTERPRETATION THEREOF OR ANY OTHER MATTER RELATED HERETO OR THERETO OR ARISING HEREUNDER OR THEREUNDER.

 

	
9.6

	
Successors and Assigns.  This Debenture shall be binding upon the Corporation and its successors and assigns including any successor by reason of amalgamation of or any other change in the Corporation and shall enure to the benefit of the Lender and its successors and assigns; provided that the Lender shall not assign any of its rights or obligations hereunder without the prior written consent of the Corporation, which consent is not to be unreasonably withheld.  The Corporation shall not assign any of its rights or obligations hereunder without the prior written consent of the Lender, not to be unreasonably withheld.

 

	
9.7

	
Notices.  All notices, requests, demands or other communications (collectively, “Notices”) by the terms hereof required or permitted to be given by one party to any other party, or to any other person shall be given in writing by personal delivery, or by facsimile transmission to such other party as follows:

 

	
  

	
(a)

	
To the Corporation at:

Medican Enterprises, Inc.

3440 E Russell Road

Las Vegas, NV 89120

Attention:  Wayne Hansen

Email:  whns42@gmail.com:

 

with a copy to (except in respect of delivery of  a Conversion Notice, in which delivery of the original Conversion Notice and Debenture shall be delivered as below, with a copy to the Corporation above, and which delivery to Affinity Law Group below shall constitute notice to the Corporation):

 

Affinity Law Group

Suite 1130 – 400 Burrard Street

Vancouver, BC  V6C 3A6

Attention: Darcy Wray

Email:  dwray@affinitylaw.ca

Facsimile: (604) 681-5889

 

  

  

  

 

 

	
  

	
(b)

	
to the Lender at:

JTB Real Estate LLLP

Suite 1450 13401 108th Avenue

Surrey B.C.  

V3T 5T3

 

Attention Brent Stickland 

 

Facsimile:                      ·

Email:                             ·

or at such other address as may be given by such person to the other parties hereto in writing from time to time.  All such Notices shall be deemed to have been received when delivered or transmitted.

 

	
9.8

	
Severability.  Should any part of this Debenture be declared or held invalid for any reason, such invalidity shall not affect the validity of the remainder which shall continue in full force and effect and be construed as if this Debenture had been executed without the invalid portion and it is hereby declared the intention of the parties hereto that this Debenture would have been executed without reference to any portion which may, for any reason, be hereafter declared or held invalid.

 

	
9.9

	
Jurisdiction. This Debenture shall be construed in accordance with and be governed by the laws of the Province of British Columbia and for the purpose of legal proceedings this Debenture shall be deemed to have been made in the said Province and to be performed there and the courts of that Province shall have jurisdiction over all disputes which may arise under this Debenture and the Corporation hereby irrevocably and unconditionally submits to the non-exclusive jurisdiction of such courts, provided always that nothing herein contained shall prevent the Lender from proceeding at its election against the Corporation in the courts of any other province, country or jurisdiction.

 

	
9.10

	
Currency.  All references in this Debenture to sums of money shall be, unless the contrary is expressly indicated, to sums in the lawful money of United States.

 

	
9.11

	
Time of the Essence.  Time shall be of essence.

 

	
9.12

	
Amendments to Debenture.  This Note may be amended only by a writing signed by the Corporation and the Lender.

 

	
9.13

	
Singular and Plural Interpretation.  Words importing the singular include the plural and vice versa; and words importing gender shall include all genders.  The headings in this Debenture are included for convenience of reference only, and shall not constitute a part of this Debenture for any other purpose.

 

	
9.14

	
Counterparts.  This Debenture may be executed in as many counterparts and by facsimile transmission as may be necessary and each of which so signed will be deemed to be an original and such counterparts and facsimile transmissions together will constitute one and the same instrument and notwithstanding the date of execution will be deemed to bear the date set forth above.

 

  

  

  

 

IN WITNESS WHEREOF the Parties have caused this Debenture to be signed by its proper officers duly authorized in that behalf as of January 31, 2015.

 

MEDICAN ENTERPRISES, INC.

By:              ____________________________________

Name:

Title:

 

JTB REAL ESTATE LLLP

By:              ____________________________________

Name:

Title:

  

  

  

 

SCHEDULE A

 

PERMITTED PRIORITY ENCUMBRANCES

 

“Permitted Encumbrances” means:

 

	
1.

	
a charge and mortgage security over the Land, provided that the principal amount owing under such mortgage is not greater than $1, 500,000;

 

	
2.

	
security given in the ordinary course of business to a public utility or any municipality or governmental or other public authority when required by such utility or municipality or governmental or other authority in connection with the Corporation’s operations;

 

	
3.

	
all rights reserved to or vested in any governmental body by the terms of any lease, license, franchise, grant or permit held by the Corporation or by any statutory provision to terminate any such lease, license, franchise, grant or permit or to require annual or periodic payments as a condition of the continuance thereof or to distrain against or obtain a lien or any property or assets of the Corporation in the event of failure to make such annual or other periodic payments;

 

	
4.

	
purchase money security interests or liens, conditional sales agreements or other title retention mortgages on a property or asset created, issued or assumed to secure the unpaid purchase price in respect of such property or asset and consented to by the Lender;

 

	
5.

	
liens for taxes, assessments or governmental charges which are not at the time due or delinquent, or if due or delinquent, the validity of which is being contested at the time;

 

	
6.

	
lien, mortgage, charge, hypothec or encumbrance that is registered against the assets of the Corporation on the date hereof and consented to by the Lender;

 

PERMITTED SUBORDINATED ENCUMBRANCES

 

	
7.

	
undetermined or inchoate liens and charges incidental to construction, maintenance or operations which have not yet been filed pursuant to law or, which relate to obligations not due or delinquent or, if due or delinquent, the validity of which is being contested;

 

	
8.

	
the lien or any right of distress reserved in or exercisable under any lease for rent and for compliance with the terms of such lease which have not yet been filed pursuant to law or, which relate to obligations not due or delinquent or, if due or delinquent, the validity of which is being contested;

 

	
9.

	
such other lien, mortgage, charge, hypothec or encumbrance as may be created, incurred or registered against the assets of the Corporation for the purposes of securing future borrowings or financings by the Corporation;

 

	
10.

	
when required by law and public and statutory obligations, an encumbrance resulting from the deposit of cash or security in connection with contracts, tenders or expropriation proceedings, or to secure Workers’ Compensation, surety or appeal bonds or costs of litigation; and

 

  

  

  

 

SCHEDULE B

 

FORM OF CONVERSION NOTICE

 

TO:           ______. (the “Corporation”)

 

The undersigned, registered holder of the attached Debenture, hereby irrevocably elects to convert such Debenture (or $ ________________ principal amount thereof) into _______________ Common Shares of the Corporation in accordance with the terms of the Debenture and directs that such Common Shares issuable and deliverable upon the conversion be issued and delivered to the person indicated below (provided that if the person indicated below is not the undersigned, then the undersigned acknowledges and agrees that the delivery of such Common Shares to the person indicated below fully satisfies repayment of the amount of the Debenture converted into such Common Shares).

 

DATED the _________ day of _____________________, 200___.

 

______

Per:              

Name:

Title:

 

 

REGISTER AND DELIVER AS FOLLOWS:

 

 

Name:          ________________________                          

 

Address:    _________________________exhibit10_2.htm

Exhibit 10.2

 

SECURITIES PURCHASE AGREEMENT

This SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of January 14, 2015, by and between MEDICAN ENTERPRISES, INC., a Nevada corporation, with headquarters located at 3440 East Russell Road, Las Vegas, NV 89120 (the “Company”), and KBM WORLDWIDE, INC., a New York corporation, with its address at 111 Great Neck Road – Suite 216, Great Neck, NY 11021 (the “Buyer”).

WHEREAS:

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

B.        Buyer desires to purchase and the Company desires to issue and sell, upon the terms and conditions set forth in this Agreement an 8% convertible note of the Company, in the form attached hereto as Exhibit A, in the aggregate principal amount of $54,000.000 (together with any note(s) issued in replacement thereof or as a dividend thereon or otherwise with respect thereto in accordance with the terms thereof, the “Note”), convertible into shares of common stock, $0.001 par value per share, of the Company (the “Common Stock”), upon the terms and subject to the limitations and conditions set forth in such Note.

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

 

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

1.           Purchase and Sale of Note.

 

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

 

  

  

  

 

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

 

c.         Closing Date.  Subject to the satisfaction (or written waiver) of the conditions thereto set forth in Section 6 and Section 7 below, the date and time of the issuance and sale of the Note pursuant to this Agreement (the “Closing Date”) shall be 12:00 noon, Eastern Standard Time on or about January 16, 2015, or such other mutually agreed upon time. The closing of the transactions contemplated by this Agreement (the “Closing”) shall occur on the Closing Date at such location as may be agreed to by the parties.

 

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

 

a.         Investment  Purpose.     As  of  the  date  hereof,  the  Buyer  is purchasing the Note and the shares of Common Stock issuable upon conversion of or otherwise pursuant to the Note (including, without limitation, such additional shares of Common Stock, if any, as are issuable (i) on account of interest on the Note, (ii) as a result of the events described in Sections 1.3 and 1.4(g) of the Note or (iii) in payment of the Standard Liquidated Damages Amount (as defined in Section 2(f) below) pursuant to this Agreement, such shares of Common Stock being collectively referred to herein as the “Conversion Shares” and, collectively with the Note, the “Securities”) for its own account and not with a present view towards the public sale or distribution thereof, except pursuant to sales registered or exempted from registration under the 1933 Act; provided, however, that by making the representations herein, the Buyer does not agree to hold any of the Securities for any minimum or other specific term and reserves the right to dispose of the Securities at any time in accordance with or pursuant to a registration statement or an exemption under the 1933 Act.

 

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

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

 

  

  

  

 

d.       Information. The Buyer and its advisors, if any, have been, and for so long as the Note remain outstanding will continue to be, furnished with all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Securities which have been requested by the Buyer or its advisors. The Buyer and its advisors, if any, have been, and for so long as the Note remain outstanding will continue to be, afforded the opportunity to ask questions of the Company. Notwithstanding the foregoing, the Company has not disclosed to the Buyer any material nonpublic information and will not disclose such information unless such information is disclosed to the public prior to or promptly following such disclosure to the Buyer. Neither such inquiries nor any other due diligence investigation conducted by Buyer or any of its advisors or representatives shall modify, amend or affect Buyer’s right to rely on the Company’s representations and warranties contained in Section 3 below. The Buyer understands that its investment in the Securities involves a significant degree of risk. The Buyer is not aware of any facts that may constitute a breach of any of the Company's representations and warranties made herein.

 

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

 

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

  

  

  

 

Securities may be pledged as collateral in connection with a bona fide margin account or other lending arrangement.

 

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

 

“NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT  FOR  THE  SECURITIES  UNDER  THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE  HOLDER),  IN  A  GENERALLY  ACCEPTABLE  FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE  144 OR RULE

 

144A UNDER SAID ACT.     NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER  LOAN  OR  FINANCING  ARRANGEMENT  SECURED BY THE SECURITIES.”

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

  

  

  

 

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

 

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

 

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

 

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

 

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

  

  

  

 

binding obligation of the Company enforceable against the Company in accordance with its terms.

 

             c.           Capitalization. As  of the date hereof and  except  as  otherwise disclosed in the SEC Documents, the authorized capital stock of the Company consists of: (i) 100,000,000 [to be increased to 1,000,000,000 upon filing of an amendment to the Company’s Certificate of Incorporation authorizing said increase] authorized shares  of Common Stock, $0.001 par value per share, of which 60,111,408 shares are issued and outstanding; and (ii) 5,000,000authorized shares of Preferred Stock, $0.001 par value per share, of which no shares are issued and outstanding; no shares are reserved for issuance pursuant to the Company’s stock option plans, certain shares are reserved for issuance pursuant to securities (including the Note and two (2) prior convertible promissory notes in favor of the Buyer:

 

	
  

	
(a) prior convertible promissory note in favor of the Buyer dated September 17, 2014 in the amount of $83,500.00 for which 1,400,000 shares of Common Stock are presently reserved; and

 

	
  

	
(b) prior convertible promissory note in favor of the Buyer dated November 17, 2014 in the amount of $43,000.00 for which 2,700,000 shares of Common Stock are presently reserved; and

 

exercisable  for,  or  convertible  into  or  exchangeable  for  shares  of  Common  Stock  and 177,900,000 shares are reserved for issuance upon conversion of the Note.  The Company and the Investor understand that at this time there are not enough authorized shares to effectuate the requested reserve. Upon the effective date  of an amendment to the Company’s Certificate of Incorporation increasing the authorized shares, the reserve shall go into effect. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and non-assessable.   No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company.  As of the effective date of this Agreement, (i) there are no outstanding options, warrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti- dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Note or the Conversion Shares.  The Company has furnished to the Buyer true and correct copies of the Company’s Certificate of Incorporation as in effect on the date hereof (“Certificate of Incorporation”), the Company’s By-laws, as in effect on the date hereof (the “By-laws”), and the

  

  

  

 

terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto.  The Company shall provide the Buyer with a written update of this representation signed by the Company’s Chief Executive on behalf of the Company as of the Closing Date.

 

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

 

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

 

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

  

  

  

 

businesses of the Company and its Subsidiaries, if any, are not being conducted, and shall not be conducted so long as the Buyer owns any of the Securities, in violation of any law, ordinance or regulation of any governmental entity.  Except as specifically contemplated by this Agreement and as required under the 1933 Act and any applicable state securities laws, the Company is not required to obtain any consent, authorization or order of, or make any filing or registration with, any court, governmental agency, regulatory agency, self regulatory organization or stock market or any third party in order for it to execute, deliver or perform any of its obligations under this Agreement, the Note in accordance with the terms hereof or thereof or to issue and sell the Note in accordance with the terms hereof and to issue the Conversion Shares upon conversion of the Note.   All consents, authorizations, orders, filings and registrations which the Company is required to obtain pursuant to the preceding sentence have been obtained or effected on or prior to the date hereof.  If the Company is listed on the OTCBB, the Company is not in violation of the listing requirements of the Over-the-Counter Bulletin Board (the “OTCBB”) and does not reasonably anticipate that the Common Stock will be delisted by the OTCBB in the foreseeable future.   The Company and its Subsidiaries are unaware of any facts or circumstances which might give rise to any of the foregoing.

 

g.         SEC Documents; Financial Statements.  The Company has timely filed all reports, schedules, forms, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “1934 Act”) (all of the foregoing filed prior to the date hereof and all exhibits included therein and financial statements and schedules thereto and documents (other than exhibits to such documents) incorporated by reference therein, being hereinafter referred to herein as the “SEC Documents”).  Upon written request the Company will deliver to the Buyer true and complete copies of the SEC Documents, except for such exhibits and incorporated documents.  As of their respective dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.  None of the statements made in any such SEC Documents is, or has been, required to be amended or updated under applicable law (except for such statements as have been amended or updated in subsequent filings prior the date hereof).  As of their respective dates, the financial statements of the Company included in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto.  Such financial statements have been prepared in accordance with United States generally accepted accounting principles, consistently applied, during the periods involved  and fairly present in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments).  Except as set forth in the financial statements of the Company included in the SEC Documents, the Company has no liabilities, contingent or otherwise, other

  

  

  

 

than (i) liabilities incurred in the ordinary course of business subsequent to September 30, 2014, and (ii) obligations under contracts and commitments incurred in the ordinary course of business and not required under generally accepted accounting principles to be reflected in such financial statements, which, individually or in the aggregate, are not material to the financial condition or operating results of the Company. The Company is subject to the reporting requirements of the 1934 Act.

 

h.         Absence of Certain Changes.  Since September 30, 2014, there has been no material adverse change and no material adverse development in the assets, liabilities, business, properties, operations, financial condition, results of operations, prospects or 1934 Act reporting status of the Company or any of its Subsidiaries.

 

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

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

 

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

 

  

  

  

 

its Subsidiaries is a party to any contract or agreement which in the judgment of the Company’s officers has or is expected to have a Material Adverse Effect.

 

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

 

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

 

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

  

  

  

 

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

 

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

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

 

r.         Permits; Compliance.  The Company and each of its Subsidiaries is in possession of all franchises, grants, authorizations, licenses, permits, easements, variances, exemptions, consents, certificates, approvals and orders necessary to own, lease and operate its properties and to carry on its business as it is now being conducted (collectively, the “Company Permits”), and there is no action pending or, to the knowledge of the Company, threatened regarding suspension or cancellation of any of the Company Permits.  Neither the Company nor any of its Subsidiaries is in conflict with, or in default or violation of, any of the Company Permits, except for any such conflicts, defaults or violations which, individually or in the aggregate,  would  not  reasonably  be  expected  to  have  a  Material  Adverse  Effect.    Since September  30,  2014,  neither  the  Company  nor  any  of  its  Subsidiaries  has  received  any notification with respect to possible conflicts, defaults or violations of applicable laws, except for notices relating to possible conflicts, defaults or violations, which conflicts, defaults or violations would not have a Material Adverse Effect.

 

s.           Environmental Matters.

(i)              There are, to the Company’s knowledge, with respect to the Company or any of its Subsidiaries or any predecessor of the Company, no past or present

 

  

  

  

 

violations of Environmental Laws (as defined below), releases of any material into the environment, actions, activities, circumstances, conditions, events, incidents, or contractual obligations which may give rise to any common law environmental liability or any liability under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 or similar federal, state, local or foreign laws and neither the Company nor any of its Subsidiaries has received any notice with respect to any of the foregoing, nor is any action pending or, to the Company’s knowledge, threatened in connection with any of the foregoing.   The term “Environmental Laws” means all federal, state, local or foreign laws relating to pollution or protection  of  human  health  or  the  environment  (including,  without  limitation,  ambient  air, surface water, groundwater, land surface or subsurface strata), including, without limitation, laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants contaminants, or toxic or hazardous substances or wastes (collectively, “Hazardous Materials”) into the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as well as all authorizations, codes, decrees, demands or demand letters, injunctions, judgments, licenses, notices or notice letters, orders, permits, plans or regulations issued, entered, promulgated or approved thereunder.

 

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

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

 

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

 

u.         Insurance.  The Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as management of the Company believes to be prudent and customary in the businesses in which the Company and its Subsidiaries are engaged.   Neither the Company nor any such

 

  

  

  

 

Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not have a Material Adverse Effect.  Upon written request the Company will provide to the Buyer true and correct copies of all policies relating to directors’ and officers’ liability coverage, errors and omissions coverage, and commercial general liability coverage.

 

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

 

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

 

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

 

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

  

  

  

 

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

 

4.           COVENANTS.

 

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

 

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

 

c.         Use of Proceeds.  The Company shall use the proceeds for general working capital purposes.

 

d.         Right of First Refusal.  Unless it shall have first delivered to the Buyer, at least seventy two (72) hours prior to the closing of such Future Offering (as defined herein), written notice describing the proposed Future Offering (“ROFR Notice”), including the terms and conditions thereof, identity of the proposed purchaser and proposed definitive documentation to be entered into in connection therewith, and providing the Buyer an option during the seventy two (72) hour period following delivery of such notice to purchase the securities being offered in the Future Offering on the same terms as contemplated by such Future Offering (the limitations referred to in this sentence and the preceding sentence are collectively referred to as the “Right of First Refusal”) (and subject to the exceptions described below), the Company will not conduct any equity (or debt with an equity component) financing in an amount less than $100,000 (“Future Offering(s)”) during the period beginning on the Closing Date and ending six (6) months following the Closing Date.  Notwithstanding anything contained herein to the contrary, the Company shall not consummate any Future Offering with an investor, or an affiliate of such investor (collectively “Prospective Investor”), identified on an ROFR Notice whereby the Buyer exercised its Right of First Refusal for a period of forty (45) days following such exercise; and any subsequent offer by a Prospective Investor is subject to this Section 4(d) and the Right of First Refusal. In the event the terms and conditions of a proposed Future Offering are amended in any respect after delivery of the notice to the Buyer concerning the proposed Future Offering, the Company shall deliver a new notice to the Buyer describing the amended terms and conditions of the proposed Future Offering and the Buyer thereafter shall

  

  

  

 

 

have an option during the seventy two (72) hour period following delivery of such new notice to purchase its pro rata share of the securities being offered on the same terms as contemplated by such proposed Future Offering, as amended.  The foregoing sentence shall apply to successive amendments to the terms and conditions of any proposed Future Offering.  The Right of First Refusal shall not apply to any transaction involving (i) issuances of securities in a firm commitment underwritten public offering (excluding a continuous offering pursuant to Rule 415 under the 1933 Act) or (ii) issuances of securities as consideration for a merger, consolidation or purchase of assets, or in connection with any strategic partnership or joint venture (the primary purpose  of  which  is  not  to  raise  equity  capital),  or  in  connection  with  the  disposition  or acquisition of a business, product or license by the Company.  The Right of First Refusal also shall not apply to the issuance of securities upon exercise or conversion of the Company’s options, warrants or other convertible securities outstanding as of the date hereof or to the grant of additional options or warrants, or the issuance of additional securities, under any Company stock option or restricted stock plan approved by the shareholders of the Company.

 

e.         Expenses.  At the Closing, the Company shall reimburse Buyer for expenses incurred by them in connection with the negotiation, preparation, execution, delivery and performance of this Agreement and the other agreements to be executed in connection herewith (“Documents”), including, without limitation, reasonable attorneys’ and consultants’ fees and expenses, transfer agent fees, fees for stock quotation services, fees relating to any amendments or modifications of the Documents or any consents or waivers of provisions in the Documents,  fees  for  the  preparation  of  opinions  of  counsel,  escrow  fees,  and  costs  of restructuring the transactions contemplated by the Documents.   When possible, the Company must pay these fees directly, otherwise the Company must make immediate payment for reimbursement to the Buyer for all fees and expenses immediately upon written notice by the Buyer or the submission of an invoice by the Buyer. The Company’s obligation with respect to this transaction is to reimburse Buyer’ expenses shall be $4,000.

 

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

 

g.           [INTENTIONALLY DELETED]

 

h.        Listing.  The Company shall promptly secure the listing of the Conversion Shares upon each national securities exchange or automated quotation system, if any, upon which shares of Common Stock are then listed (subject to official notice of issuance) and, so long as the Buyer owns any of the Securities, shall maintain, so long as any other shares of

  

  

  

 

Common Stock shall be so listed, such listing of all Conversion Shares from time to time issuable upon conversion of the Note.  The Company will obtain and, so long as the Buyer owns any of the Securities, maintain the listing and trading of its Common Stock on the OTCBB or any equivalent replacement exchange or electronic quotation system (including but not limited to the Pink Sheets electronic quotation system) and will comply in all respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the Financial Industry Regulatory Authority (“FINRA”) and such exchanges, as applicable.   The Company shall promptly provide to the Buyer copies of any notices it receives from the OTCBB and any other exchanges or electronic quotation systems on which the Common Stock is then traded regarding the continued eligibility of the Common Stock for listing on such exchanges and quotation systems.

 

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

 

 

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

 

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

 

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

 

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

 

  

  

  

 

5.         Transfer  Agent  Instructions.     The  Company  shall  issue  irrevocable instructions to its transfer agent to issue certificates, registered in the name of the Buyer or its nominee, for the Conversion Shares in such amounts as specified from time to time by the Buyer to the Company upon conversion of the Note in accordance with the terms thereof (the “Irrevocable Transfer Agent Instructions”).  In the event that the Borrower proposes to replace its transfer agent, the Borrower shall provide, prior to the effective date of such replacement, a fully executed Irrevocable Transfer Agent Instructions in a form as initially delivered pursuant to the Purchase Agreement (including but not limited to the provision to irrevocably reserve shares of Common Stock in the Reserved Amount) signed by the successor transfer agent to Borrower and the Borrower. Prior to registration of the Conversion Shares under the 1933 Act or the date on which the Conversion Shares may be sold pursuant to Rule 144 without any restriction as to the number of Securities as of a particular date that can then be immediately sold, all such certificates shall bear the restrictive legend specified in Section 2(g) of this Agreement.  The Company warrants that: (i) no instruction other than the Irrevocable Transfer Agent Instructions referred to in this Section 5, and stop transfer instructions to give effect to Section 2(f) hereof (in the case of the Conversion Shares, prior to registration of the Conversion Shares under the 1933 Act or the date on which the Conversion Shares may be sold pursuant to Rule 144 without any restriction as to the number of Securities as of a particular date that can then be immediately sold), will be given by the Company to its transfer agent and that the Securities shall otherwise be freely transferable on the books and records of the Company as and to the extent provided in this Agreement and the Note; (ii) it will not direct its transfer agent not to transfer or delay, impair, and/or hinder its transfer agent in transferring (or issuing)(electronically or in certificated form) any certificate for Conversion Shares to be issued to the Buyer upon conversion of or otherwise pursuant to the Note as and when required by the Note and this Agreement; and (iii) it will not fail to remove (or directs its transfer agent not to remove or impairs, delays, and/or hinders its transfer agent from removing) any restrictive legend (or to withdraw any stop transfer instructions in respect thereof) on any certificate for any Conversion Shares issued to the Buyer upon conversion of or otherwise pursuant to the Note as and when required by the Note and this Agreement.   Nothing  in  this  Section  shall  affect  in  any  way  the  Buyer’s  obligations  and agreement set forth in Section 2(g) hereof to comply with all applicable prospectus delivery requirements, if any, upon re-sale of the Securities.  If the Buyer provides the Company, at the cost of the Buyer, with (i) an opinion of counsel in form, substance and scope customary for opinions in comparable transactions, to the effect that a public sale or transfer of such Securities may be made without registration under the 1933 Act and such sale or transfer is effected or (ii) the Buyer provides reasonable assurances that the Securities can be sold pursuant to Rule 144, the Company shall permit the transfer, and, in the case of the Conversion Shares, promptly instruct its transfer agent to issue one or more certificates, free from restrictive legend, in such name and in such denominations as specified by the Buyer.  The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Buyer, by vitiating the intent and purpose of the transactions contemplated hereby.  Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Section 5 may be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Section, that the Buyer shall be entitled, in addition to all other available

  

  

  

 

remedies, to an injunction restraining any breach and requiring immediate transfer, without the necessity of showing economic loss and without any bond or other security being required.

 

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

 

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

 

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

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

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

 

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

 

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

 

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

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

 

  

  

  

 

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

 

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

 

f.         No event shall have occurred which could reasonably be expected to have a Material Adverse Effect on the Company including but not limited to a change in the1934 Act reporting status of the Company or the failure of the Company to be timely in its 1934 Act reporting obligations.

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

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

 

8.           Governing Law; Miscellaneous.

 

a. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated by this Agreement shall be brought only in the state courts of New York or in the federal courts located in the state and county of Nassau. The parties to this Agreement hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. The Company and Buyer waive trial by jury. The prevailing party shall be entitled to recover from the other party its reasonable attorney's fees and costs. In the event that any provision of this Agreement or any other agreement delivered in connection

 

  

  

  

 

herewith is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law.  Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement.    Each party hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this Agreement or any other Transaction Document by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.

b.        Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which shall constitute one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party.

 

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

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

 

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

f.         Notices.  All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party shall have specified most recently by written notice.  Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation

  

  

  

 

generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following  the  date  of  mailing  by  express  courier  service,  fully  prepaid,  addressed  to  such address, or upon actual receipt of such mailing, whichever shall first occur.  The addresses for such communications shall be:

 

If to the Company, to:

MEDICAN ENTERPRISES, INC.

3440 East Russell Road

Las Vegas, NV 89120

Attn: KENNETH WILLIAMS, Chief Executive Officer 

facsimile: [enter fax number]

 

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

[enter name of law firm]

Attn: [attorney name] 

[enter address line 1] 

[enter city, state, zip]

facsimile: [enter fax number]

If to the Buyer:

KBM WORLDWIDE, INC.

111 Great Neck Road – Suite 216

Great Neck, NY   11021

Attn: Seth Kramer, President 

e-mail: info@kwbmlaw.com

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

 

Naidich Wurman LLP

Att: Judah A. Eisner, Esq.

Attn: Bernard S. Feldman, Esq. 

facsimile: 516-466-3555

  

  

  

 

Each party shall provide notice to the other party of any change in address.

 

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

 

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

 

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

 

j.         Publicity.   The Company, and the Buyer shall have the right to review a reasonable period of time before issuance of any press releases, SEC, OTCBB or FINRA filings, or any other public statements with respect to the transactions contemplated hereby; provided, however, that the Company shall be entitled, without the prior approval of the Buyer, to make any press release or SEC, OTCBB (or other applicable trading market) or FINRA filings with respect to such transactions as is required by applicable law and regulations (although the Buyer shall be consulted by the Company in connection with any such press release prior to its release and shall be provided with a copy thereof and be given an opportunity to comment thereon).

 

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

 

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

  

  

  

 

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

 

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

 

MEDICAN ENTERPRISES, INC.

	By: /s/ Kenneth Williams	 	 	 
	 KENNETH WILLIAMS	 	 
	 Chief Executive Officer	 	 

 

KBM WORLDWIDE, INC.

By: /s/ Seth Kramer

Name: Seth Kramer

Title:   President

111 Great Neck Road – Suite 216

Great Neck, NY  11021

 

	
AGGREGATE SUBSCRIPTION AMOUNT:

	 	 	 
	  	 	 	 
	
Aggregate Principal Amount of Note:

	 	$	54,000.000	 
	  	 	 	 	 
	
Aggregate Purchase Price:

	 	$	54,000.000	 

 

Tranche #3  K-1556  (MDCN) 

January 14, 2015

Whns42@gmail.com

kjwilliams@gmail.com

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