Document:

Dated01
March 2014

 

 

SERVICE
AGREEMENT

 

between

 

Mitovie
Pharma Europe Limited

 

and

 

Mr
Vinod Kaush

 

   

Kennedys

25
Fenchurch Avenue London

EC3M
5AD Tel. 020 7667 9667

Fax.
020 7667 9777

 

Ref.
10/CVB/M943-3421942 (RND)

 

    	 

    	 

    

 

Contents

 

	1	INTERPRETATION................................................................................................................................	4
	2	TERM
    OF APPOINTMENT..................................................................................................................	6
	3	PROFESSIONAL
    QUALIFICATIONS .................................................................................................	7
	4	EMPLOYEE
    WARRANTIES .................................................................................................................	7
	5	DUTIES
    ....................................................................................................................................................	7
	6	PLACE
    OF WORK.................................................................................................................................	9
	7	HOURS
    OF WORK................................................................................................................................	9
	8	SALARY
    .................................................................................................................................................	9
	9	EXPENSES
    ...............................................................................................................................................	10
	10	BONUS
    .....................................................................................................................................................	10
	11	Life
    Assurance ........................................................................................................................................	 
	12	PRIVATE
    MEDICAL INSURANCE .....................................................................................................	11
	13	DIRECTORS'
    AND OFFICERS' INSURANCE....................................................................................	12
	14	CAR
    .................................................................................... ERROR! BOOKMARK NOT DEFINED.	 
	15	HOLIDAYS
    ..............................................................................................................................................	12
	16	INCAPACITY
    .........................................................................................................................................	13
	17	OUTSIDE
    INTERESTS ..........................................................................................................................	14
	18	CONFIDENTIAL
    INFORMATION ......................................................................................................	14
	19	INTELLECTUAL
    PROPERTY ...............................................................................................................	14
	20	CEASING
    TO BE A DIRECTOR...........................................................................................................	15
	21	PAYMENT
    IN LIEU OF NOTICE.........................................................................................................	15
	22	TERMINATION
    WITHOUT NOTICE .................................................................................................	16
	23	CHANGE
    OF CONTROL.......................................................................................................................	17
	24	GARDEN
    LEAVE ....................................................................................................................................	19
	25	OBLIGATIONS
    ON TERMINATION..................................................................................................	19
	26	POST-TERMINATION
    RESTRICTIONS............................................................................................	20
	27	DISCIPLINARY
    AND GRIEVANCE PROCEDURES.........................................................................	22
	28	PENSIONS...............................................................................................................................................	23
	29	DATA
    PROTECTION............................................................................................................................	23
	30	COLLECTIVE
    AGREEMENTS..............................................................................................................	24
	31	RECONSTRUCTION
    AND AMALGAMATION..............................................................................	24
	32	NOTICES.................................................................................................................................................	24
	33	ENTIRE
    AGREEMENT..........................................................................................................................	25
	34	VARIATION...........................................................................................................................................	25
	35	COUNTERPARTS..................................................................................................................................	25
	36	THIRD
    PARTY RIGHTS........................................................................................................................	25
	37	GOVERNING
    LAW AND JURISDICTION .........................................................................................	26

 

    	2

    	 

    

 

THIS
AGREEMENT is dated 01 March 2014

 

Parties

 

(1)              
Mitovie Pharma Europe Limited incorporated and registered in Scotland with company number SC264289 whose registered office is
at BioCity Scotland, Bo’Ness Road, Newhouse, Lanarkshire, ML1 5UH (Company & Associated Group  Companies).

 

(2)              
Vinod Kaushal, Copper Wharf House, Wharf Road, Wraysbury, TW19 5JW (Employee).

 

Agreed
terms

 

1       INTERPRETATION

 

1.1                      
The definitions and rules of interpretation in this clause 1 apply in this agreement.

 

Agreed
Sum: an amount equivalent to the gross value of one year's basic salary as specified in clause 8.1 (less any sums paid to
the Employee by way of notice or payment in lieu of notice).

 

Appointment:
the employment of the Employee by the Company on the terms of this agreement.

 

Associated
Employer: has the meaning given to it in the Employment Rights Act 1996.

 

Board:
the board of directors of the Company (including any committee of the board duly appointed by it).

 

Capacity:
as agent, consultant, director, employee, owner, partner, shareholder or in any other capacity.

 

Commencement
Date: 1 March 2014

 

Confidential
Information: information (whether or not recorded in documentary form, or stored on any magnetic or optical disk or memory)
relating to the business, products, affairs and finances of the Company for the time being confidential to the Company and trade
secrets including, without limitation, technical data and know-how relating to the business of the Company or any of its business
contacts, including in particular (by way of illustration only and without limitation).

 

Control:
in relation to a body corporate, the power of a person to secure that the affairs of the body corporate are conducted in accordance
with the wishes of that person (or persons):

 

(a)           
by means of the holding of shares, or the possession of voting power, in or in relation to, that or any other body corporate;
or

 

(b)           
by virtue of any powers conferred by the constitutional or corporate documents, or any other document, regulating that or any
other body corporate,

 

and
a Change of Control occurs if a person who controls any body corporate ceases to do so or if another person acquires Control of
it, but does not occur in the circumstances described in clause 23.

 

Employee's
family: the Employee's spouse or civil partner and children under the age of 18.

 

FSA:
the Financial Services Authority and its successors.

 

Garden
Leave: any period during which the Company has exercised its rights under clause 22.44.

 

Group
Company: the Company, its Subsidiaries or Holding Companies from time to time and any Subsidiary of any Holding Company from
time to time.

 

Incapacity:
any sickness or injury which prevents the Employee from carrying out his duties.

 

    	3

    	 

    

 

Intellectual
Property Rights: patents, rights to Inventions, copyright and related rights, trade marks, trade names and domain names, rights
in get-up, rights in goodwill or to sue for passing off, unfair competition rights, rights in designs, rights in computer software,
database rights, topography rights, rights in confidential information (including know-how and trade secrets) and any other intellectual
property rights, in each case whether registered or unregistered and including all applications (or rights to apply) for, and
renewals or extensions of, such rights and all similar or equivalent rights or forms of protection which subsist or will subsist
now or in the future in any part of the world.

 

Invention:
any invention, idea, discovery, development, improvement or innovation, whether or not patentable or capable of registration,
and whether or not recorded in any medium.

 

Pre-Contractual
Statement: any undertaking, promise, assurance, statement, representation, warranty or understanding (whether in writing or
not) of any person (whether party to this agreement or not) relating to the Employee's employment under this agreement which is
not expressly set out in this agreement [or any documents referred to in it].

 

Restricted
Business: the business of manufacture and wholesale distribution of medicines or any other business that the employee was
involved in to a material extent in the 6 months before Termination.

 

Restricted
Customer: any firm, company or person who, during the 6 months before Termination, was a customer or late stage prospective
customer of or was in the habit of dealing with the Company or any Group Company with whom the Employee had contact or about whom
he became aware or informed in the course of employment.

 

Restricted
Person: anyone employed or engaged by the Company or any Group Company who could materially damage the interests of the Company
or any Group Company if they were involved in any Capacity in any business concern which competes with any Restricted Business
and with whom the Employee dealt in the 6 months before Termination in the course of employment.

 

Staff
Handbook: the Company's staff handbook as amended from time to time.

 

Subsidiary
and Holding Company: in relation to a company mean "subsidiary" and "holding company" as defined in section
1159 of the Companies Act 2006 [and a company shall be treated, for the purposes only of the membership requirement contained
in subsections 1159(1)(b) and (c), as a member of another company even if its shares in that other company are registered in the
name of (a) another person (or its nominee), whether by way of security or in connection with the taking of security, or (b) a
nominee].

 

Termination:
the termination of the Employee's employment with the Company however caused.

 

1.2                      
The headings in this agreement are inserted for convenience only and shall not affect its construction.

 

1.3                      
A reference to a particular law is a reference to it as it is in force for the time being taking account of any amendment, extension,
or re-enactment and includes any subordinate legislation for the time being in force made under it.

 

1.4                      
Unless the context otherwise requires, a reference to one gender  shall include a reference to the other genders.

 

1.5                      
Unless the context otherwise requires, words in the singular include the plural and in the plural include the singular.

 

1.6                      
The schedules to this agreement form part of (and are incorporated into) this agreement.

 

2       TERM OF APPOINTMENT

 

2.1                      
Indefinite term

 

The
Appointment shall be deemed to have commenced on the Commencement Date and shall continue, subject to the remaining terms of this
agreement, until terminated by either party giving the other not less than six (6) months' prior notice in writing.

 

2.2                      
The first six (6) months of the Appointment shall be a probationary period and the Appointment may be terminated during this period
at any time on one month’s notice or payment in lieu of notice. The Company may, at its discretion, extend the probationary
period for up to a further three (3) months. During the probationary period the Employee's performance and suitability for continued
employment will be monitored. At the end of the probationary period the Employee will be informed in writing if he has successfully
completed his probationary period.

 

2.3                      
No employment with a previous employer counts towards the Employee's period of continuous employment with the Company.

 

2.4                      
The Employee consents to the transfer of his employment under this agreement to an Associated Employer at any time during the
Appointment.

 

    	4

    	 

    

 

3       PROFESSIONAL QUALIFICATIONS

 

3.1                      
It is a condition of this agreement that the Employee holds a relevant professional qualification and shall continue at all times
during the Appointment to be so qualified.

 

3.2                      
The Employee shall immediately notify the Company if he ceases to hold this qualification during the Appointment, or becomes subject
to any inquiry, investigation or proceeding that may lead to the loss of the qualification.

 

4       EMPLOYEE WARRANTIES

 

4.1                      
The Employee represents and warrants to the Company that, by entering into this agreement or performing any of his obligations
under it, he will not be in breach of any court order or any express or implied terms of any contract or other obligation binding
on him and undertakes to indemnify the Company against any claims, costs, damages, liabilities or expenses which the Company may
incur as a result if he is in breach of any such obligations.

 

4.2                      
The Employee warrants that he is entitled to work in the United Kingdom without any additional approvals and will notify the Company
immediately if he ceases to be so entitled during the Appointment.

 

4.3                      
The Employee warrants that he is not subject to any restrictions which prevent him from holding office as a director.

 

5       DUTIES

 

5.1                      
The Employee shall serve the Company as Executive Chairman.

 

5.2                      
During the Appointment the Employee shall:

 

(a)           
act as a director of the Company and carry out duties on behalf of any other Group Company including, if so required by the Board,
acting as an officer or consultant of any such Group Company;

 

(b)           
comply with the articles of association (as amended from time to time) of any Group Company of which he is a director;

 

(c)            
abide by any statutory, fiduciary or common-law duties to the Company of which he is a director;

 

(d)           
not do anything that would cause him to be disqualified from acting as a director;

 

(e)           
comply with all requirements, recommendations or regulations, as amended from time to time, of all regulatory authorities relevant
to the Company and any code of practice issued by the Company (as amended from time to time);

 

(f)            
comply with the requirements under both legislation and regulation as to the disclosure of inside information;

 

(g)           
unless prevented by Incapacity, devote the whole of his time, attention and abilities to the business of the Company and any Group
Company of which he is an officer or consultant;

 

(h)           
faithfully and diligently exercise such powers and perform such duties as may from time to time be assigned to him by the Board
together with such person or persons as the Board may appoint to act jointly with him;

 

(i)             
comply with all reasonable and lawful directions given to him by the Board;

 

(j)            
promptly make such reports to the Board in connection with the affairs of the Company on such matters and at such times as are
reasonably required;

 

(k)           
report his own wrongdoing and any wrongdoing or proposed wrongdoing of any other employee or director of the Company to the Board
immediately on becoming aware of it;

 

(l)            
use his best endeavors to promote, protect, develop and extend the business of the Company;

 

(m)          
consent to the Company monitoring and recording any use that he makes of the Company's electronic communications systems for the
purpose of ensuring that the Company's rules are being complied with and for legitimate business purposes; and

 

(n)           
comply  with  any  electronic  communication  systems  policy  that the Company may issue from time to time.

 

    	5

    	 

    

 

5.3                      
The Employee shall comply with any rules, policies and procedures set out in the Staff Handbook, a copy of which is available
from the Finance Department. The Staff Handbook does not form part of this agreement and the Company may amend it at any time.
To the extent that there is any conflict between the terms of this agreement and the Staff Handbook, this agreement shall prevail.

 

5.4                      
All documents, manuals, hardware and software provided for the Employee's use by the Company, and any data or documents (including
copies) produced, maintained or stored on the Company's computer systems or other electronic equipment (including mobile phones),
remain the property of the Company.

 

6       PLACE OF WORK

 

6.1                      
The Employee's normal place of work is BioCity Scotland, Bo’Ness Road, Newhouse, Lanarkshire, ML1 5UH.

 

6.2                      
The Employee agrees to travel on the Company's business (both within the United Kingdom or abroad) as may be required for the
proper performance of his duties under the Appointment.

 

6.3                      
During the Appointment the Employee shall not be required to work outside the United Kingdom for any continuous period of more
than one month.

 

7      HOURS OF WORK

 

7.1                      
The Employee's normal working hours shall be 09.00 to 17.30 on Mondays to Fridays and such additional hours as are necessary for
the proper performance of his duties. The Employee acknowledges that he shall not receive further remuneration in respect of such
additional hours.

 

7.2                      
The parties each agree that the nature of the Employee's position is such that his working time cannot be measured and, accordingly,
that the Appointment falls within the scope of regulation 20 of the Working Time Regulations 1998.

 

8      
SALARY

 

8.1                      
The Employee shall be paid an initial salary of £100,000 per annum (inclusive of any fees due to the Employee by the Company
as an officer of the Company).

 

8.2                      
The Employee's salary shall accrue from day to day and be payable monthly in arrears and in advance on or about the 28th
of each month directly into the Employee's bank or building society.

 

8.3                      
The Employee's salary shall be reviewed by the Board annually, the first such review to take place on 1 March 2015. The Company
is under no obligation to award an increase following a salary review. There will be no review of the salary after notice has
been given by either party to terminate the Appointment.

 

8.4                      
The Company may deduct from the salary, or any other sums owed to the Employee, any money owed to the Company by the Employee.

 

9      EXPENSES

 

9.1                      
The Company shall reimburse (or procure the reimbursement of) all reasonable expenses wholly, properly and necessarily incurred
by the Employee in the course of the Appointment, subject to production of VAT receipts or other appropriate evidence of payment.

 

9.2                      
The Employee shall abide by the Company's policies on expenses as set out in the Staff Handbook from time to time.

 

9.3                      
Any credit card supplied to the Employee by the Company shall be used only for expenses incurred by him in the course of the Appointment.

 

10    BONUS

 

10.1                   
The Board may in its absolute discretion pay the Employee a bonus of such amount, at such intervals and subject to such conditions
as the Board may in its absolute discretion determine taking into account specific performance targets, as agreed between the
Employee and the Board from time to time.

 

10.2                   
Any bonus payment to the Employee shall be purely discretionary and shall not form part of the Employee's contractual remuneration
under this agreement. If the Company makes a bonus payment to the Employee in respect of a particular financial year of the Company,
it shall not be obliged to make subsequent bonus payments in respect of subsequent financial years of the Company.

 

10.3                   
The Company may alter the terms of any bonus targets or withdraw them altogether at any time without prior notice.

 

    	6

    	 

    

 

10.4                   
Notwithstanding clause 10, the Employee shall in any event have no right to a bonus or a time-apportioned bonus if:

 

(a)                           
his employment terminates for any reason or he is under notice of termination (whether given by the Employee or the Company) at
or before the date when a bonus might otherwise have been payable.

 

10.5                   
Any bonus payments shall not be pensionable.

 

11     LIFE ASSURANCE

 

11.1                   
After successful completion of the probationary period referred to in clause

2.2
the Employee shall be entitled to participate in the Company's life assurance scheme which shall pay to the Employee's dependents
a sum equal to three times the Employee's salary if the Employee dies during the Appointment. Participation is subject to:

 

(a)          
the terms of the Company's life assurance scheme, as amended from time to time;

 

(b)          
the rules or the insurance policy of the relevant insurance provider, as amended from time to time; and

 

(c)           
the Employee satisfying the normal underwriting requirements of the relevant insurance provider and the premium being at a rate
which the Company considers reasonable.

 

Full
details of the scheme are available from the Finance Department.

 

11.2                   
If the insurance provider refuses for any reason to provide life assurance benefit to the Employee the Company shall not be liable
to provide to the Employee any replacement benefit of the same or similar kind or to pay any compensation in lieu of such benefit.

 

11.3                   
The Company in its sole and absolute discretion reserves the right to discontinue, vary or amend its life assurance scheme (including
the level of the Employee's cover) at any time on reasonable notice to the Employee.

 

12     PRIVATE MEDICAL INSURANCE

 

12.1                   
After successful completion of the probationary period referred to in clause 2.2 the Employee and the Employee's family shall
be entitled to participate in the Company's private medical insurance scheme subject to:

 

(a)          
the terms of that scheme, as amended from time to time;

 

(b)          
the rules or insurance policy of the relevant insurance provider, as amended from time to time; and

 

(c)           
the Employee and his spouse or civil partner and any children under the age of 18 satisfying the normal underwriting requirements
of the relevant insurance provider and the premium being at a rate which the Company considers reasonable.

 

Full
details of the Company's private medical insurance scheme are available from the Finance Department.

 

12.2                   
If the insurance provider refuses for any reason to provide private medical insurance benefit to the Employee or to the Employee's
family the Company shall not be liable to provide any replacement benefit of the same or similar kind or to pay any compensation
in lieu of such benefit.

 

12.3                   
The Company in its sole and absolute discretion reserves the right to discontinue, vary or amend the scheme (including the level
of the Employee's cover) at any time on reasonable notice to the Employee.

 

13     DIRECTORS' AND OFFICERS' INSURANCE

 

During
the Appointment and for six years following Termination the Employee shall be entitled to be covered by a policy of directors'
and officers' liability insurance on terms no less favorable than those in place from time to time for other members of the Board.
A copy of the policy is available from the Finance Department.

 

    	7

    	 

    

 

14    HOLIDAYS

 

14.1                   
The Employee shall be entitled to 25 days' paid holiday in each holiday year together with the usual public holidays as stated
in the Company handbook. The Company's holiday year runs between 1 April and 31 March. If the Appointment commences or terminates
part way through a holiday year, the Employee's entitlement during that holiday year shall be calculated on a pro- rata basis
rounded up to the nearest half day.

 

14.2                   
Holiday shall be taken at such time or times as shall be approved in advance by the Chief Executive Officer. The Employee shall
not without the consent of the Board carry forward any accrued but untaken holiday entitlement to a subsequent holiday year unless
the Employee has been unavoidably prevented from taking such holiday during the relevant leave year because of sickness absence
or statutory maternity, paternity or adoption leave.

 

14.3                   
The Employee shall have no entitlement to any payment in lieu of accrued but untaken holiday except on termination of the Appointment.
Subject to clause 14.3 the amount of such payment in lieu shall be 1/260th of the Employee's full-time equivalent salary for each
untaken day of the entitlement under clause 14 for the holiday year in which termination takes place and any untaken days carried
forward from the preceding holiday year.

 

14.4                   
If the Company has terminated or would be entitled to terminate the Appointment under clause 19.2 or if the Employee has terminated
the Appointment in breach of this agreement any payment due under clause 14.2 shall be limited to the Employee's statutory entitlement
under the Working Time Regulations 1998 and any paid holidays (including paid public holidays) taken shall be deemed first to
have been taken in satisfaction of that statutory entitlement.

 

14.5                   
If on termination of the Appointment the Employee has taken in excess of his accrued holiday entitlement, the Company shall be
entitled to recover from the Employee by way of deduction from any payments due to the Employee or otherwise one day's pay (calculated
at 1/260th of the Employee's full-time equivalent salary) for each excess day.

 

14.6                   
If either party has served notice to terminate the Appointment, the Board may require the Employee to take any accrued but unused
holiday entitlement during the notice period. Any accrued but unused holiday entitlement shall be deemed to be taken during any
period of Garden Leave under clause 22.44.

 

14.7                   
During any continuous period of absence due to Incapacity of one month or more the Employee shall not accrue holiday under this
contract and the Employee's entitlement under clause 14 for the holiday year in which such absence takes place shall be reduced
pro rata save that it shall not fall below the Employee's entitlement under the Working Time Regulations 1998.

 

15     INCAPACITY

 

15.1                   
Subject to the Employee's compliance with the Company's sickness absence procedures (as amended from time to time), he shall continue
to receive his full salary and contractual benefits during any period of absence due to Incapacity for up to an aggregate of 2
weeks in any 52 week period. Such payment shall be inclusive of any statutory sick pay due in accordance with applicable legislation
in force at the time of absence.

 

15.2                   
The Employee agrees to consent to medical examinations (at the Company's expense) by a doctor nominated by the Company should
the Company so require. The Employee agrees that any report produced in connection with any such examination may be disclosed
to the Company and the Company may discuss the contents of the report with the relevant doctor.

 

15.3                   
If the Incapacity is or appears to be occasioned by actionable negligence, nuisance or breach of any statutory duty on the part
of a third party in respect of which damages are or may be recoverable, the Employee shall immediately notify the Board of that
fact and of any claim, compromise, settlement or judgment made or awarded in connection with it and all relevant particulars that
the Board may reasonably require. The Employee shall if required by the Board, refund to the Company that part of any damages
or compensation recovered by him relating to the loss of earnings for the period of the Incapacity as the Board may reasonably
determine less any costs borne by him in connection with the recovery of such damages or compensation, provided that the amount
to be refunded shall not exceed the total amount paid to the Employee by the Company in respect of the period of Incapacity.

 

15.4                   
The rights of the Company to terminate the Appointment under the terms of this Agreement apply even when such termination would
or might cause the

 

Employee
to forfeit any entitlement to sick pay, permanent health insurance or other benefits.

 

16    OUTSIDE INTERESTS

 

16.1                   
Subject to clause 17.2, during the Appointment the Employee shall not, except as a representative of the Company or with the prior
written approval of the Board, whether paid or unpaid, be directly or indirectly engaged, concerned or have any financial interest
in any Capacity in any other business, trade, profession or occupation (or the setting up of any business, trade, profession or
occupation).

 

16.2                   
Notwithstanding clause 16, the Employee may hold an investment by way of shares or other securities of not more than 5% of the
total issued share capital of any company (whether or not it is listed or dealt in on a recognized stock exchange) where such
company does not carry on a business similar to or competitive with any business for the time being carried on by the Company.

 

16.3                   
The Employee agrees to disclose to the Board any matters relating to his spouse or civil partner (or anyone living as such), children
or parents which may, in the reasonable opinion of the Board, be considered to interfere, conflict or compete with the proper
performance of the Employee's obligations under this agreement.

 

    	8

    	 

    

 

17     CONFIDENTIAL INFORMATION

 

17.1                   
The Employee acknowledges that in the course of the Appointment he will have access to Confidential Information. The Employee
has therefore agreed to accept the restrictions in this clause 18.

 

17.2                   
The Employee shall not (except in the proper course of his duties), either during the Appointment or at any time after its termination
(however arising), use or disclose to any person, company or other organization whatsoever (and shall use his best endeavors to
prevent the publication or disclosure of) any Confidential Information. This shall not apply to:

 

(a)           
any use or disclosure authorized by the Board or required by law;

 

(b)           
any information which is already in, or comes into, the public domain other than through the Employee's unauthorized disclosure;
or

 

(c)            
any protected disclosure within the meaning of section 43A of the Employment Rights Act 1996.

 

18     INTELLECTUAL PROPERTY

 

18.1                   
The Employee shall give the Company full written details of all Inventions and of all works embodying Intellectual Property Rights
made wholly or partially by him at any time during the course of the Appointment which relate to, or are reasonably capable of
being used in, the business of the Company. The Employee acknowledges that all Intellectual Property Rights subsisting (or which
may in the future subsist) in all such Inventions and works shall automatically, on creation, vest in the Company absolutely.
To the extent that they do not vest automatically, the Employee holds them on trust for the Company. The Employee agrees promptly
to execute all documents and do all acts as may, in the opinion of the Company, be necessary to give effect to this clause 19.

 

18.2                   
The Employee hereby irrevocably waives all moral rights under the Copyright, Designs and Patents Act 1988 (and all similar rights
in other jurisdictions) which he has or will have in any existing or future works referred to in clause 19.

 

18.3                   
The Employee hereby irrevocably appoints the Company to be his attorney to execute and do any such instrument or thing and generally
to use his name for the purpose of giving the Company or its nominee the benefit of this clause 19 and acknowledges in favour
of a third party that a certificate in writing signed by any Director or the Secretary of the Company that any instrument or act
falls within the authority conferred by this clause 19 shall be conclusive evidence that such is the case.

 

19     CEASING TO BE A DIRECTOR

 

19.1                   
Except with the prior approval of the Board, or as provided in the articles of association of the Company, the Employee shall
not resign as a director of the Company.

 

19.2                   
If during the Appointment the Employee ceases to be a director of the Company (otherwise than by reason of his death, resignation
or disqualification pursuant to the articles of association of the Company, as amended from time to time, or by statute or court
order) the Appointment shall continue with the Employee as an employee only and the terms of this agreement (other than those
relating to the holding of the office of director) shall continue in full force and effect. The Employee shall have no claims
in respect of such cessation of office.

 

20      PAYMENT IN LIEU OF NOTICE

 

20.1                   
Notwithstanding clause 1.6.1, the Company may, in its sole and absolute discretion, terminate the Appointment at any time and
 with  immediate effect by paying a sum in lieu of notice (Payment in Lieu) equal to the basic salary (as at the date of termination)
which the Employee would have been entitled to receive under this agreement during the notice period referred to at clause 2.1
(or, if notice has already been given, during the remainder of the notice period) less income tax and National Insurance contributions.
For the avoidance of doubt, the Payment in Lieu shall not include any element in relation to:

 

(a)           
any bonus or commission payments that might otherwise have been due during the period for which the Payment in Lieu is made;

 

(b)           
any payment in respect of benefits which the Employee would have been entitled to receive during the period for which the Payment
in Lieu is made; and

 

(c)            
any payment in respect of any holiday entitlement that would have accrued during the period for which the Payment in Lieu is made.

 

20.2                   
The Company may pay any sums due under clause 21 in equal monthly instalments until the date on which the notice period
referred to at clause 2.1 would have expired if notice had been given. The Employee shall be obliged to seek alternative
income during this period and to notify the Company of any income so received. The instalment payments shall then be reduced
by the amount of such income.

 

20.3                   
The Employee shall have no right to receive a Payment in Lieu unless the Company has exercised its discretion in clause 20. Nothing
in this clause 21 shall prevent the Company from terminating the Appointment in breach.

 

    	9

    	 

    

 

21    TERMINATION WITHOUT NOTICE

 

21.1                   
The Company may also terminate the Appointment with immediate effect without notice and with no liability to make any further
payment to the Employee (other than in respect of amounts accrued due at the date of termination) if the Employee:

 

(a)           
is disqualified from acting as a director or resigns as a director from the Company without the prior written approval of the
Board;

 

(b)           
is guilty of a serious breach of the rules or regulations as amended from time to time of any regulatory authorities relevant
to the Company or any code of practice issued by the Company (as amended from time to time);

 

(c)            
fails or ceases to meet the requirements of any regulatory body whose consent is required to enable him to undertake all or any
of his duties under the Appointment or is guilty of a serious breach of the rules and regulations of such regulatory body or of
any compliance manual of the Company;

 

(d)           
is guilty of any gross misconduct affecting the business of the Company;

 

(e)           
commits any serious or repeated breach or non-observance of any of the provisions of this agreement or refuses or neglects to
comply with any reasonable and lawful directions of the Board;

 

(f)            
is, in the reasonable opinion of the Board, negligent and incompetent in the performance of his duties;

 

(g)           
is declared bankrupt or makes any arrangement with or for the benefit of his creditors or has a county court administration order
made against him under the County Court Act 1984;

 

(h)           
is convicted of any criminal offence (other than an offence under any road traffic legislation in the United Kingdom or elsewhere
for which a fine or non-custodial penalty is imposed) or any offence under any regulation or legislation relating to insider dealing;

 

(i)             
ceases to hold the relevant professional qualification;

 

(j)            
becomes of unsound mind (which includes lacking capacity under the Mental Capacity Act 2005), or a patient under any statute relating
to mental health;

 

(k)           
ceases to be eligible to work in the United Kingdom;

 

(l)            
is guilty of any fraud or dishonesty or acts in any manner which in the opinion of the Board brings or is likely to bring the
Employee or the Company into disrepute or is materially adverse to the interests of the Company;

 

(m)          
is guilty of a serious breach of any rules issued by the Company from time to time regarding its electronic communications systems;
or

 

(n)           
is unable by reason of Incapacity to perform his duties under this agreement for an aggregate period of 2 weeks in any 52-week
period.

 

21.2                   
The rights of the Company under clause 21 are without prejudice to any other rights that it might have at law to terminate the
Appointment or to accept any breach of this agreement by the Employee as having brought the agreement to an end. Any delay by
the Company in exercising its rights to terminate shall not constitute a waiver thereof.

 

22     CHANGE OF CONTROL

 

22.1                   
If there is a Change of Control of the Company and, within 12 months following the Change of Control directly or indirectly in
connection with it:

 

(a)           
the Company terminates the Appointment other than in circumstances in which it was entitled to rely on clause 211); or

 

(b)           
the Employee serves notice to terminate the Appointment  in accordance with clause 1.6, the Company shall, subject to clause 22.2
below, pay the Agreed Sum to the Employee within one month following Termination. The Agreed Sum shall be payable less any tax
or other statutory deductions which the Company is obliged to deduct.

 

    	10

    	 

    

 

22.2                   
The payment of the Agreed Sum shall be conditional on and in consideration of:

 

(a)           
the Employee complying with the obligations in clause 23.2(g);

 

(b)           
the Employee complying with and continuing to comply with his obligations relating to confidentiality, intellectual property and
restrictive covenants as set out in clause 16.3, clause  17.2(c)  and clause 24.4 respectively;

 

(c)            
Clause 24.4 applying notwithstanding that the Appointment may, or without the payment of the Agreed Sum might, otherwise have
been repudiated by the Company; and

 

(d)           
the Employee executing such documents in a form reasonably acceptable to the Company as it may require.

 

22.3                   
For the avoidance of doubt, the payment of the Agreed Sum shall not affect the Employee's entitlement to any of the following:

 

(a)           
any accrued but unpaid salary;

 

(b)           
any payment in lieu of accrued but unused holiday; or

 

(c)            
the reimbursement of expenses, provided that all claims for reimbursement are submitted within four weeks after Termination,

 

in
relation, in each case, to the period before Termination.

 

22.4                   
To the extent that the Agreed Sum is damages (which is not admitted), the parties agree that the terms of this clause 21.2 represent
a genuine pre- estimate of the loss to the Employee that would arise on termination of the Appointment in the circumstances described
and does not constitute a penalty. The [Company waives any requirement on the Employee to mitigate his losses in respect of such
termination and the] Employee shall, subject to clause 22.2(d), accept the Agreed Sum in full and final settlement of all and
any claims that he may have arising out of the Appointment or its termination (excluding any personal injury claims of which he
is not aware at Termination or any claims in relation to accrued entitlements under the Company pension scheme).

 

23     GARDEN LEAVE

 

23.1                   
Following service of notice to terminate the Appointment by either party, or if the Employee purports to terminate the Appointment
in breach of contract, the Board may by written notice place the Employee on Garden Leave for the whole or part of the remainder
of the Appointment.

 

23.2                   
During any period of Garden Leave:

 

(a)           
the Company shall be under no obligation to provide any work to the Employee and may revoke any powers the Employee holds on behalf
of the Company;

 

(b)           
the Company may require the Employee to carry out alternative duties or to only perform such specific duties as are expressly
assigned to the Employee, at such location (including the Employee's home) as the Company may decide;

 

(c)            
the Employee shall continue to receive his basic salary and all contractual benefits in the usual way and subject to the terms
of any benefit arrangement;

 

(d)           
the Employee shall remain an employee of the Company and bound by the terms of this agreement;

 

(e)           
the Employee shall ensure that the Chief Executive Officer  knows where he will be and how he can be contacted during each working
day (except during any periods taken as holiday in the usual way);

 

(f)            
the Company may exclude the Employee from any premises of the Company; and

 

(g)           
the Company may require the Employee not to contact or deal with (or attempt to contact or deal with) any officer, employee, consultant,
client, customer, supplier, agent, distributor, shareholder, adviser or other business contact of the Company.

 

    	11

    	 

    

 

24     OBLIGATIONS ON TERMINATION

 

24.1                   
On termination of the Appointment (however arising) or, if earlier, at the start of a period of Garden Leave, the Employee shall:

 

(a)           
resign immediately without compensation from any office or trusteeship that he holds in or on behalf of the Company;

 

(b)           
transfer without payment to the Company or as it may direct any shares or other securities held by him in the Company as a nominee
or trustee for the Company and deliver to the Company the related certificates;

 

(c)            
immediately deliver to the Company all documents, books, materials, records, correspondence, papers and information (on whatever
media and wherever located) relating to the business or affairs of the Company or its business contacts, any keys, credit card
and any other property of the Company including any car provided to the Employee, which is in his possession or under his control;

 

(d)           
irretrievably delete any information relating to the business of the Company stored on any magnetic or optical disk or memory
and all matter derived from such sources which is in his possession or under his control outside the Company's premises; and

 

(e)           
provide a signed statement that he has complied fully with his obligations under this clause 24 together with such reasonable
evidence of compliance as the Company may request.

 

24.2                   
Where the Employee has been placed on Garden Leave he shall not be required by clause 24 to return until the end of the Garden
Leave period any property provided to him as a contractual benefit for use during the Appointment.

 

24.3                   
The Employee hereby irrevocably appoints the Company to be his attorney to execute and do any such instrument or thing and generally
to use his name for the purpose of giving the Company or its nominee the full benefit of clause 24.1 and clause 24.1(a).

 

24.4                   
On termination of the Appointment however arising the Employee shall not be entitled to any compensation for the loss of any rights
or benefits under any share option, bonus, long-term incentive plan or other profit sharing scheme operated by the Company in
which he may participate.

 

25    POST-TERMINATION RESTRICTIONS

 

25.1                   
In order to protect the confidential information, trade secrets and business connections of the Company to which he has access
as a result of the Appointment, the Employee covenants with the Company (for itself and as trustee and agent for each Group Company)
that he shall not:

 

(a)           
for 6 months after Termination solicit or endeavor to entice away from the Company the business or custom of a Restricted Customer
with a view to providing goods or services to that Restricted Customer in competition with any Restricted Business;

 

(b)           
for 6 months after Termination in the course of any business concern which is in competition with any Restricted Business, offer
to employ or engage or otherwise endeavor to entice away from the Company any Restricted Person;

 

(c)            
for 6 months after Termination, be involved in any Capacity with any business concern which is (or intends to be) in competition
with any Restricted Business;

 

(d)           
for 6 months after Termination be involved with the provision of goods or services to (or otherwise have any business dealings
with) any Restricted Customer in the course of any business concern which is in competition with any Restricted Business; or

 

(e)           
at any time after Termination, represent himself as connected with the Company in any Capacity.

 

25.2                   
None of the restrictions in clause 25 shall prevent the Employee from:

 

(a)           
holding an investment by way of shares or other securities of not more than 5% of the total issued share capital of any company,
whether or not it is listed or dealt in on a recognized stock exchange;

 

(b)           
being engaged or concerned in any business concern insofar as the Employee's duties or work shall relate solely to geographical
areas where the business concern is not in competition with any Restricted Business; or

 

(c)            
being engaged or concerned in any business concern, provided that the Employee's duties or work shall relate solely to services
or activities of a kind with which the Employee was not concerned to a material extent in the 6 months before Termination.

 

    	12

    	 

    

 

25.3                   
The restrictions imposed on the Employee by this clause 24.46 apply to him acting:

 

(a)           
directly or indirectly; and

 

(b)           
on his own behalf or on behalf of, or in conjunction with, any firm, company or person.

 

25.4                   
The periods for which the restrictions in clause 25 apply shall be reduced by any period that the Employee spends on Garden Leave
immediately before Termination.

 

25.5                   
If the Employee receives an offer to be involved in a business concern in any Capacity during the Appointment, or before the expiry
of the last of the covenants in this clause 24.4, the Employee shall give the person making the offer a copy of this clause 24.4
and shall tell the Company the identity of that person as soon as possible.

 

25.6                   
The Company and the Employee entered into the restrictions in this clause 24.4 having been separately legally advised.

 

25.7                   
Each of the restrictions in this clause 24.46 is intended to be separate and severable. If any of the restrictions shall be held
to be void but would be valid if part of their wording were deleted, such restriction shall apply with such deletion as may be
necessary to make it valid or effective.

 

25.8                   
The Employee will, at the request and expense of the Company, enter into a separate agreement with any Group Company in which
he agrees to be bound by restrictions corresponding to those restrictions in this clause 24.46 (or such of those restrictions
as the Company deems appropriate) in relation to that Group Company.

 

26    DISCIPLINARY AND GRIEVANCE PROCEDURES

 

26.1                   
The Employee is subject to the Company's disciplinary and grievance procedures, copies of which are available Finance Department.
These procedures do not form part of the Employee's contract of employment.

 

26.2                   
If the Employee wants to raise a grievance, he may apply in writing to the Chief Executive Officer in accordance with the Company's
grievance procedure.

 

26.3                   
If the Employee wishes to appeal against a disciplinary decision he may apply in writing to the Chairman in accordance with the
Company's disciplinary procedure.

 

26.4                   
The Board may suspend the Employee from any or all of his duties for a period of up to 30 days during any period in which the
Company is investigating any disciplinary matter involving the Employee or while any disciplinary procedure against the Employee
is outstanding.

 

26.5                   
During any period of suspension:

 

(a)           
the Employee shall continue to receive his basic salary and all contractual benefits in the usual way and subject to the terms
of any benefit arrangement;

 

(b)           
the Employee shall remain an employee of the Company and bound by the terms of this agreement;

 

(c)            
the Employee shall ensure that the Chief Executive Officer  knows where he will be and how he can be contacted during each working
day (except during any periods taken as holiday in the usual way);

 

(d)           
the Board may exclude the Employee from his place of work or any other premises of the Company; and

 

(e)           
the Board may require the Employee not to contact or deal with (or attempt to contact or deal with) any officer, employee, consultant,
client, customer, supplier, agent, distributor, shareholder, adviser or other business contact of the Company.

 

    	13

    	 

    

 

27     PENSIONS

 

27.1                   
The Employee may join the Company's group personal pension scheme (Scheme) (or such other registered pension scheme as may be
set up by the Company to replace the Scheme) subject to satisfying certain eligibility criteria and subject to the rules of the
Scheme as amended from time to time. Full details of the Scheme are available from the Finance Department.

 

27.2                   
If the Employee joins the Scheme, the Company shall contribute an amount equal to 5% of the Employee's salary to the Scheme during
each year of the Appointment. The Company's contributions to the Scheme shall be payable in equal monthly instalments in arrears,
and shall be subject to the rules of the Scheme and the tax reliefs and exemptions available from HM Revenue & Customs, as
amended from time to time.

 

27.3                   
The Employee may make contributions to the Scheme of an amount up to the lower of 100% of the Employee's salary and the annual
allowance set by HM Revenue & Customs from time to time. Such contributions shall be payable in equal monthly instalments
in arrears and shall be made by way of deduction from the Employee's salary.

 

27.4                   
A contracting-out certificate is not in force in respect of the Appointment.

 

28    DATA
PROTECTION

 

28.1                   
The Employee confirms he has read and understood the Company's data protection policy, a copy of which is contained in the Staff.
The Company may change its data protection policy at any time and will notify employees in writing of any changes.

 

28.2                   
The Employee shall comply with the data protection policy when processing personal data in the course of employment including
personal data relating to any employee, customer, client, supplier or agent of the Company.

 

28.3                   
The Employee consents to the Company processing data relating to the Employee for legal, personnel, administrative and management
purposes and in particular to the processing of any sensitive personal data (as defined in the Data Protection Act 1998) relating
to the Employee, including, as appropriate:

 

(a)           
information about the Employee's physical or mental health or condition in order to monitor sick leave and take decisions as to
the Employee's fitness for work;

 

(b)           
the Employee's racial or ethnic origin or religious or similar information in order to monitor compliance with equal opportunities
legislation;

 

(c)            
information relating to any criminal proceedings in which the Employee has been involved for insurance purposes and in order to
comply with legal requirements and obligations to third parties; and

 

28.4                   
The Company may make such information available to those who provide products or services to the Company (such as advisers and
payroll administrators), regulatory authorities, potential or future employers, governmental or quasi-governmental organizations
and potential purchasers of the Company or the business in which the Employee works.

 

28.5                   
The Employee consents to the transfer of such information to any Group Company and the Company's business contacts outside the
European Economic Area in order to further its business interests even where the country or territory in question does not maintain
adequate data protection standards.

 

29    COLLECTIVE AGREEMENTS

 

There
is no collective agreement which directly affects the Appointment.

 

30      RECONSTRUCTION AND AMALGAMATION

 

If
the Appointment is terminated at any time by reason of any reconstruction or amalgamation of the Company, whether by winding up
or otherwise, and the Employee is offered employment with any concern or undertaking involved in or resulting from the reconstruction
or amalgamation on terms which (considered in their entirety) are no less favorable to any material extent than the terms of this
agreement, the Employee shall have no claim against the Company or any such undertaking arising out of or connected with the termination.

 

    	14

    	 

    

 

31     NOTICES

 

31.1                   
A notice given to a party under this agreement shall be in writing in the English language and signed by or on behalf of the party
giving it. It shall be delivered by hand or sent to the party at the address given in this agreement or as otherwise notified
in writing to the other party.

 

31.2                   
Any such notice shall be deemed to have been received:

 

(a)           
if delivered by hand, at the time the notice is left at the address or given to the addressee;

 

(b)           
in the case of pre-paid first class UK post or other next working day delivery service, at 9.00 am on the second business day
after posting or at the time recorded by the delivery service; or

 

(c)            
in the case of pre-paid airmail, 9.00 am on the fifth Business Day after posting or at the time recorded by the delivery service;
or

 

31.3                   
A notice shall have effect from the earlier of its actual or deemed receipt by the addressee. For the purpose of calculating deemed
receipt:

 

(a)           
all references to time are to local time in the place of deemed receipt; and

 

(b)           
if deemed receipt would occur on a Saturday or Sunday or a public holiday when banks are not open for business, deemed receipt
is at 9.00 am on the next business day.

 

31.4                   
This clause does not apply to the service of any proceedings or other documents in any legal action.

 

32    ENTIRE AGREEMENT

 

32.1                   
This agreement and any document referred to in it constitutes the whole agreement between the parties (and in the case of the
Employer, as agent for any Group Companies) and supersedes all previous discussions, correspondence, negotiations, arrangements,
understandings and agreements between them.

 

32.2                   
Each party acknowledges that in entering into this agreement it has not relied on and shall have no remedy in respect of any Pre-Contractual
Statement.

 

32.3                   
Each party agrees that its only liability in respect of those representations and warranties that are set out in this agreement
(whether made innocently or negligently) shall be for breach of contract.

 

32.4                   
Nothing in this agreement shall limit or exclude any liability for fraud.

 

33     VARIATION

 

No
variation or agreed termination of this agreement shall be effective unless it is in writing and signed by the parties (or their
authorized representatives).

 

34     COUNTERPARTS

 

This
agreement may be executed in any number of counterparts, each of which, when executed and delivered, shall be an original, and
all the counterparts together shall constitute one and the same instrument.

 

35     THIRD PARTY RIGHTS

 

No
person other than a party to this agreement may enforce any of its terms.

 

36     GOVERNING LAW AND JURISDICTION

 

36.1                   
This agreement and any dispute or claim arising out of or in connection with it or its subject matter or formation (including
non-contractual disputes or claims) shall be governed by and construed in accordance with Scottish law.

 

36.2                   
The parties irrevocably agree that the court of Scotland shall have exclusive jurisdiction to settle any dispute or claim that
arises out of or in connection with this agreement or its subject matter or formation (including non- contractual disputes or
claims).

 

    	15

    	 

    

 

This
document has been executed as a deed and is delivered and takes effect on the date stated at the beginning of it.

 

Executed
as a deed by Mitovie Pharma Europe Ltd acting by Dr Michael Hawthorne, a director

 

 

/s/ Dr. Michael Hawthorne

Director

 

  

Signed
as a deed by Vinod Kaushal

 

 

 /s/
Vinod Kaushal

[SIGNATURE
OF EMPLOYEE]

 

    	16mine_ex101.htm

Exhibit 10.1

 

EXCHANGE AGREEMENT

THIS EXCHANGE AGREEMENT (the “Agreement”) is dated as of June 4, 2014, by and between MINERCO RESOURCES, INC., a Nevada Corporation, with headquarters located at 20 Trafalgar Square, Suite 455, Nashua, New Hampshire 03063 (the “Company”) and V. Scott Vanis, an individual, with an address at 800 Bering Drive, Houston, Texas 77057 (the “Noteholder”).

 

WHEREAS:

 

A.           The Noteholder acquired a note in the principal amount of $583,300 from the Company on July 23, 2012 (the “Note”).

 

B.           The Noteholder desires to receive shares of the Company’s Series B Preferred Stock in exchange for the principal amount, accrued and unpaid interest owed and other amounts owed to it in respect of the Note, with the number of shares of Series B Preferred Stock to be issued to be calculated by dividing the sum of principal amount, accrued and unpaid interest and other amounts on the Note by $10.00 (the “Stated Value” of the Company’s Series B Preferred Stock); and  

 

C.           The exchange of the Note for the Series B Preferred Stock will be made in reliance upon the exemption from registration provided by Section 3(a)(9) of the Securities Act of 1933, as amended (the “1933 Act”).

 

NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants hereinafter contained, the parties hereto agree as follows:

 

1.           EXCHANGE.

 

1.1           Exchange. At the Closing, the Noteholder and the Company shall, pursuant to Section 3(a)(9) of the 1933 Act, exchange the Note, dated July 23, 2012, in the principal amount of $583,300 together will all interest and other amounts accrued thereon for the 105,000 shares of Series B Preferred Stock (which number of shares of Series B Preferred Stock to be issued to be calculated by dividing the sum of principal amount, accrued and unpaid interest and other amounts on the Note by $10.00).

 

1.2           Closing. The issuance of the Series B Preferred Stock (the “Closing”) shall occur at the offices of Gracin & Marlow, LLP in New York, New York. The date and time of the Closing shall be 10:00 a.m., New York time, on the first (1st) Business Day on which the conditions to the Closing set forth in Sections 5 and 6 below are satisfied or waived (or such later date as is mutually agreed to by the Company and the Noteholder).

 

1.3           Consideration. The Series B Preferred Stock shall be issued to the Noteholder in exchange for the Note without the payment of any additional consideration.

 

1.4           Delivery. In exchange for the Note, within three (3) business days of receipt by the Company from the Noteholder (or its designee) of the original copy of the Note,, the Company shall deliver or cause to be delivered to the Noteholder the shares of Series B Preferred Stock being exchanged for the Note . As of the Closing Date, the Note shall be null and void and any and all rights arising thereunder shall be extinguished, including all dividend rights. The Noteholder undertakes to deliver or cause to be delivered the Note to the Company as soon as commercially practicable following the Closing

 

2.           COMPANY REPRESENTATIONS AND WARRANTIES.

 

The Company represents and warrants to the Noteholder that:

 

2.1 Reporting Company Status.  The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada, and has the requisite corporate power to own its properties and to carry on its business as now being conducted.  The Company is duly qualified as a foreign corporation to do business and is in good standing in each jurisdiction where the nature of the business conducted or property owned by it makes such qualification necessary other than those jurisdictions in which the failure to so qualify would not have a material and adverse effect on the business, operations, properties, prospects or condition (financial or otherwise) of the Company.  The Company has registered its Common Stock pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

 

 

  

  

  

 

2.2 Authorized Shares.  The Company has authorized the issuance of the shares of Series B Preferred Stock and reserved for issuance, free from preemptive rights, shares of Common Stock equal to the number of shares into which the shares of Series B Preferred Stock convert (the “Underlying Shares”).  The Underlying Shares have been duly authorized and, when issued upon conversion of the Series B Preferred Stock will be duly and validly issued, fully paid and non-assessable and will not subject the holder thereof to personal liability by reason of being such holder.

 

2.3 Securities Purchase Agreement.  This Agreement and the transactions contemplated hereby have been duly and validly authorized by the Company, this Agreement has been duly executed and delivered by the Company and this Agreement, when executed and delivered by the Company, will be, a valid and binding agreement of the Company enforceable in accordance with its terms, subject as to enforceability to general principles of equity and to bankruptcy, insolvency, moratorium, and other similar laws affecting the enforcement of creditors’ rights generally.

 

2.4 Non-contravention.  The execution and delivery of this Agreement by the Company, the issuance of the Series B Preferred Stock, and the consummation by the Company of the other transactions contemplated by this Agreement do not and will not conflict with or result in a breach by the Company of any of the terms or provisions of, or constitute a default under (i) the articles of incorporation or by-laws of the Company; (ii) any indenture, mortgage, deed of trust, or other material agreement or instrument to which the Company is a party or by which it or any of its properties or assets are bound; (iii) to its knowledge, any existing applicable law, rule, or regulation or any applicable decree, judgment; or (iv) to its knowledge, order of any court, United States federal or state regulatory body, administrative agency, or other governmental body having jurisdiction over the Company or any of its properties or assets, except such conflict, breach or default which would not have a material adverse effect on the transactions contemplated herein. The Company is not in violation of any material laws, governmental orders, rules, regulations or ordinances to which its property, real, personal, mixed, tangible or intangible, or its businesses related to such properties, are subject.

 

2.5 Approvals.  No authorization, approval or consent of any court, governmental body, regulatory agency, self-regulatory organization, or stock exchange or market is required to be obtained by the Company for the issuance and exchange of the Series B Preferred Stock to the Noteholder as contemplated by this Agreement, except such authorizations, approvals and consents that have been obtained.

2.6 SEC Documents, Financial Statements.  The Company has filed on a timely basis all reports, schedules, forms, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the Exchange Act, including material filed pursuant to Section 13(a) or 15(d).  The Company has not provided to the Noteholder any information which, according to applicable law, rule or regulation, should have been disclosed publicly by the Company but which has not been so disclosed, other than with respect to the transactions contemplated by this Agreement.

As of their respective dates, the SEC Documents complied in all material respects with the requirements of the Act or the Exchange Act as the case may be and the rules and regulations of the SEC promulgated thereunder and other federal, state and local laws, rules and regulations applicable to such SEC Documents, and none of the SEC Documents 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.  The financial statements of the Company included in the SEC Documents comply as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC or other applicable rules and regulations with respect thereto.  Such financial statements have been prepared in accordance with generally accepted accounting principles applied on a consistent basis during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto or (ii) in the case of unaudited interim statements, to the extent they may not include footnotes or may be condensed or summary statements) and fairly present in all material respects the financial position of the Company as of the dates thereof and the results of operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments).

 

 

  

2

  

3.           NOTEHOLDER REPRESENTATIONS AND WARRANTIES.

 

As a material inducement to the Company to enter into this Agreement and consummate the exchange contemplated hereby, the Noteholder represents, warrants and covenants with and to the Company as follows:

 

3.1           Authorization and Binding Obligation. The Noteholder has the requisite legal capacity, power and authority to enter into, and perform under, this Agreement, and to receive the Series B Preferred Stock being issued to such Noteholder hereunder and thereunder. The execution, delivery and performance of this Agreement by such Noteholder and the consummation by such Noteholder of the transactions contemplated hereby and thereby have been duly authorized by all requisite corporate, partnership or similar action on the part of such Noteholder and no further consent or authorization is required. This Agreement has been duly authorized, executed and delivered. This Agreement constitutes the legal, valid and binding obligations of the Noteholder, enforceable against the Noteholder in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors' rights and remedies and except as rights to indemnification and to contribution may be limited by federal or state securities laws.

 

3.2           Beneficial Owner. With respect to the Note (i) the Noteholder owns, good and marketable title to the Note, free and clear of any liens or encumbrances and the Note has not been pledged to any third party; (ii) the Note held by the Noteholder is not subject to any transfer restriction, other than the restriction that they have not been registered under the 1933 Act and, therefore, cannot be resold unless registered under the 1933 Act or in a transaction exempt from or not subject to the registration requirements of the 1933 Act; (iii) the Noteholder has not entered into any agreement or understanding with any person or entity to dispose of any of the Note  or the dividends to be issued with respect to theNote; and (iv) at the Closing, the Noteholder will convey to the Company good and marketable title to the Note, free and clear of any security interests, liens, adverse claims, encumbrances, taxes or encumbrances.

 

3.3              Sale or Transfer.  The Noteholder has not sold, assigned, conveyed, transferred, mortgaged, hypothecated, pledged or encumbered or otherwise permitted any lien to be incurred with respect to the Note or any portion thereof.

 

3.4              Proceedings.  No proceedings relating to the Note are pending or, to the knowledge of the Noteholder, threatened before any court, arbitrator or administrative or governmental body that would adversely affect the Noteholder’s right and ability to surrender and exchange the Note.

 

3.5              Conveyance.  The Noteholder has full legal and equitable title to the Note, free and clear of all liens, pledges or encumbrances of any kind, nature or description, with full and unrestricted legal power, authority and right to enter into this Agreement and to transfer and deliver the Note to the Company pursuant hereto, and upon delivery of the Note to the Company, Company will be the owner of the Note, free and clear of all liens, claims, pledges or encumbrances of any kind, nature or description. The exchange by the Noteholder and the consummation of the transactions herein, does not by itself or with the passage of time violate or infringe upon the rights of any third parties or result or could reasonably result in any claims against the Noteholder or the Company.

 

3.6              Action.  The Noteholder has taken no action that would impair its ability to transfer the Note.

 

3.7              Tax Consequences.  The Noteholder acknowledges that the exchange of the Note may involve tax consequences to the Noteholder and that this Agreement does not contain tax advice. The Noteholder acknowledges that it has not relied and will not rely upon the Company with respect to any tax consequences related to the exchange of the Note. The Noteholder assumes full responsibility for all such consequences and for the preparation and filing of any tax returns and elections which may or must be filed in connection with the Note.

 

 

  

3

  

 

3.8           Reliance on Exemptions. The Noteholder understands that the shares of Series B Preferred Stock  being issued in the exchange are being issued  in reliance on specific exemptions from the registration requirements of United States federal and state securities laws  provided by Section 3(a)(9) and that the Company is relying in part upon the truth and accuracy of, and the Noteholder’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Noteholder set forth herein in order to determine the availability of such exemptions and the eligibility of the Noteholder to acquire the Series B Preferred Stock.

 

3.9           No Governmental Review. The Noteholder understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Series B Preferred Stock or the fairness or suitability of the exchange with the Series B Preferred Stock nor have such authorities passed upon or endorsed the merits of the exchange of the Series B Preferred Stock.

 

3.10           No Conflicts. The execution, delivery and performance by the Noteholder of this Agreement and the consummation by the Noteholder of the transactions contemplated hereby will not (i) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Noteholder is a party or (ii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws) applicable to the Noteholder, except in the case of clause (i) or (ii) above, for such conflicts, defaults, rights or violations which would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of the Noteholder to perform its obligations hereunder.

 

3.11           No Public Sale or Distribution.  The Noteholder (i) is acquiring the Series B Preferred Stock and (ii) upon conversion of the Series B Preferred Stock, will acquire the Underlying Shares, in each case, for its own account and not with a view towards, or for resale in connection with, the public sale or distribution thereof in violation of applicable securities laws, except pursuant to sales registered or exempted under the Securities Act of 1933. The Noteholder does not presently have any agreement or understanding, directly or indirectly, with any person to distribute any of the shares of Series B Preferred Stock or the Underlying Shares, for its own account and not with a view towards, or for resale in connection with, the public sale of securities in violation of applicable securities laws.

 

3.12           Information.  The Noteholder and its advisors, if any, have been furnished with all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Series B Preferred Stock which have been requested by the Noteholder.  The Noteholder and its advisors, if any, have been afforded the opportunity to ask questions of the Company. The Noteholder understands that its exchange of the Series B Preferred Stock involves a high degree of risk. The Noteholder has sought such accounting, legal and tax advice as it has considered necessary to make an informed decision with respect to its acquisition of the Series B Preferred Stock.  .

 

3.13           Transfer or Resale. The Noteholder understands that: (i) the shares of Series B Preferred Stock have not  been and are not being registered under the Securities Act of 1933 or any state securities laws, and may not be offered for sale, sold, assigned or transferred unless (A) subsequently registered thereunder; (B) the Noteholder shall have delivered to the Company (if requested by the Company) an opinion of counsel to the Noteholder, in a form reasonably acceptable to the Company, to the effect that the shares of Series B Preferred Stock to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration; or (C) the Noteholder provides the Company with reasonable assurance that the shares of Series B Preferred Stock  can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A promulgated under the Securities Act of 1933 (or a successor rule thereto) (collectively, “Rule 144”) and (ii) any sale of the shares of Series B Preferred Stock  made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144.

 

	  	
4.

	
COVENANTS.

 

4.1           Reasonable Best Efforts. The Company shall use its reasonable best efforts to timely satisfy each of the conditions to be satisfied by it as provided in Section 5 of this Agreement. The Noteholder shall use its reasonable best efforts to timely satisfy each of the conditions to be satisfied by it as provided in Section 6 of this Agreement.

 

 

  

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4.2           Reservation of Shares. The Company shall take all action necessary to at all times have authorized, and reserved for the purpose of issuance, no less than the maximum number of shares of Common Stock issuable upon conversion of the Series B Preferred Stock  (without taking into account any limitations on the exercise of the Series B Preferred Stock).

 

4.3           Register. The Company shall maintain at its principal executive offices (or such other office or agency of the Company as it may designate by notice to the Noteholder), a register for the Series B Preferred Stock  in which the Company shall record the name and address of the person in whose name the Series B Preferred Stock have been issued (including the name and address of each transferee) and the number of Common Stock shares issuable upon conversion of the Series B Preferred Stock  held by such person. The Company shall keep the register open and available, upon 24 hours prior written notice, during normal business hours for inspection of any Noteholder or its legal representatives.

 

5.           MISCELLANEOUS.

 

5.1           Legends. The Noteholder acknowledges that the certificate(s) representing the shares of Series B Preferred Stock shall each conspicuously set forth on the face or back thereof a legend in substantially the following form:

 

“THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE RULES AND REGULATIONS PROMULGATED THEREUNDER, OR UNDER THE SECURITIES LAWS, RULES OR REGULATIONS OF ANY STATE; AND MAY NOT BE PLEDGED, HYPOTHECATED, SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, RULES OR REGULATIONS OR AN EXEMPTION THEREFROM DEEMED ACCEPTABLE BY COUNSEL TO THE COMPANY.”

 

5.2           Governing Law; Jurisdiction; Jury Trial. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of Texas, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Texas or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Texas.

 

5.3           Arbitration.  Both parties shall resolve all disputes, controversies and differences which may arise between the parties, out of or in relation to or in connection with this Agreement, after discussion in good faith attempting to reach an amicable solution.  Provided that such disputes, controversies and differences remain unsettled after discussion between the parties, both parties agree that those unsettled matter(s) shall be finally settled by arbitration in Texas in accordance with the latest Rules of the American Arbitration Association. Such arbitration shall be conducted by three arbitrators appointed as follows: each party will appoint one arbitrator and the appointed arbitrators shall appoint a third arbitrator.  If within thirty (30) days after confirmation of the last appointed arbitrator, such arbitrators have failed to agree upon a chairman, then the chairman will be appointed by the American Arbitration Association.  The decision of the tribunal shall be final and may not be appealed.  The arbitral tribunal may, in its discretion award fees and costs as part of its award. Judgment on the arbitral award may be entered by any court of competent jurisdiction, including any court that has jurisdiction over either party or any of their assets. At the request of any party, the arbitration proceeding shall be conducted in the utmost secrecy subject to a requirement of law to disclose. In such case, all documents, testimony and records shall be received, heard and maintained by the arbitrators in secrecy, available for inspection only by any party and by their attorneys and experts who shall agree, in advance and in writing, to receive all such information in secrecy.

 

 

  

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5.4           Counterparts. This Agreement may be executed simultaneously in two or more counterparts, any one of which need not contain the signatures of more than one party, but all such counterparts taken together will constitute one and the same Agreement.  This Agreement, to the extent delivered by means of a facsimile machine or electronic mail (any such delivery, an “Electronic Delivery”), shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person.  At the request of any party hereto, each other party hereto shall re-execute original forms hereof and deliver them in person to all other parties.  No party hereto shall raise the use of Electronic Delivery to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of Electronic Delivery as a defense to the formation of a contract, and each such party forever waives any such defense, except to the extent such defense related to lack of authenticity.

 

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

 

5.6           Severability. If any provision of this Agreement is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Agreement so long as this Agreement as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).

 

5.7           Entire Agreement; Amendments. This Agreement and the other Transaction Documents supersede all other prior oral or written agreements between the Noteholder, the Company, their affiliates and persons acting on their behalf with respect to the matters discussed herein, and this Agreement, contains the entire understanding of the parties with respect to the matters covered herein and, except as specifically set forth herein, neither the Company nor the Noteholder makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be amended other than by an instrument in writing signed by the Company and the Noteholder, and any amendment to this Agreement made in conformity with the provisions of this Section shall be binding upon the Noteholder.  No provision hereof may be waived other than by an instrument in writing signed by the party against whom enforcement is sought.

 

5.8           Notices. Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one business day after deposit with an overnight courier service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:

 

If to the Company:

 

Minerco Resources, Inc.

20 Trafalgar Square, Suite 455

Nashua, New Hampshire 03063

Attention: John F. Powers

with a copy (for informational purposes only) to:

Gracin & Marlow, LLP

405 Lexington Avenue, 26th Floor

New York, New York 10174

Telephone: (212) 907-6457

Facsimile: (212) 208-4657

Attention: Leslie Marlow, Esq.

 

 

  

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If to the Noteholder:

V. Scott Vanis

800 Bering Drive

Houston, Texas 77057

with a copy (for informational purposes only) to: N/A

to its address and facsimile number set forth above, or to such other address and/or facsimile number and/or to the attention of such other person as the recipient party has specified by written notice given to each other party five (5) days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication; (B) mechanically or electronically generated by the sender's facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission; or (C) provided by an overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from an overnight courier service in accordance with clause (i), (ii) or (iii) above, respectively.

5.9           Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns, including any purchasers of the Series B Preferred Stock. The Company shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Noteholder. The Noteholder may assign some or all of its rights hereunder without the consent of the Company.

 

5.10           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. No specific representation or warranty shall limit the generality or applicability of a more general representation or warranty.

 

IN WITNESS WHEREOF, the Noteholder and the Company have caused their respective signature pages to this Agreement to be duly executed as of the date first written above.

 

	 	

MINERCO RESOURCES, INC.

	 
	 	 	 	 
	
 

	
By: 

	/s/ John F. Powers	 
	 	 	Name: John F. Powers	 
	 	 	Title: Chief Executive Officer	 
	 	 	 	 

 

 

	 	

NOTEHOLDER:

 

V. SCOTT VANIS

	 
	 	 	 	 
	
 

	
By: 

	/s/ V. Scott Vanis	 
	 	 	Name: V. Scott Vanis 	 
	 	 	Title: an individual	 
	 	 	 	 

7

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