Document:

EX-10.1

 Exhibit 10.1 

Targa Resources Corp. 2018 Annual Incentive Compensation Plan Description 

On January 12, 2018, the Compensation Committee (the “Committee”) of the Board of Directors of Targa Resources Corp.
(the “Company”), the indirect parent of the general partner of Targa Resources Partners LP (the “Partnership”), approved the Company’s 2018 Annual Incentive Compensation Plan (the “Bonus
Plan”). The Bonus Plan is a discretionary annual cash bonus plan available to all of the Company’s employees, including its executive officers, who also serve as officers of the Partnership’s general partner. The purpose of the
Bonus Plan is to reward employees for contributions toward the Company’s business priorities (including business priorities with respect to the Partnership) approved by the Committee and to aid the Company in retaining and motivating employees.
Under the Bonus Plan, the level of funding of the discretionary cash bonus pool is based on the Company’s achievement of certain business priorities, including strategic, financial and operational objectives. 

The Committee has established the following eight key business priorities for 2018: 

 

	 	•	 	execute on all business dimensions, including the 2018 business plan and public guidance, 

  

	 	•	 	continue priority emphasis and strong performance relative to a safe workplace, 

  

	 	•	 	reinforce business philosophy and mindset that promotes compliance in all aspects of our business including environmental and regulatory compliance, 

 

	 	•	 	continue to attract and retain the operational and professional talent needed in our businesses, 

  

	 	•	 	continue to control all costs—operating, capital and general and administrative—consistent with existing business environment, 

 

	 	•	 	execute on major capital and development projects—finalizing negotiations, completing projects on time and on budget, optimizing economics and capital funding, and staffing for the new facilities,

  

	 	•	 	pursue selected growth opportunities including gathering and processing build outs, fee-based capex projects, and potential purchases of strategic assets, and 

 

	 	•	 	pursue commercial and financial approaches to achieve maximum value and manage risks, including contract, credit, inventory, interest rate and commodity price exposures. 

The Committee has targeted a total cash bonus pool for achievement of the business priorities based on the sum of individual employee
market-based target bonus opportunities, which are based on a percentage of each employee’s eligible earnings. Generally, eligible earnings are an employee’s base salary and overtime pay. Near or following the end of the year, the Chief
Executive Officer (“CEO”) recommends to the Committee the total amount of cash to be allocated to the bonus pool based upon overall performance of the Company relative to the established objectives, generally ranging from 0 to 2x the
aggregate target bonus opportunities for all employees in the pool. Upon receipt of the CEO’s recommendation, the Committee, in its sole discretion, determines the total amount of cash to be allocated to the bonus pool. The Committee has
discretion to adjust the cash bonus pool attributable to the business priorities based on accomplishment of the applicable objectives as determined by the Committee and the CEO. Additionally, the Committee, in its sole discretion, determines the
amount of the cash bonus awards to each of the Company’s executive officers, including the CEO. The executive officers determine the amount of the cash bonus pool to be allocated to the Company’s departments, groups and employees (other
than the executive officers of the Company) based on performance and upon the recommendation of supervisors, managers and line officers.Blueprint

 

Exhibit 10.1

 

 

 

SECURITIES PURCHASE AGREEMENT

 

This SECURITIES PURCHASE AGREEMENT (this
“Agreement”), dated as of December 19, 2017, is entered
into by and between SINCERITY APPLIED MATERIALS HOLDINGS CORP., a
Nevada corporation (the “Company”), and EMA Financial, LLC, a Delaware limited liability
company (the “Purchaser”).

 

WHEREAS, subject to
the terms and conditions set forth in this Agreement and pursuant
to Section 4(a)(2) of the Securities Act of 1933, as amended (the
“Securities Act” or “1933 Act”), and Rule
506 promulgated thereunder by the
United States Securities and Exchange Commission (the
“SEC”), the Company desires to issue and sell to
the Purchaser, and the Purchaser desires to purchase from the
Company a 12% Convertible Note of the
Company, in the form attached hereto as Exhibit A, in the principal
amount of $83,500.00 (together with any note(s) issued in
replacement thereof or as interest thereon or otherwise with
respect thereto in accordance with the terms thereof, the
“Note”), convertible into shares (“Conversion
Shares”) of common stock, $0.001 par value per share (the
“Common Stock”), of the Company, upon the terms and
subject to the limitations and conditions set forth in such
Note.

 

NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in
this Agreement, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the Company
and the Purchaser 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 Purchaser,
and the Purchaser agrees to purchase from the Company, the Note for
an aggregate purchase price of $78,340.00 (“Purchase
Price”).

 

b) Form of
Payment. On the Closing Date
(i) the Purchaser shall pay the Purchase Price by wire transfer of
immediately available funds to the Company, in accordance with the
Company’s written wiring instructions, simultaneously with
delivery of the Note, and (ii) the Company shall deliver such Note
duly executed on behalf of the Company to the Purchaser,
simultaneously with 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 closing of the
transactions contemplated by this Agreement (the
“Closing”) shall occur on the first business day
following the date hereof or such other mutually agreed upon time
(the “Closing Date”)

 

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

 

 

-1-

 

 

a) Investment
Purpose. Purchaser is acquiring
the Note and the Conversion Shares (collectively, the
“Securities”) 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;
provided, however, by making the representations herein, Purchaser
does not agree, or make any representation or warranty, 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. The Purchaser is acquiring the
Securities hereunder in the ordinary course of its business. The
Purchaser does not presently have any agreement or understanding,
directly or indirectly, with any person to distribute any of the
Securities in violation of applicable securities
laws.

 

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

 

3. Representations
and Warranties of the Company.
Except as disclosed by the Company in the publicly filed SEC
Documents the Company represents and warrants to the Purchaser, as
of the date hereof and the Closing Date, 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. The SEC
Documents set 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 and 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 and 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 and 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 and each of such instruments will constitute, a legal, valid
and binding obligation of the Company enforceable against the
Company in accordance with its terms.

 

 

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c) Capitalization.
As of the date hereof, the authorized capital stock of the Company,
and number of shares issued and outstanding, is as set forth in the
Company’s most recent periodic report filed with the SEC.
Except as disclosed in the SEC Documents no shares are reserved for
issuance pursuant to the Company’s stock option plans. Except
as disclosed in the SEC Documents no shares are reserved for
issuance pursuant to securities exercisable for, or convertible
into or exchangeable for shares of Common Stock. 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, and except as disclosed in the SEC Documents, (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, notes 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 any of the Securities. The Company has
furnished to the Purchaser true and correct copies of the
Company’s Certificate or Articles of Incorporation as in
effect on the date hereof (“Formation Documents”), 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.

 

d) Issuance of
Shares. The Conversion Shares
are duly authorized and reserved for issuance and, upon conversion
of the Note, as the case may be, in accordance with their
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’s
executive officers and directors understand the nature of the
Securities being sold hereby and recognize that the issuance of the
Securities will have a potential dilutive effect on the equity
holdings of other holders of the Company’s equity or rights
to receive equity of the Company.  The Board of Directors
of the Company has concluded, in its good faith business judgment
that the issuance of the Securities is in the best interests of the
Company.  The Company specifically acknowledges that its
obligation to issue the Conversion Shares upon conversion of the
Notes is binding upon the Company and enforceable regardless of the
dilution such issuance may have on the ownership interests of other
stockholders of the Company or parties entitled to receive equity
of the Company.

 

 

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f) No
Conflicts. The execution,
delivery and performance of this Agreement, and 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 Formation Documents 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 and that is
not filed as an SEC Document or other document filed with the SEC,
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 Formation Documents, 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 Purchaser 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 and the Note in
accordance with the terms hereof or thereof or to issue and sell
the Securities in accordance with the terms hereof and thereof and
to issue the Conversion Shares. 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. The Company is not in
violation of the listing requirements of the Over-the-Counter
Bulletin Board (the “OTCBB”), or OTCQB, or OTC Pink and
does not reasonably anticipate that the Common Stock will be
delisted by the OTCBB, or OTCQB, or OTC Pink 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.

 

 

-4-

 

 

g) SEC Documents;
Financial Statements. The
Company has filed all reports, schedules, forms, statements and
other documents required to be filed by it with the SEC (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 Purchaser 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 Securities Exchange
Act of 1934, as amended (“1934 Act” or “Exchange
Act”), 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, 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 December 31,
2016, 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. The public filings contain 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.

 

 

-5-

 

 

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/or
entity; 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) Disclosure.
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.

 

m) Brokers.
The Company hereby represents and warrants that it has not
hired, retained or dealt with any broker, finder, consultant,
person, firm or corporation (“Broker”) in connection
with the negotiation, execution or delivery of this Agreement or
the transactions contemplated hereunder. The Company covenants and
agrees that should any claim be made against Purchaser for any
commission or other compensation by the Broker, based upon the
Company’s engagement of such person in connection with this
transaction, the Company shall indemnify, defend and hold Purchaser
harmless from and against any and all damages, expenses (including
attorneys’ fees and disbursements) and liability arising from
such claim. The Company shall pay the commission of the Broker, to
the attention of the Broker, pursuant to their separate
agreement(s) between the Company and the Broker.

 

n) 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 December 31, 2016, 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.

 

 

 

-6-

 

 

o) Insurance.
The Company and its Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks
and in such coverage, amounts as are prudent and customary in the
businesses in which the Company is engaged, including, but not
limited to, directors and officer’s insurance coverage with
coverage amounts that are at least equal to the aggregate Purchase
Price. Neither the Company nor any 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 without a significant increase in
cost.

 

p) No “Shell”. As of
the date of this Agreement, either (i) the Company is not or has
never been a “shell issuer” as defined in Rule 144 or
(ii) at least 12 months have passed since the Company filed Form 10
Type information indicating it is not a “shell
issuer”.

 

q) Bad Actor. No officer or
director of the Company would be disqualified under Rule 506(d) of
the Securities Act as amended on the basis of being a “bad
actor”.

 

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 when
applicable to timely file a Form D with respect to the Securities
as required under Regulation D and to provide a copy thereof to the
Purchaser 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 Purchaser 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 Purchaser on or prior to the Closing
Date.

 

c) Use of
Proceeds. The Company shall use
the proceeds from the sale of the Securities for general
corporate purposes, marketing and sales, product development, key
personnel recruiting and business development purposes.

 

d) Financial
Information. Upon written
request of the Purchaser, the Company agrees to within (3) three
days of the written request send or make available the following
reports filed with the SEC or OTC Markets Group to the Purchaser: a
copy of its Annual Report and its Quarterly Reports and any
Supplemental Reports; (ii) copies of all press releases issued by
the Company or any of its Subsidiaries; and (iii) copies of any
notices or other information the Company makes available or gives
to such shareholders. Notwithstanding the foregoing, the Company
shall not disclose any material nonpublic information to the
Purchaser without its consent unless such information is disclosed
to the public prior to or promptly following such disclosure to the
Purchaser.

 

 

-7-

 

 

e) Listing.
The Company will obtain and, so long as the Purchaser owns any of
the Securities, maintain the listing and trading of its Common
Stock on the OTCBB, and OTCQB, or OTC Pink or any equivalent
replacement exchange, the NASDAQ Stock Market
(“NASDAQ”), the New York Stock Exchange
(“NYSE”), or the NYSE MKT, f/k/a American Stock
Exchange (“AMEX”), 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 Purchaser copies of any
notices it receives from the SEC, OTC Markets Group and any other
exchanges or quotation systems on which the Common Stock is then
listed regarding the continued eligibility of the Common Stock for
listing on such exchanges and quotation systems, provided that it
shall not provide any notices constituting material nonpublic
information.

 

f) Corporate
Existence. So long as the
Purchaser beneficially owns any Securities, 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 NASDAQ,
NYSE or AMEX.

 

g) 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.

 

h) Securities Laws Disclosure;
Publicity. The Company shall comply with applicable
securities laws by filing a Current Report on Form 8-K, within four
(4) Trading Days following the date hereof, disclosing all the
material terms of the transactions contemplated
hereby.

 

i) Non-Public Information. Except
with respect to the material terms and conditions of the
transactions contemplated by this Agreement, the Company covenants
and agrees that neither it nor any other person acting on its
behalf will provide the Purchaser or its agents or counsel with any
information that the Company believes constitutes material
non-public information, unless prior thereto the Purchaser shall
have executed a written agreement regarding the confidentiality and
use of such information. The Company understands and confirms that
the Purchaser shall be relying on the foregoing covenant in
effecting transactions in securities of the Company.

 

j) Subsidiaries. So long as the
Note remains outstanding, the Company shall not transfer any assets
or rights to any of its subsidiaries or permit any of its
subsidiaries to engage in any significant business or operations,
whether such subsidiaries are currently existing or hereafter
created.

 

 

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k) Insurance. So long as the Note
remains outstanding, the Company and its Subsidiaries shall
maintain in full force and effect insurance reasonably believed by
the Company to be adequate coverage (a) on all assets and
activities, covering property loss or damage and loss of income by
fire or other hazards or casualty, and (b) against all liabilities,
claims and risks for which it is customary for companies similarly
situated to the Company to insure, including without limitation
applicable product liability insurance, required workmen’s
compensation insurance, and other insurance covering injury or
damage to persons or property, but excluding directors and officers
insurance coverage. The Company shall promptly furnish or cause to
be furnished evidence of such insurance to the Purchaser, in form
and substance reasonably satisfactory to the Purchaser

 

l) ROFR. At any time while the
Note is outstanding, the Company desires to borrow funds, raise
additional capital and/or issue additional promissory notes
convertible into shares of securities of the Company (a
“Prospective Financing”), the Purchaser shall have the
right of first refusal to participate in the Prospective Financing,
and the Company shall provide written notice containing the terms
of such Prospective Financing (the “ROFR Notice”) to
the Purchaser prior to effectuating any such
transaction. The ROFR Notice
shall specify all of the key terms of the Prospective Financing,
including, but not limited to, the proposed investment amount, the
proposed rate of interest, the proposed conversion price, the
proposed term of the investment, the type and number of securities
to be sold and any and all other relevant terms, each as
applicable. Upon Purchaser’s receipt of the ROFR Notice,
Purchaser shall have the exclusive right to participate in such
Prospective Financing(s), upon the terms specified in the ROFR
Notice, by sending written notice to the Company within seven (7)
business days after Purchaser’s receipt of the ROFR Notice.
In the event Purchaser fails to exercise its right of first refusal
with respect to an ROFR Notice within the time set forth above,
Purchaser shall be deemed to have waived its right of first refusal
with respect to such Prospective Financing, provided that it shall
retain such right with respect to any future Prospective Financing.
Notwithstanding anything contained herein, the Company shall not
furnish any material non-public information concerning the Company
without the Purchaser’s prior written consent, and shall
initially only indicate to the Purchaser that the Company
contemplates a financing. Notwithstanding anything contained
herein, in no event shall the Purchaser be entitled to purchase any
securities which would cause the sum of (1) the number of shares of
Common Stock beneficially owned by the Purchaser and its affiliates
(other than shares of Common Stock which may be deemed beneficially
owned through the ownership of the unconverted portion of the Note
or the unexercised or unconverted portion of any other security of
the Company subject to a limitation on conversion or exercise
analogous to the limitations contained herein) and (2) the number
of shares of directly or indirectly purchasable under this Section,
to exceed 4.9% of the outstanding shares of Common Stock
(or 9.99% of the total issued
Common Stock of the Company if specified by Purchaser and
accompanied with applicable documentation such as any Amendment
made to this Agreement or the Note).

 

 

-9-

 

 

m) Future Financings: From the
date hereof until such time as the Purchaser no longer holds any of
the Securities, in the event the Company issues or sells any shares
of Common Stock or securities directly or indirectly convertible
into or exercisable for Common Stock (“Common Stock
Equivalents”) or amends the transaction documents relating to
any sale or issuance of Common Stock or Common Stock Equivalents,
and the Purchaser reasonably believes that the terms and conditions
thereunder are more favorable to such investors as the terms and
conditions granted under this Agreement, Note or any document
provided by the Purchaser to the Company relating to any sale or
issuance of Common Stock (the “Transaction Documents”),
upon notice to the Company by such Purchaser, the Transaction
Documents shall be deemed automatically amended so as to give the
Purchaser the benefit of such more favorable terms or conditions.
Promptly following a request to the Company the Company shall
provide Purchaser with all executed transaction documents relating
to any such sale or issue of Common Stock or Common Stock
Equivalents. Company shall deliver acknowledgment of such automatic
amendment to the Transaction Documents to Purchaser in form and
substance reasonably satisfactory to the Purchaser ( the
“Acknowledgment”) within three (3) business days of
Company’s receipt of request from Purchaser (the
“Deadline”), provided that Company’s failure to
timely provide the Acknowledgement shall not affect the automatic
amendments contemplated hereby. If the Acknowledgement is not
delivered by the Deadline, Company shall pay to the Purchaser
$1000.00 per day in cash, for each day beyond the Deadline that the
Company fails to deliver such Acknowledgement Such cash amount
shall be paid to Holder by the first day of the month following the
month in which it has accrued or, at the option of the Holder,
shall be added to the principal amount of the Note, in which event
interest shall accrue thereon in accordance with the terms of the
Note and such additional principal amount shall be convertible into
Common Stock in accordance with the terms of the
Note..

 

n) Piggyback Registration Rights.
Borrower shall include on the next registration statement Borrower
files with the SEC (or on the subsequent registration statement if
such registration statement is withdrawn) all shares issuable upon
conversion of the Note. Failure to do so will result in liquidated
damages of fifty percent (50%) of the outstanding principal amount
of the Note, but not less than twenty-five thousand dollars
($25,000), being immediately due and payable to Holder at its
election in the form of cash payment or addition to the balance of
the Note.

 

o) Registration Rights Agreement.
The Borrower shall on the date, which is no later than thirty (30)
days following the Closing (“Filing Deadline”) file the
Registration Statement (as defined in the Note) with the SEC, which
shall register five times all the shares issuable upon full
conversion of the Note, or in the event that within one hundred and
eighty (180) days of Closing, the Registration Statement
registering five times the number of shares of Common Stock
issuable upon full conversion of this Note is not effective then as
liquidated damages and not a penalty, the conversion price of this
Note shall while this Note remains outstanding equal the Default
Conversion Price as defined in Section 1.2(a) of this
Note. 

 

 

-10-

 

 

5. Transfer Agent
Instructions. Upon receipt of a
duly executed Notice of Conversion, the Company shall issue
irrevocable instructions to its transfer agent to issue
certificates, registered in the name of the Purchaser or its
nominee, for the Conversion Shares in such amounts as specified
from time to time by the Purchaser to the Company upon conversion
of the Note, or any part thereof, in accordance with the terms
thereof (the “Irrevocable Transfer Agent
Instructions”). In the event that the Company proposes to
replace its transfer agent, the Company 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 this Agreement and the Securities (including but not
limited to the provision to irrevocably reserve shares of Common
Stock in the Reserved Amount (as defined in the Note)) signed by
the successor transfer agent to Company and the Company. 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
Purchaser 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 direct its transfer agent not to remove or
impair, delay, and/or hinder 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 Purchaser 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
Purchaser’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
Purchaser provides the Company 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 Purchaser 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 Purchaser.
The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the Purchaser, 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
Purchaser 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.

 

 

 

-11-

 

 

6. Injunction Posting
of Bond.  In the
event the Purchaser shall elect to convert the Note or any parts
thereof, the Company may not refuse conversion or exercise based on
any claim that Purchaser or anyone associated or affiliated with
Purchaser has been engaged in any violation of law, or for any
other reason. In connection with any injunction sought or attempted
by the Company, the Company shall be required to post a bond at
least equal to the greater of either: (i) the outstanding principal
amount of the Note; and (ii) the market value of the Conversion
Shares sought to be converted, exercised or issued, based on the
sale price per share of Common Stock on the principal market on
which it is traded.

 

7. Delivery of Unlegended
Shares.

 

a) Within three (3) business days (such third
business day being the “Unlegended Shares Delivery
Date”) after the business
day on which the Company has received (i) a notice that Conversion
Shares, or any other Common Stock held by the Purchaser has been
sold pursuant to a registration statement or Rule 144 under the
1933 Act, (ii) a representation that the prospectus delivery
requirements, or the requirements of Rule 144, as applicable and if
required, have been satisfied, (iii) the original share
certificates representing the shares of Common Stock that have been
sold, and (iv) in the case of sales under Rule 144, customary
representation letters of the Purchaser and, if required,
Purchaser’s broker regarding compliance with the requirements
of Rule 144, the Company at its expense, (y) shall deliver, and
shall cause legal counsel selected by the Company to deliver to its
transfer agent (with copies to Purchaser) an appropriate
instruction and opinion of such counsel, directing the delivery of
shares of Common Stock without any legends including the legend set
forth in Section 4(h) above (the
“Unlegended
Shares”); and (z) cause
the transmission of the certificates representing the Unlegended
Shares together with a legended certificate representing the
balance of the submitted Common Stock certificate, if any, to the
Purchaser at the address specified in the notice of sale, via
express courier, by electronic transfer or otherwise on or before
the Unlegended Shares Delivery Date.

 

b) The Company understands that a delay in the
delivery of the Unlegended Shares later than the Unlegended Shares
Delivery Date could result in economic loss to the Purchaser. As
compensation to Purchaser for such loss, the Company agrees to pay
late payment fees (as liquidated damages and not as a penalty) to
the Purchaser for late delivery of Unlegended Shares in the amount
of $1,000.00 per business day after the Unlegended Shares Delivery
Date. If during any three hundred and sixty (360) day period, the
Company fails to deliver Unlegended Shares as required by this
Section for an aggregate of thirty (30) days, then Purchaser or
assignee holding Securities subject to such default may, at its
option, require the Company to redeem all or any portion of the
shares subject to such default at a price per share equal to the
greater of (i) 200% of the most recent closing price of the Common
Stock or (ii) the parity value of the Default Sum to be paid (as
defined in Section 3.16 of the Note) (“Unlegended Redemption
Amount”). The Company
shall pay any payments incurred under this Section in immediately
available funds upon demand.

 

 

 

-12-

 

 

8. Conditions to the
Company’s Obligation to Sell. The obligation of the Company hereunder to issue
and sell the Note to the Purchaser 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
Company’s sole benefit and may be waived by the Company at
any time in its sole discretion:

 

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

 

b) The
Purchaser shall have delivered the Purchase Price to the
Company.

 

c) The
representations and warranties of the Purchaser 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 Purchaser 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 Purchaser 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.

 

9. Conditions to The
Purchaser’s Obligation to Purchase. The obligation of the Purchaser 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 Purchaser’s sole
benefit and may be waived by the Purchaser at any time in its sole
discretion:

 

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

 

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

 

c) The
Irrevocable Transfer Agent Instructions, in form and substance
satisfactory to the Purchaser, shall have been delivered to and
acknowledged in writing by the Company’s Transfer Agent (a
copy of which written acknowledgment shall be provided to Purchaser
prior to Closing).

 

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 Purchaser
shall have received a certificate or certificates reasonably
requested by the Purchaser including, but not limited to
certificates with respect to the Company’s Formation
Documents, By-laws, and Board of Directors’ resolutions
relating to the transactions contemplated hereby.

 

 

-13-

 

 

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 the 1934 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, OTCQB, and OTC Pink and trading of the Common Stock on the
OTCBB, OTCQB, and OTC Pink shall not have been suspended by the SEC
or the OTC Markets Group.

 

10.

Governing Law;
Miscellaneous.

 

a) Governing
Law. This Agreement shall be
governed by and construed in accordance with the laws of the State
of Nevada without regard to principles of conflicts of laws thereof
or any other State.  Any action brought by any party
against any other party hereto 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 New York.  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
parties executing this Agreement and other agreements referred to
herein or delivered in connection herewith on behalf of the Company
agree to submit to the in personam jurisdiction of such courts and
hereby irrevocably 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 hereto 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 contemplated hereby 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.

 

 

-14-

 

 

b) Removal
of Restrictive Legends.  In the
event that Purchaser has any shares of the Company’s Common
Stock bearing any restrictive legends, and Purchaser, through its
counsel or other representatives, submits to the Transfer Agent any
such shares for the removal of the restrictive legends thereon in
connection with a sale of such shares pursuant
to any exemption to the registration requirements under
the Securities Act, and the Company and or its counsel refuses or
fails for any reason (except to the extent that such refusal or
failure is based solely on applicable law that would prevent the
removal of such restrictive legends) to render an opinion of
counsel or any other documents or certificates required for the
removal of the restrictive legends, then the Company hereby agrees
and acknowledges that the Purchaser is hereby irrevocably and
expressly authorized to have counsel to the Purchaser render any
and all opinions and other certificates or instruments which may be
required for purposes of removing such restrictive legends, and the
Company hereby irrevocably authorizes and directs the Transfer
Agent to, without any further confirmation or instructions from the
Company, issue any such shares without restrictive legends as
instructed by the Purchaser, and surrender to a common carrier for
overnight delivery to the address as specified by the Purchaser,
certificates, registered in the name of the Purchaser or its
designees, representing the shares of Common Stock to which the
Purchaser is entitled, without any restrictive legends and
otherwise freely transferable on the books and records of the
Company.

 

c) Filing
Requirements. From the
date of this Agreement until the Notes are no longer outstanding,
the Company will timely and voluntarily comply with all reporting
requirements that are applicable to an issuer with a class of
shares registered pursuant to Section 12(g) of the 1934 Act,
whether or not the Company is then subject to such reporting
requirements, and comply with all requirements related to any
registration statement filed pursuant to this Agreement. The
Company will use reasonable efforts not to take any action or file
any document (whether or not permitted by the 1933 Act or the 1934
Act or the rules thereunder) to terminate or suspend such
registration or to terminate or suspend its reporting and filing
obligations under said acts until the Notes are no longer
outstanding. The Company will maintain
the quotation or listing of its Common Stock on the OTCBB, OTCQB,
and OTC Pink, NYSE, or NASDAQ Stock Market (whichever of the
foregoing is at the time the principal trading exchange or market
for the Common Stock (the “Principal
Market”), and will comply
in all respects with the Company’s reporting, filing and
other obligations under the bylaws or rules of the Principal
Market, as applicable. The Company will provide Purchaser with
copies of all notices it receives notifying the Company of the
threatened and actual delisting of the Common Stock from any
Principal Market.  As of the date of this Agreement and
the Closing Date, the OTC Pink, is the Principal Market.
Until the Note is no longer outstanding, the Company will continue
the listing or quotation of the Common Stock on a Principal Market
and will comply in all respects with the Company’s reporting,
filing and other obligations under the bylaws or rules of the
Principal Market.

 

d) Fees and Expenses. On or prior
to the Closing, the Company shall pay or reimburse to Purchaser a
non-refundable, non-accountable sum equal to $3,340.00 as and for
the fees, costs and expenses (including without limitation legal
fees and disbursements and due diligence and administrative
expenses) incurred by the Purchaser in connection with the
Purchaser’s due diligence and negotiation, preparation and
execution of the Transaction Documents and consummation of the
Transactions. The Purchaser may withhold and offset the balance of
such amount from the payment of its Purchase Price otherwise
payable hereunder at Closing, which offset shall constitute partial
payment of such Purchase Price in an amount equal to such offset.
Except as expressly set forth in this Agreement or the Note to the
contrary, each party shall pay the fees and expenses of its
advisers, counsel, accountants and other experts, if any, and all
other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement.
The Company shall pay all transfer agent fees, stamp taxes and
other taxes and duties levied in connection with the delivery of
any Securities to the Purchaser.

 

 

-15-

 

 

e) Usury. To the extent it may
lawfully do so, the Company hereby agrees not to insist upon or
plead or in any manner whatsoever claim, and will resist any and
all efforts to be compelled to take the benefit or advantage of,
usury laws wherever enacted, now or at any time hereafter in force,
in connection with any claim, action or proceeding that may be
brought by the Purchaser in order to enforce any right or remedy
under the Note. Notwithstanding any provision to the contrary
contained in herein or under the Note, it is expressly agreed and
provided that the total liability of the Company under the Note for
payments in the nature of interest shall not exceed the maximum
lawful rate authorized under applicable law (the
“Maximum
Rate”), and, without limiting the foregoing, in no
event shall any rate of interest or default interest, or both of
them, when aggregated with any other sums in the nature of interest
that the Company may be obligated to pay under the Note or herein
exceed such Maximum Rate. It is agreed that if the maximum contract
rate of interest allowed by law and applicable to the Note is
increased or decreased by statute or any official governmental
action subsequent to the date hereof, the new maximum contract rate
of interest allowed by law will be the Maximum Rate applicable to
the Note from the effective date forward, unless such application
is precluded by applicable law. If under any circumstances
whatsoever, interest in excess of the Maximum Rate is paid by the
Company to the Purchaser with respect to indebtedness evidenced by
the Note, such excess shall be applied by the Purchaser to the
unpaid principal balance of any such indebtedness or be refunded to
the Company, the manner of handling such excess to be at the
Purchaser’s election.

 

f) 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.

 

g) 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.

 

h) 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 Purchaser 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
Purchaser.

 

i) 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, email 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 email or facsimile
with accurate confirmation generated by the transmitting facsimile
machine or computer, at the address, email 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:

 

 

-16-

 

 

Purchaser:  EMA Financial,
LLC

40 Wall
Street, Suite 1700

New
York, NY 10005

Attn:
Felicia Preston

admin@emafin.com

 

Company:  Sincerity Applied Materials Holding,
Inc.

Level
4, 10 Yarra Street

South
Yarra, Australia VIC 3141

Attn:
Zhang Yiwen, CEO

Email: ________________

Fax:
________________

 

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

 

j) 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 Purchaser 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 Purchaser may assign its
rights hereunder to any person that purchases Securities in a
private transaction from the Purchaser or to any of its
“affiliates,” as that term is defined under the 1934
Act, without the consent of the Company.

 

k) 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.

 

l) 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 Purchaser. The
Company agrees to indemnify and hold harmless the Purchaser 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 Purchaser 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.

 

m) 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.

 

n) 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.

 

 

 

-17-

 

 

o) Remedies.
The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the Purchaser 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 Purchaser
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.

 

p) Counterparts. This Agreement
may be executed in any number of counterparts, each of which when
so executed and delivered shall be deemed to be an original and all
of which together shall be deemed to be one and the same agreement.
Any signature transmitted by facsimile, e-mail, or other electronic
means shall be deemed to be an original signature.

 

 

 

 

 

 

[Intentionally
Left Blank]

 

 

 

 

 

 

-18-

 

 

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

 

SINCERITY APPLIED MATERIALS HOLDINGS CORP

 

 

	

By:

	

 /s/
Zhang Yiwen

	
 

	
 

	

Name:
Zhang Yiwen

	
 

	
 

	

Title:
CEO

	
 

 

 

EMA FINANCIAL, LLC

 

	

By:

	

 /s/
Jamie Beitler

	
 

	

Name:

	

Jamie
Beitler

	
 

	

Title:

	

Authorized
Signatory

	
 

 

 

GUARANTY

 

Each of
the undersigned subsidiaries of the Company jointly and severally,
absolutely, unconditionally and irrevocably, guarantees to the
Purchaser and their respective successors, indorsees, transferees
and assigns, the prompt and complete payment and performance by the
Company when due (whether at the stated maturity, by acceleration
or otherwise) of all amounts due under, and all other obligations
under, the Note. Each such subsidiary’s liability under this
Guaranty shall be unlimited, open and continuous for so long as
this Guaranty remains in force.

 

	

SINCERITY AUSTRALIA PTY LTD

 

By: /s/
Zhang Yiwen

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