Document:

exv10w1

Exhibit 10.1

DIVESTITURE AGREEMENT

THIS DIVESTITURE AGREEMENT is made and entered into effective this 17th day of March,
2009, by and among:

PURERAY CORPORATION (formerly North American Natural Gas, Inc.), a Washington corporation
(the “Company”);

PURERAY HOLDINGS ULC, an Alberta unlimited liability corporation (“PureRay Holdings”);

PURERAY CORPORATION, a Canadian federal corporation (“PureRay”);

DEREK BLACKBURN, an individual resident in the Village of Manotick, in the Province of
Ontario (the “Trustee”);

JEFREY WALLACE, an individual resident in the City of Atlanta, in the State of Georgia
(“Wallace”);

and,

MICKAEL JOASIL, DEREK BLACKBURN (“Blackburn”), F.W.F. ROBINSON, FRANCIS DONALD O’DEA AS
TRUSTEE OF THE O’DEA FAMILY TRUST, KAIROS PARTNERS, LLC, THOMAS J. BROESKI, RAJ KURICHH, MEG
PADIACHY, RAMILA PADIACHY, PATRICK PIERRE AND MATTHEW SICOLI (collectively referred to as
the “Principals”)

RECITALS:

	A.	 	On July 24, 2008, the Company, PureRay Acquisition Inc. (“PureRay Acquisition”), a
corporation formed under the laws of Canada and a wholly-owned direct subsidiary of PureRay
Holdings (a wholly-owned subsidiary of the Company), PureRay Corporation (“Old PureRay”), a
corporation formed under the laws of Canada and a predecessor corporation of PureRay, and each
of the Principals entered into a share purchase agreement (the “Share Purchase Agreement”)
whereby PureRay Acquisition acquired (the “Acquisition”) all of the outstanding shares of Old
PureRay (the “PureRay Shares”) from the Principals for an aggregate amount equal to
US$35,855,000, which the parties agreed to be the fair market value of the PureRay Shares;
	 
	B.	 	PureRay Acquisition paid the purchase price for the PureRay Shares by issuing to the
Principals one exchangeable share of PureRay Acquisition (each, an “Exchangeable Share”) for
each PureRay Share acquired, for a total of 35,855,000 Exchangeable Shares;
	 
	C.	 	Concurrent with the Acquisition, the Company, PureRay Holdings, PureRay Acquisition and the
Trustee entered into a voting and exchange trust agreement (the “Exchange Agreement”) pursuant
to which the Company issued shares of preferred stock of the Company, par value
$0.0001 per share, (the “Special Voting Stock”) in a ratio of one-quarter (1/4) of one share
of Special Voting Stock for each Exchangeable Share issued in connection with the
Acquisition (for a total of 8,963,750 shares of Special Voting Stock) to the Trustee to be
held for and on behalf of the Principals;

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	D.	 	Concurrent with the Acquisition, the Company, PureRay Holdings and PureRay Acquisition
entered into a support agreement (the “Support Agreement”) which either restricted the Company
from taking certain corporate actions altogether or required the prior approval of such
actions by the Principals;
	 
	E.	 	Following the Acquisition, PureRay Acquisition and Old PureRay amalgamated to form PureRay;
	 
	F.	 	As at January 31, 2009, the Company had made certain payments on behalf of, or advanced funds
to, PureRay in the aggregate amount of approximately $1,922,100 (collectively, the “Company
Payments”); and
	 
	G.	 	The Company’s directors (the “Directors”) sought, but were unable to find, investors willing
to finance the Company’s business development and the costs of a public company. In an effort
to preserve capital and the Company as a going concern, the Directors elected to file a Form
15 with the SEC (as hereinafter defined); however, at the request of, but not pursuant to any
obligations to, certain shareholders of the Company, the Directors intend to divest the
Company of PureRay pursuant to the terms and conditions of this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained in this Agreement
and other good and valuable consideration, the receipt and sufficiency of which is acknowledged,
the parties agree as follows:

Purpose and Definitions

	1.	 	Purpose. The purpose of this Agreement is to set out the terms and conditions
pursuant to which: (i) the Company will divest its direct holdings in PureRay Holdings and its
indirect holdings in PureRay; (ii) the Exchange Agreement and the Support Agreement will be
terminated; (iii) PureRay Holdings (or its successor) will purchase or redeem all of its
issued and outstanding shares (all of which are held by the Company); (iv) the Company will
purchase for cancellation all of its issued and outstanding Special Voting Stock (all of which
are registered in the name of the Trustee); and (v) the Principals will become the holders of
all of the issued and outstanding shares of PureRay, all on the terms and conditions of this
Agreement.
	 
	2.	 	Definitions. In this Agreement, including the schedules, exhibits and amendments,
the following terms shall have the meanings set forth below unless the context otherwise
requires:

	 	a)	 	“Agreement” means this Agreement, including the schedules and exhibits
attached, as the same may be amended or supplemented from time to time;
	 
	 	b)	 	“Closing” means the completion of: (i) PureRay Holding’s (or its successor’s)
purchase of all of its issued and outstanding shares from the Company; and (ii) the
Company’s purchase of all of its issued and outstanding Special Voting Stock from the
Trustee;
	 
	 	c)	 	“Closing Date” means April 17, 2009 or such earlier or later date as the
Company and the Principals may determine;

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	 	d)	 	“GAAP” means generally accepted accounting principles in effect from time to
time in the United States, applied on a consistent basis;
	 
	 	e)	 	“Investors” means Janspec Holdings Ltd., 511919 N.B. Inc. and Anton Select Fund
Ltd.;
	 
	 	f)	 	“Place of Closing” means 3490 Piedmont Road, Suite 1120, Atlanta, Georgia
30305; and
	 
	 	g)	 	“SEC” means the United States Securities and Exchange Commission.

General Release

	3.	 	General Release by the Company. Except for the agreements, rights and obligations set
forth in this Agreement, the Company, for itself, its officers, directors, shareholders,
employees and agents, and any successors and assigns of any of the forgoing, hereby
unconditionally and absolutely releases and forever discharges PureRay Holdings, PureRay and
each of the Principals and each of their respective officers, directors, employees, agents,
heirs, legal representatives, successors and assigns, from any and all manner of action and
causes of action, suits, debts, dues, accounts, contracts, agreements, judgments, claims,
liabilities and demands of any nature or kind whatsoever, whether in law or in equity, and
whether known or unknown, which any of them ever had, now has or at any time hereafter may
have against any of them based on facts or circumstances in existence on the Closing Date. No
separate instrument shall be required to evidence the general release by the Company contained
in this Section 3. The Company, for itself, its officers, directors, shareholders, employees
and agents, and any successors and assigns of any of the forgoing, covenants that it will make
no claim against PureRay Holdings, PureRay or any of the Principals, and any and all of their
respective officers, directors, employees, agents, heirs, legal representatives, successors
and assigns, directly or indirectly, arising out of any subject matter released and discharged
in this Section 3, excepting only for breach of this Agreement.
	 
	4.	 	General Release by PureRay Holdings, PureRay and Principals. Except for the
agreements, rights and obligations set forth in this Agreement, PureRay Holdings, PureRay and
each of the Principals acting individually and for each of their respective officers,
directors, employees, agents, heirs, legal representatives, successors and assigns, hereby
unconditionally and absolutely releases and forever discharges the Company, its officers,
directors, shareholders, employees and agents, and any successors and assigns of any of the
forgoing, from any and all manner of action and causes of action, suits, debts, dues,
accounts, contracts, agreements, judgments, claims and demands of any nature or kind
whatsoever, whether in law or in equity, and whether known or unknown, which it has ever had,
now has or at any time hereafter may have against any of them based on facts or circumstances
in existence on the Closing Date. No separate instrument shall be required to evidence the
general release contained in this Section 4. Each of PureRay Holdings, PureRay and the
Principals acting individually and for each of their respective officers, directors,
shareholders, employees, agents, heirs, legal representatives, successors and assigns,
covenants that it, he or she will make no claim against the Company, its officers, directors,
shareholders, employees and agents, and any successors and assigns of any of the forgoing,
directly or indirectly, arising out of any subject matter released and discharged in this
Section 4, excepting only for breach of this Agreement.

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Terms of Divestiture

	5.	 	Pre-Closing. Before the Closing Date:

	 	a)	 	the Company shall file its Form 10Q for the quarter ended January 31, 2009 all
of which shall be certified in accordance with the SEC requirements by Wallace, as
principal executive officer of the Company, and Blackburn, as principal financial
officer of the Company;
	 
	 	b)	 	the Company shall file a Form 8K announcing that it has entered into this
Agreement;
	 
	 	c)	 	the Company shall prepare and file a preliminary and definitive proxy statement
on Schedule 14A, together with nomination of a slate of board of directors, and call
and hold a meeting of shareholders for the purpose of obtaining shareholder approval of
the transactions contemplated in this Agreement; and
	 
	 	d)	 	PureRay Holdings shall be exported from the jurisdiction of the Province of
Alberta and be continued under the federal laws of Canada pursuant to the Canada
Business Corporations Act (the “CBCA”).

	6.	 	Closing. On the Closing Date:

	 	a)	 	the Trustee will sell, transfer and deliver the Special Voting Stock to the
Company and the Company will pay to the Trustee $0.01 as consideration for such
purchase and sale;
	 
	 	b)	 	PureRay Holdings and PureRay shall be amalgamated under the CBCA to form
“PureRay Corporation” (“Amalco”) and, pursuant thereto: (i) each issued and outstanding
share of PureRay Holdings shall be converted into one redeemable special share (each, a
“Special Share”) of Amalco; (ii) each issued and outstanding common share of PureRay
(all of which are held by PureRay Holdings) shall be cancelled without repayment of any
capital; and (iii) each issued and outstanding Exchangeable Share shall be converted
into one common share of Amalco;
	 
	 	c)	 	Amalco will redeem all of its issued and outstanding Special Shares from the
Company at a redemption price of C$1.00 per share;
	 
	 	d)	 	the Company shall make, or have made, one or more capital contributions to
PureRay or Amalco, as the case may be, in an amount equal to the aggregate of all
Company Payments and all funds held by the Company as at the Closing Date;
	 
	 	e)	 	all consulting and employment agreements with the Company will be assigned to
PureRay or Amalco, as the case may be, and PureRay or Amalco shall assume all
obligations and liabilities thereunder effective as of the Closing Date;
	 
	 	f)	 	all directors and officers of the Company then in office shall resign their
respective positions effective as of the Closing Date (or as soon as practicable
thereafter);
	 
	 	g)	 	any amount due and owing to any of the Principals from the Company as at the
Closing Date shall be assumed by PureRay or Amalco, as the case may be, and the Company
will not be liable for any such amounts payable to the Principals whatsoever;

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	 	h)	 	the Exchange Agreement and the Support Agreement will be terminated and deemed
null and void in all respect effective as of the Closing Date and the Company will have
no liabilities whatsoever in connection with either agreement;
	 
	 	i)	 	any warrant or option to acquire shares of the Company’s stock that has been
issued to a Company employee, consultant or any other person or entity, shall be
terminated and deemed null and void; and
	 
	 	j)	 	the Company shall: (i) assign all of its right, title and interest in the name
“PureRay Corporation” and any variation thereof to PureRay or Amalco, as the case may
be; (ii) amend its articles of incorporation to change its name from “PureRay
Corporation” to a dissimilar name; and (iii) cause its listing symbol on the
Over-the-Counter Bulletin Board to be changed from “PURY”.

Representations and Warranties of the Principals

	7.	 	The Principals severally represent and warrant to the Company as follows, with respect to
himself, herself or itself alone and not with respect to any other of the Principals, and
acknowledge that the Company is relying upon such representations and warranties in connection
with the transactions contemplated by this Agreement:

	 	a)	 	the Principal has the legal capacity, power and authority to hold a beneficial
interest in the Special Voting Stock at the time of Closing, to enter into this
Agreement and to transfer the beneficial interest in the Special Voting Stock to the
Company;
	 
	 	b)	 	the Principal holds beneficial interest in the Special Voting Stock free of all
encumbrances and the transfer to the Company of such stock shall be free of all
encumbrances; and
	 
	 	c)	 	the Principal understands and agrees that there may be material tax
consequences to the Principal of an acquisition or disposition of the Special Voting
Stock. The Company gives no opinion and makes no representation with respect to the tax
consequences to the Principal under United States, Canadian, state, provincial, local
or foreign tax law of the Principal’s acquisition or disposition of such Special Voting
Stock.

	8.	 	Each of Wallace and Blackburn, jointly and severally, represent and warrant to the Company
and acknowledge that the Company is relying upon such representations and warranties in
connection with the transactions contemplated by this Agreement:

	 	a)	 	all material financial transactions of the Company since July 24, 2008 have
been properly recorded in the Company’s books and records, which books and records
have been maintained in accordance with GAAP and all other applicable legal and
accounting requirements and good business practice. Such books and records:

	 	i)	 	reflect the basis for the financial condition and the revenues,
expenses and results of operations of the Company shown in the Company’s
Non-Consolidated Financial Statements at January 31, 2009 as attached as
Exhibit 1 to this Agreement (the “Company’s Financial Statements”);
	 
	 	ii)	 	present fairly the financial condition and the revenues,
expenses and results of the operations of the Company as of and to the date
hereof;

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	 	b)	 	no information, records, systems, controls or data pertaining to or required
for the operation or administration of the Company are recorded, stored, maintained by,
or are otherwise dependent upon, any computerized or other system, program or device
that is not exclusively owned and controlled or leased by the Company;
	 
	 	c)	 	the Company’s Financial Statements have been prepared in accordance with GAAP
(subject to the following exceptions: (i) such financial statements are not
consolidated and exclude the assets and liabilities and results of operations of
PureRay Holdings and PureRay; (ii) footnotes required by GAAP to be included in such
financial statements are condensed or omitted; and (iii) the statement of operations
includes with such financial statements omits loss per share amounts) and present
fairly the assets, liabilities (whether accrued, absolute, contingent or otherwise) and
financial condition of the Company as at the applicable date provided thereon;
	 
	 	d)	 	to the best of their knowledge, the Company does not have any liabilities
(contingent or otherwise) of any kind whatsoever, and there is no basis for any
assertion against the Company of any liabilities of any kind, including liabilities
relating to any failure to comply with product specifications other than:

	 	i)	 	liabilities disclosed, reflected in or provided for in the
Company’s Financial Statements; and
	 
	 	ii)	 	liabilities incurred since July 24, 2008 which were incurred
in the ordinary course of business and, in the aggregate, are not materially
adverse to its business;

	 	e)	 	since July 24, 2008, the Company has not given any guarantee or warranty in
respect of any of the products sold or the services provided by it or any of its
subsidiary corporations other than standard 12-month operational product warranties
extended in the ordinary course of business;
	 
	 	f)	 	since July 24, 2008, no claim has been made against the Company for breach of
warranty or contract requirement or negligence or for a price adjustment or other
concession in respect of any defect in or failure to perform or deliver any product,
service or work;
	 
	 	g)	 	the Company is not subject to any agreement or commitment to any customer of
its business entered into since July 24, 2008 which would require it to repurchase any
products sold to such customers or to adjust any price or grant any refund, discount or
other concession to such customer;
	 
	 	h)	 	the Company is not required to provide any letters of credit, bonds or other
financial security arrangements in connection with any transactions entered into since
July 24, 2008 as part of its business or the businesses of its subsidiary corporations;
	 
	 	i)	 	all advances and accounts receivable of the Company since July 24, 2008 are
reflected in the Company’s Financial Statements;

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	 	j)	 	since July 24, 2008 and except as disclosed in the Company’s Financial
Statements, the Company has not:

	 	i)	 	incurred any obligation or liability (fixed or contingent) or
indebtedness, except normal trade or business obligations incurred in the
ordinary course of business, none of which is materially adverse to its
business;
	 
	 	ii)	 	paid or satisfied any obligations or liability (fixed or
contingent);
	 
	 	iii)	 	created any encumbrance upon any of its properties or assets,
except as described in this Agreement;
	 
	 	iv)	 	sold, assigned, transferred, leased or otherwise disposed of
any of its properties or assets, except in the ordinary course of business;
	 
	 	v)	 	purchased, leased or otherwise acquired any properties or
assets, except in the ordinary course of business;
	 
	 	vi)	 	waived, cancelled or written off any rights, claims, accounts
receivable or any amounts payable to it, except in the ordinary course of
business;
	 
	 	vii)	 	entered into any transaction, contract, agreement or
commitment, except in the ordinary course of business;
	 
	 	viii)	 	terminated, discontinued, closed or disposed of any plant,
facility or business operation;
	 
	 	ix)	 	made any material change in its method of billing customers or
the credit terms made available to its customers;
	 
	 	x)	 	made any material change with respect to any method of
management, operation or accounting in respect of its business;
	 
	 	xi)	 	suffered any damage, destruction or loss (whether or not
covered by insurance) which has materially adversely affected or could
materially adversely affect its business or its financial condition;
	 
	 	xii)	 	suffered any extraordinary loss relating to its business;
	 
	 	xiii)	 	made or incurred any material change in, or become aware of
any event or condition which is likely to result in a material change in, its
business or its financial condition; or
	 
	 	xiv)	 	authorized, agreed or otherwise become committed to do any of
the foregoing.

Conditions of Closing and Closing

	9.	 	The Company’s Conditions to Closing. The obligation of the Company to complete the
transactions contemplated in this Agreement is subject to the following terms and conditions
for
the exclusive benefit of the Company, to be fulfilled or performed at or prior to the time
of Closing or waived in whole or in part by the Company at its sole discretion without
prejudice to any rights the Company may otherwise have:

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	 	a)	 	completion of the reorganization of PureRay Holdings and PureRay, including the
continuation of PureRay Holdings under the CBCA, the amalgamation of PureRay Holdings
and PureRay to form Amalco, the conversion of the Exchangeable Shares into common
shares of Amalco and the conversion of the common shares of PureRay Holdings into
Special Shares;
	 
	 	b)	 	the Investors shall have delivered a release to the Company and the Directors
substantially similar to the release set forth in Section 3 hereof and on such other
terms as are acceptable to the Company;
	 
	 	c)	 	the Company shall have filed its Form 10Q for the quarter ended January 31,
2009, all of which have been certified in accordance with SEC requirements by Wallace,
as principal executive officer of the Company, and Blackburn, as principal financial
officer of the Company;
	 
	 	d)	 	the Company shall have prepared and filed a preliminary and definitive proxy
statement, together with nomination of a slate of board of directors, and called and
held a meeting of shareholders for the purpose of obtaining shareholder approval of the
transactions contemplated in this Agreement;
	 
	 	e)	 	all directors and officers of the Company shall have submitted their
resignations as directors and officers of the Company effective as at the time of
Closing;
	 
	 	f)	 	the representations and warranties of the Principals contained in this
Agreement shall be true and correct in all material respects at the time of Closing,
with the same force and effect as if such representations and warranties were made at
and as of such time; and
	 
	 	g)	 	a majority of the Company’s shareholders shall have ratified and approved this
Agreement and the transactions contemplated hereunder.

	10.	 	PureRay Holdings’, PureRay’s and the Principals’ Conditions of Closing. The
obligations of PureRay Holdings, PureRay and the Principals to complete the transactions
contemplated in this Agreement are subject to the following terms and conditions for the
exclusive benefit of PureRay Holdings, PureRay and the Principals to be fulfilled or performed
at or prior to the time of Closing or waived in whole or in part by them at their sole
discretion without prejudice to any rights any of them may otherwise have:

	 	a)	 	completion of the reorganization of PureRay Holdings and PureRay, including the
continuation of PureRay Holdings under the CBCA, the amalgamation of PureRay Holdings
and PureRay to form Amalco, the conversion of the Exchangeable Shares into common
shares of Amalco and the conversion of the common shares of PureRay Holdings into
Special Shares;
	 
	 	b)	 	the Investors shall have delivered a release to PureRay Holdings, PureRay and
the Principals substantially similar to the release set forth in Section 4 hereof and
on such other terms as are acceptable to PureRay Holdings and PureRay;

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	 	c)	 	the Company shall have filed its Form 10Q for the quarter ended January 31,
2009, all of which have been certified in accordance with SEC requirements by Wallace,
as principal executive officer of the Company, and Blackburn, as principal financial
officer of the Company;
	 
	 	d)	 	the Company shall have prepared and filed a preliminary and definitive proxy
statement, together with nomination of a slate of board of directors, and called and
held a meeting of shareholders for the purpose of obtaining shareholder approval of the
transactions contemplated in this Agreement;
	 
	 	e)	 	a majority of the Company’s shareholders shall have ratified and approved this
Agreement and the transactions contemplated hereunder; and
	 
	 	f)	 	the Company shall have contributed to PureRay or Amalco, as the case may be, an
amount equal to the aggregate of all Company Payments made as at the Closing Date and
all funds held by the Company as at the Closing Date.

	11.	 	Time and Place. Upon satisfaction or waiver of the conditions to closing set forth in
Sections 9 and 10, the Closing will occur on the Closing Date at the Place of Closing.

General

	12.	 	Governing Law; Legal Proceedings. This Agreement is governed by the laws of the
Province of Ontario and the federal laws of Canada applicable therein, without regard to
principles of conflicts of law. The parties agree that in the event of any default hereunder
by any party, the non-defaulting parties shall be entitled to recover reasonable attorney’s
fees and all costs incurred in enforcing the terms and provisions of this Agreement; further,
each party designates and consents to the jurisdiction of the Province of Ontario in Canada as
the forum for any legal proceedings.
	 
	13.	 	Entire Agreement. Except as may be otherwise expressly agreed between the parties in
writing, this Agreement constitutes the entire agreement between the parties pertaining to the
subject matter hereof and there are no oral statements, warranties, representations or other
agreements between the parties in connection with the subject matter hereof except as
specifically set forth or referred to herein. No amendment, waiver or termination of this
Agreement shall be binding unless executed in writing by the party or parties to be bound
thereby. No waiver of any provision of this Agreement shall be deemed or shall constitute a
waiver of any other provision nor shall any such waiver constitute a continuing waiver unless
otherwise expressly provided.
	 
	14.	 	No Merger. The representations, warranties, covenants and agreements contained in
this Agreement and in any agreement, instrument, certificate or other document executed or
delivered pursuant hereto shall survive the Closing and shall continue in full force and
effect for 18 months from the Closing Date notwithstanding any investigation made by any party
to this Agreement.
	 
	15.	 	Costs and Expenses. All costs and expenses incurred by PureRay Holdings and PureRay
in connection with this Agreement and the transactions contemplated hereby shall be paid by
PureRay (or Amalco) and all costs and expenses incurred by the Company in connection with this
Agreement and the transactions contemplated hereby shall be paid by the Company. All costs
and expenses incurred by any Principal in connection with this Agreement and the transactions
contemplated hereby shall be paid by the relevant Principal and none of the Company, PureRay
Holdings or PureRay shall bear any legal, accounting or other costs incurred by any Principal.

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	16.	 	Notices. Any notice or other communication required or permitted to be given
hereunder shall be in writing and delivered or sent by overnight courier, telefax or
electronic mail. Any such communications shall: (i) if sent by courier, be deemed to have
been received at the time it is delivered; or (ii) if sent by telefax or electronic mail, be
deemed to have been received on the next business day following transmittal (provided receipt
thereof is acknowledged by the recipient). Notices shall be delivered or addressed as
follows:
	 
	 	 	If to the Company:

c/o The Law Office of Conrad C. Lysiak, P.S.

1 W. First Avenue, Suite 903

Spokane, Washington 99201

Attention: Conrad C. Lysiak

Telefax: 509-747-1770

Email: cclysiak@qwestoffice.net

	 	 	If to PureRay Holdings or PureRay:

c/o Wildeboer Dellelce LLP

Suite 800, Wildeboer Dellelce Place

365 Bay Street

Toronto, Ontario M5H 2V1

Attention: Rory Cattanach

Telefax: 416-361-1790

Email: rcattanach@wildlaw.ca

and:

c/o Sutherlands

1 Peachtree Street N.E.

Atlanta, Georgia 30309

Attention: Michael J. Voynich

Telefax: 404.853.8806

Email: Michael.Voynich@sutherland.com

	 	 	If to a Principal, to the address of such Principal set forth in Schedule A attached hereto.
	 
	 	 	Any party may give written notice of change of address in the same manner, in which event
such notice shall thereafter be given to it as above provided at such changed address.
	 
	17.	 	Time of Essence. Time shall be of the essence of this Agreement.
	 
	18.	 	Currency. Unless otherwise indicated, any reference to currency is to United States
currency.
	 
	19.	 	Further Assurances. Each of the parties hereto agrees to promptly do, make, execute,
deliver or cause to be done, made, executed or delivered, all such further acts, documents and
things as any other party hereto may reasonably require for the purpose of giving effect to
this Agreement whether before or after the Closing.

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	20.	 	Non-Assignability; Persons Bound. None of the parties may assign any of its, his or
her rights or obligations hereunder without the prior written consent of the other parties,
which consent shall not be unreasonably withheld. This Agreement is binding on and inures to
the benefit of each of the parties and their respective heirs, personal representatives,
successors and permitted assigns.
	 
	21.	 	Severability. If any provision of this Agreement or the application thereof to any
person or circumstance shall, to any extent, be invalid or unenforceable, the remainder of
this Agreement or the application of such provision to persons or circumstances other than
those as to which it is held invalid or unenforceable, shall not be affected thereby and each
provision of this Agreement shall be separately valid and enforceable to the fullest extent
permitted by the law.
	 
	22.	 	Acknowledgement; Independent Legal Advice. Each of the Principals acknowledges it,
he or she has read this Agreement, understands it, and agrees further to be bound by its terms
and conditions. Further, each party acknowledges that it, he or she has entered into this
Agreement willingly with full knowledge of the obligations imposed by the terms of this
Agreement. Each party, by execution hereof, acknowledges that it, he or she has been afforded
the opportunity to obtain independent legal advice and confirms, by the execution hereof, that
it, he or she has either done so or has waived the right to do so and agrees that this
Agreement constitutes a binding legal obligation and it, he or she is estopped from raising
any claim on the basis that it, he or she has not obtained such advice.
	 
	23.	 	Execution; Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, and all of which together shall
constitute one and the same instrument. A facsimile signature of any party shall be considered
to have the same binding legal effect as an original signature. The parties may arrange for
executed copies to be held in escrow before exchange so as to facilitate the exchange without
the need for the presence of one or more parties.

IN WITNESS WHEREOF the parties have entered into this Agreement as of the date first above written.

	 	 	 	 	 
	 	PURERAY CORPORATION, a Washington State corporation

 	 
	 	Per:  	/s/ Jefrey Wallace
 	 
	 	 	      Jefrey Wallace, President and CEO 	 
	 	 	 	 
	 
	 	PURERAY HOLDINGS ULC, an Alberta unlimited liability
corporation

 	 
	 	Per:  	/s/ Francis Donald O’Dea
 	 
	 	 	      Francis Donald O’Dea, President and Secretary 	 
	 	 	 	 
	 

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	 	PURERAY CORPORATION, a Canadian corporation

 
	 	Per:  	/s/ Jefrey Wallace
 	 
	 	 	     Jefrey Wallace, President and CEO 	 
	 	 	 	 
	 

SIGNED, SEALED AND DELIVERED

in the presence of:

	 	 	 	 	 
	/s/ Witness

	 	/s/ Mickael Joasil	 	 
	 

Signature of Witness

	 	 

Mickael Joasil
	 	 
	 
	 	 	 	 
	/s/ Witness

	 	/s/ Derek Blackburn	 	 
	 

Signature of Witness

	 	 

Derek Blackburn, in his individual capacity and
as Trustee
	 	 
	 
	 	 	 	 
	/s/ Witness

	 	/s/ F.W.F. Robinson	 	 
	 

Signature of Witness

	 	 

F.W.F. Robinson
	 	 
	 
	 	 	 	 
	/s/ Witness

	 	/s/ Francis Donald O’Dea	 	 
	 

Signature of Witness

	 	 

Francis Donald O’Dea, as trustee of The O’Dea
Family Trust
	 	 
	 
	 	 	 	 
	/s/ Witness

	 	/s/ Thomas J. Broeski	 	 
	 

Signature of Witness

	 	 

Thomas J. Broeski
	 	 
	 
	 	 	 	 
	/s/ Witness

	 	/s/ Raj Kurichh	 	 
	 

Signature of Witness

	 	 

Raj Kurichh
	 	 
	 
	 	 	 	 
	/s/ Witness

	 	/s/ Meg Padiachy	 	 
	 

Signature of Witness

	 	 

Meg Padiachy
	 	 
	 
	 	 	 	 
	/s/ Witness

	 	/s/ Ramila Padiachy	 	 
	 

Signature of Witness

	 	 

Ramila Padiachy
	 	 
	 
	 	 	 	 
	/s/ Witness

	 	/s/ Patrick Pierre	 	 
	 

Signature of Witness

	 	 

Patrick Pierre
	 	 
	 
	 	 	 	 
	/s/ Witness

	 	/s/ Matthew Sicoli	 	 
	 

Signature of Witness

	 	 

Matthew Sicoli
	 	 

	 	 	 	 	 
	 	KAIROS PARTNERS, LLC

 	 
	 	Per:  	/s/ Jefrey Wallace
 	 
	 	 	     Name:  	Jefrey Wallace 	 
	 	 	     Title:  	Partner 	 

- 12 -

 

	 	 	 	 	 

Schedule A

Principals — Details for Delivery of Notice

	 	 	 
	Name of Principal	 	Delivery Information
	Michael Joasil

	 	900 Greenback Road, Suite 310, Nepean, ON K2J 4P6
	 

	 	Telefax: 888-385-2035; Email: mjoasil@gmail.com
	 
	 	 
	Derek Blackburn

	 	1388 River Road, Manotick, ON K2M 1B4
	 

	 	Telefax: 888-366-9627
	 

	 	Email: blackburn.derek@gmail.com
	 
	 	 
	F.W.F. Robinson

	 	5851 Knights Drive, Manotick, ON K4M 1K3
	 

	 	Telefax: 613-692-5495; Email: fwfbill@rogers.com
	 
	 	 
	Francis Donald O’Dea

	 	421 Lansdowne Road North, Ottawa, ON K1M 0X8
	 

	 	Telefax: 613-741-2039; Email: fodea@arxxwalls.com
	 
	 	 
	Thomas J. Broeski

	 	32 Mount View Drive, Afton, VA 22920
	 

	 	Telefax: 540-943-4178; Email: info@adesigner.com
	 
	 	 
	Raj Kurichh

	 	2009 Cherington Crescent, Orleans, ON K4A 4Z8
	 

	 	Telefax: 613-841-9250;
	 

	 	Email: houseoffinelighting@rogers.com
	 
	 	 
	Megs Padiachy / Ramila Padiachy

	 	91 Baroness Drive, Nepean, ON K2G 6S2
	 

	 	Telefax: 613-884-0427; Email: drramila@magma.ca
	 
	 	 
	Patrick Pierre

	 	P.O. Box 7883, Naples, FL 34101
	 

	 	Telefax: 888-293-1114; Email: ppatmail@yahoo.com
	 
	 	 
	Matthew Sicoli

	 	23 Eleanor Drive, Ottawa, ON K2E 6A3
	 

	 	Telefax: -; Email: ripper_77@hotmail.com
	 
	 	 
	Kairos Partners LLC

	 	3625 Cumberland Blvd., Suite 600, Atlanta, GA 30339
	 

	 	Attention: Jefrey Wallace
	 

	 	Telefax: 678-202-8911; jmw@kairosllc.com

- 13 -

 

Exhibit 1

Non-Consolidated Financial Statements of PureRay Corporation, a Washington Corporation,

at January 31, 2009

- 14 -

 

PURERAY CORPORATION

(a Washington corporation)

FINANCIAL STATEMENTS

As of January 31, 2009

And for the Three and Nine Month Periods Then Ended

(unaudited)

 

 

PureRay Corporation

(A Washington corporation)

Balance Sheets

(Expressed in U.S. dollars)

	 	 	 	 	 	 	 	 	 
	 	 	January 31, 2009	 	April 30, 2008
	 	 	$	 	$
	 	 	Unaudited	 	 	 	 
	ASSETS
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Current Assets
	 	 	 	 	 	 	 	 
	Cash
	 	 	—	 	 	 	9,120	 
	Loan Receivable
	 	 	—	 	 	 	100,000	 
	 
	Total Current Assets
	 	 	—	 	 	 	109,120	 
	 
	 
	 	 	 	 	 	 	 	 
	LIABILITIES AND STOCKHOLDERS’ DEFICIT
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Current Liabilities
	 	 	 	 	 	 	 	 
	Accounts payable
	 	 	—	 	 	 	24,006	 
	Due to a related party
	 	 	49,500	 	 	 	49,500	 
	Loan payable
	 	 	—	 	 	 	100,000	 
	 
	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 
	Total Liabilities
	 	 	49,500	 	 	 	173,506	 
	 
	 
	 	 	 	 	 	 	 	 
	Contingencies
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Stockholders’ Equity (Deficit)
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Preferred Stock; Par value $0.0001 per share;
8,963,750 shares issued and outstanding
	 	 	896	 	 	 	—	 
	Common Stock; Par value $0.001 per share;
15,500,000 and 34,870,000 shares issued and
outstanding
	 	 	1,550	 	 	 	3,487	 
	Additional Paid-in Capital
	 	 	2,308,509	 	 	 	307,513	 
	Donated Capital
	 	 	2,000	 	 	 	2,000	 
	Deficit Accumulated During the Development Stage
	 	 	(2,362,455	)	 	 	(377,386	)
	 
	 
	 	 	 	 	 	 	 	 
	Total Stockholders’ Equity (Deficit)
	 	 	(49,500	)	 	 	(64,386	)
	 
	 
	 	 	 	 	 	 	 	 
	Total Liabilities and Stockholders’ Deficit
	 	 	—	 	 	 	109,120	 
	 

The Accompanying Notes are an Integral Part of These Financial Statements

 

 

PureRay Corporation

(A Washington corporation)

Statements of Operations

(Expressed in U.S. dollars)

(Unaudited)

	 	 	 	 	 	 	 	 	 
	 	 	Three Months	 	Nine Months
	 	 	Ended	 	Ended
	 	 	January 31, 2009	 	January 31, 2009
	 	 	$	 	$
	Revenue
	 	 	—	 	 	 	—	 
	 
	 
	 	 	 	 	 	 	 	 
	Expenses
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Professional fees and other expenses
	 	 	(7,290	)	 	 	62,969	 
	Loss on impairment in value of assets held for divestiture
	 	 	1,922,100	 	 	 	1,922,100	 
	 
	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 
	Total Expenses
	 	 	1,914,810	 	 	 	1,985,069	 
	 
	 
	 	 	 	 	 	 	 	 
	Net Loss for the Period
	 	 	(1,914,810	)	 	 	(1,985,069	)
	 

The Accompanying Notes are an Integral Part of These Financial Statements

 

 

PureRay Corporation

(A Washington corporation)

Statements of Cash Flows

(Expressed in U.S. dollars)

(Unaudited)

	 	 	 	 	 
	 	 	Nine Months
	 	 	Ended
	 	 	January 31, 2009
	 	 	$
	Operating Activities
	 	 	 	 
	 
	 	 	 	 
	Net loss
	 	 	(1,985,069	)
	 
	 	 	 	 
	Adjustments to reconcile net loss to cash used in operating activities
	 	 	 	 
	Loss on impairment in value of assets held for divestiture
	 	 	1,922,100	 
	Change in operating assets and liabilities
	 	 	 	 
	Accounts payable
	 	 	(24,006	)
	 
	 
	 	 	 	 
	Net Cash Used in Operating Activities
	 	 	(86,975	)
	 
	 
	 	 	 	 
	Financing Activities
	 	 	 	 
	 
	 	 	 	 
	Proceeds (repayment) of notes payable
	 	 	(100,000	)
	Proceeds from issuanace of common stock
	 	 	1,999,955	 
	Cash advances to subsidiary
	 	 	(1,822,100	)
	 
	 	 	 	 
	 
	 
	 	 	 	 
	Net Cash Provided By Financing Activities
	 	 	77,855	 
	 
	 
	 	 	 	 
	Increase (Decrease) In Cash
	 	 	(9,120	)
	 
	 	 	 	 
	Cash — Beginning of Period
	 	 	9,120	 
	 
	 
	 	 	 	 
	Cash — End of Period
	 	 	—	 
	 

The Accompanying Notes are an Integral Part of These Financial Statements

 

 

PureRay Corporation

(A Washington corporation)

Statement of Stockholders’ Equity (Deficit)

(Expressed in U.S. dollars)

(Unaudited)

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Preferred Shares	 	Common Shares	 	Additional	 	 	 	 	 	 
	 	 	 	 	 	 	Par	 	 	 	 	 	Par	 	Paid -In	 	Donated	 	Accumulated	 	 
	 	 	Number	 	Value	 	Number	 	Value	 	Capital	 	Capital	 	Deficit	 	Total
	 	 	#	 	$	 	#	 	$	 	$	 	$	 	$	 	$
	 
	Balance — April 30, 2008
	 	 	—	 	 	 	—	 	 	 	34,870,000	 	 	 	3,487	 	 	 	307,513	 	 	 	2,000	 	 	 	(377,386	)	 	 	(64,386	)
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Recapitalization transactions
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Cancellation of founders stock
	 	 	 	 	 	 	 	 	 	 	(21,370,000	)	 	 	(2,137	)	 	 	2,137	 	 	 	—	 	 	 	—	 	 	 	—	 
	Issuance of Preferred Shares
	 	 	8,963,750	 	 	 	896	 	 	 	—	 	 	 	—	 	 	 	(896	)	 	 	—	 	 	 	—	 	 	 	—	 
	Unit Private Placement
	 	 	—	 	 	 	—	 	 	 	2,000,000	 	 	 	200	 	 	 	1,999,755	 	 	 	—	 	 	 	 	 	 	 	1,999,955	 
	Net loss for the period
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(1,985,069	)	 	 	(1,985,069	)
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Balance — January 31, 2009
	 	 	8,963,750	 	 	 	896	 	 	 	15,500,000	 	 	 	1,550	 	 	 	2,308,509	 	 	 	2,000	 	 	 	(2,362,455	)	 	 	(49,500	)
	 

The Accompanying Notes are an Integral Part of These Financial Statements

 

PURERAY CORPORATION

(a development stage company)

NOTES TO FINANCIAL STATEMENTS

January 31, 2009

(unaudited)

1. Background

     PureRay Corporation (the “Company”) was incorporated in the State of Washington, U.S.A. on
March 24, 2000 and is a Development Stage Company as defined by Statement of Financial Accounting
Standard (“SFAS”) No. 7 “Accounting and Reporting for Enterprises in the Development Stage”.

      During fiscal 2003 the Company changed its name from FAR Group, Inc. to North American
Natural Gas, Inc. (“NAGA”) as it had anticipated that it would undertake a new business purpose in
the oil and gas exploration industry. As described more fully hereunder, NAGA consummated a series
of transactions in 2008 through which it was merged with PureRay Corporation (a Canadian
corporation, “PureCanada”) and changed its name to that of the acquired company.

     PureCanada was incorporated in Canada in September 2007. On July 24, 2008, PureCanada and
NAGA, a publicly held “shell company” (as such term is defined in Rule 12b-2 under the Securities
Exchange Act of 1934, the “Securities Exchange Act”) consummated a series of transactions (the
“Acquisition”) through which NAGA acquired an indirect 100% interest in PureCanada. After the
Acquisition, the Company remains a Development Stage Company. PureCanada has developed a
proprietary technology for multiplexing light bulbs and light bulb charging stations designed to
meet the demand for “off-grid” lighting in the developing world. It is currently engaged in
activities to patent the technology and to manufacture product prototypes.

        In connection with the Acquisition, the following transactions were completed:

	 	a.	 	PureCanada issued 35,855,000 shares to founders and investors, of which 15,185,000 shares (subscribed as of April 30, 2008) were issued for $0.00001 per share in cash,
and 20,670,000 shares were issued as consideration for the transfer to PureCanada of certain intangible assets by the founders of PureCanada.
	 
	 	b.	 	NAGA declared a 1.76 forward split of its common stock on May 23, 2008, after which there were 34,870,000 shares of its common stock outstanding.
	 
	 	c.	 	Jim Glavas, the former President and a former director of NAGA, contributed 21,370,000 post-split restricted shares of NAGA’s Common Stock to NAGA as a capital
contribution for no consideration, after which there were 13,500,000 shares of NAGA’s common stock outstanding.
	 
	 	d.	 	Pursuant to a Share Purchase Agreement, NAGA acquired, through an indirect wholly-owned subsidiary (“Acquisition Sub”), all of the outstanding shares of PureCanada by
issuing one (1) exchangeable share (the “Exchangeable Shares”) of Acquisition Sub for each share of PureCanada (total Exchangeable Shares issued, 35,855,000). The
Exchangeable Shares are non-voting but have other rights and privileges on a basis pari passu with the common stock of the Company.
	 
	 	e.	 	Under a Voting and Exchange Trust Agreement (the “Exchange Agreement”), the Company issued shares of preferred stock of the Company, par value $0.0001 per share (the
“Special Voting Stock”), in a ratio of a quarter (1/4) share of Special Voting Stock for each Exchangeable Share issued in connection with the Acquisition (for a total
of 8,963,750 shares of Special Voting Stock) to a trustee to be held for and on behalf of the registered holders of the Exchangeable Shares.
	 
	 	f.	 	NAGA completed a private placement (the “Offering”) of 2,000,000 units at a price of $1.00 per unit, whereby each unit is comprised of one common share and one share
purchase warrant (the “Warrants”) at an exercise price of
$1.00 per share for a period of six months. As of January 24,
2009, the Warrants have expired.
	 
	 	g.	 	The former sole director of NAGA appointed three holders of Exchangeable Shares to the Company’s Board of Directors and subsequently resigned from the Board of Directors.

1

 

PURERAY CORPORATION

(a development stage company)

NOTES TO FINANCIAL STATEMENTS

January 31, 2009

(unaudited)

2. Basis of Presentation
     

     The interim unaudited financial
statements are special purpose financial statements prepared solely for information purposes in
connection with the Planned Divestiture (Note 5) and have not been reviewed by the Company’s
independent accountants. The financial statements have been prepared in accordance with
accounting principles generally accepted in the United States
(“GAAP”) for interim financial
information, except as follows:

	 	1.	 	The financial statements do not include the assets and liabilities and results of
operations of the Company’s wholly-owned subsidiaries. The financial statements should be
read in conjunction with the consolidated financial statements of the Company and notes
thereto for the three and nine months ended January 31, 2009, included in the Company’s
Form 10-Q to be filed by March 17, 2009.
	 
	 	2.	 	Advances by the Company to PureCanada ($1,922,100 as of January 31, 2009), which are
eliminated in consolidated financial statements, have been charged to expense in the accompanying
statement of operations, as such amount will not be repaid by PureCanada or otherwise recovered
by the Company.
	 
	 	3.	 	The financial statements do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements. Therefore, these
financial statements should be read in conjunction with the Company’s audited financial statements
and notes thereto for the year ended April 30, 2008, included in the Company’s Annual Report on
Form 10-K filed on July 24, 2008 with the SEC.
	 
	 	4.	 	The Statements of Operations exclude per share data.
	 
	 	5.	 	The financial statements do not include a provision under Statement of Financial
Accounting Standards No. 123R to recognize compensation expense for the fair value of -warrants
granted to non-employees (Note 3). Consulting expense related to such warrants was treated as
an expense of PureCanada and has not been recognized in the stand-alone financial
statements of the parent company.

     The financial statements are prepared in conformity with accounting principles applicable to a
going concern, which contemplates the realization of assets and liquidation of liabilities in the
normal course of business. The Company does not have sufficient cash nor does it have an
established source of revenue to cover its ongoing costs of operations. As of January 31, 2009, the
Company has never generated any revenues and has accumulated losses of $2,362,455 since its
inception. These factors raise substantial doubt about the Company’s ability to continue as a going
concern. These financial statements do not include any adjustments that might result from the
outcome of this uncertainty.

3. Shareholders’ Equity
     

     The issued and outstanding shares of the Company are as follows (see Notes 1 and 2):

	 	 	 	 	 	 	 	 	 
	 	 	January 31,	 	April 30,
	 	 	2009	 	2008
	Preferred Shares
	 	 	8,963,750	 	 	 	—	 
	Common Shares
	 	 	15,500,000	 	 	 	34,870,000	 

      In addition to the issued and outstanding shares above, the Company has potentially dilutive
securities as follows:

	a.	 	The Exchangeable Shares (Note 1)
	 
	 	 	 

2

 

PURERAY CORPORATION

(a development stage company)

NOTES TO FINANCIAL STATEMENTS

January 31, 2009

(unaudited)

	b.	 	Warrants issued for services-In October 2008, the Company granted warrants to a
non-employee for the purchase of 750,000 common shares at an exercise price of $0.50 per
share, based upon the average trading price of the Company’s common stock for the immediately
succeeding five days following the date of grant. The warrants vest in four quarterly
installments beginning November 1, 2009. The fair value of the warrants will be amortized to
consulting expense over the vesting period at the fair value of the warrants at each vesting date. PureCanada recognized $26,250 of consulting expense for the three months ended January 31, 2009, estimated using the Black-Scholes Pricing Model with the following assumptions: risk-free interest rate of 2.6%; expected life of 5.3 years; expected volatility of 75%; and an expected dividend yield of 0.0%.
	 
	c.	 	2008 Stock Option and Incentive Plan (the “2008 Option Plan”)—The
Company adopted the 2008 Option Plan in October 2008. The 2008 Option
Plan authorizes up to 5,500,000 common shares for the grant of options
or restricted stock to qualified recipients, including employees and
non-employees. The exercise price of options and the value established
for restricted shares will be the then current fair value per common
share. Vesting schedules and other terms will be determined by the
Board of Directors upon each grant under the plan. No options or
restricted shares had been granted as of January 31, 2009.

4. Related Party Transactions

     As of January 31, 2009, $49,500 was due to a shareholder and former president of the Company
for cash advanced to the Company. The advance is non-interest bearing, unsecured and due on demand.

     At April 30, 2008, the Company had $100,000 outstanding under a non-interest bearing demand
loan from an unrelated third party. The Company advanced the funds to PureCanada to pay certain
costs and expenses in contemplation of the Acquisition. The Company subsequently borrowed an
additional $150,000 under the loan agreement and advanced those funds to PureCanada. In connection
with the Acquisition, the Company repaid in full the $250,000 outstanding balance of the loan.

     From the proceeds of the loan (above) and the Offering (Note 1) the Company has advanced a
total of $1,922,100 to PureCanada to fund its development stage operations. In connection with the
planned divesture described more fully in Note 5, the advances will not be repaid by PureCanada.

5. Subsequent Event -- Planned Divestiture

     
The board of directors of the Company has determined to unwind the Acquisition, divest its
holdings in PureRay Holdings and PureCanada and place the Company in, as nearly as practical, the
same position it was in prior to the entering into the Share Purchase Agreement and  related
agreements. On March 17, 2009, the Company entered into a Divestiture Agreement to effect the
unwind and divestiture. Under the terms of the Divestiture Agreement, a series of transactions
will occur the result of which will be to transfer ownership of PureRay Holdings and PureCanada
to the holders of the Exchangeable Shares. The Exchangeable Shares issued by PureCanada and the Special Voting Stock and
all warrants and options previously issued by the Company will be cancelled. Any amounts
previously advanced to PureCanada will be treated as a capital contribution to PureCanada. Any
assets and liabilities related to the operation of PureCanada since the date of the Acquisition
will be retained by PureCanada. As of January 31, 2009, all assets and liabilities reflected
in the consolidated balance sheet, with the exception of the $49,500 note payable to a
shareholder (Note 4), are related to the operations of PureCanada and will be retained by
PureCanada after the divestiture.

     
The closing of the Divestiture Agreement is subject to several conditions with respect to the
Company, PureRay Holdings, PureCanada and the Principals as set forth in the Divestiture
Agreement, including the condition that the Divestiture Agreement be approved by two-thirds
of the outstanding voting power of the Company pursuant to Section
12.020(5) of the Washington Business Corporation Act. Further, existing shareholders
have the right to dissent pursuant to Section 13.020(1)(c) of the Washington Business Corporation Act.

     In connection with the Divestiture Agreement, on March 17, 2009, the Company entered into a
subscription agreement with David Alley pursuant to which Mr. Alley purchased 20,000,000 restricted
shares of the Company’s common stock in consideration of $20,000.

3EX-10.3

Exhibit 10.3

SECOND AMENDMENT AND WAIVER

          SECOND AMENDMENT AND WAIVER, dated as of March 17, 2009 (this “Amendment”), to the
Amended and Restated Credit and Guarantee Agreement, dated as of April 25, 2006 (as amended prior
to the date hereof, the “Credit Agreement”), among LEAR CORPORATION, a Delaware corporation
(the “U.S. Borrower”), certain Subsidiaries of LEAR CORPORATION, the several lenders from
time to time parties thereto (the “Lenders”), the several agents parties thereto and
JPMORGAN CHASE BANK, N.A., as general administrative agent (the “General Administrative
Agent”).

W I T N E S S E T H:

          WHEREAS, the U.S. Borrower has requested, and the Majority Lenders and the General
Administrative Agent have agreed, upon the terms and subject to the conditions set forth herein,
that certain Events of Default will be waived and certain covenants will be amended for a certain
period of time as set forth herein;

          NOW, THEREFORE, the parties hereto hereby agree as follows:

          SECTION 1. Defined Terms. Capitalized terms used but not defined herein shall have
the meanings assigned to such terms in the Credit Agreement.

          SECTION 2. Waivers. (a) Until 5:00 p.m. (New York time) on May 15, 2009 (the
“Termination Date”), the undersigned Lenders hereby waive any Default or Event of Default
under paragraph (c) of Section 15 of the Credit Agreement which resulted from the U.S. Borrower’s
permitting the Leverage Ratio at the last day of the four consecutive fiscal quarters of the U.S.
Borrower ending with Q4 2008 to exceed the amount specified in subsection 13.1(b) of the Credit
Agreement.

          (b) Until the Termination Date, the undersigned Lenders hereby waive any Default or Event of
Default under paragraph (e) of Section 15 of the Credit Agreement if such Default or Event of
Default arises out of the existence of a “going concern” or like qualification or exception in the
auditor’s report accompanying the financial statements delivered pursuant to subsection 12.1(a) of
the Credit Agreement for the fiscal year ending December 31, 2008.

          (c) The waivers provided in this Section 2 shall terminate without any further act being
required on the Termination Date.

          SECTION 3. Amendments. (a) Until the Termination Date, subsection 13.1 of the
Credit Agreement is hereby amended by adding the following new paragraph at the end thereof:

“Notwithstanding the foregoing or any other provision hereof, the U.S. Borrower shall not be
subject to (x) the Interest Coverage Ratio covenant for the four consecutive fiscal quarters
of the U.S. Borrower ending with Q1 2009 specified in subsection (a) above or (y) the
Leverage Ratio covenant at the last day of the four consecutive fiscal quarters of the U.S.
Borrower ending with Q1 2009 specified in subsection (b) above.”

          (b) Until the Termination Date, clause (i) of Section 15 of the Credit Agreement is hereby
amended by (i) adding an “(x)” at the beginning thereof, (ii) deleting the “,” at the end of clause

 

 

2

(iv) thereof and substituting in lieu thereof the word “or” and (iii) deleting clause (vi)
thereof and substituting in lieu thereof the following:

     “(y) the Board of Directors of the U.S. Borrower shall authorize any of the foregoing;”

          (c) The amendments provided in this Section 3 shall terminate without any further act being
required on the Termination Date.

          SECTION 4. Conditions to Effectiveness of Amendment. This Amendment shall become
effective on the date (the “Amendment Effective Date”) on which the General Administrative
Agent shall have received a counterpart of this Amendment, executed and delivered by a duly
authorized officer of the U.S. Borrower, the other Borrowers and the Majority Lenders.

          SECTION 5. Fees. The U.S. Borrower shall pay to the General Administrative Agent,
on the Amendment Effective Date if this Amendment becomes effective prior to 2:00 p.m., New York
City time, and on the Business Day following the Amendment Effective Date if this Amendment becomes
effective after 2:00 p.m., New York City time, (a) for distribution to each Lender which has
delivered an executed copy of this Amendment to the General Administrative Agent on or prior to the
consent deadline for this Amendment, an amendment fee equal to 0.25% of such Lender’s U.S.
Revolving Credit Commitments and outstanding Term Loans, as applicable, and (b) fees payable for
the account of the General Administrative Agent in connection with this Amendment pursuant to
written agreement between the General Administrative Agent and the U.S. Borrower.

          SECTION 6. Effect on the Loan Documents. (a) Except as specifically amended or
waived herein, all Loan Documents shall continue to be in full force and effect and are hereby in
all respects ratified and confirmed. Each Borrower hereby agrees, with respect to each Loan
Document to which it is a party, that: (i) all of its obligations, liabilities and indebtedness
under such Loan Document shall remain in full force and effect on a continuous basis after giving
effect to this Amendment and (ii) all of the Liens and security interests created and arising under
such Loan Document shall remain in full force and effect on a continuous basis, and the perfected
status and priority of each such Lien and security interest continues in full force and effect on a
continuous basis, unimpaired, uninterrupted and undischarged, after giving effect to this
Amendment, as collateral security for its obligations, liabilities and indebtedness under the
Credit Agreement.

          (b) Except as specifically provided herein, the execution, delivery and effectiveness of this
Amendment shall not operate as a waiver of any right, power or remedy of any Lender or the General
Administrative Agent under any of the Loan Documents, nor constitute a waiver of any provision of
any of the Loan Documents.

          (c) Each Borrower and the other parties hereto acknowledge and agree that this Amendment shall
constitute a Loan Document.

          SECTION 7. Expenses. The U.S. Borrower agrees to pay or reimburse the General
Administrative Agent for all of its reasonable out-of-pocket costs and expenses incurred in
connection with this Amendment and any other documents prepared in connection herewith, including,
without limitation, the reasonable fees and disbursements of counsel to the General Administrative
Agent.

          SECTION 8. Representations and Warranties. The U.S. Borrower hereby represents and
warrants that on the date hereof (a) each of the representations and warranties made by each of the
Loan Parties in or pursuant to the Loan Documents shall be, after giving effect to this Amendment,
true and correct in all material respects as if made on and as of the Amendment Effective Date
after giving

 

 

3

effect to this Amendment (except that any representation or warranty which by its terms is
made as of a specified date shall be true and correct in all material respects as of such specified
date) and (b) after giving effect to this Amendment, no Event of Default shall have occurred and be
continuing.

          SECTION 9. GOVERNING LAW; WAIVER OF JURY TRIAL. THIS AMENDMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK. EACH PARTY HERETO HEREBY AGREES AS SET FORTH IN
SUBSECTION 17.13 OF THE CREDIT AGREEMENT AS IF SUCH SUBSECTION WERE SET FORTH IN FULL HEREIN.

          SECTION 10. Execution in Counterparts. This Amendment may be executed by one or
more of the parties to this Amendment on any number of separate counterparts, and all of said
counterparts taken together shall be deemed to constitute one and the same instrument.

[Remainder of page intentionally left blank.]

 

 

          IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and
delivered by their respective proper and duly authorized officers as of the day and year first
above written.

	 	 	 	 	 
	 	LEAR CORPORATION

 	 
	 	By:  	____________________
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	LEAR CANADA

 	 
	 	By:  	____________________
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	LEAR CORPORATION SWEDEN AB

 	 
	 	By:  	____________________
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	LEAR FINANCIAL SERVICES (NETHERLANDS) B.V.

 	 
	 	By:  	____________________
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	LEAR CORPORATION (UK) LIMITED

 	 
	 	By:  	____________________
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	LEAR CORPORATION MEXICO, S. DE R.L. DE C.V.

 	 
	 	By:  	____________________
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

 

 

	 	 	 	 	 
	 	JPMORGAN CHASE BANK, N.A., as General Administrative

Agent and as a Lender

 	 
	 	By:  	____________________
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

 

 

	 	 	 	 	 
	 	Signature page to Second Amendment and Waiver dated

as of March 17, 2009 to the Lear Corporation Amended

and Restated Credit and Guarantee Agreement, dated as

of April 25, 2006

________________________  

(Name of Lender)

 	 
	 	By:  	____________________
 	 
	 	 	Name:  	 	 
	 	 	Title:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00155-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00155-of-00352.parquet"}]]