UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): December 4, 2013

Zenosense, Inc.
(Exact name of registrant as specified in its charter)
 
  Nevada     000-54936     N/A
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(IRS Employer
Identification No.)

 
Avda Cortes Valencianas 58
Planta 5
Valencia, Spain
   
46015 N
(Address of principal executive offices)
 
(Zip Code)
 
Registrant’s telephone number, including area code:   011-34-960- 454- 202
 


(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
 
1

 
 
Item 1.01 — Entry into a Material Definitive Agreement

Zenosense, Inc., formerly Braeden Valley Mines, Inc., a Nevada corporation (the “Company”), entered into a Development and Exclusive License Agreement (the “License Agreement”) with Sgenia Industrial, S.L. and its subsidiaries Sgenia Soluciones, S.L. and ZENON Biosystem, S.L., all of which are formed under the laws of Spain. The License Agreement has an effective date of December 4, 2013. Sgenia Industrial and Sgenia Soluciones are together referred to as “Sgenia.”  ZENON Biosystem, S.L. is referred to as “Zenon.”

Under the terms of the License Agreement, the Company will provide Zenon with capital  for the development of the sensory technology for a methicillin resistant Staphylococcus aureus / Staphylococcus aureus (“MRSA/SA”) detection device and other improvements and variations to the products (the “Sgenia Products”) to be used in the hospital and health care environments, in exchange for a worldwide, exclusive license to manufacture, market and sell the resulting products, subject to certain limitations and a royalty arrangement on a revenue sharing basis.

Under the License Agreement, the Company will fund the development of the Sgenia Products pursuant to a research and development plan proposed by Sgenia.  The funding will be provided on an advance basis, per month based on three development stages, for the period to be funded.  In return, the Company will have the exclusive right and obligation to manufacture, formulate, package, market and sell the Sgenia Products world-wide, for 40 years.  All intellectual property developed by Sgenia and/or Zenon at any time during the term related to manufacturing, formulating and/or packaging process shall be shared and licensed to Company on a royalty-free basis.  Sgenia will also supply to Company, at a negotiated price based on quantity, all of its requirements for the integrated circuits on microchips that are necessary for the operation of the Sgenia Products. Sgenia, Zenon and the Company will also work together to research and develop the Sgenia Products and establish written plans and reviewing committees for the management of the overall development project and commercialization of the Sgenia Products.  The license to the Company includes all improvements to the Sgenia Products.

In additional to providing the development funding, the Company will also pay Zenon royalties for sales of the Sgenia Products, payable 60 days after each fiscal quarter of the Company (the “Royalties”).  The Royalties will be 20% of net sales, which is calculated based on gross sales of the device and the installation and training for the Sgenia Products, less various expenses, including manufacturing, components acquired from Sgenia, commissions, refunds and discounts and sales taxes.  If the Sgenia Products are sold by Sgenia or Zenon in Spain for original use in Spain, then the Royalties will be reduced. The Company also has the right to sublicense to other parties throughout the world, except in Spain if and when, if at all, Sgenia or Zenon seek to act as the distributor in that territory.

Sgenia and Zenon have granted the Company the first right to negotiate for a license to any improvements and variations of the Sgenia Products that are not covered by the license or other commercial uses of the sensory technology that is based on the Sgenia patents for use in relation to hospital acquired infections, which currently are not licensed under the License Agreement, and for products developed for any other commercial uses for the sensory technology based on the patents held by Sgenia Soluciones and its affiliates.

The License Agreement may be terminated by either party if a party commits a material breach that is not cured in 90 days after the non-breaching party provides a notice of the breach.  Upon the termination of the License Agreement for any reason other than the Company’s failure to cure a material breach, the Company has the right to dispose of any of the Sgenia Products then on hand, and to complete orders for Sgenia Products then on order.

 
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All the parties have agreed to various collaboration obligations to assure and maintain quality of the Sgenia Products, to oversee manufacturing, marketing and pricing and achieving marketing objectives.  The obligations extend to the budgeting and expense of development of the Sgenia Products.  The Company’s funding of development is limited to the initial budget and achieving each stage of development, in an aggregate of approximately $1.26 million, of which $296,749, was provided as of December 4, 2013, which budget can be modified after collaboration and approval of the Company in its sole discretion.  The funding period is through December 3, 2014, based on the current business plan.

Sgenia will be the exclusive supplier of the integrated circuits for the Sgenia Products, which it will be responsible for manufacturing and imprinting the necessary circuitry.

The Sgenia Products, once manufactured and distributed, may only be sold under the limited warranties of having been manufactured in accordance with specifications, practices and procedures established by the parties, to be free of material defects and free from contamination and to be manufactured and labeled in accordance with applicable health laws and regulations.

Sgenia and Zenon are responsible for regulatory filings in jurisdictions selected by the Company, subject to the collaborative process and any regulatory approvals are jointly owned by the parties to the License Agreement.  The expenses of meeting the regulatory requirements will be borne by the Company, subject to its right to approve the regulatory budget, which is separate from the development funding budget.

Sgenia is responsible for prosecuting, maintaining and protecting its patents and patent applications on which the Sgenia Products are based.  The Company may request Sgenia to take action to stop competitive infringement of the Sgenia Products, and take over the responsibility for such action if Sgenia does not act, and retain any award achieved by Company action.
 
The License Agreement is governed by New York law, and the venue for actions based on the License Agreement is to be in New York.

The foregoing description of the License Agreement does not purport to be complete and is qualified in its entirety by reference to the complete text of the agreement, which will be filed, with confidential terms redacted, with the Securities and Exchange Commission as an exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ending December 31, 2013.

Item 2.01 - Completion of Acquisition or Disposition of Assets

We entered into a License Agreement, effective December 4, 2013, with Sgenia and Zenon and have obtained the worldwide exclusive license to manufacture, market and sell the Sgenia Products.   Reference is made to the disclosure set forth under Item 1.01 of this report, which disclosure is incorporated herein by reference.
 
Our arrangement with Sgenia and Zenon is solely that of a license agreement.  We did not acquire any operations of Sgenia or Zenon, we did not enter into any joint venture or similar arrangements with Sgenia or Zenon, and we did not hire any of their employees. Sgenia and Zenon remain independent from the Company, as we remain independent from them.  We have no equity interest in Sgenia and Zenon, and have no rights of control over their management, such as the appointment of officers and directors.  Other than the terms set forth in the License Agreement where we will work together on the development of the products for which we will obtain the license and future collaboration for the manufacturing and marketing of any developed products, we do not have any control over Sgenia or Zenon’s daily operations. Sgenia and Zenon are independent operational companies in Spain. The development of products is the responsibility of Zenon and Sgenia.

In this document, we rely on and refer to information and statistics regarding the industry relating to Sgenia Products that we have obtained from a variety of sources. This information is publicly available for free and has not been specifically prepared for us for use in this report or otherwise. Although we believe that this information is generally reliable, we cannot guarantee, nor have we independently verified, the accuracy and completeness of this information.  Since the Company did not merger into or acquire any formerly operating business, there is no pro forma financial information that can be updated in this Form 8-K.

 
3

 
Incorporation of Company
 
Zenosense, Inc., formerly Braeden Valley Mines, Inc., was incorporated on August 11, 2008 in the State of Nevada. Our authorized common stock currently consists of 500,000,000 authorized shares of common stock, with par value of $0.001.

The original purpose of the Company was to acquire and to develop mineral properties and to engage in the exploration for gold and other mineral properties.  We acquired the right to explore and develop four unpatented lode mining claims situated in the Northern Tuscarora Mountains of Elko County, Nevada. On May 15, 2013, our mining lease expired and we have lost our right to explore the mining property. We currently have no other mining properties or mining assets.  We indicated on our Form 10-Q/A report filed on February 28, 2013, under the Securities and Exchange Act of 1934, as amended, that we were a shell company.

We held an annual meeting of stockholders on November 22, 2013, at which there were elected three directors, the authorized share capital was increased to 500,000,000 shares, the name of the Company was changed to “Zenonsense, Inc.” and the bylaws were amended to increase to the permitted maximum size of the board of directors to be 12 persons.

On December 2, 2013, the Company completed a dividend of two additional shares for each outstanding share.

In November 2013, the Company borrowed $318,749 from an unrelated third party, for working capital, including the payment of the first development fee under the License Agreement, which amount was converted into 796,872 shares of common stock on December 4, 2013, at a per share rate of $0.40, in full satisfaction of the debt.  The debt did not bear interest.  The issuance of the shares was made to a sophisticated, accredited investor under the provisions of Section 4(2) of the Securities Act.

From time to time for working capital, the Company borrowed an aggregate of $146,536 from our Chief Executive Officer, Mr. Vasquez. The debt did not bear interest. On December 4, 2013, Mr. Vasquez agreed to convert this debt into 366,340 shares of common stock, at the per share rate of $0.40, in full satisfaction of the debt.   The issuance of the shares was made to a sophisticated, accredited investor under the provisions of Section 4(2) of the Securities Act.

On December 4, 2013, the Company entered into a securities purchase agreement for the sale of shares of common stock to a non-United States, sophisticated, accredited investor under the provisions of Section 4(2) of the Securities Act of 1933, as amended (“Securities Act”), for the initial sale of 375,000 shares of common stock at a gross sale price of $150,000.  The securities purchase agreement provides that the investor will purchase an additional $180,000 worth of common stock at a per share price determined by the following formula: the quotient of (a) the purchase price divided by (b) the market price where the market price will be eighty-five percent (85%) of the average of the published closing prices (whether or not there are actual trades for such trading day) for a share of common stock for the 10 trading days ending on the second trading day prior to the date of the additional purchase of shares.  The Company and investor agree to use their best efforts to agree on a second closing date, which will not be later than January 29, 2014.

To be effective December 7, 2013, Mr. Alejandro Vasquez will resign from all his officer positions, and the Board of Directors appointed Mr. Carlos Jose Gil, a current director of the Company, as the chief executive officer to replace Mr. Vasquez upon his resignation.  Additionally, Mr. Hilario Vanegas Gutierrez will resign as a director and an officer of the Company at the same time.  Separately, Messrs. Vasquez and Gutierrez have agreed to surrender as a contribution to the capital of the Company an aggregate of 43,500,000 shares of common stock.

Based on the current outstanding, less the contribution to capital to be completed, plus the two debt conversions and the sale of the shares in a private placement on December 4, 2013 only, the outstanding shares of common stock of the company, after these transactions are completed and the shares cancelled or issued as the case may be, there will be 48,038,212 shares of common stock issued and outstanding.

 
4

 
General

The Company, after entering into the License Agreement, is now a development stage company seeking to commence the new business of developing a device to detect MRSA/SA in healthcare environments, for which we have the world-wide manufacturing, marketing and selling rights once it is successfully developed and approved by the relevant regulatory authorities. The proposed Sgenia Products will be developed to be utilized primarily in hospitals and other medical care centers to detect MRSA/SA, which is a type of bacteria that is resistant to many antibiotics and is a common cause of hospital-acquired infections. The Sgenia Products will be based on and expanded from the licensed technologies licensed from Sgenia under the License Agreement.

See the description of the license agreement in Item 1.01, which is incorporated by reference.

Product and Potential Revenue Lines

The Company has entered into a license agreement to engage Sgenia and Zenon to develop a device to be used in hospitals and other medical care centers to detect MRSA/SA.  The product is intended to be one that detects the presence of MRSA/SA on both individuals and in the general environment rather than diagnosing whether or not a particular patient is infected with the MRSA/SA.   MRSA stands for methicillin-resistant Staphylococcus aureus, which is a type of Staphylococcus aureus that is resistant to the antibacterial activity of methicillin and other related antibiotics of the penicillin class. Staphylococcus aureus is a species of bacterium commonly found on the skin and/or in the noses of healthy people. Although it is usually harmless at these sites, it may occasionally get into the body (for example, through breaks in the skin such as abrasions, cuts, wounds, surgical incisions or indwelling catheters) and cause infections. In the hospital and other medical care environments, MRSA/SA has become an increasing issue as these infections can cause complications in a recovering patient and can result in death of the patient.
 
 
The objective of the Sgenia Products is to alert the medial care facility to a potential for infection in a patient, in personnel or in a specific area, such as a room or operating theater, so that the individuals or area can be isolated; then the individuals can undergo a full diagnostic test and the areas can be cleansed or sanitized until the bacteria is no longer poses a threat to the patients and personnel.  The product will be based on patents and trade secrets owned by Sgenia.  The Company will have collaborative rights in the development of the Sgenia Products, regulatory approval applications and prosecution, and the manufacturing design of the Sgenia Products.  Together the Company, Sgenia and Zenon will collaborate on the manufacture process, selection of the actual manufacturer, marketing and distribution and potential sublicensing of the Sgenia Products.  These various collaborations will be by joint committees and consultations among the Company, Sgenia and Zenon, and are set forth with particularity in the License Agreement.  In certain instances, such as oversight on the development budget, the Company will have the final right of determination.

The Company currently does not generate any revenue. If the development of the Sgenia Products is successful, the Company believes that its principal sources of revenues will be from the sale of the Sgenia Products and the training of personnel in the use of the Sgenia Products. There is no assurance that a marketable product will be developed, approved by regulatory authorities, manufactured or successfully distributed.  There can be no assurance that the Company will be able to generate any revenues in the future.  The Company will need substantial funding for all the phases of its business plan.

Manufacturing and Supplies

Under the License Agreement, the Company has the right to manufacture the Sgenia Products.  The development plan of the Sgenia Products includes the obligation of the developer to create the manufacturing design and provide it to the Company for use by the selected product manufacture. The manufacturing design is to be provided on a royalty free basis. The Company and Sgenia and Zenon will collaborate on the manufacturing design, process and selection of manufacturer. Neither the Company nor Sgenia and Zenon have manufactured devices similar to the proposed Sgenia Products, therefore there can be no assurance that they will be successful in their designing of a product that can be manufactured on a commercial scale.

 
5

 
 
One of the essential components in the Sgenia Products is a microchip that carries the integrated circuits necessary for the operation of the Sgenia Products. Sgenia and Zenon will provide the necessary microchip integrated circuit with the required microprocessing circuitry, which will be imprinted by Sgenia and Zenon at their facilities with the circuitry based on the intellectual property of Sgenia.  Sgenia and Zenon will supply the chip to the Company on an as required basis, from time to time, at fixed, negotiated prices depending on the quantities ordered.  Sgenia and Zenon have only obtained microchips on a test basis, to date, and therefore there can be no assurance of their ability to obtain the necessary quantities of the microchips and imprint them at their facilities in commercial quantities at the necessary quality level.   While we believe Sgenia and Zenon will be able to adequately supply the Company requirements for this component, if they fail in their obligation, then under the terms of the License Agreement the Company has the right to obtain the microchip component from other suppliers and obtain the design of the circuitry from Sgenia and Zenon for our own manufacture of the microchips. No assurance can be given that in the event of a default by Sgenia and Zenon that the Company will be able to obtain the circuitry and to be able to continue to produce the Sgenia Products.

The Company plans to subcontract manufacturing of the Sgenia Products. It is anticipated that a number of the parts will be standard electronic components that are readily available in the manufacturing market.  For those components that are not obtained from open sources and not obtained from Sgenia and Zenon, the Company believes that there are numerous manufacturers throughout the world which are capable of producing the necessary additional parts that will comprise the Sgenia Products and which are capable of assembling the Sgenia Products, at a high quality level and efficient rate of production for prices that will work within the projected pricing of the Sgenia Products.

Regulation

The Company expects that its Sgenia Products will be subject to some level of regulation in the various intended markets. Such regulation will be oriented towards the efficacy of the Sgenia Product for its intended purpose, in the healthcare environment. Currently, the first market being contemplated is the United States.  This will require obtaining certain approvals from the U.S. Federal Food and Drug Administration (the “FDA”) in advance of the manufacture and marketing and sale of the Sgenia Products.  Because the Sgenia Product is not based on invitro analysis, the Company does not believe it will be subject to the FDA guidance relating to the analytical and clinical performance of nucleic acid-based in vitro diagnostic devices (“IVDs”) intended for the detection and differentiation of MRSA and SA, which was issued in 2011. That regulation is oriented to culture based, blood sample based analytics in laboratory settings.  Notwithstanding that, we anticipate that our Sgenia Products will be regulated as a medical device. The Food, Drug, and Cosmetic Act (“FD&C Act”) and other federal and state statutes and regulations govern the research, design, development, preclinical and clinical testing, manufacturing, safety, approval or clearance, labeling, packaging, storage, record keeping, servicing, promotion, import and export, and distribution of medical devices.

Under the License Agreement, Sgenia and Zenon are responsible for obtaining the required regulatory approvals for the Sgenia Products.  We have the right of notice and to participate in the regulatory process, and we will be responsible for funding the associated expenses.  Sgenia and Zenon, as well as ourselves, have not sought regulatory approval before the FDA or any other agency for any medical devices. There is no assurance that we will be able to pursue regulatory approval or obtain the necessary licensing.  We may have to engage professionals to help or take over the regulatory process, which will add expense to our development costs, which we cannot estimate at this time.

FDA Regulation

Unless an exemption applies, we believe that each medical device that we plan to commercially distribute in the U.S. will require prior pre-market notification and 510(k) clearance from the FDA.  Although we cannot determine with certainty at this time because the Sgenia Products are still in the development stage, we believe that they will be categorized as either a Class I or Class II device.

The FDA classifies medical devices into one of three classes. Devices being placed in Class I or II require fewer controls because they are deemed to pose lower risk. Class I devices are subject to general controls such as labeling, pre-market notification, and adherence to the FDA’s Quality System Regulation (a set of current good manufacturing practice requirements put forth by the FDA, which governs the methods used in, and the facilities and controls used for, the design, manufacture, packaging, labeling, storage, installation and servicing of finished devices) (“QSR”). Class II devices are subject to special controls such as performance standards, post-market surveillance, FDA guidelines, as well as general controls. Some Class I and Class II devices are exempted by regulation from the premarket notification, or 510(k), clearance requirement or the requirement of compliance with certain provisions of the QSR. Devices will be placed in Class III and will require approval of a PMA application (i) if insufficient information exists to determine that the application of general controls or special controls of the device are sufficient to provide reasonable assurance of safety and effectiveness, or (ii) if they are life-sustaining, life-supporting or implantable devices, or (iii)  if the FDA deems these devices to be “not substantially equivalent” either to a previously 510(k) cleared device or to a “pre-amendment” Class III device in commercial distribution before May 28, 1976, for which PMA applications have not been required.

 
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Clinical trials are sometimes required for a 510(k) clearance. These trials generally require submission of an application for an Investigational Device Exemption (“IDE”) to the FDA. An IDE application must be supported by appropriate data, such as laboratory testing results, and a testing protocol that is scientifically sound. The IDE application must be approved in advance by the FDA, unless the product is deemed a non-significant risk device and eligible for more abbreviated IDE requirements. The FDA’s approval of an IDE allows clinical testing to go forward, but does not bind the FDA to accept the results of the trial as sufficient to prove the product’s safety and effectiveness, even if the trial meets its intended success criteria.

Any clinical trials must be conducted in accordance with the FDA’s IDE regulations that govern investigational device labeling, prohibit promotion of the investigational device, and specify an array of recordkeeping, reporting and monitoring responsibilities of study sponsors and study investigators.

The withdrawal of previously received approvals or failure to comply with existing or future regulatory requirements would have a material adverse effect on our business, financial condition and results of operations.

After a device is approved or cleared and placed in commercial distribution, numerous regulatory requirements apply. These include:

·  
establishment registration and device listing;
·  
QSR, which requires manufacturers to follow design, testing, control, documentation and other quality assurance procedures;
·  
labeling regulations, which prohibit the promotion of products for unapproved or “off-label” uses and impose other restrictions on labeling;
·  
medical device reporting regulations, which require that manufacturers report to the FDA if a device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if it were to recur; and
·  
corrections and removal reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FD&C Act that may present a risk to health.

The FDA enforces regulatory requirements by conducting periodic, unannounced inspections and market surveillance. Inspections may include the manufacturing facilities of our subcontractors. Thus, we must continue to spend time, money, and effort to maintain compliance.

Failure to comply with applicable regulatory requirements may result in enforcement action by the FDA, which may lead to any of the following sanctions:

·  
warning letters;
·  
fines and civil penalties;
·  
unanticipated expenditures;
·  
delays in approving or refusal to approve our applications, including supplements;
·  
withdrawal of FDA approval;
·  
product recall or seizure;
·  
interruption of production;
·  
operating restrictions;
·  
injunctions; and
·  
criminal prosecution.

 
7

 
Our contract manufacturers, specification developers, and some suppliers of components will be required to manufacture our products in compliance with current Good Manufacturing Practices (“cGMP”) requirements set forth in the QSR. The QSR requires a quality system for the design, manufacture, packaging, labeling, storage, installation and servicing of marketed devices, and includes extensive requirements with respect to quality management and organization, device design, equipment, purchase and handling of components, production and process controls, packaging and labeling controls, device evaluation, distribution, installation, complaint handling, servicing, and record keeping. The FDA enforces the QSR through periodic unannounced inspections that may include the manufacturing facilities of our subcontractors. We expect that our subcontractors’ manufacturing facilities will be subject to domestic and international regulatory inspection and review. If the FDA believes any of our contract manufacturers or regulated suppliers are not in compliance with these requirements, it can shut down the manufacturing operations of our contract manufacturers, require recall of our products, refuse to approve new marketing applications, institute legal proceedings to detain or seize products, enjoin future violations, or assess civil and criminal penalties against us or our officers or other employees. Any such action by the FDA would have a material adverse effect on our business. We cannot assure you that we will be able to comply with all applicable FDA regulations.

Non-FDA Government Regulation

The advertising of our products will be subject to both FDA and Federal Trade Commission regulations. In addition, the sale and marketing of medical devices are subject to a complex system of federal and state laws and regulations intended to deter, detect, and respond to fraud and abuse in the healthcare system. These laws and regulations restrict and may prohibit pricing, discounting, commissions and other commercial practices that may be typical outside of the healthcare business. In particular, anti-kickback and self-referral laws and regulations will limit our flexibility in crafting promotional programs and other financial arrangements in connection with the sale of our products and related services, especially with respect to customers seeking reimbursement, if available, through Medicare or Medicaid and other government programs. Sanctions for violating federal laws include criminal and civil penalties that range from punitive sanctions, damage assessments, money penalties, imprisonment, denial of Medicare and Medicaid payments, or exclusion from the Medicare and Medicaid programs, or both. These laws also impose an affirmative duty on those receiving Medicare or Medicaid funding to ensure that they do not employ or contract with persons excluded from the Medicare and other government programs.

Many states have adopted or are considering legislative proposals similar to the federal fraud and abuse laws, some of which extend beyond the Medicare and Medicaid programs. These state laws typically impose criminal and civil penalties similar to the federal laws.

In the ordinary course of their business, medical device manufacturers and suppliers have been and are subject regularly to inquiries, investigations and audits by federal and state agencies that oversee these laws and regulations. Federal and state legislation has increased funding for investigations and enforcement actions, which have increased dramatically over the past several years. This trend is expected to continue. Private enforcement of healthcare fraud also has increased, due in large part to amendments to the Civil False Claims Act in 1986 that were designed to encourage private persons to sue on behalf of the government. These whistleblower suits by private persons, known as qui tam relaters, may be filed by almost anyone, including physicians and their employees and patients, our employees, and even competitors.

European Device Regulation

The medical device regulatory process for international distribution is subject to government regulations that will vary by country from those having few or no regulations to those having pre-market controls and pre-market acceptance. In the EU, for example, medical devices require a Conformité Européenne (“CE”) Mark in order to be placed in the market. The CE Mark certifies that a product has met EU consumer safety, health and environmental requirements. CE marking requires meeting the conditions of the European Directive to which the medical device applies. The directives regulate the design, manufacture, clinical trials, labeling, and post-market surveillance reporting activities for medical devices.

To facilitate CE Mark approval, it may be beneficial or necessary to complete the International Organization for Standardization (“ISO”) certification process for the Company’s comprehensive management system for the design and manufacture of medical devices.

 
8

 
Marketing and Customers

We intend to seek as our first customers the distributors of medical devices and hospitals.  The use of medical device distributors is an efficient way to market and to place our device into the mix of products available to health care providers who have concern about MRSA and SA, and to gain immediate exposure to the end users based on a distributor’s network of clients.  We also will seek entry directly with hospitals and hospital medical clinical chains, as they are the most likely to be interested in our product, as their environments are the most susceptible to MRSA and SA outbreaks.  The Company currently does not have any distribution agreements or other arrangements of any kind in place and has not done any marketing to any distributors or specific end users. There can be no assurance given that the Company will be able to establish any distribution agreements or arrangements, or that health care providers will be interested in our products.

As a supplement to the use of distributors, we plan to use other forms of direct sales, presentations and appointments with healthcare associations and distributors in the healthcare industry to generate recognition and acceptance of our products. We also plan to use print media and brochures in conjunction with our distribution and sales efforts.
 
 
We plan to use trade shows, demonstration opportunities and similar venues to increase brand awareness and product understanding and recognition. These venues can also foster valuable business partnerships. Generally, these trade shows are held on a regular annual basis and attract the important companies and users within the industry, which will provide a valuable venue for the Company to showcase the company and its products.
 
We also plan to offer training in the use of the Sgenia Products.  We believe that this will be necessary not only at the initial installation of the devices but on an ongoing basis as personnel at the health care facilities changes over time.  We anticipate being able to charge for the training, and anticipate it being an important, supplemental revenue source.
 
We also anticipate having to provide certain consulting services with respect to the environment design and installation of our products.  Although installation will be the responsibility of the end user, the placement of a device can be important in its efficiency to detect MRSA/SA.  We plan on charging separately for this service.
 
 Being able to offer training on an ongoing basis and installation consulting will be an additional marketing tool because most medical device users do not want to be unable to obtain training for their personnel on a regular basis or mis-install a device so as to get the full benefit of their capital commitment in medical devices. The assurance that we will be able to help them get the full benefits of their devices, in terms of placement and use, will provide the end user comfort in that they will have the necessary support from the device manufacturer and seller.
 
Competition

At this time there are a number of producers of MRSA/SA detection devices.  Companies such as Cephide, Nerac, and FCubed have various devices for use in the detection of hospital environment borne diseases using different means of detection.  Most of these devices, and those companies identified above rely on blood, swab and DNA testing.  The proposed Sgenia Product will not rely on such patient specific forms of analysis, and therefore we believe that there is no direct competition for our proposed product.  We believe our proposed product will be less expensive to deploy than the patient specific analytical methods, and because it will be oriented to monitoring the medical space environment, unobtrusive to doctors, health care personnel and patients.  We believe it will be more efficient and more effective in preventing the spread of MRSA/ SA because our product is intended to be preventative.  We believe our product will be able to detect MRSA/ SA in the environment before infection takes place so that the area can be isolated and cleansed before a patient is infected and remedial medical treatment is required.

Because hospital acquired infections are such a growing problem and deadly in many instances, it is likely that there will be other entrants into the market for developing and selling detection systems, whether based on invitro or other technologies.  We anticipate that many of these companies, including those identified above, will be better capitalized, have established market presence and have internal development teams able to develop new and different products in competition with the product anticipated to be developed under the License Agreement.  Moreover, such companies have an established market presence with products that have received FDA approval and are perceived by health care providers to be working to solve the problem.  Therefore, the Company, in marketing its product, will have to overcome the established positions of then current products and establish a reputation among its customers that the Sgenia Product is reliable, cost effective and problem solving.

 
9

 
Intellectual Property

The Company will not have any ownership rights in the underlying technology on which the Sgenia Product relies, but will only have a license agreement with respect to the products derived therefrom and within the scope of the license.  If Sgenia or Zenon ceases operations, then under the terms of the License Agreement, the Company will have the right to copies of the underlying technology to use for the term of the license arrangement for the manufacture and marketing of the Sgenia Products.  In the future, the Company may develop trademarks and service marks in connection with its business, which it will own and which it will seek to protect by usage and registration.

Employees

The Company is undergoing a change in its executive staff.  Prior to December 7, 2013, the Company had two employees; however, to be effective December 7, 2013, they will resign and Mr. Carlos Jose Gil, one of our current directors, will become the sole employee, as the Chief Executive Officer.  As the Company works with the Sgenia group to develop the Sgenia Products, the Company anticipates adding personnel and engaging consultants.
 
 
Property

The Company currently does not own any real properties, and operates from a shared office for which it is not obligated to pay rent.

RISK FACTORS
 
We have not generated any revenues and have incurred losses for the period since inception, there is an uncertainty about whether we will be able to continue as a going concern and, as a result, a possibility that shareholders may lose some or all of their investment in our Company.
 
We are a development stage company. We did not generate any revenues for the year ended December 31, 2012, and had a net loss of $25,150. We have had no revenues and have a total accumulated deficit of $102,145, since inception. We anticipate generating losses for the next 18 months and thereafter, as our principal activity will be funding the development of the Sgenia Products, with no sales or other revenue making operations. Therefore, we may be unable to continue operations in the future as a going concern. We will need a substantial amount of financing to develop the Sgenia Product. If financing is available, it may involve issuing securities senior to our common stock. In addition, in the event we do not raise additional capital, there is every likelihood that our growth will be restricted and we may be forced to scale back or curtail implementing our business plan. Without adequate capital, we may be in default under our funding obligations under the License Agreement. If we fail to fully fund the development expenses, the funds previously invested in development will be lost.  If we cannot continue as a viable entity, our shareholders may lose some or all of their investment in the Company.
 
The Company will need a substantial amount of capital to fulfill its obligation under the License Agreement.
 
Under the License Agreement and for the implementation of our business plan, the Company's capital requirements will be significant over the longer term. The Company does not have any commercial products at this time, and, therefore, it is not currently generating any cash flow to fund its operations. There can be no assurance that the Company will be able to generate cash flows from operations in the future, which will be sufficient to fund its business activities. In connection with the License Agreement, the Company is required to raise at least $1,256,000 to support the development of the Sgenia Products. Thereafter it will need to raise additional funds to manufacture, market and distribute the Sgenia Products. Therefore, the Company plans from time to time over the next 36 months, if not also thereafter, to seek additional equity capital to fund its business development and operations. There is no assurance that it will be able to obtain financing in the amounts required or on terms acceptable to the Company. If financing is not obtained, then the Company may not be able to fulfill its obligations under the License Agreement, may lose its license arrangement with Sgenia and Zenon.  Any funds provided to Sgenia and Zenon or spent on other aspects of product development, regulatory approval, manufacturing design and components, as well as marketing, will be lost in the event that the license arrangement is terminated. Except for the securities purchase agreement to sell an aggregate of $330,000 worth of common stock, the Company has no current arrangements with respect to additional financing. There can be no assurance that any sources of additional financing will be available to the Company on acceptable terms, or at all.
 
 
 
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We are dependent on the continuing innovation and input from Sgenia.
 
The success of our business depends heavily on the success of Sgenia and its technologies.  Although the Company and Sgenia and Zenon will collaborate in the research and development of Sgenia technologies, we do not have any ownership interest or corporate control over Sgenia or Zenon and their respective day-to-day operations.  We have certain collaborative rights through various joint committees to influence the process and results of the licensing arrangements, but only for some do we have the final determinative power. If there is a breakdown of cooperation or if Sgenia fails to retain its innovation talents or continue its operation, these will have a material adverse effect on our business, operating results and financial condition.
 
The Sgenia technologies are not yet verified in practice or on a commercial scale.
 
The success of our Company depends on whether Sgenia and Zenon can successfully apply its technologies to develop MRSA/SA infection detection devices.  The Sgenia technologies, however, are in the early stages of development. The technologies have not been tested in a commercial setting or manufactured on a commercial scale. There is no assurance that Sgenia will be able to fully develop commercial products that produce the anticipated objective, on a timely basis or at all. There is no assurance that we will be able to successfully obtain regulatory approval, manufacture, promote and sell the Sgenia Products. You should understand that your investment is in a development-stage technology company, with no assurances of an ability to develop a commercial product or obtain commercial revenues, and such revenues may be insufficient for our operations to continue.
 
Laboratory conditions differ from commercial manufacturing conditions and field conditions, which could affect the effectiveness of our product. Failures to effectively move from laboratory to the field would harm our business .
 
Observations and developments that may be achievable under laboratory circumstances may not be able to be replicated in commercial manufacturing facilities or in the use of products in the field. The end products will be used in hospitals and other medical care environments, and it is not clear whether the devices we plan to produce can successfully detect the bacteria that causes MRSA/SA in those environments or any other environments where the products may be used. The inability of our development stage products to be manufactured in contract manufacturing facilities or meet the demands of users in the field would harm our business.
 
The Sgenia Products will be subject to regulatory approval and monitoring as they are marketed, and there is no assurance that Sgenia and Zenon will be able to obtain the necessary licensing and we will be able to maintain that license.
 
The Sgenia Products, unless they will qualify for an exception, will have to be licensed under 510(k) of the Food and Drug Act and the regulations of the United States FDA.  This is a process by which the efficacy of the product will be reviewed and verified, based on the underlying science and possible clinical testing.  There is no assurance that the necessary regulatory approval of the Sgenia Products will be obtained.  If obtained, the Company and its manufacturers will have to comply with various good manufacturing requirements, labeling and other regulation, both at the federal and state levels.  If not approved, the proposed products may have to be redesigned, if that is determined possible.  The Company expects that the regulatory requirements will cause a considerable expense and obstacle to having a marketable product, and may delay the anticipated launch of the product. Such delay may stretch into years.  Additionally, if the Company does not adhere to the legal requirements for the manufacture and marketing of the products, the regulatory approval may be terminated, and the Company may be subject to different kinds of penalties and sanctions.
 
Sgenia, Zenon and the Company do not have prior experience in seeking or obtaining regulatory approval in any jurisdiction for medical devices.  This lack of experience may prevent or make more expensive our obtaining any necessary regulatory approval.
 
Sgenia and Zenon, as well as ourselves, have not sought regulatory approval before the FDA or any other agency for any medical devices. There is no assurance that we will be able to pursue regulatory approval or obtain the necessary licensing.  We may have to engage professionals to help or take over the regulatory process, which will add expense to our development costs, which we cannot estimate at this time.  We may not be able to fund this additional cost, in which case the development expense will be lost.
 
We will rely on subcontractors to manufacture the Sgenia Products, and market launch could be adversely affected if the subcontractors decline to manufacture our designs.
 
Although we will be responsible for the manufacturing, marketing and selling of the Sgenia Products, we will not manufacture any products directly. Our business model contemplates outsourcing the manufacturing process to subcontractors. It is not guaranteed that we will be able to find competent subcontractors that have the technical and manufacturing capacity to produce the Sgenia Products at a profitable price.  Any reluctance by subcontractors to manufacture our designs could adversely affect the market acceptance of our designs.
 
 
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We will rely on Sgenia and Zenon for a critical component, which if we are not able to purchase from them or obtain the underlying technology according to the License Agreement, we will not be able to manufacture the Sgenia Products.
 
The Sgenia Products rely on certain patents and intellectual property held exclusively by Sgenia.  The License Agreement provides that Sgenia and Zenon will obtain microchips and imprint them with critical circuitry that is essential to the operations of the Sgenia Products and provide this component to us at negotiated prices, as we need it from time to time for our manufacturing of the Sgenia Products.  If we are not able to obtain the microchips in the quantity and quality needed, on a timely basis, then we will not be able to manufacture the Sgenia Products. There is no assurance that Sgenia and Zenon will be able to produce the microchips.  Although we have the right to obtain the technology to produce our own microchips in the event that Sgenia terminates its business or breaches the License Agreement, there is no assurance that we will be able to obtain that technology from Sgenia and if obtained to product the microchips. The inability to obtain these microchips will cause us irreparable harm and investors likely will lose their investment in the Company.
 
To successfully implement our business plan, we will need to hire new personnel to establish and implement the manufacturing, marketing and sales plans for the Sgenia Products.

The Company does not have any full-time employees, and our current executive officers provide their services on a part-time, as needed basis.  In the future, we will need to hire employees to further our new business venture.  Specifically, we will need employees to monitor the development of the Sgenia Products and to help design the manufacturing protocols and establish a manufacturing plan for the Sgenia Products.  Although Sgenia and Zenon are responsible for the regulatory approval, we will need our employees to participate in the regulatory process.  Additionally, we will need employees to identify and monitor the selected manufacturers, establish marketing plans and implement sales.  Since we have the worldwide exclusive license to manufacture, market and sell the Sgenia Products, we might need to set up offices in different countries and hire talent from different countries to implement our business plans. Our ability to identify, attract, hire, train, retain and motivate highly skilled technical, managerial, sales, marketing and customer service personnel is uncertain. Competition for such personnel is intense, and there can be no assurance that we will be able to successfully attract, assimilate or retain sufficiently qualified personnel. The failure to attract and retain necessary technical, managerial, sales, marketing and service personnel could have a material adverse effect on our business, operating results and financial condition.

The strategic relationships we rely on may not be successful.

To successfully manufacture, market and sell the Sgenia Products in the international market, we need to develop strategic relationships with supply chain companies, distribution companies, regional providers, hospitals, healthcare professionals and others to help establish our market presence and enhance the efforts of our own market penetration, business development, implementation, manufacturing, and sales. These relationships are expected to, but may not, succeed. There can be no assurance that these relationships will develop and mature, or that any of our existing relationships will be successful or that potential competitors will not develop more substantial relationships with attractive partners. Our inability to successfully implement our strategy of building valuable strategic relationships could harm our business.

The complexity of our products could result in unforeseen delays or expenses from undetected defects or errors in our technology designs, which could reduce the market acceptance for our new products, damage our reputation with prospective customers and adversely affect our operating costs.
 
Highly complex products such as our proposed technology solutions frequently contain defects and errors when they are first introduced or as new versions are released. We may in the future experience these defects, errors and bugs. If any of our proprietary features contain defects or errors when first introduced or as new versions are released, we may be unable to correct these problems. Consequently, our reputation may be damaged and hospitals may be reluctant to use our products in the future, which could harm our ability to attract new customers and negatively impact our financial results. In addition, these defects or errors could interrupt or delay sales to our future customers. These problems may also result in claims against us by the hospital, healthcare professional and patients. Potential product defects could also result in a claim for substantial damages against us, regardless of our responsibility for such failure, and could cause us to incur substantial costs in defending against such lawsuits.
 
Until the Company has developed and launched the Sgenia Products at commercial levels, there is uncertainty of market acceptance and the efficacy of the commercialization strategy.
 
As the Company is a start-up, development stage company, it has not yet launched any of its products at a commercial level. Until it has consistent, proven sales, there is uncertainty of the product acceptance in the intended markets and the ability of the Company to commercialize any of its products. Until then, the Company believes it will have to fund its operations from capital rather than revenues. If there are no, or only low levels of, product acceptance and sales, the Company will have to alter its business plan. As is typical of any new business concept, demand and market acceptance for newly introduced products and services is subject to great uncertainty. Achieving market acceptance will require the Company to undertake substantial marketing efforts and to make significant expenditures to create awareness of and demand for its products. The Company has limited marketing experience and limited financial, personnel and other resources to undertake extensive marketing activities. The Company's efforts will be subject to all of the risks associated with the commercialization of new products, including unanticipated delays, expenses, technical problems or difficulties and technological obsolescence due to changing technology and the evolution of industry standards. There can be no assurance that markets for the Company's products will not be limited, or that the Company's strategies will result in successful product commercialization or in initial or continued market acceptance for the Products.
 
 
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We may be subject to intellectual property rights claims by third parties, which are extremely costly to defend, could require us to pay significant damages and could limit our ability to use certain technologies.
 
The success of the Sgenia Products depends on Sgenia maintaining and obtaining the necessary patents and its ability to protect its intellectual property worldwide. There can be no assurance as to the breadth or degree of protection which existing or future patents, if any, and other trade secrets may afford the Company under the terms of the License Agreement, that any patent applications that may be made in the future will result in issued patents, that the Company's future trademarks, if any, will be upheld if challenged, or that competitors will not develop similar or superior methods or products outside the protection of any patent issued in relation to the Sgenia Products.
 
Although the Company believes, based on representations in the License Agreement, that the intellectual property Sgenia is using in developing Sgenia Products does not infringe any patents, trademarks, or violate proprietary rights of others, it is possible that its existing intellectual property may not be valid or that infringement of existing or future patents, trademarks or proprietary rights may occur. In the event the Sgenia Products infringe patents or proprietary rights of others, Sgenia and the Company may be required to modify the design of the Sgenia Products, change the name of its products or obtain a license. There can be no assurance that Sgenia and the Company will be able to do so in a timely manner, upon acceptable terms and conditions or at all. The failure to do any of the foregoing could have a material adverse effect upon the Company. In addition, there can be no assurance that either Sgenia or the Company will have the financial or other resources necessary to defend a patent infringement or proprietary rights violation action. Moreover, if the Company's products infringe patents, trademarks or proprietary rights of others, the Company could, under certain circumstances, become liable for damages, which also could have a material adverse effect on the Company.
 
Both Sgenia and the Company rely on proprietary know-how and employ various methods to protect the source codes, concepts, ideas and documentation of their respective intellectual property and proprietary technologies. However, such methods may not afford complete protection, and there can be no assurance that others will not independently develop similar know-how or obtain access to Sgenia’s or the Company's know-how or software codes, concepts, ideas and documentation. Although the Company has and expects to have confidentiality agreements with its employees and appropriate vendors, there can be no assurance that such arrangements will adequately protect the Company's trade secrets or those on which it relies owned by others.
 
The Company has paid no cash dividends to date.

The Company has paid no cash dividends on its common stock to date.  Payment of dividends on the common stock is within the discretion of the board of directors and will depend upon the Company's earnings, its capital requirements and financial condition, and other relevant factors.  The Company does not currently intend to declare any dividends on its common stock in the foreseeable future.

There is not now or may never be an active market for our common stock.
 
We are providing no assurances of any kind or nature whatsoever that an active market for our common stock will ever develop. Investors should understand that there may be no alternative exit strategy for them to recover or liquidate their investments in the common stock of the Company. Accordingly, investors must be prepared to bear the entire economic risk of an investment in the common stock for an indefinite period of time. If a public or private market ever develops for our common stock, we anticipate that our then financial condition, product offerings, and product roll out strategy and implementation will greatly impact the value of the stock, which may not reflect our business prospects.

 
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We are subject to the reporting requirements of the United States securities laws, which will require expenditure of capital and other resources.

We are a public reporting company subject to the information and reporting requirements of the Securities Exchange Act of 1934 and other federal securities laws, including, without limitation, compliance with the Sarbanes-Oxley Act (“Sarbanes”). The costs of preparing and filing annual and quarterly reports, proxy statements and other information with the SEC and furnishing audited reports to stockholders will cause our expenses to be substantially higher than they would otherwise be if we were privately-held. It will be difficult, costly, and time-consuming for us to develop and implement internal controls and reporting procedures required by Sarbanes, and we will require additional staff and third-party assistance to develop and implement appropriate internal controls and procedures. If we fail to or are unable to comply with Sarbanes, we will not be able to obtain independent accountant certifications that the Sarbanes requires publicly-traded companies to obtain.
 
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
Reference is made to the disclosure on pages 24 to 27, entitled “ Management’s Discussion and Analysis of Financial Condition and Results of Operations ” set forth in the Form 10-K of the Company, filed with the Securities and Exchange Commission on April 15, 2013, and the disclosure on pages 4 to 8 entitled “ Management’s Discussion and Analysis of Financial Condition and Results of Operations ” set forth in the Form 10-Q of the Company, filed with the Securities and Exchange Commission on November 12, 2013, which is incorporated herein by reference.  Such disclosure is supplemented by the information set forth in this Current Report on Form 8-K.

FINANCIAL INFORMATION
 
No financial information, including pro forma financial statements, are required to be filed with this Current Report on Form 8-K to reflect the entry into the License Agreement and the change of business plan being pursued in respect of the development of the Sgenia Products.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
The information set forth in “ Security Ownership of Certain Beneficial Owners and Management ” in the Company’s Proxy Statement filed   with the Securities and Exchange Commission on November 8, 2013, at page 13, is incorporated herein by reference.
 
DIRECTORS AND EXECUTIVE OFFICERS
 
The information set forth in “Election of Directors” in the Company’s Proxy Statement filed on November 8, 2013, at pages 7 to 9, is incorporated herein by reference.

COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT.
 
The information set forth in “ Compliance with Section 16(a) of the Securities Exchange Act ” in the Company’s Proxy Statement filed with the Securities and Exchange Commission on November 8, 2013, at page 14, is incorporated herein by reference.

EXECUTIVE COMPENSATION
 
The information set forth in “ Executive Compensation ” in the Company’s Proxy Statement filed with the Securities and Exchange Commission on November 8, 2013, at page 14, is incorporated herein by reference.

The Company has entered into a service agreement on December 5, 2013, under which it will obtain the services of Mr. Carlos Jose Gil as the Chief Executive Officer of the Company.  Mr. Gil will be paid a base salary of 4,500 Euros, and will be provided with additional cash compensation equal to 10 % of the net sales generated from the sales of the Company of the products licensed under the License Agreement, based on the same definition of “net sales” in the License Agreement.  The employment arrangement is for a period of one year, which is automatically extended on a month to month basis, unless three months advance notice is given to not extend the agreement.  Mr. Gil may terminate the agreement on three months’ notice and the Company may terminate the agreement on one months’ notice.  Mr. Gil will spend a majority of his time on the business affairs of the Company, but there is no specified number of hours to be so expended, and Mr. Gil has the right to pursue other business activities directly or through his consulting firm, Ksego Engineering S.L.  The agreement contains standard provisions to terminate for cause and disability.
 
 
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
 
The information set forth in “ Certain Relationships and Related Transactions ” in the Company’s Proxy Statement filed with the Securities and Exchange Commission on November 8, 2013, at page 14, is incorporated herein by reference.
 
From time to time, the Company borrowed an aggregate of $146,536 for working capital from Mr. B. Alejandro Vasquez, which did not bear interest and as due on demand.  This debt was converted into 366,340 shares of common stock at the rate of $0.40 on December 4, 2013, in full satisfaction of the Company obligation.

Code of Ethics
 
We have not yet prepared a written code of ethics and employment standards.  We have only recently commenced operations.  We expect to implement a Code of Ethics during the next fiscal year.

Corporate Governance; Audit Committee Financial Expert
 
We currently do not have an audit committee financial expert or an independent audit committee expert at this time.


LEGAL PROCEEDINGS
 
The information required to be provided herein is set forth in “ Legal Proceedings ”in the Company’s Form 10-K, at page 23, filed with the Securities and Exchange Commission on April 15, 2013, and is incorporated herein by reference.
 
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
 ISSUER PURCHASES OF EQUITY SECURITIES
 
The information required to be provided herein is set forth in “ Market for Common Equity ” in the Company’s Form 10-K, at pages 23 and 24, filed with the Securities and Exchange Commission on April 15, 2013, and is incorporated herein by reference.
 
INDEMNIFICATION OF DIRECTORS AND OFFICERS.
 
Section 78.7502 of the Nevada Revised Statutes and Article VI of our Bylaws permit us to indemnify our officers and directors and certain other persons against expenses in defense of a suit to which they are parties by reason of such office, so long as the persons conducted themselves in good faith and the persons reasonably believed that their conduct was in our best interests or not opposed to our best interests and, with respect to any criminal action or proceeding, had no reasonable cause to believe their conduct was unlawful.
 
Indemnification is not permitted in connection with a proceeding by us or in our right in which the officer or director was adjudged liable to us or in connection with any other proceeding charging that the officer or director derived an improper personal benefit, whether or not involving action in an official capacity.
 
 
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ITEM 3.02  UNREGISTERED SALES OF EQUITY SECURITIES
 
Prior to November 2013, the Company borrowed $318,749, from an investor, for the payment of the first development fee under the License Agreement and other working capital needs, which amount was converted into 796,872 shares of common stock on December 4, 2013, at a per share rate of $0.40, in full satisfaction of the debt, pursuant to a written debt conversion agreement.  The debt did not bear interest.  The issuance of the shares was made to a sophisticated, accredited investor under the provisions of Section 4(2) of the Securities Act. The debt conversion agreement does not provide for any registration rights for the shares sold or to be sold.  The shares are being issued as restricted stock, subject to a standard Securities Act restrictive legend.
 
From time to time for working capital, the Company borrowed an aggregate of $146,536 from our Chief Executive Officer, Mr. Vasquez. The debt did not bear interest. On December 4, 2013, Mr. Vasquez agreed to convert this debt into 366,340 shares of common stock, at the per share rate of $0.40, in full satisfaction of the debt. The issuance of the shares was made to a sophisticated, accredited investor under the provisions of Section 4(2) of the Securities Act.
 
On December 4, 2013, the Company entered into a securities purchase agreement for the sale of shares of common stock to a non-United States, sophisticated, accredited investor under the provisions of Section 4(2) of the Securities Act of 1933, as amended (“Securities Act”), for the initial sale of 375,000 shares of common stock at a gross sale price of $150,000.  The securities purchase agreement provides that the investor will purchase an additional $180,000 worth of common stock at a per share price determined by the following formula: the quotient of (a) the purchase price divided by (b) the market price where the market price will be eighty-five percent (85%) of the average of the published closing prices (whether or not there are actual trades for such trading day) for a share of common stock for the 10 trading days ending on the second trading day prior to the date of the additional purchase of shares.  The Company and investor agree to use their best efforts to agree on a second closing date, which will not be later than January 29, 2014.
 
Messrs. Vasquez and Gutierrez have agreed to surrender as a contribution to the capital of the Company an aggregate of 43,500,000 shares of common stock.
 
ITEM 5.02  DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTEMTN OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENT OF CERTAIN OFFICERS

To be effective December 7, 2013, Mr. Alejandro Vasquez will resign from all his officer positions, and the Board of Directors appointed Mr. Carlos Jose Gil, a current director of the Company, as the chief executive officer to replace Mr. Vasquez upon his resignation.  Additionally, Mr. Hilario Vanegas Gutierrez will resign as a director and an officer of the Company at the same time.

The Company has entered into a service agreement on December 5, 2013, under which it will obtain the services of Mr. Carlos Jose Gil as the Chief Executive Officer of the Company.  Mr. Gil will be paid a base salary of 4,500 Euros, and will be provided with additional cash compensation equal to 10 % of the net sales generated from the sales of the Company of the products licensed under the License Agreement, based on the same definition of “net sales” in the License Agreement.  The employment arrangement is for a period of one year, which is automatically extended on a month to month basis, unless three months advance notice is given to not extend the agreement.  Mr. Gil may terminate the agreement on three months’ notice and the Company may terminate the agreement on one months’ notice.  Mr. Gil will spend a majority of his time on the business affairs of the Company, but there is no specified number of hours to be so expended, and Mr. Gil has the right to pursue other business activities directly or through his consulting firm, Ksego Engineering S.L.  The agreement contains standard provisions to terminate for cause and disability.
 
ITEM 5.06 CHANGE IN SHELL COMPANY STATUS

We have been classified as a “shell company” (as such term is defined in Rule 12b-2 under the Exchange Act) until immediately before the execution of a License Agreement.  Effective as of December 4, 2013, 2013, the Company has commence a new business venture by entering into the License Agreement set forth under Items 1.01 and 2.01 of this report, which disclosure is incorporated herein by reference.  Consequently, we believe that the transaction has caused us to cease being a shell company.

 
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ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

(d) Exhibits

     
Exhibit No.
 
Description
     
10.1
 
Development and Exclusive License Agreement, by and among the Company, Sgenia Solutions, S.L., and ZENON Biosystem, S.L., dated November 26, 2013.
     
10.2
 
Amendment No. 1 to Development and Exclusive License Agreement, dated December 4, 2013, delaying the effective date and adding Sgenia Industrial, S.L. as a party
     
10.3
 
Form of Employment Agreement with Mr. Carlos Jose Gil, dated December 5, 2013.
     
10.4
 
Form of Debt Conversion Agreement dated December 4, 2013, between B. Alejandro Vasquez and the Company, for the issuance of 366,340 shares.
     
10.5
 
Form of Debt Conversion Agreement dated December 4, 2013, for the issuance of 796,872 shares.
     
10.6
 
Form of Securities Purchase Agreement, dated December 4, 2013.
     



 
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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

         
 
ZENOSENSE, INC.
 
 
Date: December 6, 2013 
By:  
/s/ B. Alejandro Vasquez
 
   
B Alejandro Vasquez,
President and Chief Executive Officer 
 
       
 
 
 

 

 
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Exhibit 10.1
DEVELOPMENT AND EXCLUSIVE LICENSE AGREEMENT
 
 
 
AGREEMENT, dated as of November 26, 2013, among Sgenia Solutiones, S.L. (“Sgenia”), ZENON Biosystem, S.L.  (“Subco”), a subsidiary wholly owned by Sgenia, both of which are formed under the laws of Spain, and Braeden Valley Mines Inc., a Nevada corporation (the “Company”).
 
Whereas, Sgenia has developed certain technology and owns certain intellectual property relating to sensory monitoring of defined environments, referred to as the “Sensory Technology” herein; and
 
Whereas, Sgenia has established a subsidiary, Subco, and licensed Subco under Spanish law all the intellectual property necessary to use the Sensory Technology to develop a Methicillin-Resistant Staphylococcus Aureus / Staphylococcus Aureus (“MRSA/SA”) detection device and other devices to detect Hospital Acquired Infections (“HAIs”); and
 
Whereas, Subco, and its parent Sgenia for the benefit of Subco and itself, seek an arrangement with the Company for the provision of development capital for the MRSA/SA detection device in exchange for a worldwide, exclusive license to manufacture, market and sell the resulting product, subject to certain limitations and a royalty arrangement on a revenue sharing basis; and
 
Whereas, the Company seeks the license arrangement embodied in this Agreement for the MRSA/SA detection device in exchange for its funding Subco development activities;
 
Whereas, the Company is also being granted the right of first negotiation for additional future products related to MRSA/SA, other HAI products, and the same right for all other products based on the Sensory Technology; and
 
Whereas, Sgenia, Subco and the Company will work together on various aspects of the development, manufacture and marketing of the resulting product or products, as embodied in this Agreement.
 
1.   Definitions.
 
a.   “Affiliate” shall mean a corporation, association, foundation, institute, or other entity that directly or indirectly controls, is controlled by, or is under common control with another entity.  Control means actual control, or ownership or other beneficial interest in, or control of, more than 50% of the voting stock or other voting interest of a corporation, association, foundation, institute, or other entity.
 
b.   “Chip” shall mean any type of microcontroller chips, memory chip or similar microelectronic component programed with the Sgenia Software to detect MRSA/SA. The Chip will be protected against inverse engineering so as to protect the Sgenia Software.
 
c.   “Designee” shall mean a corporation or other entity that is employed by, under contract to, or in partnership with Sgenia, Subco or Company, and a Sublicensee, or an Affiliate of the foregoing, to make, use, sell, promote, distribute, market, import, or export the Product.
 
d.   “Effective Date” shall be the date on which this Agreement is executed by Sgenia, Subco and Company
 
 
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e.   “Field” shall mean any and all uses.
 
f.   “Health Registration” means any and all consents, licenses, registrations, authorizations, and approvals (including, where applicable, pricing and reimbursement approvals) required by a Regulatory Authority such as the United States Food and Drug Administration (“USFDA”), the European Agency for the Evaluation of Medical Products or any other Ministry of Health, for the distribution, sale, manufacture, or testing of the Product in the Field.
 
g.   “Materials” shall mean the tangible physical material developed by Sgenia, Subco and Company and any Designees, Sublicensees, and Affiliates of the foregoing relating to the Products and substantially constructed from the components listed in Exhibit A hereto, and any progeny or derivatives thereof.  “Sgenia-generated Materials” shall mean the tangible physical material developed by developed by Sgenia and/or Subco relating to the Sgenia Patents and substantially constructed from the components listed in Exhibit A hereto, and any progeny and derivatives thereof.
 
h.   “Net Sales” shall mean the greater of the gross invoice or contract price to Third Party customers for the Product, its installation and the related training whether at the time of installation or subsequent thereto, less:  (i) direct manufacturing costs of Product and of the provision of installation and training expense, each as determined by United States Generally Applied Accounting Practices, (ii) the cost to Company of the Chips as provided by Sgenia and/or Subco or their affiliates, to the extent not included in the direct manufacturing costs of Product, (iii) normal and customary quantity and/or cash discounts and allowances actually given and shown on the invoice; (iv) commissions paid to Third Parties, including distributors, freight, postage, shipping, and insurance expenses separately identified in such invoice; (v) credits or refunds actually allowed for bona fide returns (net of all returns actually made or allowed as supported by credit memorandum actually issued to the customers) of Products; and (vi) sales and other taxes and duties directly related to the sale, to the extent that such items are included in the gross invoice price (but not including taxes assessed against or measured by the income derived from such sale), plus Upfront, Milestone and Lump Sum Payments.   Any discounts and allowances based on overall purchases by the customer or its Affiliate may be applied to reduce Net Sales only to the extent of the pro rata amount of such discounts or rebates attributable to the Products included in such overall purchases. Any of the deductions listed above which involves a payment by Sgenia or Company and Designees, Sublicensee, or Affiliates of the foregoing shall be taken as a deduction against aggregate sales for the calendar quarter in which the expense is accrued by Sgenia or Company and Designees, Sublicensee, or Affiliates of the foregoing.  
 
For the clarification of the calculation of Net Sales, if a Product is sold in combination with one or more other products or services, the services relating to installation and training at any time is included therein, but warranty and other revenue sources of any other products and services will not be included in the gross invoice or contract price of the Products for purposes of Net Sales, pursuant to the understanding that the Sgengia and Company have the right to generate other forms of income premised on the Product.
 
i.   “Sgenia Patent” or “Sgenia Patents” shall mean the patents and patent applications listed in Exhibit B hereto; any application owned in whole or in part or filed by Sgenia ; any continuation applications, divisional applications, or continuation in part applications that claim priority to the patents and/or applications listed in Exhibit B ; any patents that issue from any of the foregoing; and any reissues, re-examinations, renewals, substitutions, and extensions of any of the foregoing.
 
j.   “Patent Product” or “Patent Products” shall mean any product or service (or any component there) that is, incorporates, or relates to a Sgenia Patent for use in relation to devices to detect MRSA/SA and the discovery, development, manufacture, use, sale, distribution, rental, importation, exportation, or lease of which cannot be effected without infringing, in the relevant jurisdiction, a claim of a Sgenia Patent that has neither expired nor been declared invalid or that is described by a pending claim of a pending patent application within the Sgenia Patents covering the relevant jurisdiction.
 
k.   “Product” or “Products” shall mean a Patent Product.
 
l.   “Regulatory Authority” means any governmental authority in a country or region that regulates the manufacture or sale of medically related products, including the USFDA and the relevant European agency, and any successors thereto.
 
 
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m.   “Sgenia Entity” means Sgenia, Subco and or any entity directly or indirectly controlling, controlled by or under common control with Sgenia from time to time.
 
n.   “Sgenia Software” means software developed by or for any Sgenia Entity before or during the term of this Agreement, including (i) enhancements, additions and changes that (a) improves the function of, (b) adds a new function to or (c) substantially enhances the performance of Sgenia Software or any Product, including any improvements, new use or new functions, in any form, that have a value or utility separate from the Sgenia Software and any Product, (ii) error corrections and (iii) new releases.
 
o.   “Sgenia Territory” means the Kingdom of Spain, as it exists or existed on September 1, 2013.
 
p.    “Software Documentation” means any existing or hereinafter created installation guides, operating, training, and user manuals, functional and technical specifications, database schema and other documentation pertaining to the Sgenia Software to describe the manner of use of such software, or which includes  standard operating instructions relating to such software, including but not limited to a copy of the standard associated control statements and other documentation used for operation and use of the software; manuals consisting of instructions and procedures for systems and operations personnel and end users, and any other related documentation.
 
q.   “Sublicensee” shall mean any corporation or other business entity to whom Sgenia, Subco or Company has granted a sublicense to any of the rights transferred in this Agreement, including permitted sublicensees of such corporations or other business entities.
 
r.   “Technical Information” shall mean any know-how, information (technical, process, clinical or other), knowledge, research, trade secrets, techniques, designs, data, Sgenia Software,  Software Documentation,  specifications, practices, procedures, assays, formulae, processes, systems, improvements, methods, skill, test and other data including chemical, pharmacological, toxicological and clinical test and other data, analytical and quality control data, and laboratory notes that:
 
                                (i) relate to Sgenia, Subco or Materials; and;
 
                                (ii) is owned by Sgenia or controlled by Sgenia with the right to grant an exclusive or nonexclusive sublicense to Subco and/or the Company; and
 
                                (iii) (1) was conceived, reduced to practice, or developed, in whole or in part, in the laboratories/offices of Sgenia and/or Subco before the Effective Date, and/or (2) is conceived, reduced to practice, or developed, in whole or in part, in the laboratories/offices of Sgenia and/or Subco after the Effective Date (“Future Technical Information”), but only to the extent before it is disclosed to an employee or consultant of Company or Sublicensee, Designee or Affiliates of the foregoing and relates to the Product.
 
s.    “Territory” shall mean worldwide, unless Sgenia and Subco exercise their right to market and sell Product in the Sgenia Territory.
 
t.    “Third Party” shall mean any entity other than Sgenia, Subco and Company, and the Sublicensees, Designees, or Affiliates of the foregoing.
 
 
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u.    “Upfront, Milestone, and Lump Sum Payments” shall mean any funds, including but not limited to cash payments or cash equivalents, or securities, received by the Company from Sublicensees as full or partial consideration for the grant of any sublicense by the Company pursuant to Section 2(b); provided that funds derived from the following shall be excluded:
 
(i)           Proceeds from the sale of equity or equity interests in Company, but only to the extent the price of the securities purchased are a good faith price resulting from an arms’ length transaction approved by the Company’s directors.
 
(ii)           Loans and advances, but only to the extent they are repaid or reimbursed to the grantor.
 
(iii)           Funds that are designated in writing to be used and actually used for research, development, manufacturing, commercialization, and marketing of Products, including operations support, testing, patent expenses, obtaining regulatory approval and upfront, milestone, lump sum and other payments to licensors of the Company.
 
(iv)           Payments for Products that are calculated based on sales or a percentage of sales of a Product, but excluding a minimum payment or milestone payment which are not creditable against royalties.  This subsection 1(q)(iv) shall not, in any way, affect the right of Sgenia or Subco to receive royalties under Section 7 of the Agreement.
 
v.   “Valid Claim” shall mean a claim that has not expired and that has not been found invalid by a court of competent jurisdiction from which no appeal can be taken.
 
2.   License Grant
 
a.   Sgenia and Subco jointly and severally grant to the Company, upon and subject to all the terms and conditions of this Agreement:
 
i.   The sole and exclusive right and license under, and to use, practice, commercialize and exploit, the Sgenia Patents to develop, manufacture, have manufactured, make, have made, use, sell, have sold, import, export, distribute, rent or lease the Products (including without limitation any improvements and varisations thereto) in the Field throughout the Territory, together with the right to grant sublicenses as herein provided; and;
 
ii.   To the extent Sgenia and Subco each has the power to so grant, the sole and exclusive right and license under, and to use, practice, commercialize and exploit, Technical Information and Material to develop, manufacture, have manufactured, make, have made, use, sell, have sold, export, import, distribute, rent or lease the Product (including without limitation any improvements and varisations thereto) in the Field throughout the Territory, together with the right to grant sublicenses as herein provided.  Otherwise, the nonexclusive right and license under, and to use, practice, commercialize and exploit, Technical Information and Material to develop, manufacture, have manufactured, make, have made, use, sell, have sold, export, import, distribute, rent or lease the Product (including without limitation any improvements and varisations thereto) in the Field throughout the Territory, together with the right to grant sublicenses as herein provided.
 
b.   Sgenia and Subco, each grants to the Company the right to grant sublicenses to other parties in the Field throughout the Territory other than the Sgenia Territory, either directly or through a Sublicensee, provided that: (i) the Company remains fully liable for the performance of its obligations in the Agreement; (ii) the Company remains fully liable for the performance of Sublicensees under the sublicense agreement; (iii) Sgenia shall have the right to review for seven (7) business days the final version of any proposed sublicense or material amendments thereto, and shall be permitted to disapprove of any proposed Sublicensee or material amendments thereto before execution solely if the proposed sublicense is otherwise in violation of the terms of this Agreement, which approval shall not be unreasonably withheld and the failure to respond by Sgenia within the seven (7) business day period shall constitute approval; and (iv) the sublicense shall not be inconsistent with any terms or conditions in this Agreement.
 
 
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c.   All rights not specifically granted herein are reserved to Sgenia and Subco, respectively.  Additionally, Sgenia has the right to limit the Territory to exclude the Sgenia Territory, solely for marketing and sale of the Product, upon 180 days advance notice to Company, which limitation will be for either a stated duration or for the balance of the Term of the licenses granted hereunder.  In the event of such a limitation being effected by Sgenia, Company shall have the right to complete any pending orders for Product in the Sgenia Territory, and thereafter refer any new orders from within the Sgenia Territory, for delivery in the Sgenia Territory to Sgenia.  It is understood, that the limitations on the Territory do not apply to Product that is delivered outside the Sgenia Territory or destined for ultimate original use outside the Sgenia Territory.
 
d.   During the term of this Agreement, and subject to the terms hereof, Sgenia and Subco shall maintain the Technical Information and Sgenia-generated Materials that exist as of the Effective Date with the same care as is standard in their laboratories/offices, during which time the Company shall have the right to request transfer of Technical Information and Sgenia-generated Materials upon reasonable notice to the extent reasonably determined necessary to obtain the benefits of the licenses set forth here, provided that Company will not have the right to request transfer of the Sgenia Software.
 
e.   As between Sgenia and Subco, on the one hand, and the Company, its Sublicensees and their Affiliates, on the other hand, the Company and its Sublicensees and their Affiliates shall own all inventions, discoveries, developments, improvements, new uses, enhancements and other technologies and intellectual property conceived, reduced to practice, developed, made or obtained by or on their behalf.
 
3.   Reservation of Rights for Improvements; Right of First Negotiation  
 
a.   Improvements. If Sgenia and/or Subco, after the date hereof, including their respective employees and consultants develop any improvements to and variations of the Products which are not licensed hereunder or develop any other commercial uses for the Sensory Technology based on the Sgenia Patents, including but not limited to other devices to detect HAIs  (collectively, “Improvements/New Uses”), Sgenia and Subco shall have the obligation to disclose such Improvements/New Uses to Company, provided that Company agrees in writing to keep the information confidential to itself and to use it for no purpose other than to consider licensing the Improvements/New Uses.
 
b.   Right of First Negotiation.  Sgenia and Subco hereby grants to Company the first right to negotiate for a license to any and all such Improvements/New Uses for the Field for worldwide commercialization, which may include the right to finance such Improvements/New Uses separately or in combination with a license.  Such right to negotiate for a license must be exercised within 90 days after receipt by the Company of written notice and disclosure of the Improvements/New Uses.  Exercise of such option by Company shall initiate a negotiation period that expires 180 days after receipt by Sgenia and/or Subco of such written notice from the Company.  Company shall be obligated to make the first offer of terms for a license to the Improvement/New Use.  Sgenia and Subco, together shall be obligated to make a counter-offer within 21 days of the first offer.   For every day beyond 21-days after Company’s offer that Sgenia and Subco fails to make a counter-offer, a day shall be added to the 180 day period of negotiation.  Sgenia and Subco shall have an obligation to negotiate in good faith with Company regarding a license to Improvements/New Uses during the 180 day period.  If the parties are unable to reach agreement as to the terms of a license to the Improvements/New Uses after such 180 day period, Sgenia and Subco shall have the right in its sole discretion to grant a license to the Improvements/New Uses offered to Company in the Field and Territory to a party other than  Company on any terms and conditions that Sgenia and Subco desires, provided that the license is not inconsistent with the terms of this Agreement.
 
 
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4.   Collaboration
 
a.   Scope of Collaboration.  Each of Sgenia, Subco and Company will work together to research and develop the Product for manufacture, commercialization and sale pursuant to this Agreement.  As may be required from time to time, the parties to this Agreement shall work together to establish written plans and reviewing committees for the management of the overall project, implementing budgets and changes thereto, research and development of the Product, attaining government approvals, and reviewing the sale and marketing strategies of the Product.  Each of Sgenia, Subco and Company may request such plans and committees, and the other parties to this Agreement will cooperate in satisfaction of such requests and work to achieve the goals thereof.  Each committee established hereby will be co-chaired by one representative on behalf of Sgenia and Subco together and one representative of Company, and the members of the committee will be split equally on those lines. All decisions of the committees shall be made by only the co-chairmen, in the exercise of good faith. Such decisions shall adhere to applicable ethical and legal standards.  If agreement cannot be attained, the matter shall not proceed until an agreement can be attained.  The committees shall work in good faith to resolve deadlocks. Each committee shall appoint one person to keep complete and accurate records pertaining to the committees' meetings and activities. Each party to this Agreement shall have the right to review such records upon reasonable notice to the record-keeping party and at reasonable times.  Notwithstanding all the foregoing, as to matters regarding the overall expense in excess of the initial Budget as attached hereto as Exhibit D, Company may act to with total discretion to not approve any changes to the overall funding.
 
b.   Research and Development Plan; Budget.  The current versions of the research & development plan (“R&DP”) is set forth as Exhibit C and expense thereof (“Budget”) is set forth as Exhibit D , each to be delivered contemporaneously herewith.  The R&DP will include, without limitation, allocation of work to be done and responsibilities to be borne by Sgenia and Subco and any Third Parties.  Activities in the R&DP and amounts to be budgeted and allocations within the Budget may be adjusted through a collaborative process by the parties hereto.
 
c.   Funding the R&DP. (i) It is the obligation of Company to fund only Subco to pursue the R&DP, in accordance with the Budget.  The amount of the funding requirement for the first month’s budget pursuant to Exhibit D hereunder will be deposited in an escrow account under separate documentation, so as to be immediately available upon execution of this Agreement by all the parties and commencement of corporate status. Funding will be paid by Company to Subco in advance of the period to be funded.  Funds paid to Subco under the funding obligation for the Budget shall not be repatriated or otherwise paid to Sgenia, except for a specifically Budgeted item that notes it is to be paid to Sgenia or as otherwise provided herein. The Company obligation is to fund those items as specified on the Budget, including employee and consultant salary, bonus, benefits and other compensation, research, leases, information technology, utilities and other indirect costs. Company has no obligation to agree to any increase in the Budget or its funding obligations at any time, and in the event that the financial requirements of Subco exceed the Budget, then Company has the right to terminate this Agreement, or in the alternative, in its discretion, work with Sgenia and Subco to change the Budget.  If the funding obligation of Company is increased as a result of changes in the Budget, regardless of any prior approval or approvals given by Company, which increase or increases aggregate more than 20% of the original total Budget attached hereto as Exhibit D , Company has the right to terminate this Agreement on thirty days’ notice.  In addition to the foregoing, regardless of any approval by the Company to increase the Budget and its funding, if the Budget is exceeded by any amount and the Agreement is not terminated, then the rights reserved to Sgenia and Subco with respect to the Sgenia Territory will be terminated.
 
d.   Failure of a Stage; Accounting.  (i)  At the completion of Stages 1, 2 and 3 of the Budget and R&DP, Subco and Sgenia will jointly certify to Company that the stage has been completed and the objective of the stage has been fully achieved if not exceeded.  Company, in its discretion may ask for any and all supporting documentation of the stage completion and goal achievement, including scientific data, test results, accounting documentation, and the like, the failure of which to be provided will be deemed to be a failure to achieve completion and goals of the stage.  If a stage is not successfully completed and/or the objective of the stage is not met, then the Company will have the right to terminate the funding obligation of this Agreement. Stage success is defined as Stage 1: Prototype MRSA/SA sensor to be developed from Sgenia technology, having a capacity to detect  MRSA and/or SA contamination; Stage 2: Produce & successfully laboratory test a minimum of 20 beta versions of the MRSA/SA sensor, delivering a pre serie (pre-production) design suitable for hospital use; and Stage 3: Obtain relevant health organisation approvals in the European Union and the U.S. to produce a final product ready for mass production and marketing.
 
 
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(ii)           Subco shall provide reasonable verification from time to time as requested to Company that such amounts have been spent according to the Budget.  In addition to the foregoing, at the end of each Stage, as defined herein, Subco will prepare a formal detailed accounting of the Budget, funding received and funding disbursed.  Company may request the formal accounting to be audited by an independent Third Party auditory of its selection, and the costs of such audit will be borne by Company, provided that if the audit process reveals that the accounting is at an overall variance of 5%, then the cost of the audit will be split equally by the parties.
 
(iii)           Any amounts not spent in Stages 1 and 2 of the Budget (as “Stages” are indicated in the Budget) will be carried forward to Stages 2 and 3, respectively, and any amounts not spent in Stage 3 will adjust funding required in the last month or months of Stage 3, it being understood that the funding is to cover actual expenses and not to provide a profit to Subco. Notwithstanding the foregoing, if the total funding of Subco for all three Stages is less than the total Budget as modified by the parties, then Sgenia will be paid 20% of the difference between the actual expenses of Subco pursuant to the Budget and the projected expenses in the Budget, and the balance of any saving will be returned to Company.
 
e.   Subco Obligations under R&DP and Budget.  Subco will use commercially reasonable efforts to commence the R&DP once the first funding of the Budget is received and to diligently perform its obligations set forth in the R&DP and to provide allocation of sufficient time and effort, using personnel with sufficient skills and experience, to execute and substantially perform its obligations under the R&DP and develop a commercially viable Product. Sgenia and Subco will use their commercial best efforts to communicate information within the scope of this Agreement to Company. Sgenia and Subco each will keep complete and accurate records pertaining to their activities hereunder consistent with the creation and maintenance of data, records and reports necessary or useful in the preparation, approval and maintenance of Health Registrations for the Product and sufficient to enable, for example, the efficient transfer of Product manufacturing know-how from Sgenia and Subco to Company.
 
f.   Advisory Board of Company.  During the term of this Agreement, Company will maintain an advisory board that will be made up of designees of Company and Sgenia, and the composition of the advisory board will include not less than two persons appointed by Sgenia. Any failure to appoint a designee will result in a vacancy thereon, which may be filled at any time.  A designee need not be the same from meeting to meeting.  The advisory board will have the right to obtain information concerning the matters governed by this Agreement from the parties thereto, to be provided promptly by the respective management.  The advisory board will meet at least three times each year, which may be by telephonic and other electronic means by which all persons may communicate in real time, and any conclusions or reports of the advisory board will be conveyed to both the board of directors or equivalent of both Sgenia and Company, and may also be conveyed to management of both Sgenia and Company.  The expenses of the members of the advisory board will be borne by the parties appointing the members, and the advisory board will rely on the appointing person to provide any compensation for their participation in the advisory board.  The initial Sgenia appointees will be set forth in Exhibit E .
 
5.   Manufacture and Supply of Products
 
a.   Designation of Manufacturing Parties.  Company shall have the exclusive right and obligation to manufacture, formulate and package the Product for commercial and non-commercial purposes in the Field in and for the Territory, including the Sgenia Territory, and to supply Sgenia quantities of Product necessary to satisfy commercial demand in and for the Sgenia Territory to the extent required.
 
b.   Marketing Committee.  Sgenia and Subco, on the one hand, and Company, on the other hand, will establish and maintain a committee (“Marketing Committee”) with one representative from each and together those persons will appoint a third person to the committee that is independent of both Sgenia and Subco, on the one hand, and Company, on the other hand, to oversee the selection of markets to be addressed and the manufacture, formulation and packaging of the Product, the review by which will be reasonable and timely, however the final determinations of markets, manufacturing, formulation and packaging will be made by Company.
 
 
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c.   Technology Transfers.  All intellectual property developed by Sgenia and/or Subco at any time during the collaboration and term hereof related to the manufacturing, formulation and/or packaging process shall be shared and licensed to Company on a royalty-free basis.  Sgenia and Subco each agrees to engage in ongoing manufacturing, formulation and/or packaging related technology transfer to Company and its designees, and to the extent such activities are after the funding period set forth in the Budget, the Company shall reimburse the Sgenia and/or Subco for actual costs associated with such transfer.
 
d.   Supply of Chips.  Sgenia or Subco will supply the Chips to Company for use in the Product.
 
(i)            Supply.  Sgenia or Subco will supply to Company all of its requirements for Chips that hold the Sgenia Software necessary for the operation of the Product and its manufacture.  Time shall be of the essence in the providing the quantity of Chips that have been requested by the Company. The Chips to be provided shall be of a quality standard that equals or exceeds that required for the Products as designed by Sgenia or Subco.
 
(ii)           Price Of Chips.  The pricing of the Chips supplied will be at a price as set forth in Exhibit F hereto. Payment terms shall be net 60 days. All purchases shall be invoiced by Sgenia and/or Subco. All invoices shall be itemized, and all applicable discounts and returns shall be clearly identified. Sgenia and Subco shall promptly provide and/or make available to Company any information reasonably requested in connection with the reasonable review of the data used to arrive at the cost of goods sold.  Sgenia and Subco, on the one hand and Company on the other hand shall give due regard during negotiations regarding the cost of goods sold if a dispute arises to actual and forecasted changes in volume and the affect thereof on the cost of goods sold.
 
 
(iii)           Cost of Delivery.  The Chips supplied by Sgenia and Subco will be packed in standard shipping packages, sent via Federal Express Priority Overnight shipping, and delivered to the address specified by Company.  Freight charges shall be F.O.B. destination, prepaid and allowed (Company is not responsible for paying freight charges). Title, risk and/or loss from damage of goods in transit shall be the responsibility of Sgenia and/or Subco.
 
(iv)           Returns.  If any Chips are found to be defective by manufacturing standards or otherwise, and/or  unsuitable for their intended and developed use, Company shall immediately notify Sgenia or Subco for assistance. Sgenia and Subco, jointly and severally will assist Company or their agents (including manufacturers) in assessing the situation, determine the need for Chip replacement and make a recommendation for further action to the mutual satisfaction of both parties.  For items ordered in error by the Company, then the Company shall pay return freight charges. For items shipped in error by Sgenia or Subco to Company, Sgenia and Subco shall incur return freight charges.
 
(v)           Inspection.  The Chips furnished shall be exactly as specified in each order and as required for the manufacture of the Product and shall be subject to inspection by Company or its agents (including its manufacturers) at all times and places. If, prior to final acceptance or use of any goods, which shall be deemed completed the later of twenty (20) calendar days after  receipt of such goods or incorporation of such goods in a manufactured Product, they are found not as specified in an order or are otherwise damaged or not meeting the quality standards of the Chip, Company or its agents (including its manufacturers) may reject them by immediate shipment to Sgenia or Subco or as otherwise instructed by Sgenia or Subco, and Company may require Sgenia and Subco to correct or replace them without charge. If Sgenia or Subco is unable or refuses to correct such items within a time deemed reasonable by Company, then Company may terminate such order in whole or in part. Sgenia and Subco shall bear all risks as to rejected goods and, in addition to any costs for which Sgenia and Subco may become liable to Company, shall reimburse Company for all transportation costs, other related costs incurred, or payments to Sgenia and/or Subco in accordance with the terms of each order for unaccepted goods incidental thereto. Notwithstanding final acceptance and payment, Sgenia and Subco shall be liable for fraud or such gross mistakes as amount to fraud.

 
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e.   Commercial Supply to Sgenia or Subco.
 
i.            Supply.  If requested by Sgenia or Subco, Company shall supply all of their requirements for Product necessary to satisfy commercial demand in and for the Sgenia Territory, which product is for original use in the Sgenia Territory.  During any period when the total quantities of Product that can be manufactured by Company shall be less than the volume of Product required or ordered by Company, on the one hand, and Sgenia and Subco on the other hand, and Company will be unable to supply the full amount of Product ordered by Sgenia and Subco due to a manufacturing shortage, Company will allocate any available Products among all buyers, itself and its Affiliates, and shall deliver to Sgenia and/or Subco such portion of the available Product as their purchases during the previous six (6) months bears to their total purchase of such Product during such period.
 
ii.           Price to Sgenia Parties.  All Product manufactured by Company and sold to Sgenia and Subco for commercial purposes shall be supplied to them at a price equal to the Company’s cost of goods sold, as determined in accordance with USGAAP, plus zero percent (0%).  Company shall promptly provide and/or make available to Sgenia and Subco any information reasonably requested in connection with the reasonable review of the data used to arrive at the Company’s cost of goods sold.  Sgenia and Subco, on the one hand and Company on the other hand shall give due regard during negotiations regarding the cost of goods sold if a dispute arises to actual and forecasted changes in volume and the affect thereof on the cost of goods sold.
 
iii           Price to Others.  The price of the Product to Third Parties sold by the Company will be based on a minimum sale price and installation expense, established from time to time, provided that the Company shall be entitled to recover its full expense of manufacture, marketing, overhead and other expenses in the manufacture and sales of the Product and installation in each of the markets where the product is being sold and a reasonable margin on such sales.
 
iv.           Sgenia Purchase Orders.  To effect the purchase of Product by Sgenia or Subco, they shall give Company a binding written purchase order, which will be in the regular form and subject to the regular practices of Company in respect of similar types of orders, and the terms of such purchase order, except as set forth herein, will be on regular commercial terms of the Product as then sold by Company.
 
f.   Warranty.  All Product supplied by Company to Third Parties and to Sgenia and Subco hereunder will, at the time of delivery, (i) be manufactured in accordance with the manufacturing specifications, practices and procedures established from time to time by Company in agreement with Sgenia and Subco, (ii) be free from material defects and from contamination resulting from faulty manufacture, and conform to the specifications of the Product and quality control standards agreed upon by the parties hereto, and (iii) be labeled and packaged in accordance with the specifications from time to time agreed upon by the parties hereto. Company warrants that all manufacturing and packaging operations conducted by it in connection with the Products shall be conducted in conformity with this Agreement and the Health Registrations and all other applicable laws and regulations and that it shall maintain all records required by law to be maintained in connection with such operations.
 
COMPANY MAKES NO REPRESENTATION OR WARRANTY EXCEPT AS MAY BE EXPRESSLY SET FORTH IN THIS AGREEMENT, AND COMPANY EXPRESSLY DISCLAIMS ANY AND ALL IMPLIED WARRANTIES, INCLUDING ALL IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
 
 
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g.   Quality Assurance and Control.
 
i.           Quality Certifications.  Company will be responsible for manufacturing the Product and maintaining the quality requirements to preserve the permits, licenses and approvals necessary for the proper manufacture of the Product.  Company will maintain all documentation relating to the manufacture and or quality control of the Product for the required periods by statute or regulation.  Sgenia and Subco will have the right, during normal business hours to review such documentation at its expense, and Company will cooperate to make the documentation available.  Additionally, Sgenia and Subco will have the right, during normal business hours, to have access to Company’s manufacturing facilities upon reasonable notice at any time during the manufacture of the Product and all related material and for quality audits, to observe the manufacture, packaging, labeling and storage of the Product.
 
ii           Samples.  Sgenia and Subco may obtain samples of each batch of products, at their expense, equivalent to the cost to Company.
 
h.   Regulatory Matters.
 
i.   Regulatory Responsibility.  Sgenia and Subco, jointly and severally, are solely responsible for preparation, filing, prosecution and maintenance of all Health Registrations required to be filed with any Regulatory Authority with regard to the Product (herein, together the “Responsible Party”) worldwide, as required by Company to be able to license, manufacture, market, sell and deliver the Product, including but not limited to the Sgenia Territory.  All Health Registrations and other Regulatory Authority approvals, including within the Sgenia Territory, will be jointly owned by Sgenia, Subco and Company.  The costs incurred by the Responsible Party in the preparation, filing and submission of such Health Registration and Regulatory Authority approvals in all jurisdictions will be borne by Company, pursuant to a budget developed jointly by Sgenia and Subco on the one hand and Company on the other hand. Company will have the right to require pre-approval of payments to be made under the budget and has sole right to authorize payments under the budget, including the right to discontinue the Health Registration and/or Regulatory Authority approvals in any particular jurisdiction or region or in relation to any Product.  Except as otherwise provided in an applicable R&DP, the Responsible Party shall oversee, monitor and coordinate all regulatory actions, communications and filings with and submissions, including filings and submissions of supplements and amendments thereto, to Regulatory Authorities with respect to the Product and shall give Company a reasonable opportunity for prior review of all such material communications, filings and submissions.  Health Registrations and other approval by Regulatory Authorities are to be commenced in Stage 3 of the R&DP.  In its sole discretion, Company has the right to assume the obligations hereunder of the Responsible Party at any time.
 
ii.   Regulatory Meetings and Correspondence. Except as otherwise provided in the R&DP, the Responsible Party shall be responsible for interfacing, corresponding and meeting with Regulatory Authorities with respect to the Product, and Company will promptly refer any contacts or questions from Regulatory Authorities to the Responsible Party. Both the Responsible Party and Company will be entitled to attend all meetings and, if reasonably practicable, telephone conferences with Regulatory Authorities. The Responsible Party and Company shall agree on the types of telephone and other forms of consultation with Regulatory Authorities that the parties will be required to notify the other party of and permit the other party to participate in.
 
iii.   Reporting Adverse Elements. Each of Sgenia, Subco and Company agree to timely share information freely with respect to, and will develop and agree upon safety data exchange procedures governing the collection, investigation, reporting, and exchange of, information concerning any malfunction of the Product, product quality, manufacturing process, product complaints involving malfunction of the Product and other regulatory issues, sufficient to permit each party to comply with its legal obligations. The safety data exchange procedures will be promptly updated if required by changes in legal requirements or by agreement between the parties.  The Responsible Party will be responsible for reporting all required safety and malfunction  data to the appropriate Regulatory Authorities in accordance with applicable laws and regulations.
 
 
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6.   Marketing of Products
 
a.   Marketing and Sales Strategy.  Company will be responsible for all decisions regarding the marketing and sales of the Product, subject to the review and coordination thereof through the Marketing Committee (referenced in Section 5.a.).  Notwithstanding the foregoing, Sgenia and Subco, together, will have the right to obtain from Company marketing and sales plans and data for the purpose of commenting on and suggesting market and sales strategy. Marketing coordination shall be implemented through the Marketing Committee, and strategies and tactics for marketing, selling and otherwise commercializing the Products, including without limitation prices of marketed Products, method of sales and distribution, organization and management of sales and marketing, packaging and labeling, appointment of distributors and other terms and conditions for such sales and marketing shall be reviewed by the Marketing Committee. The Marketing Committee shall also coordinate the exchange of sales and marketing plans and promotional literature, and coordinate and implement marketing and marketing strategies and tactics, joint sales force training program, sales forecasts and post Health Registration studies for the Product.  Notwithstanding the foregoing, Company will use commercially reasonable efforts to commercialize the Product that receives Health Registration and other Regulatory Approval, in a particular country jurisdiction or defined region, taking into account the scientific and commercial potential for the Product as determined by the Marketing Committee and agreed by the Company.  To this end the Marketing Committee will establish periodic marketing and sales effort targets on a country-by-country or defined regional basis for the Product, which if not altered from time to time will continue for future periods, and the failure of Company to meet such schedule or 90% of any marketing or sales targets shall be deemed to be the failure of Company to use commercially reasonable efforts.  Sgenia will provide sixty (60) days' notice to Company, if, in Sgenia’s opinion, Company is not using its commercially reasonable efforts to market and sell the Product in a particular country or defined region in order for the parties to discuss the situation and for Company to make diligent and continuing efforts to rectify the situation.  If the parties finally agree that Company is not using such commercially reasonable efforts or it is shown by clear documentary evidence that the Company has failed to meet such schedule or marketing or sales effort targets as may be revised, Company shall have an additional 150 days to cure the situation.  If Company shall fail to cure such situation within such 150 day period, then Company’s rights with respect to such country or defined region shall automatically become non-exclusive.  In such event, Sgenia or Subco or a designee shall be entitled to exercise all rights of Company with respect to such jurisdiction.  For clarification, the failure of the Product to meet the Health Registration requirements or other necessary approval of a Regulatory Authority  for a particular country or defined region will not be basis to assert that the Company failed to satisfy its obligation to use commercially reasonable efforts to market and sell the Product.
 
b.   Distributor.  Company may elect one or more Third Parties to act as its agent in connection with the marketing, sale and distribution of the Product, on a territory basis to be determined by Company. Amounts payable to or retained by any such agent shall be included in the expense of manufacture, marketing and sales, to be deducted for purposes of the calculation of Net Sales.
 
c.   Labeling and Promotion.  To the extent permitted by applicable law and in accord with the Health Registrations, each Product will be marketed with one label and will bear one or more Product trademarks. All advertising and promotional material in respect of the Product (including any Product labeling or packaging inserts to the extent permitted by law or required by any Regulatory Authority and approved by the Company or, if one exists, the marketing committee) will include Sgenia’s, Subco’s and Company’s name and address to indicate its role as patent owner, developer, manufacturer and promoter, the size and placement of which will be determined by the Company or, if one exists, the marketing committee.  Each party shall supply the other copies of promotional materials used by it, to facilitate the reasonably necessary exercise of its promotion rights under this Agreement. Company shall not, and shall cause its employees, representatives and agents not, to make any claims or representations in respect of Products that have not been approved by the Health Registrations.
 
d.   Returns.  The party selling the Product for the original end user in their respective territories shall be responsible for handling all Product returns and with respect to Products marketed by its Affiliates, distributors, resellers and sublicensees.
 
e.   Marketing Support by Sgenia and Subco.  To the extent reasonably required or requested by Company, both Sgenia and Subco will make available on a regular basis, and from time to time, personnel, non-Confidential Information (as defined herein), and other marketing materials to aid and facilitate the manufacture, commercialization, marketing and sales of Company and any Designees, Sublicensees and Affiliates of the foregoing, at the expense of Sgenia and Subco, jointly and severally, provided that reasonable, actual out of pocket expenses of Sgenia and Subco, as the case may be, will be reimbursed by Company in accordance with its regular reimbursement policy for its employees. In addition, in order to facilitate and further the marketing of the Product and all aspects of the branding, establishment of good will and financing of Company, the Company is entitled to make reference to Sgenia’s and Subco’s input into the Product and the development procees and Sgenia’s and Subco’s business, assets, history, personnel and involvement in other projects, technologies and products directly and indirectly related to the Sgenia Patents, the Sensory Technology and the Products.
 
 
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7.   Royalties and Payment .
 
a.   Fees, Royalties, and Payments.  In consideration of the licenses granted under this Agreement, the Company shall pay to Subco or its designees a fee of 20% of the Net Sales, payable sixty (60) days after each fiscal quarter of the Company, based on the fiscal year of Company as declared for income tax purposes, subject to appropriate adjustments for any change in the fiscal year
 
b.   Fees, Royalties and Payments Relating to Sgenia Territory.  In the event that Sgenia or Subco, or an Affiliate or Designee of either, directly or indirectly sells the Product within the Sgenia Territory for original use in the Sgenia Territory, then the amounts due from Company to Subco under the provisions of Section 7.a. above will be reduced by an amount equal to 50% of the Net Sales of the Product by Sgenia or Subco or an Affiliate or Designee of either. Notwithstanding the foregoing, if the set off provided by the preceding sentence is greater than the amount due from Company, then Subco will pay to Company the difference between the set off and the 50% of the Net Sales. Additionally, if the Products sold by Sgenia or Subco or an Affiliate or Designee of either is for original use outside the Sgenia Territory, then the gross sales amount for such Products will be attributed to the sales of the Company for purposes of the determination of the fees, royalties and payments due to Subco under Section 7.a. above, and appropriate set off by the Company will be applied or Sgenia and/or Subco will pay to the Company the amount due in respect of those sales.
 
c.   Duration of Product Royalties.  The fees, royalties and payments provided for in this Agreement will be for a period of forty (40) years, or until the termination of this Agreement.
 
d.   No Non-Monetary Consideration.  Without the prior written consent of  the other parties hereto, Sgenia, Subco and Company and their respective Designees, Sublicensees, and Affiliates shall not solicit or accept any material consideration for the commercial sale of any Product other than as will be accurately reflected in Net Sales.
 
8.   Reports and Payments .
 
a.   Reports. Sixty (60) days after the end of each calendar quarter, commencing with respect to the calendar quarter during which a payment first accrues under Section 7, the Company shall submit to Subco on the one hand and if there are sales in the Sgenia Territory by the Sgenia parties then by Subco to the Company on the other hand, written reports with respect to that calendar quarter (the “Payment Report”) stating:
 
i.   Net Sales during such quarter for the Product, in local currency and United States dollars, with notation of the applicable exchange rate then used;
 
ii.   The names of the royalty-bearing Products, gross sales, Net Sales, and any taxes withheld.
 
iii.   A description of any other payments accruing to one or the other parties under Section 7;
 
iv.   A calculation under Section 7 of the amounts due to Subco and to be deducted from such amount or to be due to Company, making reference to the applicable subsection thereof.
 
 
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b.   Payment.  Simultaneously with the submission of each Payment Report, the Company shall make payment to Subco, except as provide above where Subco is required to pay to Company a portion of the Net Sales of the amounts due for the calendar quarter covered by the Payment Report, net of any taxes required by a governmental agency to be withheld therefrom, provided that the recipient will provide reasonable documentary evidence showing payment of any such taxes
 
c.   Final Settlement. Within sixty (60) days after the date of termination or expiration of this Agreement, the parties hereto will settle the amounts due pursuant to this Agreement as of the date of such termination or expiration, together with a Payment Report for such payment in accordance with Section 8.a. hereof, except that such Payment Report shall cover the period from the end of the last calendar quarter prior to termination or expiration to the date of termination or expiration.  Nothing in this provision shall affect any additional rights and obligations the parties may have subsequent to the termination of this Agreement.
 
d.   Payments in Dollars. Fee, royalty and payments hereunder will be in United States Dollars or determined in United States Dollars.  Any and all loss of exchange value, taxes, or other expenses incurred in the transfer or conversion of foreign currency into U.S. dollars, and any income or remittance taxes on such royalties required to be withheld at the source shall be the exclusive responsibility of payor.  Royalty statements shall show sales both in the local currency and US dollars, with the exchange rate used clearly stated.
 
e.   Maintenance of Records. The parties to this Agreement each shall maintain at its principal office the usual books of account and records showing its actions under this Agreement.  Upon reasonable notice, such books and records shall be open to inspection and copying, during usual business hours, by an independent certified public accountant to whom the notice recipient has no reasonable objection, for seven (7) years after the calendar quarter to which they pertain, for purposes of verifying the accuracy of the amounts paid under this Agreement.  In the event that such review shows that a party has underpaid (or under credited) royalties by at least five percent (5%) with respect to any calendar quarter, the under paying or under crediting party shall pay or credit, within ten days after demand, the amounts owed and one-half of the reasonable costs and expenses of such review.  A party can request, once every two years for each Sublicensee, that the licensor thereof conduct an audit of the books and records of the Sublicensee, but only to the extent the party has the power to do so.
 
f.   Late Payment. Notwithstanding anything to the contrary in this Agreement, any payment required hereunder that is made late (including unpaid or uncredited portions of amounts due) shall bear interest, compounded monthly, at the prime rate (as quoted in The Wall Street Journal on the first day of the month of accrual) plus three (3) percentage points.  Any interest charged or paid in excess of the maximum rate permitted by applicable law shall be deemed the result of a mistake and interest paid in excess of the maximum rate shall be credited or refunded.
 
9.   Confidentiality .  
 
a.   Confidential Treatment.  Each of the parties and their agents will treat as confidential all reports and all other information obtained by it from examination of the other party’s records and clearly indicated as confidential information (“Confidential Information”) and shall use Confidential Information only for the purposes of enforcing its rights under the Agreement, or for complying with its other legal, regulatory, governmental, or contractual obligations. Notwithstanding the foregoing, the terms of this Agreement and all marketing and sales data relating to the subject of this Agreement are not Confidential Information, and further the parties agree that it is in their parties best interests for the commercializing, marketing and selling of the Products that the Products are publized to the fullest extent possible, in any relevant way; therefore, the parties hereto will use their best endeavors to promptly share and make public, as relevant non-Confidential Information relating to the parties, this Agreement and the Products and not seek to characterize non-Confidential Information as Confidential Information.
 
b.   No Posting. The obligation of confidentiality under this provision shall include, but not be limited to, the obligation to make reasonable efforts to prevent the posting of Confidential Information on a public World Wide Web site.
 
c.   Limits.  The obligations of confidentiality under this section do not apply to any information that a party can demonstrate:
 
i.   was known to the party prior to receipt thereof from the other party;
 
 
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ii.   was or becomes a matter of public information or publicly available through no act or failure to act on the part of party charged with maintaining confidential the Confidential Information;
 
iii.   was acquired from a Third Party entitled to disclose it;
 
iv.   was   discovered or developed independently without reference to or use of such Confidential Information.
 
d.   Right to Disclose. Notwithstanding the foregoing, the Company or any Sublicensee may disclose any information furnished by Sgenia or Subco pursuant to this Agreement to its existing or prospective Sublicensees, Designees, Affiliates of the foregoing, and other collaborators, manufacturers, distributors, consultants, scientific or professional advisors for use in furtherance of the business of the Company.  Any existing or prospective Sublicensees, Designees, Affiliates of the foregoing, financing sources and investors, collaborators, manufacturers, distributors, consultants or scientific or professional advisors who are recipients of information hereunder shall be under the same obligation of confidentiality with respect to such information as the disclosing party.
 
e.   Copies.  Neither Sgenia, Subco or Company shall disclose or make available to any person, firm or entity a copy, summary or extract of this Agreement or any of the terms hereof, except to the extent reasonably required for enforcing the parties’ rights under the Agreement, compliance with securities and other laws and regulations, capital raising, financial disclosure and guidance, implementation of this Agreement, contractual obligations, and accounting requirements, or as may be necessary or desirable with respect to existing or prospective Sublicensees and other collaborators, manufacturers, distributors, consultants, scientific or professional advisors.
 
f.   Replacement. The provisions of this Agreement supersede and shall be substituted for any terms of any prior confidentiality agreement between the parties hereto relating to the subject matter hereof, including the Sgenia Patents and the Technical Information.
 
10.   Representations; Disclaimer of Warranty; Limitations of Liability .  
 
a.   Right to Contract.  Each party represents and warrants to the other party that: (i) it is a corporation duly incorporated and validly existing and in good standing under the laws of its respective state/country of incorporation; (ii) this Agreement has been duly executed and delivered by such party; and (iii) this Agreement constitutes the legal, valid and binding obligations of such party, enforceable against such party in accordance with its terms.
 
11.   Compliance with Governmental Obligations.
 
a.   Each party disclaims any obligation or liability arising under the license provisions of this Agreement and any other provision of this Agreement, if any other party is, by a final determination in a governmental action, found to have materially violated material governmental regulations in the course of taking steps to bring any Product to a point of practical application.
 
b.   Each party shall comply upon notice from any other party with all governmental requests directed to a party (and timely relayed by it in writing) and provide all information and assistance necessary to comply with the governmental requests.
 
c.   Each party shall comply with all applicable government regulations in force and effect, including, but not limited to, federal, state, provincial and municipal legislation.
 
 
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12.   Patent Prosecution and Maintenance; Infringement .
 
a.   Sgenia, by counsel it selects to whom Company has no reasonable objection, in cooperation and consultation with counsel appointed by Company, will prepare, file, prosecute and maintain all Sgenia Patents in Sgenia’s name and in countries designated by the Company determined in collaboration with Sgenia in such a process so as to permit Company to fulfill its obligations hereunder to manufacture, commercialize, market and sell the Product.  Company shall have the right to meaningfully participate in the patent strategy and patent drafting and filing activities relating to the Product.  Notwithstanding the foregoing, in the event of any disagreement with respect to the preparation, filing, prosecution, or maintenance of Sgenia Patents, final decisions shall be made by Sgenia in its sole discretion acting reasonably and in good faith and subject to the objectives of this Agreement.
 
b.   Sgenia shall provide Company with a draft of any materials that it plans to submit to any domestic or foreign patent office ("Patent Office") in connection with the filing or prosecution of Sgenia Patents with sufficient advance notice to allow Company a reasonable period of time to review and comment upon such materials.  Sgenia shall provide Company with any materials received from any Patent Office in connection with the filing or prosecution of Sgenia Patents.
 
c.   Sgenia will be responsible for all expenses in filing, prosecuting and maintaining the Sgenia Patents (“Patent Expenses”), including without limitation, attorneys’ fees, the costs of any interference proceedings, oppositions, reexaminations, or any other ex parte or inter partes administrative proceeding before patent offices, taxes, annuities, issue fees, working fees, maintenance fees and renewal charges.
 
d.   Sgenia shall have the right and obligation to initiate and/or control a legal proceeding involving the validity, enforceability, or infringement of the Sgenia Patents.  Sgenia shall have the right to settle the claims asserted in such proceeding on any terms and conditions that it deems desirable in its sole discretion, which terms and conditions may include the granting  by the Company to the opposing party of a sublicense to the Sgenia Patents, Technical Information, or Materials and Sgenia-generated Materials; provided, however, that the granting of any such sublicense shall be subject to Company's prior written approval, which shall not materially impair the licenses granted hereunder, which approval shall not be unreasonably withheld or delayed.  Company’s failure to approve a settlement because of an objection of a Sublicense shall not constitute a reasonable basis for refusing to approve a settlement.
 
e.   Company may request that Sgenia take steps, at Sgenia’s expense, to stop a Third Party selling products or services in competition with the Product and/or from infringing an issued patent falling within the definition of Sgenia Patents by providing Sgenia with written notice of such request accompanied by written evidence demonstrating prima facie competition and/or infringement of such patent.  Company shall have the right to initiate and control legal proceedings against any such third-party infringer in its own name and at Company's own expense unless Sgenia, not later than ninety (90) days after receipt of such notice, either (i) causes such infringement to cease, or (ii) initiates legal proceedings against the third-party infringer.  If Company controls the legal proceeding, Company shall not settle the proceeding without Sgenia’s prior written approval, which shall not be unreasonably withheld or delayed.
 
f.   Any recovery, whether by way of settlement or judgment, pursuant to an actual or threatened legal proceeding shall first be used to reimburse the party in control of the proceeding for its costs and legal fees incurred to conduct such proceedings.  The balance of such recovery shall be divided seventy-five percent (75%) to the party that initiated the legal proceeding and twenty-five percent (25%) to the other party.
 
g.   In the event that a party to the Agreement initiates and/or controls a proceeding involving Sgenia Patents pursuant to this section, the other party shall cooperate fully with and supply all assistance reasonably requested by the party initiating such proceeding, including, without limitation, joining the proceeding as a party if requested.  The party that initiates a legal proceeding involving the Sgenia Patents shall have sole control of that proceeding and shall reimburse the other party for any reasonable expenses incurred in providing assistance and cooperation in accordance with this Section.  The party in control of a proceeding shall keep the other party reasonably apprised of the status of the proceeding.
 
 
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13.   Marking .  
 
a.   Prior to the issuance of a Sgenia Patent, the Company will mark the Product made, used, sold, offered for sale, imported, or otherwise disposed of by the Company under the license granted in this Agreement with the words “Patent Pending,” and following the issuance of one or more patents, with the numbers of such patents.  The Company shall cause Sublicensees, Designees, and Affiliates of the foregoing to comply with the marking requirements of this section.
 

14.   Export Control Laws
 
a.   This Agreement is made subject to any restrictions concerning the export of products or technical information from the United States of America which may be imposed from time to time by the government of the United States of America.  The parties shall cooperate with one another as reasonably necessary to permit compliance with the laws and administrative regulations of the United States relating to the control of exports of commodities and technical data (“Export Laws”).  Each party hereby assures the other they and their Affiliates, Designees and Sublicensees will not export or re-export, directly or indirectly, any technical information acquired from any other party under this Agreement or any products using such technical information or any part thereof to any country for which a validated license is required for such export or re-export under the Export Laws in effect at the time without first obtaining such a validated license.
 

15.   Breach and Cure; Transfer of Software in Certain Circumstances .
 
a.   Breach. The following conduct by either Sgenia, Subco or Company shall be deemed a material breach of the Agreement: (i) failure to pay fully and promptly all amounts due pursuant to this Agreement or provide information for the proper crediting and calculation of all amounts due pursuant to this Agreement; (ii) failure to comply with governmental requests directed to Sgenia, Subco or Company and compliance by any of Sgenia, Subco and Company with the Health Registrations or other applicable law, rules and regulations; (iii) failure to comply with the Export Laws under Section 14; (iv) a party’s breach of its representations and warranties in this Agreement; or (v) a material breach of any other provision of this agreement.
 
b.   Cure Period. Either party shall have the right to cure its material breach.  The cure shall be effected within ninety (90) days after notice of any breach given by the non-breaching party.
 
c.   Right to Obtain Software and Software Documentation.  Notwithstanding anything to the contrary in this Agreement, (A) if Sgenia and/or Subco is consistently or regularly in breach of the provisions of this Agreement to provide chips to be used in the Product, including but not limited to meeting the supply demands and quality standards, or (B) either Sgenia or Subco (i) becomes the subject of a bankruptcy or any proceeding relating to insolvency, receivership, or liquidation, whether voluntary or involuntary, (ii) has appointed for it or a substantial portion of its assets a receiver or trustee, or (iii) makes an assignment for the benefit of its creditors, then Company shall have the right to have transferred or provided to it or its designees complete copies of all Sgenia Software and Software Documentation, in part to be able to manufacture or have manufactured the Chips for the Product and to develop, enhance or improve current and/or future Products or future products, and such Sgenia Software and Software Documentation, if not otherwise covered by the licenses hereunder will be so included to the fullest extent possible, and Company will have the right to modify, improve, amend and use in all respects the Sgenia Software and Software Documentation.
 
 
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16.   Term of Agreement .
 
a.   This Agreement shall be effective as of the Effective Date and shall continue in full force and effect until its termination in accordance with this Section 16.
 
b.   Unless terminated earlier under any provision of this Agreement, the term of the licenses granted under this Agreement in a country or countries shall extend for forth (40) years.
 
c.   The licenses granted under this Agreement may be terminated by either party upon a party’s failure to cure a material breach.  The licenses granted under this Agreement may also be terminated by Sgenia and Subco on the one hand in the event Company commits any act of bankruptcy, becomes insolvent, or files a petition under any bankruptcy or insolvency act.
 
d.   Upon any termination of this Agreement, all permitted sublicenses granted by the Company under it shall be assigned to Sgenia or Subco, as determined by Sgenia.  In the event of termination of this Agreement, each Sublicensee may continue its license directly from Sgenia or Subco, as assigned, if Sublicensee is not in breach of its sublicense and thereafter all payments due under the Sublicense shall be paid directly to the licensor, which shall have no obligation to the Company with respect thereto.  Notwithstanding the foregoing, Sgenia and/or Subco shall have the right to terminate any sublicense that places upon it obligations different from or in excess of the obligations Sgenia owes to Company under this Agreement.
 
e.   Sections 5.f.iii (but only for the longer of any statutory period or one (1) year), 7, 8, 9, 11, 12, 15.c, 16.f and g., 17 - 27 will survive any termination or expiration of this Agreement.
 
f.   Any termination of this Agreement shall not adversely affect any rights or obligations that may have accrued to either party prior to the date of termination, including without limitation, the payment obligations of this Agreement.
 
g.   Upon any termination of this Agreement for any reason other than Company's failure to cure a material breach of this Agreement, the Company, Designees, Sublicensees, and Affiliates of the foregoing shall have the right to dispose of Product or substantially completed Product then on hand, and to complete orders for Product then on hand, and royalties shall be paid to Sgenia and/or Subco with respect to such Product pursuant to this Agreement.
 
h.   Notwithstanding anything to the contrary in the Agreement, to the extent the manufacture of a Product infringes an issued patent within the definition of Sgenia Patents, the sale of that Product after the expiration date of the issued patent shall still constitute a royalty-bearing sale.
 
i.   The rights provided in this Section 16 shall be in addition and without prejudice to any other rights which the parties may have with respect to any breach or violations of the provisions of this Agreement.
 
 
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17.   Notices.  Any notice required or permitted to be given under this Agreement shall be sufficient if in writing and shall be considered given (i) when mailed by certified mail (return receipt requested), postage prepaid, or (ii) on the date of actual delivery by hand or overnight delivery, with receipt acknowledged,
 
if to Sgenia, to:                                                                     C/Chile, 4 Edificio II
28230 Las Rozas de Madrid
Madrid, Spain

if to Subco, to:                                                                      C/Chile, 4 Edificio II
28230 Las Rozas de Madrid
Madrid, Spain

In each case with a copy to:                                               Muñíz Bermuy y Asociados, S.L.
C/ Columela, 4 – 2º
28001 Madrid, Spain


if to the Company, to:                                                           Braeden Valley Mines, Inc.
 
Avda Cortes Valencianas 58, Planta 5
46015 Valencia, Spain

with a copy to (which will not
represent notice):                                 Golenbock, Eiseman, Assor, Bell & Peskoe LLP
                                                                437 Madison Avenue
                                                                New York, New York  10022
                                                                Attention: Andrew D. Hudders, Esq.

or to such other address as a party may specify by notice hereunder.
 
18.   Assignment.  This Agreement and all rights and obligations hereunder may not be assigned by any party without the written consent of the other parties, except (i) that the Company may assign this Agreement to any successor-in-interest, by sale, merger or otherwise, of substantially all of the Company’s assets to which this Agreement relates, who agrees in a writing sent to Sgenia and Subco to abide by all obligations in this Agreement, and (ii) that the Company may assign, sell and transfer the rights of first negotiation embodied herein.  Any attempt to assign without compliance with this provision shall be void.
 
 
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19.   Waiver.  The failure of any party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver or deprive that party thereafter of the right to insist upon strict adherence to that term or any other term of this Agreement.  All waivers must be in writing and signed by an authorized representative of the party against which such waiver is being sought.
 
20.   Binding on Successors.  This Agreement shall be binding  upon and inure to the benefit of the parties and their respective successors and assigns to the extent assignment is permitted under this Agreement.
 
21.   Independent Contractors.  It is the express intention of the parties that the relationship of Sgenia and Subco on the one hand and the Company on the other hand shall be that of independent contractors and shall not be that of agents, partners or joint venturers.  Nothing in this Agreement is intended or shall be construed to permit or authorize either party to incur, or represent that it has the power to incur, any obligation or liability on behalf of the other party.
 
22.   Entire Agreement; Amendment.  This Agreement, together with the Exhibits, sets forth the entire agreement between the parties concerning the subject matter hereof and supersedes all previous agreements, written or oral, concerning such subject matter.  This Agreement may be amended only by written agreement duly executed by the parties.
 
23.   Governing Law.  This Agreement shall be governed by substantive laws of the State of New York applicable to agreements made and to be fully performed in New York, and without reference to the conflict of laws principles of any jurisdiction.  Each party agrees that it shall not argue to any court or other tribunal that the substantive laws of the State of New York do not govern the construction and enforcement of this Agreement.  The parties agree that any and all claims arising under or related to this Agreement shall be heard and determined only in either the United States District Court for the Southern District of New York or in the courts of the State of New York located in the City and County of New York, and the parties irrevocably agree to submit themselves to the exclusive and personal jurisdiction of those courts and irrevocably waive any and all rights any such party may now or hereafter have to object to such jurisdiction.
 
24.   No Unidentified Beneficiaries.  Except as expressly set forth herein, the parties hereto agree that there are no unidentified beneficiaries of any kind to this Agreement.
 
25.   Severability.  All rights and restrictions contained herein may be exercised and shall be applicable and binding only to the extent that they do not violate any applicable laws and are intended to be limited to the extent necessary so that they will not render this Agreement illegal, invalid or unenforceable.  If any provision or portion of any provision of this Agreement not essential to the commercial purpose of this Agreement shall be held to be illegal, invalid or unenforceable by a court of competent jurisdiction, it is the intention of the parties that the remaining provisions or portions thereof shall constitute their agreement with respect to the subject matter hereof, and all such remaining provisions or portions thereof shall remain in full force and effect.
 
26.   Headings.  The section and paragraph headings are for convenience only and are not a part of this Agreement.
 
27.   Counterparts.  This Agreement may be executed counterparts, all of which together shall be deemed one original Agreement.
 

 
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IN WITNESS WHEREOF, Sgenia, Subco and the Company have caused this Agreement to be executed by their duly authorized representatives as of the day and year first written above.
 

 
Sgenia  Soluciones, S.L.
 

 
By:            /S/ Jesus Lama
                  Name: Jesús Lama
Title: Administrador Unico – Chief Executive Officer
 

 
ZENON Biosystem, S.L.
 

 
By:            /S/ Jesus Lama
Name: Jesús Lama
Title: Administrador Unico – Chief Executive Officer
 
 
 
Braeden Valley Mines Inc.
 

 
By:            /S/ B. Alejandro Vasquez
 Name: B. Alejandro Vasquez
 Title: President
 

 

 
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Exhibit 10.2

AMENDMENT NO. 1 TO THAT CERTAIN
DEVELOPMENT AND EXCLUSIVE LICENSE AGREEMENT

 
THIS AMENDMENT NO. 1, dated as of December 4, 2013 (the “Amendment”), to that certain AGREEMENT dated as of November 26, 2013 (the “Agreement”), among Sgenia Soluciones, S.L. (“Soluciones”), ZENON Biosystem, S.L.  (“Subco”) and Zenosense, Inc., formerly Braeden Valley Mines, Inc. (the “Company”), is hereby being amended to include as an additional party, Sgenia Industrial, S.L. (“Sgenia”), the parent corporation of its subsidiaries, Soluciones and Subco, and formed under the laws of the Kingdom of Spain, and to acknowledge that the operative date of the Agreement shall be the date of this Amendment; provided however, all the parties hereto acknowledge that the funding obligations of the initial payment by the Company have been fully met.
 
The parties to this Amendment hereby restated the revised “Whereas Clauses” of the Agreement in substitution thereof, as follows:
 
Whereas, Sgenia, together with Soluciones, has developed certain technology and they own directly and indirectly certain intellectual property relating to sensory monitoring of defined environments, referred to as the “Sensory Technology” herein; and
 
Whereas, Sgenia has established a subsidiary, Subco, and caused Soluciones to license Subco under Spanish law all the intellectual property necessary to use the Sensory Technology to develop a Methicillin-Resistant Staphylococcus Aureus / Staphylococcus Aureus (“MRSA/SA”) detection device and other devices to detect Hospital Acquired Infections (“HAIs”); and
 
Whereas, Subco and Soluciones and the parent company, Sgenia, together for their respective benefits, seek an arrangement with the Company for the provision of development capital for the MRSA/SA and other HAI detection devices to be developed by Subco in exchange for a worldwide, exclusive license to manufacture, market and sell the resulting product as provided herein, subject to certain limitations and a royalty arrangements on a revenue sharing basis; and
 
Whereas, the Company seeks the license arrangement embodied in this Agreement for the MRSA/SA detection device in exchange for its funding Subco development activities;
 
Whereas, the Company is also being granted the right of first negotiation for additional future products related to MRSA/SA, other HAI products, and the same right for all other products based on the Sensory Technology; and
 
Whereas, Sgenia, Soluciones and Subco on the one hand and the Company on the other hand will work together on various aspects of the development, manufacture and marketing of the resulting product or products, as embodied in this Agreement.
 
The parties hereby agree that for the consideration provided and to be provided and the obligations of the parties under the terms of the Agreement, that the following provisions of the Agreement are hereby amended:
 

 
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1.            Definitions .                      Certain of the definitions, as indicated below, set forth in Section 1, entitled Definitions, are amended, as follows, and to the extent stated below are in substitution for the definitions set forth in the Agreement.
 
 (c)            “Designee” shall mean a corporation or other entity that is employed by, under contract to, or in partnership with Sgenia, Soluciones, Subco or the Company, and any Sublicensee or an Affiliate of the foregoing.
 
(d)           Effective Date” shall be the date on which this Amendment to the Agreement is executed by Sgenia, Soluciones, Subco and Company.
 
(g)           “Materials” shall mean the tangible physical material developed by Sgenia, Soluciones, Subco and Company and any Designees, Sublicensees, and Affiliates of the foregoing, relating to the Products and substantially constructed from the components listed in Exhibit A hereto, and any progeny or derivatives thereof.  “Sgenia-generated Materials” shall mean the tangible physical material developed by Sgenia, Soluciones and/or Subco relating to the Sgenia Patents and substantially constructed from the components listed in Exhibit A hereto, and any progeny and derivatives thereof.
 
(h)           “Net Sales” shall mean the greater of the gross invoice or contract price to Third Party customers for the Product, its installation and the related training whether at the time of installation or subsequent thereto, less:  (i) direct manufacturing costs of Product and of the provision of installation and training expense, each as determined by United States Generally Applied Accounting Practices, (ii) the cost to Company of the Chips as provided by Sgenia and/or Subco or their Affiliates, to the extent not included in the direct manufacturing costs of Product, (iii) normal and customary quantity and/or cash discounts and allowances actually given and shown on the invoice; (iv) commissions paid to Third Parties, including distributors, freight, postage, shipping, and insurance expenses separately identified in such invoice; (v) credits or refunds actually allowed for bona fide returns (net of all returns actually made or allowed as supported by credit memorandum actually issued to the customers) of Products; and (vi) sales and other taxes and duties directly related to the sale, to the extent that such items are included in the gross invoice price (but not including taxes assessed against or measured by the income derived from such sale), plus Upfront, Milestone and Lump Sum Payments.   Any discounts and allowances based on overall purchases by the customer or its Affiliate may be applied to reduce Net Sales only to the extent of the pro rata amount of such discounts or rebates attributable to the Products included in such overall purchases. Any of the deductions listed above which involves a payment by Sgenia or Company and Designees, Sublicensee, or Affiliates of the foregoing shall be taken as a deduction against aggregate sales for the calendar quarter in which the expense is accrued by Sgenia or Company and Designees, Sublicensee, or Affiliates of the foregoing.  
 
For the clarification of the calculation of Net Sales, if a Product is sold in combination with one or more other products or services, the services relating to installation and training at any time is included therein, but warranty and other revenue sources of any other products and services will not be included in the gross invoice or contract price of the Products for purposes of Net Sales, pursuant to the understanding that the Sgengia and Company  and Designees, Sublicensees and Affiliates have the right to generate other forms of income premised on the Product.
 
(i)           “Sgenia Patent” or “Sgenia Patents” shall mean the patents and   patent applications listed in Exhibit B hereto; any application owned in whole or in part or filed by Sgenia, Soluciones and/or Subco and their Affiliates; any continuation applications, divisional applications, or continuation in part applications that claim priority to the patents and/or applications listed in Exhibit B ; any patents that issue from any of the foregoing; and any reissues, re-examinations, renewals, substitutions, and extensions of any of the foregoing.
 
(m)            “Sgenia Entity” means Sgenia, Soluciones, Subco and or any entity directly or indirectly controlling, controlled by or under common control with Sgenia from time to time. Additionally, the term Sgenia, as used in the Agreement, shall include both Sgenia and Soluciones, unless the context of the Agreement is clear that the term Sgenia should only refer to either Sgenia, as the parent corporation, or Soluciones, as the subsidiary corporation, in which case the term will only refer to one or the other of such Sgenia Entities.
 
(q)            “Sublicensee” shall mean any corporation or other business entity to whom Sgenia, Soluciones, Subco or Company has granted a sublicense to any of the rights transferred in this Agreement, including permitted sublicensees of such corporations or other business entities.
 
 
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(r)           “Technical Information” shall mean any know-how, information (technical, process, clinical or other), knowledge, research, trade secrets, techniques, designs, data, Sgenia Software,  Software Documentation,  specifications, practices, procedures, assays, formulae, processes, systems, improvements, methods, skill, test and other data including chemical, pharmacological, toxicological and clinical test and other data, analytical and quality control data, and laboratory notes that:
 
                                (i) relate to Sgenia, Soluciones, Subco or Materials; and;
 
                                (ii) is owned by a Sgenia Entity with the right to grant an exclusive or nonexclusive sublicense to Subco and/or the Company; and
 
                                (iii) (1) was conceived, reduced to practice, or developed, in whole or in part, in the laboratories/offices of a Sgenia Entity before the Effective Date, and/or (2) is conceived, reduced to practice, or developed, in whole or in part, in the laboratories/offices of a Sgenia Entity after the Effective Date (“Future Technical Information”), but only to the extent before it is disclosed to an employee or consultant of Company or Sublicensee, Designee or Affiliates of the foregoing and relates to the Product.
 
(t)           “Third Party” shall mean any entity other than Sgenia, Soluciones, Subco and Company, and the Sublicensees, Designees, or Affiliates of the foregoing.
 
2.            License Grant and Other Intellectual Property Rights .  For purposes of interpretation of the Agreement and for an abundance of clarity, the grant of the licenses thereunder with respect to the intellectual property being licensed to and transferred to Company, the term Sgenia as defined above in this Amendment is intended to include Soluciones, and their Affiliates as relevant, including but not limited to Subco, so that Company obtains the full benefit of its bargain to obtain all the necessary intellectual property rights sufficient to commercialize the Product as provided in the Agreement, whether from Sgenia, Soluciones or Subco and any of their Affiliates.  It is agreed by the parties hereto that in any dispute the licensors should be broadly interpreted to include any and all of the Sgenia Entities as is or may be necessary to provide the Company with the intended rights under the Agreement and this Amendment.
 
3.            Consents by Sgenia and/or Soluciones .  Although the term “Sgenia” is defined to include both Sgenia and Soluciones by this Amendment, in those provisions of the Agreement where the consent or approval or similar action of Sgenia is required, it will be sufficient that only one of Sgenia or Soluciones provide the consent, and the Company may rely on any communication from either Sgenia or Soluciones, singly and not jointly, in respect of any such consent, approval or similar action to be provided by Sgenia.
 
4.            Joinder of Parties .                                Sgenia, is hereby added as a party to the Agreement, entitled to enjoy the benefits and privileges thereof and suffer the obligations thereof in all respects, without any limitions, to the same degree as Soluciones as set forth in the Agreement before amendment, and as a full party thereto Sgenia makes to the Company all the representations made by Soluciones as if made by Sgenia and is and will be bound by the terms of the Agreement that apply to Soluciones to the same degree as applicable to Soluciones, subject to the exception that if some obligation clearly can only be that of Sgenia or Soluciones, each as a separate corporation, then Sgenia or Soluciones will not be obligated to be bound by such term.
 
5.            Notices .  Notices to Soluciones and Sgenia will be sent to the address of Sgenia set forth in the Agreement, in the same manner as set forth therein with respect to notices to Sgenia.
 
6.            Entire Agreement .  The Agreement, as specified in Section 22 of the Agreement, shall include this Amendment.
 
7.            Execution in Counterparts . This Amendment may be executed in counterparts, all of which together shall be deemed one original Amendment.  This Amendment may be transmitted to the other parties hereto by pdf. or other electronic form.
 
8.            Affirmation of Agreement .  Unless specifically amended or interpreted by this Amendment, the original Agreement is hereby confirmed in all respects, and the parties thereto and hereto agree to be bound by such terms as hereby amended and interpreted.
 

 
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Sgenia  Industrial, S.L.

By:            /s/ Jesús Lama                        
Name: Jesús Lama
Title: Administrador Unico – Chief Executive Officer

Sgenia  Soluciones, S.L.

By:            /s/ Jesús Lama                 
Name: Jesús Lama
Title: Administrador Unico – Chief Executive Officer

ZENON Biosystem, S.L.

By:            /s/ Jesús Lama                 
Name: Jesús Lama
Title: Administrador Unico – Chief Executive Officer


Zenosense, Inc.

By:            /s/B. Alejandro Vasquez                   
Name: B. Alejandro Vasquez
Title: President

 

 
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Exhibit 10.3

SUPPLY OF SERVICES AGREEMENT

 
THIS SUPPLY OF SERVICES AGREEMENT (the “ Agreement ”) is entered into with an effective date of December 5, 2013 the “ Effective Date ”, between Zenosense, Inc., a Nevada corporation, with an address at Avda Cortes Valencianas 58, Planta 5, 46015 Valencia, Spain (the “ Company ”), and Ksego Engineering SL, a Spanish Sociedad Limitada Company, with an address at  Plaza Europa 6, 46380 Cheste, Valencia, Spain whereby Ksego Engineering SL (“the Ksego”), and Carlos Jose Gil (“Contractor”) a principal of the Ksego, agrees to provide certain services (“the Services”) to the Company.

The intention of this Agreement is that the Ksego will make available to the Company the services of Contractor, and Contractor agrees to provide such services and to be bound by this Agreement as if he had entered into it in his own right as a self employed contractor in the event that Ksego is no longer able to procure or does not procure the Services for whatever reason and, likewise, the Company agrees that the Agreement shall continue in full force as if it were a contract between Contractor and the Company in the event of the dissolution of Ksego. In such circumstances references to Ksego herein shall be construed as references to Gill as a self-employed contractor.

NOW, THEREFORE , in consideration of the mutual covenants, representations, warranties and agreements contained herein, and for other valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:
 
ARTICLE I   :  Definitions and Interpretations
 
1.1   Definitions
 
For purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires, the following terms shall have the following respective meanings:
 
Base Fee ” shall have the meaning specified in Section 3.1 .
 
Board of Directors ” shall mean the Board of Directors of the Company.
 
Cause ” shall have the meaning specified in Section 4.3.
 
Company ” will also include its subsidiaries, parents and affiliates where it is reasonably logical the use of the word would include such other entities, and include any successor to its business and/or substantially all its assets which executes and delivers the Agreement as provided for in Section 7.4 or which otherwise becomes bound by all terms and provisions of this Agreement by operation of law.
 
Confidential Information ” shall have the meaning specified in Section 5.1(a) .
 
 
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Disability ” shall mean a physical or mental condition of the Contractors that, in the good faith judgment of not less than a majority of the Board of Directors, prevents that individual from being able to perform the services required under this Agreement. If any dispute arises as to whether a Disability has occurred, or whether a Disability has ceased and the Contractor is able to resume duties, then such dispute shall be referred to a licensed physician mutually agreed upon by the Contractor and the Company, which physician will not be any of the Contractor’s regular physicians.  The Contractor shall submit to such examinations and provide information as such physician may request and the determination of such physician as to the Contractor's physical or mental condition shall be binding and conclusive on the parties.  The Company shall pay the cost of any such physician and examination.
 
Dispute ” shall have the meaning specified in Article VI .
 
 “ Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended.
 
Expiration Date ” shall have the meaning specified in Section 2.2.
 
Notice of Termination ” shall mean a notice purporting to terminate this Agreement in accordance with Section 4.1 , 4.2 or 4.3.
 
Person ” shall mean and include an individual, a Partnership, a joint venture, a corporation, a trust and an unincorporated organization.
 
Incentive Fee ” shall have the meaning specified in Section 3.2.
 
Term ” shall have the meaning specified in Section 2.2.
 
Termination Date ” shall mean the termination date specified in a Notice of Termination delivered in accordance with this Agreement.
 
1.2   Interpretations
 
(a)   In this Agreement, unless a clear contrary intention appears, (i) the words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision, (ii) reference to any Article or Section, means such Article or Section hereof, (iii) the words “including” (and with correlative meaning “include”) means including, without limiting the generality of any description preceding such term, and (iv) where any provision of this Agreement refers to action to be taken by either party, or which such party is prohibited from taking, such provision shall be applicable whether such action is taken directly or indirectly by such party.
 
(b)   For the avoidance of doubt this Agreement refers to the provision of certain services to be provided by the Contractor.
 
(c)   The Article and Section headings herein are for convenience only and shall not affect the construction hereof.
 
 
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(d)   Fo r the avoidance of doubt it is specifically agreed between the Parties that nothing in this Agreement shall be construed as inferring any employment rights and obligations between the Company and/or any of its subsidiaries and associates and the Contractor and, as a result, the Company shall have no obligation or right to make any withholding tax deductions, unless required to do so by law. The Ksego and Contractor, jointly and severally, warrant and represent to the Company that they shall be solely responsible for any income, social security or other taxation liabilities that are payable on the compensation referred to herein. The Company agrees that it or any subsidiary that benefits from the service provided by Contractor will pay IVA, if any, that is payable or is subsequently deemed to be payable on invoices raised by Kesgo, even if such IVA is not initially included in invoices by virtue of the Parties understanding that the service provided are not subject to IVA because they are effectively exported and therefore believes to be zero rated.
 
ARTICLE II   : Services, Compensation etc.
 
2.1   Service Arrangement
 
The Company agrees to contract with Ksego and, directly the Contractor in the event Ksego is not longer in existence, to obtain the services of the Contractor as further described herein and Ksego and the Contractor agree to provide such services.
 
2.2. Term of Agreement
 
Unless sooner terminated pursuant to Article IV , the term of this Agreement (the “ Term ”) shall end on twelve months from the date of this Agreement, subject to extension as herein provided.  The Term will be automatically extended by an additional one (1) month, on a successive basis, unless one party gives written notice to the other at least 3 months before the then effective Expiration Date indicating that the party does not extend Term of the Agreement.  If the Term is extended, then the Expiration Date will be automatically extended by a corresponding one month (1) months.  The right not to extend the Term and the corresponding Expiration Date is separate from the right to give a Notice of Termination herein.
 
2.3   Services
 
(a)   During the Term of the Agreement, the Contractor shall provide such professional and related services as are commensurate with the position of Company Chief Executive Officer/President.  In addition the Contractor shall agree that it shall accept appointment as a director and/or other officer of the Company and its subsidiaries, as shall be agreed from time to time with the Company, and, as such, the Contractor shall have the responsibilities and authorities designated to him by the bylaws of the Company, if stated therein, and the Board of Directors.
 
(b)   During the Term of the Agreement, the Contractor shall (i) report to the Board of Directors and (ii) observe and comply with all lawful policies, directions and instructions of the Board of Directors and the Company that are consistent with the provisions of this paragraph 2.3.
 
(c)   During the Term of the Agreement, the Contractor shall (i) devote his business time, attention, skill and efforts to the faithful and efficient performance of the provision of the Services as is reasonably required, with the understanding that it is likely to be the majority of his business time.
 
(d)   The Company acknowledges that Ksego and the Contractor, separately and together, may occasionally have other clients and that Ksego and the Contractor may have other commitments which they need to attend to. Insofar as the Contractor as such other responsibilities from time to time, the Contractor agrees as follows: (i) that his obligations to provide service to the Company shall take priority to other commitments and (ii) to not accept any other client that may create a conflict with services to be provided to the Company, and (iii) to take reasonable steps to resign his role in relation to any client that may come into conflict with the Company, the Company acknowledges and accepts that the Contractor’s existing directorships and relationships with Ksego and as disclosed in Schedule 1 (“Disclosed Relationships”) to this agreement do not represent an employment conflict, and (iv) to accept the decision of the Board of Directors of the Company as to whether a conflict situation exists and to draw any client situation to the attention of the Board of Directors if the Contractor believes that a conflict does or may arise.
 
 
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(e)   During the currency of this Agreement, the Contractor shall not knowingly prejudice, in any material respect, the reputation of the Company in the fields of business in which it is engaged or with the investment community or the public at large.
 
(f)   If elected or appointed thereto, and only for the duration of such elected term or appointment, the Contractor shall, as an integral part of and to facilitate the provision of the Services referred to herein, serve as a director and/or officer of the Company and any of its subsidiaries and/or in one or more executive positions of any of such subsidiaries, provided that the Contractor is indemnified for serving in any and all such capacities on a basis consistent with that provided by the Company to other directors and executive officers of the Company or similarly situated executive officers of any such subsidiaries.
 
(g)   The Contractor represents that there are no restrictions imposed upon him by any covenants or agreements arising out of any prior engagement which materially affect his ability to provide the services set forth in this Agreement. The Contractor agrees to indemnify and hold the Company harmless for any judgment and related costs, including attorney’s fees, which may be entered against the Company as a result of a breach of any such covenants or violation of any such restrictions, and agrees that any such breach or violation shall qualify for “Cause” termination pursuant to Section 4.3 below.
 
ARTICLE III   : Fees and Expenses
 
3.1   Base Fee
 
(a)   For services rendered by the Contractor under this Agreement, the Company shall pay to the Contractor, as the designee of Ksego, a base monthly fee of 4,500 Euros to be paid at the end of each month in Euros to a bank account nominated by the Contractor and maintained in his name. The amount is exclusive of any IVA that is or may be payable.
 
(b)   As additional consideration for the services of the Contractor, on his assumption of the role of the chief executive officer (or similar office), the Contractor will be paid 10% of the annual Net Sales, as that term is defined in that certain Development and License Agreement dated November 26, 2013, as amended on December 4, 2013 (“License Agreement”), which definition is incorporated herein by reference, in respect of the sales of and revenues from the products and services that are subject to the License Agreement (generally referred to as the (“ Additional Consideration”).  The right to the Additional Consideration will commence only after Consultant has been actively employed by the Company, under this Agreement, for a period of 18 months from the date hereof and through the date of his termination of employment by the Company; provided that if Consultant is actively employed by the Company at the 18 month anniversary of the date of this Agreement, then Consultant will be due the Additional Consideration that would have accrued during the first 18 months of this Agreement if this provision would have been applicable. [For purposes of clarification and interpretation, the Additional Consideration accrues and is payable only during the period commencing the 18 months anniversary of the date of this Agreement through the termination, for any reason, of Consultant’s employment, and is retroactive on the 18 month anniversary during the preceding 18 months.)  The Additional Consideration will be paid on a monthly basis, subject to year-end adjustment based on the year-end financial statements. The Contractor specifically agrees that for purposes of any final year-end adjustment, the Company may withhold such amount as may be necessary to determine the final, annual Net Sales for purposes of the Additional Consideration, provided that the withholding will not be greater than 40% of the estimated payment due on a monthly basis.
 
(c)    For clarity, Ksego hereby agrees not to claim from the Company any right in cash compensation or stock warrants paid or awarded to the Contractor, under this section or any other section of this Agreement or for any other reason by the Company or an affiliate thereof, and to the extent that Ksego has any rights in the compensation or stock warrants paid to Contractor, it will only seek recourse against Contractor and not the Company.
 
 
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3.2   Incentive Fee
 
During the Term, the Parties may agree from time to time to modify this Agreement so as to engage the Contractor to provide services over and above those set out in this Agreement and/or to provide incentive to the Contractor to add exceptional value.
 
3.3   Period of Absence
 
The Company accepts that the Contractor may from time to time take vacation from his full time client commitments to the Company (Period of Absence). During such periods the Contractor shall ensure that adequate base coverage is provided by the Contractor so as not to prejudice the quality of the overall service. On no account shall the Contractor take a Period of Absence other than in accordance with the following: (a) it shall be within the overall average annual Time Commitment calculation; (b) it shall only exceed 14 consecutive business days with the prior agreement of the Board of the Company, which shall not be unreasonably denied.
 
3.4   Expense Reimbursement
 
The Company shall reimburse the Contractor for all reasonable travel and other business expenses incurred by its Contractors in the performance of the Services. Such expenses shall be submitted monthly in arrears and the Contractor shall retain and make available for inspection all supporting vouchers for the duration of the Agreement. Expense reimbursements shall be made in line with the principles set out in the Companies policies that apply to its employees as modified by agreement from time to time made in writing between the Parties.
 
ARTICLE IV   : Termination
 
4.1   Termination by the Contractor
 
Either Ksego or the Contractor may, at any time prior to the Expiration Date, terminate the provision of the Agreement for any reason by delivering a Notice of Termination to the Board of Directors.  The Notice of Termination shall be effective on a date not less than three months after the date of the notice and state the effective Termination Date and if none is specified then the Termination Date will be three months after the date of the Notice of Termination.  The Termination Date under this provision may be beyond the Expiration Date.
 
4.2   Termination by the Company
 
The Board of Directors may, at any time commencing one month after the date of this Agreement and prior to the Expiration Date, terminate the Agreement for any reason by delivering a Notice of Termination to the Contractor, which shall also be deemed notice to Ksego.  The Notice of Termination by the Company shall be effective not less than one month after the date of the notice and state the effective Termination Date and if none is specified then the Termination Date will be three months after the date of the Notice of Termination.  The Termination Date under this provision may be beyond the Expiration Date.
 
 
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4.3   Termination for Cause
 
The Company may terminate the Agreement for “Cause” upon the giving of a Notice of Termination to the Contractor, which shall also be deemed notice to Ksego, subject to the terms of this sub-part, which shall be effective immediately.  The Notice of Termination for Cause shall state the basis for the notice.  The Company shall have “Cause” to terminate the Agreement during the Term of this Agreement, if the Contractor’s actions result in:
 
(a)   Failure to materially provide the Services to a reasonable standard after written notice and reasonable opportunity for cure, all as reasonably determined by the Board of Directors upon a vote of a majority of its members, such vote not including the Contractor.  Any such notice will allow for a minimum of one (1) month for the Contractor to cure such failure from the date of such notice.  Any determination of whether the Contractor has failed to materially perform his duties shall not be based on performance or the financial condition of the Company or the ability of the Contractor to effectuate such Company performance or financial condition.
 
(b)   Conviction of the Contractor of a felony or any crime involving embezzlement or theft during the Term or any embezzlement or theft from the Company whether or not the subject of a conviction; or
 
(c)   Serious willful misconduct by the Contractor, including fraud willful dishonesty or the substantial breach of any fiduciary duty owed to the Company.
 
4.4   Resignations
 
In the event of a termination of this Agreement the Contractor shall immediately resign any office or directorship in the Company or any of its Subsidiaries of Associates which he holds by virtue of this Agreement or otherwise.  This contract may be replaced with a similar contract under circumstances where at its sole discretion the Board of Directors shall determine that the Contractor should continue to serve in any office or directorship, and such separate offer shall not be deemed to be a breach of any agreement, duty or obligation owing by Company to Ksego.
 
4.5   Payment in the event of Termination.
 
(a)   After the termination of the Agreement for any reason by the Company, including the inability of the Contractor to provide services due to disability of the Contractor, but other than for Cause, the Company shall pay to the Contractor the aggregate of (i) any unpaid Base Fee earned by that Contractor hereunder prior to the Termination Date and any unreimbursed expenses, plus an amount equal to the equivalent of the daily per diem rate inherent in the base fee multiplied by the number of excess days spent prior to the Termination Date over the number of days in the current annual period spent in excess of the Time Commitment apportioned on a straight line time basis, AND (ii) an amount, which is to be regarded as compensation for early termination, equal to the Base Fee which would otherwise have been due from the Termination Date to the then Expiration Date of the then Term, if the Expiration Date is after the Termination Date.
 
(b)   Upon termination of the Agreement by the Company for Cause the Company shall pay the Contractor the unpaid Base Fee earned through the Termination Date and unreimbursed, actual expenses incurred by Executive in furtherance of the Company’s business, subject to any rights of set off for damages to the Company as it asserts.  Except as provided in this agreement or by law, upon termination for Cause, the Company shall have no further financial obligation to Executive.
 
(c)   Upon termination of the Agreement by the Contractor (and for this purpose the death of the Contractor shall be regarded as Termination by the Contractor with Notice given from the date of the Contractor’s death) the Company shall pay the Contractor any unpaid Base Fee earned hereunder prior to the Termination Date and any unreimbursed expenses.
 
 
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ARTICLE V   : Confidential Information and Non-Competition
 
5.1   Confidential Information
 
(a)   Ksego and the Contractor recognizes that the services to be performed hereunder are special, unique, and extraordinary and that, by reason of the Agreement, Ksego and/orthe Contractor may acquire Confidential Information concerning the operation of the Company, the use or disclosure of which would cause the Company substantial loss and damages which could not be readily calculated and for which no remedy at law would be adequate.  Accordingly, Ksego and the Contractor  and agrees with the Company that each will not (directly or indirectly) at any time, whether during or after the Term, (i) knowingly use for an improper personal benefit any Confidential Information that is learned or may be learned or has learned by reason of the Agreement with the Company, or (ii) disclose any such Confidential Information to any Person except (A) in the performance of the Contractor’s obligations to the Company hereunder, (B) as required by applicable law, (C) in connection with the enforcement of Ksego’s or the Contractor’s rights under this Agreement, (D) in connection with any disagreement, dispute or litigation (pending or threatened) between the Ksego or Contractor and the Company or (E) with the prior written consent of the Board of Directors.  As used herein, “ Confidential Information ” includes information with respect to the operation and performance of the Company, its investments, portfolio companies, products, services, facilities, product methods, research and development, trade secrets and other intellectual property, systems, patents and patent applications, procedures, manuals, confidential reports, company data, product price lists, customer lists, financial information, business plans, prospects or opportunities (including, as applicable, all of the foregoing information regarding the Company's past, current and prospective portfolio companies); provided, however, that such term, shall not include any information that (x) is or becomes generally known or available other than as a result of a disclosure by Ksego or the Contractor or (y) is or becomes known or available to Ksego or the Contractor on a non-confidential basis from a source (other than the Company) that, to Ksego’s or the Contractor's knowledge, is not prohibited from disclosing such information to Ksego or the Contractor by a legal, contractual, fiduciary or other obligation to the Company.
 
(b)   The Ksego and Contractor each confirms that all Confidential Information is the exclusive property of the Company.  All business records, papers and documents kept or made by Ksego or the Contractor during the Term relating to the business of the Company shall be and remain the property of the Company at all times.  Upon the request of the Company at any time, the Ksego and Contractor shall promptly deliver to the Company, and shall retain no copies of, any written materials, records and documents made or coming into Ksego’s or the Contractor’s possession during the Term concerning the business or affairs of the Company other than personal materials, records and documents (including notes and correspondence) of Ksego or the Contractor not containing proprietary information relating to such business or affairs.  Notwithstanding the foregoing, Ksego and the Contractor shall be permitted to retain copies of, or have access to, all such materials, records and documents relating to any disagreement, dispute or litigation (pending or threatened) between them and the Company.
 
5.2   Non-Competition
 
(a)   Within the Term of the Agreement and for a period of one year thereafter (such period being the “ Restricted Period ”), Ksego and Contractor shall not, unless Ksego and the Contractor receives the prior written consent of the Board of Directors, own a material interest in, manage, operate, join, control, lend money or render financial or other assistance to or participate in or be connected with, as an officer, employee, contractor, stockholder, consultant or otherwise, any Person that competes with the Company, or any other business actively being pursued by or developed by the Company during the Term provided this is in line with the business plan as approved by the board of directors of the Company.
 
(b)   Ksego and the Contractor has carefully read and considered the provisions of this Section 5.2 and, having done so, agrees that the restrictions set forth in this Section 5.2 (including the Restricted Period, scope of activity to be restrained and the geographical scope) are fair and reasonable and are reasonably required for the protection of the interests of the Company, its officers, directors, employees, creditors and shareholders.  Ksego and the Contractor understands that the restrictions contained in this Section 5.2 may limit their ability to engage in a business similar to the Company's business, but acknowledges that thhe will receive sufficiently high remuneration from the Company hereunder to justify such restrictions.
 
(c)   During the Restricted Period, the shall not, whether for his own account or for the account of any other Person (excluding the Company), intentionally (i) solicit, endeavor to entice or induce any employee or contractor of the Company to terminate the Contractor's employment or contractors contract with the Company or accept employment with anyone else or (ii) interfere in a similar manner with the business of the Company including its contracting parties, customers or clients, suppliers, creditors and financiers.
 
(d)   In the event that any provision of this Section 5.2 relating to the Restricted Period or the areas of restriction shall be declared by a court of competent jurisdiction to exceed the maximum time period or areas such court deems reasonable and enforceable, the Restricted Period or areas of restriction deemed reasonable and enforceable by the court shall become and thereafter be the maximum time period and/or areas.
 
 
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5.3   Injunctive Relief
 
Ksego and the Contractor acknowledges that a breach of any of the covenants contained in this Article V may result in material irreparable injury to the Company for which there is no adequate remedy at law, that it will not be possible to measure damages for such injuries precisely and that, in the event of such a breach, any payments remaining under the terms of this Agreement shall cease and the Company shall be entitled to obtain a temporary restraining order or a preliminary or permanent injunction restraining Ksego and/or the Contractor from engaging in activities prohibited by this Article V or such other relief as may be required to specifically enforce any of the covenants contained in this Article V .  Ksego and the Contractor agrees to and hereby does submit to in personal jurisdiction before each and every such court for that purpose.
 
ARTICLE VI   : Dispute Resolution
 
6.1   Disputes
 
In the event a dispute shall arise between the parties as to whether the provisions of this Agreement have been complied with (a “ Dispute ”), the parties agree to resolve such Dispute in accordance with the following procedure:
 
(a)   A meeting shall be held promptly between the parties, attended (in the case of the Company) by one or more individuals with decision-making authority regarding the Dispute, to attempt in good faith to negotiate a resolution of the Dispute.
 
(b)   If, within 10 days after such meeting, the parties have not succeeded in negotiating a resolution of the Dispute, the parties agree to submit the Dispute to mediation in accordance with the Commercial Mediation Rules of the American Arbitration Association except that Disputes with regard to the existence of a Disability shall be resolved in accordance with the definition of the term “ Disability ” above.
 
(c)   The parties will jointly appoint a mutually acceptable mediator, seeking assistance in such regard from the American Arbitration Association if they have been unable to agree upon such appointment within 10 days following the 10-day period referred to in clause (b) above.
 
(d)   Upon appointment of the mediator, the parties agree to participate in good faith in the mediation and negotiations relating thereto for 15 days.
 
(e)   If the parties are not successful in resolving the Dispute through mediation within such 15-day period, the parties agree that the Dispute shall be settled by arbitration in accordance with the Expedited Procedures of the Commercial Arbitration Rules of the American Arbitration Association.
 
(f)   The fees and expenses of the mediator/arbitrators shall be borne solely by the non-prevailing party or, in the event there is no clear prevailing party, as the mediator/arbitrators deem appropriate.
 
(g)   Except as provided above, each party shall pay its own costs and expenses (including, without limitation, attorneys' fees) relating to any mediation/arbitration proceeding conducted under this Article VI .
 
(h)   All mediation/arbitration conferences and hearings will be held in the greater London area.
 
(i)   In the event there is any disputed question of law involved in any arbitration proceeding, such as the proper legal interpretation of any provision of this Agreement, the arbitrators shall make separate and distinct findings of all facts material to the disputed question of law to be decided and, on the basis of the facts so found, express their conclusion of the question of law.  The facts so found shall be conclusive and binding on the parties, but any legal conclusion reached by the arbitrators from such facts may be submitted by either party to a court of law for final determination by initiation of a civil action in the manner provided by law.  Such action, to be valid, must be commenced within 20 days after receipt of the arbitrators' decision.  If no such civil action is commenced within such 20-day period, the legal conclusion reached by the arbitrators shall be conclusive and binding on the parties.  Any such civil action shall be submitted, heard and determined solely on the basis of the facts found by the arbitrators.  Neither of the parties shall, or shall be entitled to, submit any additional or different facts for consideration by the court.  In the event any civil action is commenced under this paragraph (i), the party who prevails or substantially prevails (as determined by the court) in such civil action shall be entitled to recover from the other party all costs, expenses and reasonable attorneys' fees incurred by the prevailing party in connection with such action and on appeal.
 
 
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(j)   Except as limited by paragraph (i) above, the parties agree that judgment upon the award rendered by the arbitrators may be entered in any court of competent jurisdiction.  In the event legal proceedings are commenced to enforce the rights awarded in an arbitration proceeding, the party who prevails or substantially prevails in such legal proceeding shall be entitled to recover from the other party all costs, expenses and reasonable attorneys' fees incurred by the prevailing party in connection with such legal proceeding and on appeal.
 
(k)   Except as provided above, (i) no legal action may be brought by either party with respect to any Dispute and (ii) all Disputes shall be determined only in accordance with the procedures set forth above.
 
ARTICLE VII   : Miscellaneous
 
7.1   Assignability
 
The obligations of the Contractor hereunder are personal to the Contractor and may not be assigned or delegated by the Contractor or transferred in any manner whatsoever, nor are such obligations subject to involuntary alienation, assignment or transfer.  The Company shall have the right to assign this Agreement and to delegate all rights, duties and obligations hereunder as provided in Section 4, provided always that it will continue to be liable for the obligations of the assignee in the event of default by the assignee.
 
7.2   Notices
 
All notices and all other communications provided for in the Agreement shall be in writing and addressed (i) if to the Company, addressed at its principal office address or such other address as it may have designated by written notice to the Executive for purposes hereof, directed to the attention of the CEO with a copy to the Secretary of the Company and (ii) if to Ksego or the Contractor, at the address written above, or to such other address as Ksego or the Contractor may have designated to the Company in writing for purposes hereof.  Each such notice or other communication shall be deemed to have been duly given when delivered to the receiving party by registered post to the address referred to above where such delivery requires signature as proof of delivery by the receiving party.
 
7.3   Severability
 
The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.
 
7.4   Successors: Binding Agreement
 
(a)   The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company, by agreement in form and substance reasonably acceptable to the Contractor, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.  Failure of the Company to obtain such agreement prior to the effectiveness of any such succession shall be a breach of this Agreement.
 
(b)   This Agreement and all rights of Ksego and the Contractor hereunder shall inure to the benefit of and be enforceable by Ksego’s and the Contractor’s personal or legal representatives, executors, administrators, successors, permitted assignees heirs, distributes, devisees and legatees.  If the Contractor should die while any amounts would be payable to the Contractor hereunder if the Contractor had continued to live, all such amounts, unless otherwise provided herein, shall be paid, in an amount calculated in accordance with the terms of this Agreement, to the Contractor’s devisee, legatee, or other designee (as notified to the Company) or, if there be no such designee, to the Contractor's estate. For the avoidance of doubt the Company agrees that such payments will be made in this manner.
 
7.5   Amendments and Waivers
 
No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Company.  No waiver by either party hereto at any time of any breach by the other party hereto of, or in compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.
 
 
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7.6   Entire Agreement, Termination of Other Agreements
 
This Agreement is an integration of the parties' agreement and no agreement or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party that are not set forth expressly in this Agreement. This Agreement supersedes any and all previous agreements, oral or otherwise, express or implied, with respect to the subject matter hereof between the parties.
 
7.7   Governing Law
 
THE VALIDITY, INTERPRETATION, CONSTRUCTION AND PERFORMANCE OF THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF NEVADA.
 
7.8   Counterparts
 
This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same instrument.
 
7.9   Bad Boy Representation
 
The Contractor and Ksego, both individually represent to the Company that they have not been convicted of any felony or misdemeanor in connection with the purchase or sale of any security, involved in the making of any false filing with the Securities and Exchange Commission, or the conduct of the business of an underwriter, broker, dealer or paid solicitor of purchasers of securities, and is not subject to any order in connection with the foregoing, or subject to any order the restricts him/it from being engaged in the banking, insurance, savings business, suspends or revokes registration as a broker-dealer or being associated with a person or entity involved in penny stock offerings, or is subject to an order based on anti-fraud provisions of the United States securities laws, or is subject to any suspension or expulsion from a securities exchange or securities association or a Unites States postal service false representation order.
 
[Signature page follows]
 

 
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IN WITNESS WHEREOF , the parties have executed this Agreement effective as of the date first above written.
 
ZENOSENSE, INC.





______________________________________
TITLE: CHIEF EXECUTIVE OFFICER
Name: B ALEJANDRO VASQUEZ




KSEGO ENGINEERING SL


/S/ CARLOS JOSE GIL

______________________________________
TITLE: AUTHORISED SIGNATORY
Name: CARLOS JOSE GIL



CARLOS JOSE GIL, INDIVIDUALLY


/S/CARLOS JOSE GIL

___________________________________
Name: CARLOS JOSE GIL


 
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Schedule 1

Disclosed Relationships

NONE.

 
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Exhibit 10.4

DEBT PAYMENT AGREEMENT

THIS DEBT PAYMENT AGREEMENT (this “ Agreement ”) is made as of December 4, 2013, by and between Zenosense, Inc. (the “ Company ”) and B. Alejandro Vasquez (“Vasquez”).

WHEREAS , the Company owes Vasquez an outstanding payable of $146,536 (“Debt”).

WHEREAS, the Company has agreed to pay Vasquez the outstanding payable of $146,536 in shares of the Company’s Common Stock.

NOW, THEREFORE , in consideration of the foregoing and the mutual covenants and agreements herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties agree as follows:

1.  
Vasquez hereby acknowledges that 366,340 shares of Common Stock of the Company, par value $0.001 per share (the “Shares”), will be issued to him in full payment and satisfaction of the outstanding payable of $146,536.  Upon the issuance of the Shares, any and all obligations of the Company in connection with its obligation to Vasquez shall be extinguished.

2.  
Zenosense, Inc. and Vasquez intend and agree that the fair market falue of the Shares be equal to $146,536.

3.  
Vasquez acknowledges that he is a sophisticated investor and as an officer and director is able to assess the risk of investing in Zenosense, Inc., which is currently a “shell company” as defined in Rule 144.  Vasquez further acknowledges that the Shares are being issued as restricted stock and therefore, will bear a standard Securities Act of 1933 legend. Vasquez understands that it may have to hold the stock for an indefinite period of time because of the restricted nature of the Shares.






 
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IN WITNESS WHEREOF , the Company and [  ] have caused this Agreement to be executed and delivered as of the date and year first above written.



ZENOSENSE, INC.


By: /s/ B Alejandro Vasquez

Name: B. Alejandro Vasquez
Title: President and CEO


/s/ B. Alejandro Vasquez
_____________________________________________
B. Alejandro Vasquez







 
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Exhibit 10.5

DEBT PAYMENT AGREEMENT

THIS DEBT PAYMENT AGREEMENT (this “ Agreement ”) is made as of December 4, 2013, by and between Zenosense, Inc. (the “ Company ”) and ECAG.

WHEREAS , the Company owes ECAG an outstanding payable of $318,749 (“Debt”).

WHEREAS, the Company has agreed to pay ECAG the outstanding payable of $318,749 in shares of the Company’s Common Stock.

NOW, THEREFORE , in consideration of the foregoing and the mutual covenants and agreements herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties agree as follows:

1.  
ECAG hereby acknowledges that 796,872 shares of Common Stock of the Company, par value $0.001 per share (the “Shares”), will be issued to them in full payment and satisfaction of the outstanding payable of $318,749.  Upon the issuance of the Shares in the name of ECAG or their designee(s), as provided to the Company by ECAG prior to the issuance of the Shares, and delivery of the certificates representing the Shares to  ECAG, any and all obligations of the Company in connection with its obligation regarding the Debt to ECAG shall be extinguished.

2.  
As there is no active market for the Common Stock of the Company, and as the Company and ECAG are unrelated parties, negotiating this Agreement as independent third parties, both the Company and ECAG intend and agree that the fair market value of the Shares as of the date hereof is equal to $318,749.

3.  
ECAG acknowledges that they are a sophisticated investor and as such is able to assess the risk of investing in the Company, which is currently a company with limited operations, and limited prospects due to its financial condition and the need and obligations to raise additional capital to pursue its intended business plan.  Additionally, ECAG understands that the Company is a “shell company” as that term is defined in Rule 144, and as such the resale of the Shares under Rule 144 will have certain limitations imposed by Rule 144.  ECAG further acknowledges that the Shares are being issued as restricted stock and therefore, will bear a standard Securities Act of 1933 legend.  ECAG understands that it may have to hold the stock for an indefinite period of time because of the restricted nature of the Shares.
 


 
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IN WITNESS WHEREOF , the Company and ECAG have caused this Agreement to be executed and delivered as of the date and year first above written.



ZENOSENSE, INC.


By:                                                                           
Name: B. Alejandro Vasquez
Title: President and CEO

ECAG


_____________________________________________
Name:
Title: Director







 
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Exhibit 10.6

SECURITIES PURCHASE AGREEMENT

Zenosense, Inc.
Avda. Cortes Valencianas 58, Planta 5,
46015 Valencia, Spain  

The undersigned (the " Investor ") hereby confirms its agreement with you as follows:
 
1. This Securities Purchase Agreement (“Agreement”) is made as of the date set forth below between Zenosense, Inc., a Nevada corporation (the " Company "), and the Investor.  The Investor is hereby agreeing to make an equity investment in two tranches, one with the signing of this Agreement (“Initial Purchase”) and one during the month of January 2014, pursuant to the terms of this Agreement (“Commitment Purchase”). Notwithstanding the foregoing, the Company reserves the right to sell additional securities of a similar or different nature, for different prices, from time to time  prior to the consummation of the Commitment Purchase and thereafter, without notice to the Investor, and the Investor may experience dilution in respect of its investment due to any other any sales.
 
2. As of the date hereof, in respect of the Initial Purchase, the Company and the Investor agree that the Investor will purchase from the Company, and the Company will issue and sell to the Investor, for an aggregate purchase price of US$0.40 (the “Initial Purchase Price”), an aggregate of 375,000 shares of the Company's common stock, par value $0.001 per share (the “ Common Stock ”).

On a date to be mutually determined in the Month of January 2014, in respect of the Commitment Purchase, provided that if there is no mutual determination of such a date, then on Wednesday, January 29, 2014 (the “Second Closing Date”), the Investor will purchase an additional number of shares of Common Stock for an aggregate amount of $180,000 (“Commitment Purchase Price”) determined by the following formula: the quotient of (a) the Commitment Purchases Price divided by (b) the Market Price. For the purpose of this Section, the “Market Price” shall be 85 percent (85%) of the average of the published closing prices (whether or not there are actual trades for such trading day) for a share of Common Stock for the 10 trading days ending on the second trading day prior to the date of the additional purchase of shares of Common Stock (rounded to two decimal places, with $0.005 being rounded upward) ), as reported by stock exchange or trading medium in the United States on which the Common Stock is then admitted for listing or trading.  The Company and Investor agree to use their best efforts to agree on a Second Closing Date, notwithstanding the default date of January 29, 2014.  The Investor understands and agrees that the Commitment Purchase is a firm commitment and obligation to purchase shares, without any conditions precedent, other than as set forth in the Terms and Conditions for Purchase attached hereto, and the Commitment Purchase is an enforceable agreement being made by the Investor, and that the Company will be entitled to take any and all such action as it deems necessary and prudent to enforce its rights hereunder.

The Initial Purchase Price is due to the Company with the return of the Securities Purchase Agreement by the Investor, and the Commitment Purchase Price is due to the Company on the Second Closing Date.  Each of the Initial Purchase Price and Commitment Purchase Price will be deposited into the IOLA account of the Company’s counsel, and the funds will be transferred to the Company operating account upon acceptance of the Securities Purchase Agreement by the Company and delivery of the instructions to issue the shares to the Company’s transfer agent.   During the period the Investor funds are held by the agent of the Company, they will be at risk of the creditors of the Company claiming rights to such funds.

3.           The Company and the Investor agree that the purchase and sale of the Common Stock, as of the date of this Agreement and as of the Second Closing Date is subject to the Terms and Conditions for Purchase attached hereto as Annex I and incorporated herein by reference as if fully set forth herein. Unless otherwise requested by the Investor in Exhibit A , the Common Stock issued to the Investor will be issued in the Investor's name and address as set forth below.
 
4. The Investor represents that, except as set forth below, (a) it has had no position, office or other material relationship within the past three years with the Company or its affiliates, other than as a passive stockholder, if at all, (b) neither it, nor any group of which it is a member or to which it is related, beneficially owns (including the right to acquire or vote) any securities of the Company that is greater than 5% of the current issued and outstanding shares of common stock as reported in the latest report filed by the Company with the United States Securities and Exchange Commission, and (c) neither it, nor any affiliate of the Investor, has any direct or indirect affiliation or association with any Finance and Regulatory Authority, Inc. (" FINRA ") member. Exceptions:
 
(If no exceptions, write "none." If left blank, response will be deemed to be "none.")
 
___________________________________________________________


 
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Please confirm that the foregoing correctly sets forth the agreement between us by signing in the space provided below for that purpose .
 
     
Dated as of: December 4, 2013
       
       
       
       
     
By: ECAG
     
Name:
Title: Director
 
     
 
       
       
 
AGREED AND ACCEPTED, December 4, 2013:
ZENOSENSE, INC.

 
By: ____________________
      Name: B. Alejandro Vasquez
      Title: Authorized Signatory





[SECURITIES PURCHASE AGREEMENT SIGNATURE PAGE]
 

 
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Annex I
 
Terms and Conditions for Purchase of Securities
 
1. Agreement to Sell and Purchase Securities.
 
1.1 Purchase and Sale. At a Closing (as defined in Section 2 ), the Company will sell to the Investor, and the Investor will purchase from the Company, upon the terms and subject to the conditions set forth herein, for the Initial Purchase Price or Commitment Purchase Price, as the case may be, the Common Stock described in Paragraph 2 of the Securities Purchase Agreement attached hereto (collectively with this Annex I and the other exhibits attached hereto, this “ Agreement ”).
 
1.2 Investor. The Investor must execute and deliver a Securities Purchase Agreement, and must complete a Certificate Questionnaire (in the form attached as Exhibit A hereto) and an Investor Questionnaire (in the form attached as Exhibit B hereto) in order to purchase the Common Stock.

2. Delivery at Closing.   The completion of the purchase and sale of the Common Stock at either the Initial Purchase or the Commitment Purchase, as defined in the Securities Purchase Agreement (either being referenced herein as a “ Closing ”) shall occur in respect of the Initial Purchase to be the date of this Agreement and with respect to the Commitment Purchase on a date to be determined as the Second Closing Date, as defined in the Securities Purchase Agreement (either dates being referenced herein as the “ Closing Date ”). At the Closing, the Company shall instruct its transfer agent to issue (the “ Instruction Letter ”) to the Investor that number of shares of Common Stock relevant to the investment, as set forth in Paragraph 2 of the Securities Purchase Agreement. In exchange for the delivery of the shares of Common Stock, the Investor shall pay the Initial Purchase Price and the Commitment Purchase Price to the IOLA account of the counsel to the Company by wire transfer of immediately available funds, pursuant to the written instructions provided by the Company, if not previously delivered to the Company.
 
The Company's obligation to issue and sell the shares of Common Stock to the Investor shall be subject to the satisfaction of the following conditions, any one or more of which may be waived by the Company: (a) prior receipt by the Company of a copy of this Agreement executed by the Investor; (b) the accuracy of the representations and warranties made by the Investor in this Agreement; (c) the receipt of the Purchase Price or Commitment Purchase Price by the counsel to the Company; and (d) the Investor will have agreed to exchange a debt obligation of the Company to the Investor in the principal amount of $318,749, into 796,872 shares of Common Stock, by separate agreement, which conversion rate will be the same as the Initial Purchase Price.
 
The Investor's obligation to purchase the Common Stock shall be subject to the satisfaction of the following conditions, any one or more of which may be waived by the Investor: (a) the accuracy of the representations and warranties made by the Company in this Agreement; (b) the execution and delivery by the Company of the Instruction Letter; (c) the fulfillment of the obligations of the Company under this Agreement on or prior to the Closing; and (d) the two principal shareholders, Messrs. Vasquez and Gutierrez, as they decide between themselves, will have surrendered to the Company, as a contribution to the capital thereof, for cancellation an aggregate of 43,500,000 shares of Common Stock.
  
3. Representations and Warranties of the Company .  Except as set forth in the SEC Reports (as defined below), the Company hereby represents and warrants to the Investor as of the date hereof and the Closing Date, as follows:
 
3.1 Organization . The Company is a corporation duly organized and validly existing under, and by virtue of, the laws of the State of Nevada and is in good standing under such laws, and is qualified and in good standing under the laws of each other jurisdiction in which it is required to be so qualified.
 
 
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3.2          Corporate Power . The Company has all requisite corporate power and authority to own and operate its properties and assets, and to carry on its business as presently conducted.  The Company has all requisite legal and corporate power and authority to execute and deliver the Agreement and to carry out and perform its obligations under the terms of the Agreement.
 
3.3           Authorization; Validity . The execution, delivery and performance of the Agreement by the Company has been duly authorized by all requisite corporate action and the Agreement constitute the valid and binding obligations of the Company, enforceable against it in accordance with its terms, except as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally.  The shares of Common Stock when issued pursuant to the Agreement shall be, duly authorized, validly issued, fully paid and non-assessable.

3.4             Non-Contravention .  Neither the execution, delivery nor performance of any of the Agreement has or will result in a violation or conflict with or constitute, with or without the passage of time or giving of notice or both, either a default under any provision of the Company’s articles of incorporation or by-laws or any agreement, instrument or contract to which it is a party or by which it is bound and that has been filed as an exhibit to the SEC Reports.
 
3.5            Compliance with Laws . The Company is not in material violation of, and neither the execution, delivery nor performance of the Agreement or any of its terms by the Company has or will result in a material violation of, any federal, state, local or foreign law, rule, regulation, order, judgment or decree applicable to the Company.
 
3.6             Accurate Information .  All disclosure furnished by the Company to the Investor regarding the Company, its business and the transactions contemplated hereby, is true and correct in all material respects.

  4.              Representations and Warranties of the Investor .  The Investor hereby represents and warrants to the Company as of the date hereof and the Closing Date, as follows:
 
4.1           Investor Knowledge and Status . The Investor represents and warrants to, and covenants with, the Company that: (i) the Investor is an "accredited investor" as defined in Regulation D under the Securities Act of 1933, as amended (the “ Securities Act ”), is knowledgeable, sophisticated and experienced in making, and is qualified to make decisions with respect to, investments in restricted securities of micro-cap companies presenting an investment decision similar to that involved in the purchase of the Common Stock, and has requested, received, reviewed and considered all information it deemed relevant in making an informed decision to purchase the Common Stock; (ii) the Investor understands that the shares of Common Stock will be “restricted securities” when issued and will not have been registered under the Securities Act and will be acquiring the shares of Common Stock in the ordinary course of its business and for its own account for investment only, has no present intention of distributing any of the securities and has no arrangement or understanding with any other persons regarding the distribution of the Common Stock; and (iii) the Investor has, in connection with its decision to purchase the Common Stock, relied only upon the representations and warranties of the Company contained herein and the information contained in the SEC Reports. The Investor understands that the issuance of the Common Stock to the Investor have not been registered under the Securities Act, or registered or qualified under any state securities law, in reliance on specific exemptions therefrom, which exemptions may depend upon, among other things, the representations made by the Investor in this Agreement. No person is authorized by the Company to provide any representation that is inconsistent with or in addition to those contained herein or in the SEC Reports, and the Investor acknowledges that it has not received or relied on any such representations.
 
4.2            Power . The Investor has all requisite power and authority to execute and deliver this Agreement and to carry out and perform its obligations under the terms of this Agreement.

 
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4.3             Authorization; Validity .   The execution, delivery and performance by the Investor of the transactions contemplated by this Agreement have been duly authorized by any necessary corporate or similar action on the part of the Investor, as applicable. This Agreement has been duly executed by the Investor and constitutes the valid and binding obligation of the Investor, enforceable against it in accordance with its terms, except as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally.
 
4.8           Additional Acknowledgement . The Investor acknowledges that it has independently evaluated the merits of the transactions contemplated by this Agreement, that it has independently determined to enter into the transactions contemplated hereby, that it is not relying on any advice from or evaluation by any other person, that it is relying solely upon the representations and warranties of the Company set forth in this Agreement in making its investment decision, and that it is not acting in concert with any other person in making its purchase of the Common Stock hereunder.
 
5.            Transfer Restrictions; Legends . Certificates evidencing the shares of Common Stock shall each bear any legend as required by the "blue sky" laws of any state and a restrictive legend in substantially the following form, until such time as they are not required:
 
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OR (B) AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY AND ITS TRANSFER AGENT OR (II) UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.
 
6 .            Notices .  All notices, requests, consents and other communications hereunder shall be in writing, shall be delivered by first-class registered or certified airmail, or internationally recognized overnight express courier, postage prepaid, or by facsimile, and shall be deemed given (i) if delivered by first-class registered or certified mail domestic, upon the business day received, or (ii) if delivered by an internationally recognized overnight carrier, one business day after timely delivery to such carrier, and shall be addressed as follows, or to such other address or addresses as may have been furnished in writing by a party to another party pursuant to this paragraph:
 
(a) if to the Company, to:
Zenosense, Inc.
Avda Cortes Valencianas 58, Planta 5,
46015 Valencia, Spain
 
Attention:
 
   
with a copy to:
Golenbock Eiseman Assor Bell & Peskoe LLP
437 Madison Avenue
New York, New York 10022
 
Attention: Andrew D. Hudders, Esq.
 
The above notice to counsel is only for informational purposes, and shall not constitute legal notice under this Agreement or for any other purpose.
 
(b)   if to the Investor, at its address on the signature page to the Securities Purchase Agreement.

 
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7.           Amendments; Waiver . This Agreement may not be modified or amended except pursuant to an instrument in writing signed by the Company and the Investor. Any waiver of a provision of this Agreement must be in writing and executed by the party against whom enforcement of such waiver is sought.
 
8.           Headings . The headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be part of this Agreement.
 
9.     Entire Agreement; Severability . This Agreement sets forth the entire agreement and understanding of the parties relating to the subject matter hereof and supersedes all prior and contemporaneous agreements, negotiations and understandings between the parties, both oral and written relating to the subject matter hereof. If any provision contained in this Agreement is determined to be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby.  Other than a condition precedent, the Investor has no rights under the Asset Purchase Agreement.
 
10.     Governing Law; Jurisdiction .  This Agreement shall be governed by and construed and enforced in accordance with the law of the State of New York, without giving effect to principals of conflict of laws. The parties (i) agree that any legal suit, action or proceeding arising out of or relating to this Agreement shall be instituted exclusively in the courts of the State of New York, County of New York, (ii) waive any objection to the venue of any such suit, action or proceeding and the right to assert that such forum is not a convenient forum, and (iii) irrevocably consent to the jurisdiction of the courts of the State of New York, County of New York, in any such suit, action or proceeding, and further agree to accept and acknowledge service of any and all process which may be served in any such suit, action or proceeding and agree that service of process upon them mailed by certified mail to their respective addresses shall be deemed in every respect effective service of process upon them in any such suit, action or proceeding.
 
11.     Counterparts . This Agreement may be executed in two or more counterparts, each of which shall constitute an original, but all of which, when taken together, shall constitute but one instrument, and shall become effective when one or more counterparts have been signed by each party hereto and delivered to the other parties.

12.             Successors and Assigns .  This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. Neither party may assign this Agreement or any rights or obligations hereunder without the prior written consent of the other party (other than by merger).
 
13.     Fees and Expenses .  Except as provided in this Agreement, 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 the Common Stock to the Investor.
 
14.     Severability .  If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction.
 
15.     Remedies .  In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Investor and the Company will be entitled to specific performance under the Agreement.  The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the Agreement and hereby agrees to waive and not to assert in any action for specific performance of any such obligation the defense that a remedy at law would be adequate.

16 .            Non-Contravention .  The Investor is agreeing to the terms of this Agreement on the understanding and agreement that the Company will use all commercially reasonable efforts to not frustrate in any way the ability of the Investor to sell any of the Shares that may be purchased under this Agreement, including to cause its agents to act expeditiously to take any and all action to remove any federal and state securities restrictive legends and other restrictions that it is legally able to remove, time being of the essence, as requested by the Investor from time to time, such actions to be at the expense of the Company. It is agreed that if the Company does not act in accordance with the foregoing obligations that it will be liable in damages, to reimburse the Investor for any loss in the market value of the Shares that the Investor intends to sell but is unable to sell, including any “buy-in” expenses imposed on the Investor in any attempt to sell the Shares, and any legal and other expenses of the Investor in attempting to recover its damages from the Company. Notwithstanding the foregoing, this obligation of the Company does not include registering any of the Shares for resale under any federal or state securities laws, or to take any other action to facilitate the sale of the Shares, including consenting to any service in any jurisdiction or paying any fees in respect of the sale of the Shares.
 
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