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): April 13, 2018

 

NEWMARKT CORP.  

(Exact name of registrant as specified in its charter r)

 

Nevada 333-212821 35-2540672
(State or Other Jurisdiction
of Incorporation)
(Commission File Number) (I.R.S. Employer Identification Number)

 

319 Clematis Street Suite 714 West Palm Beach FL 33401 (Address of principal executive offices, including zip code)

 

(760) 466-8076

(Registrant’s telephone number, including area code)

 

P.O. Box 1408, 5348 Vegas Drive, Las Vegas, Nevada 89108

(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:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
   
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
   
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
   
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
   
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
   
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

 

  - 1 -  

 

 

Item 1.01 Entry into a Material Definitive Agreement.
Item 2.01 Completion of Acquisition or Disposition of Assets.

 

Acquisition of Ozop Surgical, Inc. and Share Redemption

 

Effective April 13, 2018, Newmarkt Corp. ("we," "us," "our," "NWKT," or the “Company”) entered into and completed a share exchange agreement (the "Share Exchange Agreement") with Ozop Surgical, Inc., a Delaware corporation ("OZOP"), the shareholders of OZOP (the “OZOP Shareholders”) and Denis Razvodovskij, the holder of 2,000,000 shares of our common stock. Pursuant to the terms of the Share Exchange Agreement, the OZOP Shareholders transferred and exchanged 100% of the capital stock of OZOP in exchange for an aggregate of 25,000,000 newly issued shares of our common stock (the “Share Exchange”). After giving effect to the redemption of 2,000,000 shares of our common stock pursuant to the Redemption Agreement discussed below and the issuance of 25,000,000 shares of our common stock pursuant to the Share Exchange Agreement, we had 25,797,500 shares of common stock issued and outstanding, with the OZOP Shareholders, as a group, owning 96.9% of such shares. Our executive officers and directors, as a group, own 19,900,000 of our shares representing 77.1% of our issued and outstanding shares of common stock. Upon completion of the share exchange pursuant to the Share Exchange Agreement, OZOP became our wholly owned subsidiary.

 

OZOP invents, designs, develops, manufactures and globally distributes innovative endoscopic instruments, surgical implants, instrumentation, devices and related technologies, focused on spine, neurological and pain management procedures and specialties.

 

Effective April 13, 2018, in connection with the acquisition of OZOP, we agreed to purchase and redeem 2,000,000 shares of our common stock from Mr. Razvodovskij for a total purchase price of $350,000 pursuant to a Share Redemption Agreement (the “Redemption Agreement”).

 

Pursuant to the terms of the Share Exchange Agreement, effective April 13, 2018, Mr. Razvodovskij resigned as the Company's Chief Executive Officer, Chief Financial Officer, Secretary, and sole director, and Michael Chermak, Salman J. Chaudhry and Eric Siu were named as directors of the Company.

 

Convertible Promissory Note with Carebourn Capital, L.P.

 

On April 13, 2018, we sold Carebourn Capital, L.P., a Delaware limited partnership (“Carebourn”) a convertible promissory note in the principal amount of $442,175 (the “Note”), pursuant to a Securities Purchase Agreement we entered into with them dated April 1, 2018. The Note bears interest at the rate of 12% per annum and is due and payable on April 13, 2019. The Note had an original issue discount of $57,675. We paid $25,000 to cover Carebourn’s transactional expenses and $9,500 to cover Carebourn’s legal fees in connection with the sale of the Note, which were included in the principal amount of the Note.

 

Periodic payments are due by us on the Note at the rate of $850 per day (the “Repayment Amount”) via direct withdrawal from our bank account, beginning on April 27, 2018 and to last for a 30-day period. Following this period, the Repayment Amount automatically increases to $1,100 per day until the Note is satisfied in full. The Repayment Amount automatically adjusts to a prorated higher amount based upon the addition of charges to the outstanding balance of the Note, as well as to reflect any penalties incurred or events of defaults triggered under the terms of the Note.

 

The Note provides for standard and customary events of default such as failing to timely make payments under the Note when due, the failure of the Company to timely comply with the Securities Exchange Act of 1934, as amended, reporting requirements and the failure to maintain a listing on the OTC Markets. Additionally, upon the occurrence of certain defaults, as described in the Note, we are required to pay Carebourn liquidated damages in addition to the amount owed under the Note.

 

The principal amount of the Note and all accrued interest thereon is convertible at the option of the holder thereof into our common stock at any time following the date the Note was issued. The conversion price of the Note is equal to 55% of the lowest price quoted on the OTC Markets for the Company’s common stock during the 25 trading days prior to the conversion date. The conversion price of the Notes is subject to proportional adjustment in the event of stock splits, stock dividends, rights offerings by us relating to our securities or the securities of any our subsidiaries, combinations, recapitalization, reclassifications, extraordinary distributions and similar events. Additionally, in the event our shares are not deliverable via DWAC following conversion an additional 10% discount is added to the conversion discount of the note and in the event we fail to meet certain other requirements of the note, an additional 5% discount is added to the conversion discount of the conversion price.

 

  - 2 -  

 

In the event we fail to deliver the shares of common stock issuable upon conversion of the Note within three business days of our receipt of a conversion notice, we are required to pay Carebourn $2,000 per day for each day that we fail to deliver such shares.

 

At no time may the Note be converted into shares of our common stock if such conversion would result in Carebourn and its affiliates owning an aggregate of in excess of 4.99% of the then outstanding shares of our common stock.  This ownership limitation can be increased or decreased by the holder upon 61 days’ notice to us.

 

We may prepay in full the unpaid principal and interest on the Note, with at least 20 trading days’ notice, (a) any time prior to the 180th day after the issuance date, by paying 130% of the principal amount of the Note together with accrued interest thereon; and (b) any time beginning on the 181st day after the issuance date and ending on the 364th day after the issuance date, by paying 150% of the principal amount of the Note together with accrued interest thereon. After the expiration of the 364th day after the issuance date, we have no right of prepayment.

 

The Note also contains customary positive and negative covenants.

 

In the event we receive any third party offer to provide us funding while the note is outstanding we are required to offer Carebourn a right of first refusal to provide such funding on the terms offered by the third party. We also agreed that if we provide any financing source more favorable terms than Carebourn under the note while the note is outstanding that the Carebourn note would, at the option of Carebourn, be amended to include such more favorable terms.

 

Pledge Agreement. In connection with our obligations under the Note, our executive officers and the Company entered into a Pledge Agreement (the “Pledge Agreement”) whereby they pledged as collateral for the Loan an aggregate of 19,900,000 shares of our common stock and we pledged the shares of our subsidiary OZOP Surgical, Inc. (collectively, the “Collateral”). Upon a default under the terms of the Note, Carebourn may, among other things, collect or take possession of the Collateral, proceed with the foreclosure of the security interest in the Collateral or sell, lease or dispose of the Collateral.

 

The foregoing descriptions of the Share Exchange Agreement, the Redemption Agreement, the Securities Purchase Agreement, the Note and form of Pledge Agreement are summaries only and are qualified in their entireties by reference to the full text of the Share Exchange Agreement, the Redemption Agreement, the Securities Purchase Agreement, the Note and form of Pledge Agreement, filed herewith as Exhibits 2.1, 10.1, 10.2, 10.3 and 10.4, respectively, and incorporated herein by reference.

 

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

 

The disclosures above in Item 1.01, below the heading “Convertible Promissory Note with Carebourn Capital, L.P.”, are incorporated by reference in this Item 2.03 in their entirety.

 

Item 3.02 Unregistered Sales of Equity Securities.

 

The disclosures above in Item 1.01 are incorporated by reference in this Item 3.02 in their entirety.

 

The shares of the Company's common stock issued in connection with the Share Exchange Agreement and the shares of common stock issuable upon conversion of the Note were not registered under the Securities Act of 1933, as amended (the "Securities Act") in reliance upon an exemption from registration provided by Section 4(a)(2) under the Securities Act in a transaction not involving a public offering or distribution. The shares issued to the OZOP Shareholders and upon conversion of the Note may not be transferred or sold absent registration under the Securities Act or an applicable exemption therefrom. 

 

Item 5.01 Changes in Control of Registrant

 

The disclosures above in Item 1.01 are incorporated by reference in this Item 5.01 in their entirety.

 

Except as described herein, there were no arrangements or understandings among members of both the former and new control groups and their associates with respect to the election of directors or other matters. As required to be disclosed by Regulation S-K Item 403(c), there are no arrangements, known to the Company, including any pledge by any person of securities of the Company or any of its parents, the operation of which may at a subsequent date result in a change in control of the Company.

 

  - 3 -  

 

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangement of Certain Officers

 

Executive Officer and Director Resignations and Appointments

 

In connection with the Share Exchange Agreement, effective April 13, 2018, Mr. Razvodovskij resigned as the Company's Chief Executive Officer, Chief Financial Officer, Secretary, and sole director and Michael Chermak, Salman J. Chaudhry and Eric Siu were appointed as directors of the Company. On the same date, the Board appointed Michael Chermak as our Chief Executive Officer, Barry Hollander as our Chief Financial Officer and Salman J. Chaudhry as our Chief Operating Officer and corporate secretary.

 

Background

 

Michael D. Chermak has been a director and Chief Executive Officer of OZOP since September 2016. From June, 2011 to present he has served as president of MD Capital Advisors, Inc., a business advisory firm. Previously, he was the founder and CEO of Healthdemographics, Inc., a company in the healthcare predictive data and decision support business. He sold the company in 1997 to Medirisk. In 1998, he was the co-founder and Chairman of Medibuy.com, an Internet healthcare supply vendor. From 2005 to 2008, he was the Chairman and Chief Executive Officer of Bridgetech Holdings International (OTC: BGTH) which focused on introducing western medicine into China. He has served on the Board of Directors and as an Audit Committee member of Beijing Origin Seed (NASDAQ: SEED) from 2005 to 2006. Michael graduated from the University of New Mexico, Anderson School of Management.

 

Barry Hollander has nearly 30 years of business experience including 15 years as Chief Financial Officer of private and public companies. From August 2012 to August 2015, Mr. Hollander served as the CFO of American Doctors Online, Inc., a private company that owns intellectual property related to the delivery of telemedicine. From 2011 to September 2015, Mr. Hollander served as the Chief Financial Officer of Agritek Holdings, Inc. (“Agritek”). Agritek provides real estate management and health and wellness product lines for the medicinal marijuana industry. From 2010 to May 2016, Mr. Hollander served as the CFO of Petrogress, Inc. (formerly 800 Commerce, Inc.), a public company that at that time, marketed credit card processing services From 2006 through January 2014, Mr. Hollander was the acting Chief Executive Officer of FastFunds Financial Corporation, a publicly traded company that provides a variety of business consulting services to businesses in the cannabis industry. In 2010, Mr. Hollander founded Venture Equity, LLC, a Florida limited liability corporation that offers financial and business consulting services. Mr. Hollander began his career in 1981 in the accounting department of Macgregor Sporting Goods and became part of its executive management team. Over his career, Mr. Hollander contributed to acquisitions, mergers assisting company’s preparing to go public and public reporting responsibilities, thereafter. Mr. Hollander has a Bachelor of Science degree from Fairleigh Dickinson University.

 

Eric Siu was the Chief Operating Officer of OZOP from September 2016 until December 2016 and has been a director since September 2016. From 2010 until 2015 he was a founder of Think Capital Partners, Ltd. and Managing Director of Think Group, where he applied his experience in the field of endoscopic systems and their use in management information system applications to assist clients in the development and distribution of medical products. He has established academic research collaborations with the Chinese University of Hong Kong and Hong Kong University as well as leading institutions in the Peoples Republic of China (“PRC”). He has collaborated with the Ministry of Health of the PRC (MOH) where he has organized over 200 workshops for leading Chinese surgeons working with international medical device manufacturers as well as the Chinese Doctors Association (CDA) regarding physician and surgeon training and continuing education initiatives. He also has worked with the PRC’s regulatory body, the CFDA, and has registered products for international medical device manufacturers. Eric has been focused on endoscopic surgical approaches during his career and holds China and international patents in this area. Eric has a degree in Applied Mathematics and Physics from the University of London.

 

Salman J. Chaudhry has been the Chief Operating Officer of OZOP since January 2017 and Director since February 2018. From 2008 to 2016, Salman was the Managing Director of Appello Real Estate Brokers LLC, a boutique real estate brokerage company dealing in residential and commercial properties in Dubai. From 2001 until 2008, he held the position of Vice President, Investment Banking in Gulf International Bank B.S.C. (“GIB”) where he led and completed pioneering equity transactions in Saudi Arabia, Bahrain and the UAE, including provision of advisory services to some of the largest healthcare groups and medical device distributors in the Middle East. From 1998 to 2000, Salman worked as an Associate for RP Associates, a California based venture capital incubator of start-ups focusing on medical devices, B2B internet and other companies. He holds a Bachelor of Science (Hons) degree in Business Management from Kings College, University of London and a Master of Science in Accounting and Finance from the London School of Economics.

 

  - 4 -  

 

Compensation

 

At this time, we do not have any written employment agreement or other formal compensation agreements with our officers and directors. Compensation arrangements are the subject of ongoing development and we will make appropriate additional disclosures as they are further developed and formalized.

 

Item 9.01 Financial Statements and Exhibits.

 

(a) Financial Statements of Business Acquired.

 

In accordance with Item 9.01(a)(4) of Form 8-K the financial statements required under this Item 9.01 will be filed by amendment to this Current Report on Form 8-K no later than 75 days after the completion of Share Exchange.

 

(b) Pro Forma Financial Information.

 

In accordance with Item 9.01(b)(2) of Form 8-K the financial statements required under this Item 9.01 will be filed by amendment to this Current Report on Form 8-K no later than 75 days after the completion of the Share Exchange.

 

 

Exhibit No.   Description
     
2.1*   Share Exchange Agreement dated April 5, 2018 by and among Newmarkt Corp., the shareholders of Ozop Surgical, Inc., Ozop Surgical, Inc. and Denis Razvodovskij.
     
10.1*   Share Redemption Agreement dated April 13, 2018, by and between Newmarkt Corp. and Denis Razvodovskij.
     
10.2*   Securities Purchase Agreement dated April 13, 2018, by and between Newmarkt Corp. and Carebourn Capital, L.P.
     
10.3*   $442,175 Convertible Promissory Note dated April 13, 2018, by Newmarkt Corp. in favor of Carebourn Capital, L.P.
     
10.4*   Form of Pledge Agreement in favor of Carebourn Capital, L.P.

 

*Filed herewith.

 

  - 5 -  

 

SIGNATURES

 

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

 

 

  NEWMARKT CORP.
   
   
Date: April 19, 2018 By: /s/ Michael Chermak  
    Michael Chermak
    Chief Executive Officer

 

 

 

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Exhibit 2.1

 

 

 

 

 

SHA R E EXC H ANG E A GREE ME N T

 

by and a m o ng

Newmarkt Corp ,

Denis Razvodovskij,

Ozop Surgical , Inc .

A nd

 

T he S h areh o l de r s o f Ozop Surgical , I n c.

 

 

 

 

 

 

 
 

 

TABLE OF CONTENTS
         
Article I.   SHARE EXCHANGE   4  
Section 1.01   The Exchange   4  
Section 1.02   Closing   5  
Section 1.03   NWKT Deliverables at the Closing   5  
Section 1.04   OZOP Deliverables at the Closing   5  
Section 1.05   Tax Consequences   6  
Section 1.06   Conveyance Taxes   6  
           
Article II.   REPRESENTATIONS AND WARRANTIES REGARDING OZOP   6  
Section 2.01   Corporate Existence and Power   6  
Section 2.02   No Conflict; Due Authorization   6  
Section 2.03   Valid Obligation   6  
Section 2.04   Governmental Authorization   6  
Section 2.05   Authorized Shares and Capital   7  
Section 2.06   Books and Records   7  
Section 2.07   Litigation and Proceedings   7  
Section 2.08   Contracts   7  
Section 2.09   Compliance With Laws and Regulations   7  
Section 2.10   Taxes   8  
Section 2.11   Tax Returns and Audits   8  
Section 2.12   Employee Benefit Plans; ERISA   8  
Section 2.13   Limited Representations and Warranties   8  
           
Article III.   REPRESENTATIONS AND WARRANTIES OF THE OZOP SHAREHOLDERS   8  
Section 3.01   Corporate Existence and Power   8  
Section 3.02   No Conflict: Due Authorization   9  
Section 3.03   Valid Obligation   9  
Section 3.04   Title to and Issuance of the OZOP Stock   9  
Section 3.05   Broker’s, Finder’s or Similar Fees   9  
Section 3.06   Investment Representations   9  
Section 3.07   Limited Representations and Warranties   10  
           
Article IV.   REPRESENTATIONS AND WARRANTIES REGARDING THE NWKT PARTIES   11  
Section 4.01   Corporate Existence and Power   11  
Section 4.02   No Conflict; Due Authorization   11  
Section 4.03   Valid Obligation   11  
Section 4.04   Governmental Authorization   11  
Section 4.05   Authorized Shares and Capital   11  
Section 4.06   Options or Warrants   12  
Section 4.07   Subsidiaries and Predecessor Corporations   12  
Section 4.08   Books and Records   12  
Section 4.09   Financial Statements   12  
Section 4.10   Undisclosed Liabilities   12  
Section 4.11   Litigation and Proceedings   12  
Section 4.12   Contracts   13  
Section 4.13   No Conflict With Other Instruments   13  
Section 4.14   Compliance With Laws and Regulations   13  
Section 4.15   Taxes   13  
Section 4.16   Tax Returns and Audits   13  
Section 4.17   Employee Benefit Plans; ERISA   13  
Section 4.18   Conflict of Interest   14  
Section 4.19   Bank Accounts   14  
Section 4.20   Officer, Director and Promoter's Information   14  
Section 4.21   Limited Representations and Warranties   14  
           
Article V.   ADDITIONAL COVENANTS OF THE PARTIES   14  
Section 5.01   Actions at and Following the Closing   14  
           
Article VI.   INDEMNIFICATION   15  
Section 6.01   Indemnification of NWKT   15  
Section 6.02   Indemnification of OZOP and OZOP Shareholders   15  
Section 6.03   Expiration and Time Limit   15  
Section 6.04   Procedure   16  
Section 6.05   Periodic Payments   17  
Section 6.06   Insurance   17  
           
Article VII.   DISPUTE RESOLUTION   18  
Section 7.01   Arbitration   18  
Section 7.02   Waiver of Jury Trial; Exemplary Damages   19  
           
Article VIII.   MISCELLANEOUS   19  
Section 8.01   Brokers   19  
Section 8.02   Governing Law   19  
Section 8.03   Notices   20  
Section 8.04   Attorneys' Fees   20  
Section 8.05   Confidentiality   20  
Section 8.06   Public Announcements and Filings   21  
Section 8.07   Schedules; Knowledge   21  
Section 8.08   Third Party Beneficiaries   21  
Section 8.09   Expenses   21  
Section 8.10   Entire Agreement; Definitions; Interpretation   21  
Section 8.11   Survival; Termination   22  
Section 8.12   Amendment; Waiver; Remedies; Agent   22  
Section 8.13   OZOP Shareholders Appointment of Attorneys in Fact   22  
Section 8.14   Arm's Length Bargaining; No Presumption Against Drafter   23  
Section 8.15   Headings   23  
Section 8.16   Exhibits and Schedules   23  
Section 8.17   No Assignment or Delegation   23  
Section 8.18   Commercially Reasonable Efforts   24  
Section 8.19   Further Assurances   24  
Section 8.20   Specific Performance   24  
Section 8.21   Counterparts   24  
Section 8.22   No Drafting Party   24  
           
Exhibits Exhibits      
Exhibit A OZOP Shareholders' OZOP Stock and Exchange Shares   26  
Exhibit B Defined Terms   27  

 

 
 

 

SHA R E EXC H ANG E A GREE ME N T

D a t ed as o f April 13 , 2018

T h i s S har e E xchan g e A g ree m en t (t o g e t he r w it h t h e E x h i b it s , S chedu l e s an d a t t ach m en t s here t o , t h i s A greeme n t ) i s en t e r e d i n t o a s o f t h e da t e f i rs t s e t f o r t h abo v e ( t h e E ffect i v e D ate ) b y an d a m o ng ( i ) Ozop Surgical, I nc . a Delaware c o rpor a ti o n ( OZOP ”) ; (ii) the shareholders of OZOP (the “ OZOP Shareholders ”) ( iii ) Newmarkt , Corp , a Nevada c o rpora t i o n (“ NWKT ”) and ( i v ) Denis Razvodovskij , t h e ho l d er , d i r ec tl y o r i nd i r e c tl y , o f 2,000,0000 shares of common stock of NWKT, representing a m a j or it y o f t h e i s sue d an d o u t s t and i n g cap i t a l s t oc k o f NWKT (“ Razvodovskij ”) . E ac h o f NWKT an d Razvodovskij m ay b e ref e rre d t o c o ll e c ti v e l y here i n a s t h e NWKT P a r t i es an d separ a t e l y a s a NWKT P arty ”. E ac h o f OZOP an d t h e OZOP S hareh o l der s m ay b e referre d t o c o ll ec t i v e l y here i n a s t h e OZOP P a r t i e s an d separa t e l y a s an OZOP P a rty . E ac h NWKT P ar t y an d eac h OZOP P ar t y m a y b e referre d t o here i n co ll e c ti v e l y a s t h e P a r t i es an d separa t e l y a s a P a rty ”.

 

W HEREAS NWKT will purchase and redeem from Razvodovskij pursuant to a Redemption Agreement 2,000,000 shares (the “ Redemption Shares ”) of NWKT’s common stock (the “ NWKT Common Stock ”) for $350,000 (the “ Redemption Price ”); and

 

WHEREAS, OZOP shall have received original stock certificates evidencing 665,500 shares of NWKT Common Stock, duly endorsed in blank and accompanied by stock powers duly executed in blank with medallion guarantee, or other instruments of transfer in form and substance reasonably satisfactory to OZOP and documents to substantiate identification of each seller.

 

W HEREAS , NWKT a g ree s t o acqu i r e fro m t h e OZOP S hareho l der s a l l o f t h e share s o f co mm o n s t o c k o f OZOP he l d by t h e OZOP S hareho l der s i n ex c han g e fo r t h e i ssuanc e b y NWKT t o OZOP S hareho l der s o f sha r e s o f NWKT s C o mm o n S t oc k, upo n t h e t e r m s an d sub j ec t t o t h e co n d iti on s s e t fo r t h i n t h i s A g re e m ent ; an d

 

W HEREAS , unless otherwise agreed by the Parties, NWKT will satisfy all outstanding indebtedness of NWKT at the time of closing; and

 

W HEREAS , i t i s i n t ende d t ha t OZOP w il l beco m e a w ho ll y o w ne d subs i d i ar y o f NWKT ; an d

 

W HEREAS , fo r F edera l i nco m e t a x purposes , i t i s i n t ende d t ha t t h e E xchan g e ( as def i ne d be l o w ) qua li f y a s a reor g an i z a ti o n unde r t h e pro v i s i on s o f S ec t i o n 368(a ) o f t h e I n t erna l R e v enu e C od e o f 1986 , a s a m ende d ( t h e C o d e ”) ;

 

NO W T H EREF O RE , o n t h e s t a t e d pre m i se s an d fo r an d i n cons i der a ti o n o f t h e m u t u a l co v enan t s an d a g re e m en t s here i na f t e r s e t f o r t h an d t h e m u t ua l benef i t s t o t h e P a r ti e s t o b e d e r i v e d herefro m , an d i n t end i n g t o b e l e g a ll y boun d hereb y , i t i s hereb y a g ree d a s fo ll o w s :

 

A rt i c l e I . S H AR E E XC H A N G E

 

Sec t i on 1 . 01 T he E x chan g e . O n t he t e r m s and su b j e c t t o t h e con d i ti ons s e t f o r t h i n t h i s A g r e e m en t , on t he C l o si ng D a t e ( as d e f i n ed b e l o w ) , t he OZOP S ha r e h o l d e r s, w ho h o l d an a gg r e g a t e of ( i ) 25,000,000 s ha r es of c o mm on s t oc k , par v a l u e $ 0.00 0 1 per sh a r e, o f OZOP (t he “ OZOP Co m m on Sto c k ) , r e p r e s e n t i ng 100% of OZOP ’s i s s u e d and o u t s t an d i ng ca p i t al s t o c k , sh a l l s e l l , a s s i g n, t r an sf er a nd d e l i v er t o NWKT , f r ee and c l ear o f a l l l i en s , p l ed g e s , encu m b r an ce s, c h a r g e s , r e s t ri c t i ons or k no w n c l a i m s o f any k i nd, na t u r e, o r d e s c r i p ti on, a l l o f t h e OZOP S t ock he l d by t hem as s et f o r t h on Ex h i b i t A ,

 

( a) I n exchan g e f o r :

 

(i ) t he tr a n s f er o f a l l OZOP C o m m on Sto c k t o NWKT by t he OZOP Sh a r eh o l de r s, NWKT sh a l l d e li v er t o s u ch OZOP Sha r e h o l d e r s 25, 0 00 , 000 sh a r es of NWKT C o m m on Sto c k , r ep r e s e n t i ng 1.0 sh a r es of NWKT C o m m on Sto c k f or ea ch s h a r e o f OZOP Co m m on Sto c k;

 

( b) Exhi b i t A s e t s f o r t h t he n u m ber of sh a r es of NWKT C o m m on Sto c k be d e l i v e r ed t o t he OZOP Sh a r e ho l de r s pu r su a n t t o Se c ti o n 1 . 01 ( b), a nd su c h sh a r es o f NWKT St o ck sh a l l c o l l ec t i v e l y be r e f e r r ed t o h e r e i n as t he “ E x change S h a r es .”

 

(c ) Pro m p tl y f o ll o w i ng t he C l o s i n g , t he OZOP Sha r e ho l de r s sh a ll , o n su r r en d er o f t he i r re s pe c ti v e sh a r es of OZOP Sto c k t o NWKT , be r eco r ded i n t he s t ock l ed g er o f NWKT a s t h e own e r s o f t h e a pp l i ca b l e p o r t i on of t he E x c han g e Sha r e s a s s e t f o r t h o n Exhi b i t A .

 

( d ) T he e xch a n g e as s e t f o r t h i n t h i s S e c t i on 1.01, s u b j ect t o t he o t h e r t e r m s and cond i t i ons h e r e i n, i s r e f e r r ed t o h e r e i n a s t h e E x change .”

 

  4  

 

Sec t i on 1 . 02 C l os i n g . T he c l o s i ng o f t he t r an s a c t i o n s c o n t e m p l a t ed by t h i s A g r ee m ent ( t he “ Cl os i n g ) sh a l l o cc ur s i m u lt a n eou s l y w it h t he e x ec u ti on and d e l i v e r y of t h i s A g r ee m en t , by r e m o t e exch a n g e of e l e c t r o n i c do c u m en t s (t h e da t e and ti m e at w h i ch t h e C l o s i ng i s ac t u a l l y he l d be i ng t he “ C l o s i ng D a t e ) .

 

Sec t i on 1 . 03 NWKT D e li v e r a b l e s at t h e C l os i n g . A t t he C l os i n g , NWKT shall d e li v e r :

 

( a) T o t he OZOP Sh a r eh o l d e r s t he E x chan g e Sh a r e s i n acc o r da n ce wi t h S e c t i on 1 . 0 1 ( b) T o OZOP a c e r t i f i ca t e o f t h e Se c r e t a r y of NWKT , d a t ed as o f t he C l os i ng D a t e, a nd:

 

(i ) a t t ac h i ng and c e r t if y i ng c o p i es of ( i ) t h e r e s o l u ti o n s o f e ach of t he B o a r d o f D ir e c t o r s o f NWKT ( t he NWKT B oard ) a nd t he s h a r eh o l d e r s of NWKT a u t ho r i z i ng t h e exec u t i on, de l i v e r y and pe r f o r m ance o f t h i s A g r ee m ent and t he o t h e r d o cu m en t s r e f e r enc e d he r e i n and t he co m p l e ti o n of t he t r a n s a c t i ons c on t e m p l a t ed h e r e i n, and ( i i ) t he NWKT O r g an i z a ti on a l D ocu m en t s, a s a m ended p u r su a n t t o Se c t i on 5.0 1 ( a ) a n d Sec t i on 5.01 ( b ) ;

 

( i i ) a t t ac h i ng a ce r t i f i c a t e o f s t a t us i s s u e d by t he Nevada D e pa rt m ent o f St a t e f o r NWKT , da t ed as of a d a t e w i t h i n 5 da y s of t he Clo s i ng D a t e ;

 

( i i i ) ce r t i f y i ng t hat t he a c ti o n s s et f o r t h i n Se c ti o n 5.01 h a v e been co m p l e t e d; and

 

( b) T o OZOP , t he r e s i g na t i ons of a l l o f t h e o f f i ce r s a n d d i r e c t o r s of NWKT .

 

Sec t i on 1 . 04 OZOP Deliverables at t he C l o s i n g . A t t he C l o s i n g , OZOP o r t he OZOP Sha r e h o l d e rs , as app l i c ab l e , sh a l l d e l i v er t o NWKT :

 

(a) Promptly following the Closing, a l l o f t h e OZOP S t oc k , fr e e a nd c l e ar o f a l l encu m b r ance s , a c co m pan i ed by du l y exec u t ed s t ock po w e r s or s uch o t h e r i ns t r u m en t s of t r a n s f e r du l y execu t ed i n b l ank and w it h a l l r eq u i r ed s t ock tr a ns f e r s t a m ps a ffi x ed, i n f or m and sub st a nce s a t i s f a c t o r y t o NWKT as r eq u ir ed f or t h e s a m e t o be t r a n s f e rr e d t o t he o w n e r s h i p of NWKT . In the event there are no physical s t ock c e r t i f i c a t es, t he app l i c ab l e OZOP Sh a r eh o l d e r m ay de li v er an a g r ee m ent i n a f o r m m u t u a ll y ac c ep t ab l e t o OZOP and NWKT, evidencing their ownership and granting of stock powers to NWKT .

 

( b) A ce r t i fi c a t e of t he S ec r e t a r y of OZOP , d a t ed a s o f t he Clo s i ng D a t e, an d :

 

(i) a t t ac h i ng and c e r t i f y i ng cop i es of t he r e so l u t i ons o f t he B oa r d of D i r e c t o r s of OZOP au t h o ri z i ng t he exe c u t i on, de l i v e r y and pe r f o r m ance of t h i s A g r ee m ent and t h e o t h e r docu m en t s r e f e r e n ced h e r e i n and t he c o m p l e ti o n of t he tr a ns a c t i ons con t e m p l a t ed he r e i n;

 

( i i ) a t t ac h i ng a c e r t i f i c a t e of s t a t us i s s u ed by t he Delaware D epa r t m ent of S t a t e f or OZOP , da t ed as o f a da t e w i t h i n 5 da y s of t h e Cl o s i ng D a t e ; a nd

 

(c) T he o r i g i n a l s o f t he co r po r a t e m i n u t e b o o k s, boo k s o f a c cou n t , c on t r a c t s , r e co r d s, and a l l o t h e r boo k s or do c u m en t s of OZOP now in t he pos s e s s i o n of OZOP or i t s r e p r e s e n t a ti v e s .

 

  5  

 

Sec t i on 1 . 05 T ax C ons e que n ce s . For U .S. f e d e r a l i nco m e t a x p ur pos e s, t h e Exc h an g e i s i n t ended t o qua l if y as a “ r eo r g a n i z a t i on” w it h i n t he m ean i ng of Se c ti on 3 68 ( a ) of t he C ode and t h e Tr e a s u r y R e g u l a t i ons p r o m u l g a t ed t h e r eu n de r . T h e Pa r t i e s adopt t h i s A g r ee m ent as a “p l an o f r eo r g a n i z a ti o n” w i t h i n t he m ean i ng of Tre a su r y R eg u l a ti o ns S e c t i ons 1.36 8 - 2 ( g ) and 1.36 8 - 3 ( a ) .

 

Sec t i on 1 . 06 C on v e y ance Taxe s . The OZOP Sh a r e h o l d e r s wi l l pay a l l s a l e s , u s e, v a l u e add e d, tr a n s f e r , s t a m p, r e g i s tr a t i o n , docu m en t a r y , ex c i s e, r e al p r op e rt y t r an s f e r or g a i n s, o r s i m il a r T a x es i nc u rr e d as a r e s u l t of t he t r an s a c t i o ns c o n t e m p l a t ed by t h i s A g r ee m en t .

 

A rt i c l e II . R E P R E S E N T A TIO N S AN D W A R RAN TIE S R E G A RD I NG OZOP

 

A s an i nd u ce m ent t o, a n d t o o b t a i n t he r e l i ance of t he NWKT P a r t i e s , e x ce p t a s s e t f o r t h i n t he d i s c l o s u r e s c h ed u l es as a t t a ched h e r e t o as Sch e du l e 2 ( t he OZOP S ched u l e s ”) ( i t b e i ng a g r eed t h at t h e d i s c l o s u r e of any m a tt er i n any s e c t i on or su b s e c ti o n o f t h e OZOP Sc h ed u l es s ha l l b e dee m ed t o ha v e been d i s c l o s ed i n any o t her s e c ti o n or sub s e c ti on i n t h e OZOP S c hed u l e t o w h ic h a pp l i c ab i l i t y of s uc h d i s c l o s u r e i s r eas o na b l y a p pa r e n t o n t he f a c e o f s u ch d i s c l os u r e ) , OZOP h e r e b y r ep r e s e n t s and w a r r an t s t o t h e NWKT P a r t i e s , as o f t h e Clo s i ng D a t e, as f o l l o w s :

 

Sec t i on 2 . 01 C o r po r a t e E x i s t e nce a nd P o w e r . OZOP i s a c o r p o r a t i on d u l y o r g an i z ed a n d v a li d l y ex i s t i ng und e r t he La w s of t he S t a t e o f Delaware and has t he c o r po r a t e po w e r and i s du l y a u t ho r i z ed u nd e r a l l app l i ca b l e La w s, r e g u l a t i o ns, o r d i nan c e s , and o r de r s of p ub l i c a u t ho r i ti e s t o c ar r y on it s b u s i n e s s i n a l l ma t e ri a l r e s p e cts as i t i s n o w be i ng cond u c t ed. OZOP has d e li v e r e d t o NWKT c o mp l e t e and co r r e c t c op i es of t h e o r g an i z a t i on a l do cu men t s and t he c o r p o r a t e m i nu t e b oo k s of OZOP as i n e ff e ct on t he E ff e c t i v e D a t e ( t he “ OZOP O r ga ni z a ti on a l D oc u m e n t s ) . OZOP has f u l l c o r p o r a t e po w er and a u t ho r i t y t o ca r r y on it s bu s i n e s s e s as i t i s now be i ng cond u c t e d a n d as now p r op o s e d t o be c onduc t ed and t o o w n or l ea s e i t s p r o p e r ti e s a nd a s s e t s.

Section 2.02 No Conflict; Due Authorization. The execution, delivery and performance of this Agreement and all agreements and other documents executed by the OZOP in connection herewith does not, and the consummation of the transactions contemplated hereby will not, violate any provision of the OZOP Organizational Documents or applicable Law. OZOP has taken all actions required by Law, the OZOP Organizational Documents or otherwise to authorize the execution, delivery and performance of this Agreement and to consummate the transactions herein contemplated.

Sec t i on 2 . 03 V a li d O b l i g a t i o n . This A g r ee m ent and a l l a g r e e m en t s and o t her d o cu m en t s ex ec u t ed by OZOP i n con n ec t i on he r ewi t h con s t i t u t e t he v a l i d a nd b i n d i ng ob l i g a t i ons o f OZOP , e n f o r ce a b l e i n acc o r da n ce wi t h it s or t h e i r t e r m s, e x c ept as m ay be li m it e d by t he E n f o r cea b i l i t y Excep t i o n s .

 

Sec t i on 2 . 04 G o v e r n m en t al A u t h o r i z a ti o n . N e i t h e r t h e e x ec u ti o n a n d de l i v e r y nor p e r f o r m ance of t h i s A g r ee m ent by OZOP r equ i r es any co n s e n t , app r ov a l , l i ce n se or o t h er a c ti o n by or i n r e sp e c t o f , or r e g i s t r a ti o n , de c l a r a ti on or f i l i ng w it h a ny A u t ho r it y .

 

  6  

 

Sec t i on 2 . 05 A u t ho r i z ed Sh a r es and Ca p it a l .

 

( a) T he au t ho r i z ed ca p i t al s t oc k of OZOP con s i s t s of 1 00,000,000 sh a r es o f c ommon s t oc k , par v a l ue $0. 0 001 per sh a r e, o f w h i ch 25, 00 0,000 sh a r es a r e i s s u ed and o u t s t a n d i n g . A l l o f t he i s su e d and o u t s t an d i ng OZOP Sto c k i s h e l d, c o ll e c t i v e l y , by t he OZOP S h a r e h o l d e r s.

 

(b) T h e r e i s no v o ti ng tr u s t , a g r ee m ent or a r r an g e m ent a m o n g any of t he ben e f i c i a l ho l d e r s o f OZOP St o ck a f f e c ti ng t h e no m i na t i on o r e l e c t i on o f d ir e c t o r s or t he e x e r c i se of t he v o ti ng r i g h t s of OZOP S t oc k .

 

(c) T he o f f e r , i s s u an c e a n d s a l e of s u ch sh a r es of OZOP Sto c k w e r e ( a) exe m pt f r om t he r e g i s t r a t i on and p r os p e c t us de l i v e r y r e qu i r e m en t s o f t he Sec u r i t i e s A c t , ( b) r e g i s t e r ed or q u a l i f i ed ( or w e r e exe m pt fr om r e g i s t r a ti on or qua l i f i c a t i on) u n der t he r e g i s t r a t i on o r qu a l i f i ca t i on r e q u ir e m en t s of a l l app l i ca b l e s t a t e s e c u r i t i es La w s a n d ( c) a c co m p li s he d i n co n f o r m it y w it h a l l o t her a p p l i ca b l e s e c u r i ti e s La w s. N one of s uch sh a r es of OZOP St o ck a r e su b j e ct t o a ri g ht of w it h d r aw a l or a ri g ht o f r e s c i s s i on u nder a n y f ede r a l o r s t a t e s e c u r i t i e s or “ Bl ue S ky ” La w .

 

(d) N one of t he OZOP St o ck i s su b j e c t t o p r e - e m p ti ve or s i m il a r r i g h t s, e i t h e r pu r s u ant t o any OZOP O r g an i za ti o n al D ocu m en t , r eq u ir e m ent of L aw or any c o n t r a c t , and no Pe r son h a s any p re - e m p ti v e ri g h t s o r s i m i l a r ri g h t s t o p u r c h a s e o r r e c e i v e any OZOP Sto c k or o t her i n t e r e s t s i n OZOP .

 

Sec t i on 2 . 06 B oo k s and R e c o r d s. T h e b o o k s and r eco r ds, f i na n c i al a nd o t h e r w i s e, of OZOP a r e i n a l l m a t e ri a l a s p ec t s co m p l e t e and c o r r e c t and h a v e been m a i n t a i n ed i n a c co r dan c e w it h g ood bu s i ne s s a n d accou n t i ng p r ac t i c e s .

 

Sec t i on 2 . 07 Li t i g a ti on a n d P r oc e ed i n gs . T h e r e a r e no a c ti o n s, s u it s, p r o cee d i n g s, o r i n v e s ti g a ti ons pend i ng or, t o t h e knowledge of OZOP a f t er r easo n ab l e i n v e s t i g a ti o n, t h r e a t en e d by or a g a i n s t OZOP or a f f e c t i ng OZOP or it s p r op e r t i e s , at l aw or i n e q u i t y , be f o r e any cou r t or o t h e r g o v e r nmen t al a g ency or i ns t r umen t a l it y , dome sti c or f o r e i g n, o r b e f o r e any a r b i t r a t or of any k i nd. OZOP do e s n o t ha v e any k no w l ed g e of any ma t e r i al d e f a u l t on i t s p a r t wi t h r e s pe c t t o any jud g me n t, o r d e r , i n j u nc t i on, d e c r ee, award, r u l e, or r e g u l a t i on of any cou r t , a r b i t r a t o r , or g o v e r nmen t al a g ency or i n s tr umen t a l i t y or of any c i r cums t ances w h i ch, a ft e r r e a son a b l e i n v e s t i g a ti o n, w o u l d r e s u l t i n t he d i s co v ery of su c h a de f au l t .

 

Sec t i on 2 . 08 C on tr a c t s.

 

( a) A l l OZOP M a t e r i al C o n tr a c t s t o w h i ch OZOP i s a pa rt y or by w h i ch i t or a ny of it s a s s e t s , p r odu c t s, t e c hno l o gy , or p r ope r ti e s a r e bou n d o t h er t h an t h o se i ncu r r ed i n t he or d i n a r y cou r se of bus i n e s s a r e s e t f o r t h on t he OZOP Sch e du l e s .

 

( b) A l l OZOP M a t e r i a l C o n tr a c t s t o w h i ch OZOP i s a pa r t y or by w h i ch i t s p r o p e r t i es a r e bou n d and w h i ch a r e m a t e r i al t o t h e o p e r a t i ons of OZOP t ak en as a w h o l e a r e v a li d a n d e n f o r cea b l e by OZOP i n a l l r e s p e c t s, e x cept as li m it ed by t he E n f o r cea b i l it y Exce p t i on s .

 

( c) Except as d i s c l o s e d on t h e OZOP Sch e du l e s , OZOP i s n o t a p a r t y t o any o r al or w r i t t en ( i ) con t r a c t f o r t h e e m p l oy m ent of any o ff i c e r or e m p l o y ee; ( i i ) p r o f i t s h a r i n g , bonus, d e f e rr e d co m pen s a t i on, s t ock op t i o n, s e v e r a n ce pa y , pe n s i on bene f i t or r e t i r e m ent p l a n, ( i i i ) co l l e c ti v e b a r g a i n i ng a g r e e m en t ; or ( iv ) a g r e e m ent wit h any p r e s e n t o r f o r m er o f f i cer or d i r e c t or of OZOP .

 

Sec t i on 2 . 09 C o m p li ance with La w s a n d R e g u l a t i on s . T o t he b es t of i t s k no w l ed g e, OZOP has co m p li ed w it h a l l ap p l i ca b l e s t a t u t es and r e g u l a t i ons of any p r o v i n c i a l , f e de r a l , s t a t e, o r o t h e r g o v e r n m en t a l en t it y or a g e ncy t he r e o f , e x cept t o t he ex t ent t h a t non c o m p li ance w o u l d not m a t e r i a l l y and ad v e r s e l y a ff ec t t he bu s i ne s s, o pe r a t i ons, p r op e r t i e s , a s s e t s, or co n d i t i on of OZOP or e x cept t o t he ex t ent t ha t nonco m p li a n ce w o u l d n o t r e s u l t i n t h e o c cu r r en c e o f a ny m a t er i al l i ab i l i t y f or OZOP .

 

  7  

 

Sec t i on 2 . 10 T a x e s . OZOP h as d u l y and pun c t u a ll y pa i d a l l g ove r n m en t al f e e s and ta x e s w h ic h it has b eco m e li a b l e t o pay a n d has d u l y a l l o w ed f or a l l t a xes r eas o na b l y f o r e s eea b l e and i s u nder no l i a b i l it y t o pay any pena l t y or i n t e r e st i n conn e c t i on w it h any c l a i m f or g o v e r n m en t al f ees or t axes and OZOP has m ade any and a l l p r o p er dec l a r a ti o ns a n d r e t u r n s f o r t ax pu r p o s e s and a l l i n f o r m a t i on c on t a i n ed i n su c h dec l a r a t i ons a n d r e t u r n s i s t r ue and co m p l e te .

 

Sec t i on 2 . 11 T ax R e t u r n s a nd A u d i t s . Al l r eq u i r ed f e d e r a l , s t a t e and l ocal T ax R e t u r ns of OZOP ha v e been a c cu r a t e l y p r epa r ed i n a l l m a t e r i a l r e s pe c t s and du l y and ti m e l y fil e d , and a l l f ede r a l , p r o v i n c i al a nd l oc a l T a x es r equ i r ed t o be pa i d wi t h r e s p ect t o t he p er i ods c o v e r ed by su c h r e t ur ns ha v e been p a i d t o t h e ex t e n t t h at t h e s ame ha v e b eco m e due, ex c ept w h e r e t he f a i l u r e so t o f i l e or pay cou l d n o t r e a son a b l y be expe c t ed t o ha v e a M a t e r i a l A d v e r se E f f e c t o n OZOP . OZOP i s n o t and h a s n o t b een d e li n que n t i n t he pa y m ent of any T ax. OZOP has n o t had a T ax de f i c i ency a s s e s s ed a g a i nst i t and h as not e xec u t ed a w a i v er of any s t a t u t e of li m it a t i ons o r t he a s s e s sment o r c o l l ec t i on of any T a x. N o ne of OZOP f e de r a l i ncome, p r o v i n c i a l a n d l oc al i ncome and fr a nc h i se t a x r e t u r n s h a s b e en a u d i t ed by any A u t ho r i t y . T h e r e s e r v es f or T a x es r e f l ec t ed on t he OZOP F i n a nc i al St a t emen t s a r e and wi l l be s u f f i c i ent f or t h e p ayment of a l l u n pa i d T ax e s pa y ab l e by OZOP . OZOP has n o t r ec e i v ed any no t i ce of any p r o p os e d au d it s , i n v e s t i g a ti o n s, c l a i m s or a d m i n i s t r a t i v e p r o c ee d i n g s r e l a t i ng t o Tax e s or any T ax Re t u r ns. OZOP ( i ) i s not a p a rt y t o, n o r i s i t bo un d by or ob li g a t ed u nde r , a n y t ax sh a r i ng a g r ee m en t s, and ( i i ) d o es n o t ha v e any po t e n t i al li a b i l i t y or ob li g a ti o n t o any Pe r son as a r e su l t o f , or p u r su a nt t o, any su c h t ax s h a r i ng a g r ee m en t s. OZOP h a s no l i ab i l i t y f or any o t her t axpa y er und e r U .S. T r ea s u r y R e g u l a t i on 1.1502 - 6 or any o t h e r s i m il ar p r o v i s i on.

 

Sec t i on 2 . 12 E m p l o y ee B ene f i t P l an s ; E R I SA . Except a s d i s c l o s ed i n t he OZOP Sch e du l e s , t he r e a r e no “e m p l o y ee be n e f i t p l a n s ( wi t h i n t he m ean i ng of S e c t i on 3 ( 3) of E R I S A ) nor a n y o t her e m p l o y ee bene f i t or f r i n g e ben e f i t a r r an g e m en t s, p r ac t i c e s , con t r a c t s , po l i c i es o r p r o g r a m s o t h e r t han p r o g r a m s m e r e l y i n v o l v i ng th e r e g u l ar pa y m ent o f w a g e s , co m m i s si o n s, or bo n us e s e s t a b l i sh e d, m a i n t a i ned or con t r i bu t ed t o by OZOP , w h e t h e r w r i tt en or u n w r i t t en a n d w h e t h e r or n ot f und e d .

 

Sec t i on 2 . 13 Li m it ed R e p r e s e n t a ti o n s a nd W a r r a n ti e s . Ex c ept f or t h e r ep r e s e n t a t i ons and w a r r an t i es exp r e s s l y s e t f o r t h i n t h i s A r t i c l e I I ( as m od ifi ed by t h e OZOP Sch e du l e s ) and t he o t h er a g r ee m en t s a nd docu m en t s d e li v e r e d i n c on nec t i on h e r e w it h , n e i t h e r OZOP nor any of i t s A f f i l i a t es o r any Pe r son a c t i ng on beh a l f o f any of t he f o r e g o i ng m a k es or has m ade any o t her ex p r e s s or i m p l i ed r e p r e s e n t a ti on o r w a rr a n t y t o t he NWKT Pa r t i es as t o t h e a cc u r acy o r c o m p l e t e n e s s of any i n f o r m a ti on r e g a r d i ng OZOP , t h e OZOP Sto c k , t he t r an s a c ti o n s co n t e m p l a t e d he r e by or any o t her m a tt e r , and OZOP d i s c l a i m s and t h e NWKT Pa r t i es s h a l l not b e e n t i tl e d t o r e l y upon any o t h e r r ep r e s e n t a ti o ns or w a rr a n ti e s , w he t h er m ade by on beha l f o f OZOP or any of i t s r e s p e c ti v e A f f i l i a t es o r any Pe r s on a c t i ng on beh a l f o f t h e f o r e g o i n g .

 

A rt i c l e III . R E P R E S E N T A TIO N S AN D W A R RAN TIE S OF TH E OZOP S H AR EHOL D E R S

 

A s an i nd u ce m ent t o, a n d t o o b t a i n t he r e l i ance of t he NWKT P a r t i e s , e x ce p t a s s e t f o r t h i n t he d i s c l o s u r e s ched u l e s as a t t a ched h e r e t o as Sch e du l e 3 ( t he OZOP S h areh o l d e r Sched u l e s ”) ( i t b e i ng a g r eed t h at t he d i s c l os u r e o f any m a tt er i n any s e c ti o n or sub s e c t i on of t he OZOP Sha r eh o l d e r Sc h ed u l es sh a l l be d e e m ed t o ha v e been d i s c l os e d i n any o t h e r s e c t i on o r su b s e c ti o n i n t h e OZOP Sha r eh o l der Sched u l e t o w h i c h ap p l i ca b i l it y of su c h d i s c l os u r e i s r easo n ab l y app a r e n t on t he f ace of s u ch d i s c l os u r e ) , each OZOP S h a r e ho l d er, s e v e r a ll y , and n o t j o i n tl y , he r eby r ep r e s e n t s and w a r r an t s t o t h e NWKT P a r t i e s , as of t he C l o s i ng D a t e, so l e l y w it h r e s p e ct t o s uch OZOP Sha r eho l de r , and n ot as t o any o t h e r OZOP Sha r e h o l d e r , as f o l l o w s:

 

Sec t i on 3 . 01 C o r po r a t e Existence and Power. Such OZOP Shareholder ( i f an entity ) is du l y o r g an i z ed a nd v a l i d l y e x i s t i ng i n t he j u r i s d i c t i on of it s o r g a n i z a ti o n . S u ch OZOP Sha r eh o l d e r h a s t he r eq u i s i t e po w er and a u t h o r i t y t o ex e cu t e, d e li v er and p e rf o r m t h i s A g r ee m en t .

 

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Sec t i on 3 . 02 No Conflict; Due A u t h o r i z a ti on. T h e execution , d e li v e r y and performance of t h i s A g r ee m ent does no t , and t h e con s u m m a ti on of t he t r a n s a c t i o n s co n t emp l a t ed he r e by w il l n o t, vi o late a n y p r o v i s i on of t h e or g ani z a t ional doc u m e nts of s uch OZOP Sha r e ho l d er ( i f a n en t i t y ) . Such OZOP S ha r e h o l d er has t a k en a l l ac t i ons r eq u ir e d by Law, a n d its o r g a n izati o n al d o c u m e n ts (if an e n tit y ) or o t h e r w i s e t o au t h o r i z e t he e xecu t i on, d e li v e r y and pe r f o r m ance of t h i s A g r ee m ent and t o co n su m m a t e t h e tr a n s a c t i ons he r e i n co n t emp l a t ed.

 

Sec t i on 3 . 03 V a li d O b l i g a ti o n . This A g r ee m ent a nd a l l a g r ee m en t s and o t h e r d o cu m en t s e xe c u t ed by su c h OZOP S ha r eh o l d e r i n c onn e c t i on he r ew i t h c ons t it u t e t h e v a l i d and b i n d i ng ob l i g a t i ons of s u ch OZOP S h a r e h o l d e r , e nf o r c e ab l e i n acc o r d a nce wit h i t s or t he i r t e r m s, exc e pt as m ay be l i m it ed by t h e Enfo r cea b i l it y Ex c ep t i ons.

 

Sec t i on 3 . 04 Ti t l e t o and I s s ua n ce o f t he OZOP S t oc k . Su c h OZOP Sh a r eh o l d e r i s t he r e c o r d and bene f i c i a l o w ner and h o l d e r of t he OZOP Sto c k as s e t f o r t h opp o s i t e su c h OZOP Sha r eh o l d e r’ s na m e on Exh i b i t A , f r e e and c l e a r of a l l L i en s . N one o f t he OZOP S t o ck he l d by s u ch OZOP Sha r eh o l der i s su b j e ct t o p r e - e m p ti v e or s i m i l ar r i g h t s, e i t her p u r su a n t t o any OZOP O r g an i z a ti o nal D o cu m en t , r eq u ir e m ent of L aw or any con t r a c t , and s u ch OZOP Sha r e h o l d er do e s not h a v e any p re - e m p ti v e ri g h t s or s i m il a r r i g h t s t o p u r c ha se or r ec e i v e any OZOP Sto c k or o t h er i n t e r e s t s i n NWKT . Such OZOP Sha r e h o l d er h as t he po w er a nd a u t ho r it y t o t r a n s f e r t he OZOP St o ck t o NWKT a s c on t e m p l a t ed p u r s u ant t o t he t e r m s of t h i s A g r ee m en t . U pon de l i v e r y of t he Exchan g e Sha r es t o s u ch OZOP Sha r e ho l d e r s i n exchan g e f or t he OZOP Sto c k he l d by su c h OZOP Sha r eh o l d e r a s co n t e m p l a t ed h e r eb y , NWKT sh a l l acqu i r e g ood a nd v a li d t i t l e t o s u ch OZOP S t oc k , fr ee and c l ear of a l l Li e ns.

 

Sec t i on 3 . 05 B ro k er’s, F i nd e r’s o r S i m ilar F e es. E x ce p t a s s e t f o rt h on t h e OZOP S h a r eh o l d e r Sched u l e s , t h e r e a r e no b r ok e r a g e co m m i s si ons, f i nd er s f e es o r s i m il a r f ees o r c o m m i s si ons pa y ab l e by s uch OZOP S ha r eho l d er i n con n ec t i on wi t h t he t r an s ac t i o n s c on t e m p l a t e d h e r eby ba s ed on any a g r ee m en t , a r r an g e m ent or unde r s t an d i ng w it h s u c h OZOP Sha r e ho l d er o r any ac ti on t a k en by s uch OZOP Sh a r eh o l d e r .

 

Sec t i on 3 . 06 I n v e st m ent R ep r e s e n t a t i ons.

 

( a) I n v e st m ent Purpo se . A s o f t he E ff e c t i v e D a t e, t h e OZOP Sha r eho l d e r und e r s t an d s and a g r e e s t h a t t h e c o nsu m m a ti on of t h i s A g r ee m ent i n c l u d i ng t h e d e li v e r y of t he Exch a n g e Sha r e s t o s u ch OZOP Sha r eh o l d e r i n e xchan g e f o r t h e OZOP S t ock as c o n t e m p l a t ed h e r e by con st i t u t es t h e o ff e r and s a l e of s ec u r i ti e s un d er t h e S e c u r i t i es A ct and ap p l i ca b l e s t a t e s t a t u t es and t hat t h e Exchan g e Sha r es a r e be i ng acqu i r ed f or s u ch OZOP Sha r eh o l d e r s o w n accou n t and not w i t h a p r e s ent v i ew t o w a r ds t h e p ub l i c s a l e or d i s t ri b u t i on t h e r e o f , e xce p t p u r s ua n t t o s a l es r e g i s t e r ed o r exe m p t ed f r om r e g i s t r a t i on under t he S ec u r i t i es A c t .

 

(b) I n v e st or St a t u s . The OZOP Sha re h o l d er i s an “a c c r e d i t ed i n v e s t o r ” as t h a t t e r m i s de f i ned i n R u l e 5 0 1 ( a ) o f R e g u l a t i on D ( an “ A cc r ed i t ed In v e st o r ) . T h e OZOP Sha re ho l d e r has been f u r n i s h ed wi t h a l l d o cumen t s and m a t e ri a l s r e l a t i ng t o t he b us i ne s s, f i na n ces a nd ope r a ti on s of NWKT a nd i t s s u bs i d i a r i es a n d i n f o r m a ti on t h a t su c h OZOP Sha r e ho l d er r equ es t ed a n d d ee m e d m a t e ri a l t o m a k i ng an i n f o r m ed de c i s i on r e g a r d i ng t h i s A g r ee m ent and t he un d e r l y i ng tr a n s a c t i ons.

 

( c) R e l i ance on E x e m p ti on s . T he OZOP Sh a r eh o l d e r und e r s t ands t h at t h e Ex c h an g e Sha r es a r e be i ng o f f e r ed and so l d t o s u ch OZOP S h a r e h o l d er i n r e l i a n ce u p on s p ec i f i c e xe m p ti ons f r om t he r e g i s t r a ti on r eq u i r e m en t s of U n it ed S t a t es f ed e r a l a n d s t a t e s ec u r i ti e s La w s a n d t h a t NWKT i s r e l y i ng upon t h e t r u t h and a cc u r acy o f , a n d t h e OZOP Sha r eh o l d e r s co m p l i ance wi t h, t h e r ep r e s e n t a t i ons, w a r r a n t i e s , a g r ee m en t s, ac k no w l ed g m en t s and unde r s t a n d i n g s of t he OZOP Sha r e h o l d er s e t f o rt h h e r e i n i n o r d e r t o de t e r m i ne t h e a v a i l a b i l it y o f su c h e xe m p ti ons a nd t he e li g i b i l it y of t he OZOP Sha r e h o l d er t o a cqu i r e t he Exchan g e Sh a r e s .

 

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(d) I n f o r m a ti o n . T he OZOP Sha r eho l der and i t s a d v i so r s, i f an y , ha v e been f u r n i s hed wi t h a l l m a t e ri a l s r e l a t i ng t o t he bu s i ne s s, f i nan c es a n d ope r a t i o ns of NWKT and m a t e r i a l s r e l a t i ng t o t he o f f e r and s a l e o f t he E xch a n g e Sha r e s w h i ch ha v e b e en r e que s t ed by t he OZOP Sha r e h o l d er or its ad v i so r s . T h e OZOP S h a r eh o l d e r and it s ad v i so r s, i f an y , ha v e been a f f o r d ed t h e oppo r t u n it y t o a s k que s t i ons of NWKT . T he OZOP Sha r eh o l d e r und e r s t an d s t h a t i t s i n v e st m ent i n t he E x change Sha r e s i n v o l v es a s i g n i f i c a nt de g r e e o f r i s k . T he OZOP Sh a r eh o l d e r i s n o t a w a r e o f a ny f a c t s t h a t m ay con sti t u t e a b r ea c h of any of NWKT’ s r e p r e s e n t a t i ons a nd w a r r a n t i es m ade he r e i n .

 

( e) G o v e r n m en t al R e v i e w . T h e OZOP Sha r e h o l d er u n de r s t an d s t h a t no U n i t ed S t a t es f ed e r a l or s t a t e a g ency or any o t h e r g o v e r n m ent or g o v e r n m e n t al a g ency has p a s s ed up o n or m ade any r eco mm enda ti on o r en d o r se m ent of t he Exc h an g e Sha r e s .

 

(f ) T r an s f e r o r R e s a l e . T h e OZOP S h a r e h o l d er un d e r s t an d s t h a t (i ) t he s a l e or r e - s al e o f t h e Exchan g e Sha r es h a s not be en and i s not b e i ng r e g i s t e r e d under t he S e cu r i t i es A c t o r any app l i ca b l e s t a t e s ec u r i t i es La w s, and t he E x chan g e Sh a r es m ay not be t r an s f e r r ed un l e s s ( a) t he Ex c han g e Sha r e s a r e so l d p u r su a nt t o an e f f e c ti v e r e g i s t r a ti on s t a t e m ent un d er t h e S e cu ri ti e s A c t , ( b) t he OZOP Sha r eho l der s ha l l ha v e de l i v e r ed t o NWKT , a t t he c ost o f t h e OZOP Sha r e h o l d e r , a n op i n i on o f c o uns e l t h a t s h a l l be i n f o r m , sub s t a n ce and s c ope cu s t o m a r y f or o p i n i o ns of cou n s e l i n co m pa r ab l e t r an s a c t i ons t o t he e f f e c t t h at t he Exc h an g e Sha r e s t o be so l d o r t r a n s f er r ed m ay be so l d or t r a n s f e r r ed p u r s ua n t t o a n exe m p ti o n f r om su c h r e g i s t r a t i on, w h i ch o p i n i o n s h a l l be a c ce p t ed by NWKT , ( c) t he E xch a n g e Sha r es a r e s o l d o r t r an s f e r re d t o a n “ a f f i l i a te ( as de fi ned i n R u l e 144 p r o m u l g a t ed u n d er t he S e cu r it i es A c t ( or a s u cce ss or r u l e ) (“ R ule 1 4 4 ) ) o f t he OZOP Sha r e h o l d er w h o a g r e e d t o s e l l o r o t h e r w i s e tr a ns f er t h e Exc h an g e Sh a r es on l y i n acc o r da n ce w i t h t h i s S e c t i on 3.06 and w ho i s an A c c r e d it e d I n v e st o r , ( d ) t he E xch a n g e Sha r es a r e s o l d p u r s ua n t t o R u l e 144, o r ( e ) t he E x cha ng e Sha r es a r e so l d pu r s ua n t t o R e g u l a t i on S und e r t h e Secu r i t i es A c t (o r a s uc c e s s o r r u l e ) ( R e gul at i on S ) , a n d t he OZOP Sha r e h o l d er s h a l l ha v e de li v e r ed t o NWKT , at t he c o st o f t he OZOP Sha r e h o l d e r , a n op i n i on of c ouns e l t h at s ha l l be i n f o r m , sub st ance a n d s c ope cu s t o m a r y f or o p i n i o ns o f c o uns e l i n co r p o r a t e t r an s a c t i ons, w h i c h o p i n i on s ha l l be a c ce p t ed by NWKT ; ( i i ) any s a l e of su c h Exchan g e S h a r e s m ade i n r e l i a nce o n R u l e 144 m ay be m ade on l y i n acc o r da n ce w it h t he t e r m s o f s a i d R u l e and f u rt h e r , i f s a i d R u l e i s n o t ap p l i ca b l e, a n y r e - s al e o f su c h Exchan g e S h a r e s u nder c i r cu m s t a nces i n w h i ch t h e se ll e r ( or t he pe r son t h r ou g h w hom t he s a l e i s m ade) m ay be dee m ed t o be an und e r w r it e r ( as t h at t e r m i s de f i n e d i n t he S ec u r i t i es A c t ) m ay r eq u ir e co m p li a n ce wi t h so m e o t her exe m p t i on un d er t he Sec u r i t i es A c t or t he r u l e s and r e g u l a ti o n s of t h e S E C t he r eund e r ; and ( i i i ) n e it h er NWKT n o r any o t her p e r s o n i s und e r a ny ob l i g a ti on t o r e g i s t e r su c h E xch a n g e Sha r es un d er t he Sec ur i t i es A ct or any s t a t e s ecu r i ti e s La w s o r t o co m p l y w it h t h e t e r m s and cond it i ons of any exe m p ti on t h e r e und e r (i n ea ch cas e ) . N o t w i t hs t an d i ng t he f o r e g o i ng or an y t h i ng e l s e co n t a i ned he r e i n t o t he c o n t r a r y , t h e Ex c han g e Sha r e s m ay be p l ed g ed as co l l a t e r al i n conne c t i on wi t h a bona fi d e m a r g i n account or o t h e r l e nd i ng a r r an g e m en t .

 

( g ) Le g end s . T he OZOP S h a r eh o l d e r un d e r s t a nds t h a t t he Exch a n g e Sha r e s, u n t i l s uch t i m e as t h e Exchan g e Sh a r es ha v e b ee n r e g i s t e r ed u nd e r t he S e c u r i ti e s A c t , o r m ay be so l d pu r s u ant t o R u l e 144 o r R e g u l a t i on S wi t ho u t any r e s t r i c ti on as t o t he n u m ber of s ec u r i t i es as of a p a r t i c u l ar d a t e t h at can t h en be i m m ed i a t e l y so l d, t he Exc h an g e Sha r e s m a y bear a s t and a r d R u l e 144 l e g end a n d a s t op - tr an s f e r o r der m ay be p l a c ed a g a i n st t r an s f er of t h e ce rt i f i c a t es f o r su c h Exc h an g e Sha r e s .

 

Sec t i on 3 . 07 Li m it ed R e p r e s e n t a ti o n s a nd W a r r a n ti e s . Ex c ept f or t h e r ep r e s e n t a t i ons and w a r r an t i es exp r e s s l y s e t f o r t h i n t h i s A rt i c l e II I ( as m od ifi ed by t he OZOP Sha r eh o l d e r Sched u l e s ) and t he o t h er a g r ee m en t s and docu m en t s de l i v e r ed i n co n ne c ti o n h er ewi t h , ne i t h e r t he OZOP Sha r e h o l d er n or a ny of it s A f f i l i a t e s or any Pe r son ac t i ng on beha l f of any of t h e f o r e g o i ng m a k es or has m ade any o t her e x p r e ss or i m p li ed r e p r e s en t a t i on or w a r r an t y t o t he NWKT P a r t i es a s t o t he ac c u r a cy or co m p l e t eness o f a ny i n f o r m a ti o n r e g a r d i ng OZOP , t h e OZOP Sto c k , t h e t r a n s a c t i ons co n t e m p l a t ed h e r e by or any o t h e r m a tt e r , and t h e OZOP Sh a r eh o l d e r d i s c l a i m s and t h e NWKT P a r ti es s h a l l n o t be en t i t l ed t o r e l y upon any o t h er r ep r e s e n t a t i ons or w a rr a n ti e s , w he t h er m ade by t he OZOP Sha r eho l der o r a n y of it s A ff i l i a t es or any Pe r son a c ti ng on b eh a l f o f t he f o r e g o i n g .

 

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A rt i c l e I V . R E P R E S E N T A TIO N S AN D W A R RAN TIE S R E G A RD I NG TH E NWKT PAR TIE S

 

A s an i n d uce m ent t o, and t o o b t a i n t he r e l i ance o f t he OZOP P a r t i es, e xce p t as s e t f o r t h i n t h e d i s c l o s u r e s c hed u l es a s a t t ached h e r e t o as S che d u l e 4 ( t he “ NWKT Sch e d u l e s ”) ( i t b e i ng a g r e e d t h a t t h e d i s c l o s u r e of any m a tt er i n any s e c t i on or sub s ec t i on o f t h e NWKT S c hed u l es sh a l l b e d e e m ed t o ha v e b een d i s c l o s ed i n any o t h er s e c t i o n or s ubs e c t i on i n t he NWKT Sched u l e t o w h i c h a pp l i c ab i l it y of su c h d i s c l o su r e i s r ea s ona b l y app a r e n t o n t he f ace of s u ch d i s c l o su r e ) , t h e NWKT P a r t i es h e r eb y , j o i n tl y and s e v e r a ll y , r e p r e s e n t and wa r r a n t t o t h e OZOP Pa r t i e s , a s of t he C l o s i ng D a t e, a s f o l l o w s:

 

Sec t i on 4 . 01 C o r po r a t e E x i s t ence and P o w e r . NWKT i s a c o r p o r a ti on du l y o r g an i z ed and v a l i d l y ex i s t i ng under t he L aws o f t h e S ta t e o f Nevada a n d has t he co r p o r a t e po w e r a n d i s d u l y au t h o ri z ed un d er a l l app l i ca b l e La w s, r e g u l a t i o ns, o r d i nan c e s , and o r de r s of p ub l i c a u t ho r i ti e s t o c ar r y on it s b u s i n e s s i n a l l m a t e ri a l r e s p ec t s a s i t i s n o w be i ng co n du c t ed. NWKT h as d e l i v ered t o OZOP c o m p l e t e a n d c o r r ect co p i e s of t he a r t i c l es o f i nc o r p o r a t i on and b y l aws o f NWKT as i n e f f e c t on t he E ff ec t i v e D a t e ( t he “ NWKT O rga n i z a t i onal D oc u m e nt s ”) . NWKT h as f u l l c o r p o r a t e po w er a nd a u t h o r i t y t o c a r r y on it s b us i ne s s e s as i t i s now be i ng con d uc t ed a n d a s now pr o pos e d t o be c o n d uc t ed and t o o w n o r l ea s e it s p r o p e r t i es a n d a s s e t s.

 

Sec t i on 4 . 02 N o C on f l i c t ; D ue A u t ho r i z a ti o n . The execution , delivery and performance of t h i s A g r ee m ent and a l l a g r ee m en t s and o t h er docu m en t s e xecu t ed by t he NWKT P a r t i es i n conn e c t i on he r ew i t h does no t , a nd t he co n su mm a t i on o f t he tr a ns a c t i ons c o n t e m p l a t ed h e r eby w i l l no t , v i o l a t e any p r o v i s i o n o f t he NWKT O r g an i za ti o n al D o cu m en t s or app l i c ab l e La w . T h e NWKT Pa r t i es h a v e t a k en a l l a c t i ons r eq u i r ed by La w , t he NWKT O r g an i z a t i on a l D ocu m en t s or o t h e r w i se t o a u t h o ri z e t h e e xecu t i on, d e l i v e r y and pe r f o r m ance o f t h i s A g r e e m ent and t o con s u mm a t e t h e t r an s ac t i o n s h e r e i n co n t e m p l a t ed.

 

Sec t i on 4 . 03 V a li d O b l i g a ti o n . This A g r ee m ent a nd a l l a g r ee m en t s and o t h e r d o cu m en t s e xe c u t ed by t he NWKT P a r t i es i n conn ec ti on h e r e w it h co n s t i t u t e t h e v a l i d a nd b i n d i ng o b li ga ti on o f t he NWKT P a r t i e s, en f o r c e ab l e i n a cc o r da n ce w it h i t s o r t h e i r t e r m s, exce p t as m ay be li m it ed by t he Enfo r cea b i l i t y Excep t i o n s.

 

Sec t i on 4 . 04 G o v e r n m en t al A u t h o r i z a ti o n . N e i t h e r t h e e x ec u ti o n a n d de l i v e r y nor p e r f o r m ance of t h i s A g r ee m ent by any NWKT Pa r t y r eq u ir e s a ny co n s e n t , a p p r o v a l , li c en s e or o t h er a c t i on by or i n r e s p e ct o f , o r r e g i s t r a ti o n , de c l a r a ti on or f i l i ng w it h a ny A u t ho r it y .

 

Sec t i on 4 . 05 A u t ho r i z ed Sh a r es and C a p it a l .

 

( a) T he a u t ho r i z ed c a p i t al s t o c k of NWKT c o ns i s t s of ( a ) 75,000,000 authorized sh a r es o f co m m on s t oc k , p a r v a l u e $0.001 p e r sh a re , o f w h i ch 2,797,500 s ha r es a r e i s s ued and ou t s t a n d i n g .

 

( b) Im m ed i a t e l y f o l l o w i ng C l o s i ng t h e r e w i l l b e a t o t al of 25,797,500 s h a r e s of NWKT C o m m on Sto c k i s s ued and ou t s t a nd i n g .

 

(c) U pon i s s uan c e of t he E x c h an g e Sha r e s, t h e Exch a n g e Sha r e s sh a l l b e v a li d l y au t ho ri z ed, l e g a l l y i s s u ed, f u ll y pa i d, and n o n - a s s e s s a b l e and fr e e and c l e a r of any Li e n s , and e x ce p t as s e t f o rt h i n t h e NWKT O r g an i z a t i on a l D oc u m en t s, n one of t he E x chan g e Sha r e s i s s u b j e ct t o p re - e m p ti v e or s i m il ar ri g h t s, and no P e r son h a s a ny p r e - e m p ti v e ri g h t s or s i m il ar r i g h t s t o pu r cha s e or r ece i v e any of t h e Exchan g e Sh a r es o t h er t han pu r s u ant t o o r a s s e t f o r t h i n t h i s A g r ee m en t .

 

( d) T h e r e i s no v o t i ng tr u s t , a g r ee m ent o r a rr a n g e m ent a m o n g any of t he ben e f i c i al ho l d e r s of NWKT Sto c k a f f ec t i ng t he no m i na t i on or e l e c t i on of d i r e c t o r s or t he ex e r c i se of t he v o t i n g ri g h t s of NWKT Sto c k .

 

( e) T he o ff e r , i s s uan c e a nd s a l e of su c h s h a r e s o f NWKT St oc k w e r e ( a) exe m pt fr om t he r e g i s t r a ti on a n d p r os p ec t us d e li v e r y r e qu i r e m en t s of t h e Se c u r i t i es A c t , ( b) r e g i s t e r ed or qu a l i fi e d ( or w e r e exe m pt fr om r e g i s t r a t i on or qu a li fi c a t i on) u n der t he r e g i s t r a t i on or qu a l i f i ca t i on r e q u ir e m en t s o f a l l app l i ca b l e s t a t e s e c u r i t i es La w s a n d ( c) a c co m p li s he d i n co n f o r m it y w it h a l l o t her a p p l i ca b l e s e c u r i ti e s L aws. N one of s u ch s h a r es of NWKT S t ock a r e su b j e ct t o a r i g ht o f w it h d r a w al o r a ri g ht o f r e s c i s s i on und e r any f e de r a l or s t a t e s e c u r i t i es o r B l u e Sky ” La w .

 

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Sec t i on 4 . 06 O p ti o n s o r Wa r r a n t s . T h er e a r e n o o p ti o ns, w a r r an t s, con v e r t i b l e s ec u r i t i e s , sub s c ri p t i on s , s t ock a p p r e c i a t i on ri g h t s, pha n t om s t o ck p l a n s o r s t ock eq u i v a l e n t s or o t her ri g h t s, a g r ee m en t s, a r r an g e m en t s or co m m i t m en t s ( con t i n g ent or o t h e r w i s e ) o f any ch a r a c t e r i s s ue d or a u t h o ri z ed by NWKT r e l a t i ng t o t he i s s u ed or u n i s s u ed ca p i t al s t ock of NWKT (i n c l u d i n g , w it ho u t li m i t a t i on, r i g h t s t he v a l u e o f w h i ch i s d e t e r m i ned w it h r e f e r en c e t o t he c ap i t a l s t o c k or o t her s e c u r i t i es o f NWKT ) or o b li g a t i ng NWKT t o i s s u e o r s e l l any sh a r es of c a p i tal s t o ck o f , o r o p ti o n s, w a r r an t s, c o n v e r t i b l e s e cu r i ti e s , s u bs c ri p t i ons o r o t h e r equ i t y i n t e r e s t s i n, NWKT . There a r e n o o u t s t an d i ng co n tr a c t u al ob l i g a t i ons of NWKT t o r ep u r c h a s e, r e deem o r o t h e r w i s e a cqu i r e any sh ar es o f NWKT C o m m on Sto c k of NWKT, except as contained herein in Section 8.19, o r t o p ay any d i v i dend o r m a k e any o t h e r d i s t r i bu t i on i n r e s p ect t h e r e of or t o p r o v i de f unds t o, o r m a k e any i n v e st m ent (i n t h e f o r m of a l oan, ca p i t al con t ri b u t i on o r o t he r w i s e ) i n, any pe r s o n.

 

Sec t i on 4 . 07 Subs i d i a r i es a nd P r ed e ce ss or C o r po r a t i on s . NWKT d o es not ha v e any s u b s i d i a ri e s, and d o es not o w n, b en e fi c i a ll y or of r ec o r d, a ny sh ar e s of any o t her c o r p o r a ti o n .

 

Sec t i on 4 . 08 B oo k s and R eco r d s. The boo k s and r e c o r d s, f i nan c i al and o t h e r wi s e , of NWKT a r e i n a l l m a t e ri a l a s p e c t s co m p l e t e and co r r e c t and ha v e been m a i n t a i ned i n acc o r da n ce w it h g ood bus i n e ss and accou n t i ng p r a c t i ces.

 

Sec t i on 4 . 09 Fin a n c i a l S t a t e m en t s .

 

( a) NWKT h as de l i v e r ed t o OZOP t he ( i ) b a l ance sh e et ( t he NWKT B a l a nce S h e e t ) as o f April 3 0 , 2017 ( t he NWKT B a l a n ce S h e et D a t e ) ; ( i i ) s t a t e m en t s of o pe r a t i ons and con s o l i d a t ed s t a t e m ent of s t o c k ho l d e r s’ d e f i c i t f o r t he y ear ended April 3 0 , 2017; and ( i i i ) an i n t e r i m b a l ance s h eet as of January 31, 2018 and ( i v ) s t a t e m en t s o f ope r a t i ons and s t a t e m ent of cash flows f o r t he n i n e m on t h p e r i od end e d January 31, 2018 ( c o l l e c ti v e l y , t he “ NWKT F i na n c i a l Sta t e m e n t s ).

 

( b) T he NWKT Fi n an c i a l St a t e m en t s ( a) a r e i n acc o r d a nce w it h t h e boo k s and r e co r d s of NWKT , and ( b) p r e s ent f a i rl y i n a l l m a t e r i a l r e s p ec t s t he f i na n c i a l co n d i t i on of NWKT a t t he d a t es t he r e i n sp e c i fi e d and t h e r e s u lt s of i t s op e r a t i ons a nd chan g es i n fi n an c i a l po s i t i on f or t he pe r i o d s t h e r e i n s p e c i f i ed.

 

S ec ti o n 4.1 0 U nd i s c l o s ed L i a b i l i t i es . E x cept as d i s c l os e d on t h e NWKT Sche d u l e s, NWKT has no l i ab i l i ti e s t h a t w ou l d be r eq u i r ed t o b e d i s c l os e d on t he NWKT B a l ance S h e e t un d er GAA P , e xcept f o r s u ch li a b i l i t i e s : (i ) d i s c l o s ed, r e fl e c t ed o r r e s er v ed a g a i n s t i n t he NWKT B a l a n ce S he e t ; ( i i ) t ho s e w h i ch ha v e b een i n cu r r ed i n t he o r d i n a r y cou r se of bu s i ne s s s i nce t h e NWKT B a l a nc e Sh e et D a t e ; ( i i i ) i n c u r r ed i n con n e c ti on wi t h t he tr a n s a c t i ons c o n t e m p l a t ed by t h i s A g r ee m ent or any o t h e r a g r ee m en t s and o t h e r docu m en t s de l i v e r ed i n conne c t i on he r ew i th ; and ( i v ) t hose w h i ch do not i nd i v i dua ll y exc e ed $ 5,000 or i n t he a gg r e g a t e exc e ed $25,000.

 

Sec t i on 4 . 11 Li t i g a ti on and P r o c ee d i n g s . The r e a r e n o a c t i ons, s u i t s, p r oc e ed i n g s o r i n v e s t i g a ti o n s pend i ng o r , t o t he k no w l e d g e of t h e NWKT P a r t i es a ft e r r e a s ona b l e i n v e s ti g a t i on, t h r e a t e n ed by or a g a i n s t t he NWKT Pa r t i es or a f f e c ti ng t he NWKT Pa r t i es or t h e i r r e s p ec ti v e p r o p e r ti e s, at l aw or i n equ i t y , be f o r e any cou r t or o t h e r g o v e r n m en t al a g e n cy or i n s tr u m en t a l i t y , do m e st i c o r f o r e i g n, o r be f o r e a n y a r b i tr a t o r o f any k i nd exce p t as d i s c l os e d i n NWKT Sched u l e s . The NWKT Pa r t i e s ha v e no k no w l ed g e of any de f a u l t on i t s p a r t wi t h r e s p ect t o any j ud g m en t , o r de r , w r i t , i n j un c t i on, de c r e e , award, r u l e or r e g u l a t i on o f any cou rt , a r b i tr a t o r , or g o v e r n m en t al a g ency or i n s tr u m en t a l it y or any c i r c u m s t ance w h i ch a f t er r e a s o n ab l e i n v e s ti g a t i on w o u l d r e s u l t i n t he d i s co v e r y of s u ch d e f a u lt .

 

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Sec t i on 4 . 12 C on tr a c t s.

 

( a) A l l NWKT M a t e r i a l C on t r a c t s t o w h i ch NWKT i s a pa r t y or by w h i ch i t o r any of it s a s s e t s, p r o du c t s, t ech n o l o gy , or p r o p e r t i e s ar e bou n d o t h e r t han t h o se i n cu r r ed i n t he o r d i n a r y co u r s e of bu s i n e ss a r e s e t f o r t h on t h e NWKT Sche d u l e s .

 

( b) T o t he A l l NWKT M a t e r i al C o n tr a c t s t o w h i ch NWKT i s a p a rt y or by w h i ch i t s p r o pe r t i e s a r e bo u nd a n d w h i ch a r e m a t e r i al t o t he o pe r a ti o ns of NWKT t a k en as a w ho l e a r e v a li d and e n f o r c eab l e by NWKT i n a l l r e sp e c t s, exc e pt as l i m i t ed by t he E n f o r cea b i li t y Excep t i on s .

 

Sec t i on 4 . 13 N o Conflict W it h O t h e r Instruments . The e xec u t i on o f t h i s A g r ee m ent a nd t he con s u mm a ti on of t he t r a n s a c t i ons co n t e m p l a t ed by t h i s A g r ee m ent w il l not r e s u l t i n t he b r e ach o f any t e r m or p r o v i s i on o f , con s t i t u t e a d e f a u l t und e r , o r t e r m i na t e, a c c e l e r a t e o r m od if y t he t e r m s o f , any i nde n t u r e, m o rt g a g e, deed o f tr u s t , NWKT M a t e r i a l C o n tr a ct or o t h e r m a t e ri a l a g r e e m ent or i n s t r u m ent t o w h i ch e i t her o f t he NWKT P a r t i es a r e a p a r t y or t o w h i ch any of it s a s s e t s , p r op er t i e s or op e r a t i o n s a r e s u b j e c t.

 

Sec t i on 4 . 14 C o m p li ance W it h La w s a n d R e g u l a ti o n s . T o t h e be s t of it s k no w l ed g e, each NWKT Pa rt y has co m p li ed w it h a l l ap p l i ca b l e s t a t u t es and r e g u l a t i ons of any p r o v i n c i a l , f e de r a l , s t a t e, o r o t h e r g o v e r n m en t a l en t it y or a g ency t he r e o f , e x cept t o t he ex t ent t h a t non c o m p li ance w o u l d not m a t e r i a l l y and ad v e r s e l y a ff ec t t he b u s i n e s s, o pe r a t i ons, p r ope r ti e s, a s s e t s, o r con d i t i o n of NWKT or e x ce p t t o t he e x t e n t t h at n o nco m p li a n ce w ou l d n o t r e s u l t i n t he o cc u rr e n ce o f any m a t e r i al l i ab il it y f or NWKT .

 

Sec t i on 4 . 15 T a x e s . NWKT has d u l y and punc t u a l l y pa i d a l l g o v e r n m en t al f ees and t a x es w h i c h i t has beco m e li a b l e t o p ay and h as d u l y a ll o w e d f o r a l l t a xe s r e a son a b l y f o r e s e ea b l e an d i s u nder no l i a b i l i t y t o pay any pena lt y or i n t e r e s t i n conne c t i on wi t h any c l a i m f or g o v e r n m en t al f e es or t ax e s and NWKT h a s m ade any and a l l p r op e r de c l ar a t i ons and r e t u r n s f o r t a x pu r po s es and a l l i n f o r m a ti on con t a i n ed i n su c h dec l a r a t i ons and r e t u r ns i s t r ue a nd comp l e t e.

 

Sec t i on 4 . 16 T ax R e t u r n s a nd A u d i t s . A l l r eq u i r ed f ed e r a l , s t a t e and l oc a l Tax R e t u r ns of NWKT h a v e been a cc u r a t e l y p r ep a r ed i n a l l m a t e r i al r e sp e c t s and d u l y and t i m e l y fi l ed, a n d a l l f e de r a l , p r o v i n c i a l a n d l oc a l T a x es r equ i r ed t o be pa i d wi t h r e s p ect t o t he p er i ods c o v e r ed by su c h r e t ur ns ha v e been p a i d t o t h e ex t e n t t h at t h e s ame ha v e b eco m e due, ex c ept w h e r e t he f a i l u r e so t o f i l e or pay cou l d n o t r e a son a b l y be expe c t ed t o ha v e a M a t e r i a l A d v e r se E f f e c t on NWKT . NWKT i s n o t and has n ot b een d e l i nque n t i n t h e pa y m ent of a ny Tax. NWKT h as not had a T ax d e f i c i ency a s s e s s e d a g a i n s t i t and h a s n o t e xecu t ed a w a i v er o f any s t a t u t e o f li m it a ti o n s o r t he a s s e s s m ent o r c o l l e c ti on of any T a x . N o n e o f NWKT’ s fe de r a l i ncome, p r o v i n c i a l and l o c al i ncome and f r a n ch i s e t ax r e t u r n s has b e en aud i t ed by any A u t ho r i t y . T he r e s e r v es f o r Taxes r e f l e c t ed on t h e NWKT F i na n c i a l S t a t emen t s a r e and wil l be s u f f i c i e n t f or t h e pa y m ent of a l l u np a i d T a x e s pa y ab l e by NWKT . NWKT has not r ec e i v ed any no ti ce of any p r opos e d au d i t s, i n v e sti g a t i ons, c l a i m s or adm i n i s t r a ti v e p r oce e d i n g s r e l a t i ng t o T a xes or any T a x R e t u r ns. NWKT ( i ) i s n o t a pa r t y t o, n o r i s i t bou n d by or o b li g a t ed u n de r , any t ax s h a r i ng a g r ee m en t s, and ( i i ) does n o t h a v e any po t e n ti a l l i ab i l i t y or ob l i g a t i on t o any Pe r s o n as a r e s u l t o f , or pu r su a n t t o, any su c h t a x sh a r i ng a g r ee m en t s. NWKT has no l i a b i l it y f o r any o t h e r t axpa y er u nder U .S. Trea s u r y R e g u l a t i on 1 . 150 2 - 6 or any o t her s i m il a r p r o v i s i on.

 

Sec t i on 4 . 17 E m p l o y ee B ene f i t P l an s ; E R I S A . T he r e a r e no “ e m p l o y ee bene f i t p l an s ( w it h i n t he m ean i ng of Sec t i on 3 ( 3) of E R I S A ) nor any o t her e m p l o y ee bene f i t o r f ri ng e bene f i t a rr a n g e m en t s, p r a c t i ces, co n tr a c t s, p o li c i e s or p r o g r a m s o t h e r t h an p r o g r a m s m e r e l y i n v o l v i ng t he r e g u l ar pa y m ent of w a g e s , co m m i s si ons, or b onus e s e s t a b l i sh e d, m a i n t a i ned o r c on t ri b u t e d t o by NWKT , w h e t h e r w r i t t en or un w r i tt e n and w h e t h er o r n ot f u nded.

 

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Sec t i on 4 . 18 C on f l i c t of I n t e r e s t . E x ce p t as a ho l d er of NWKT S t oc k , t o t he k no wl ed g e of t he NWKT Pa r t i e s , no Pe r son a f f i l i a t ed w it h NWKT has o r wi l l h a v e any c l a i m s or r i g h t s wi t h r e s p e c t t o any d i r e c t o r i n d i r e c t i n t e r e st i n a ny t an g i b l e or i n t an g i b l e p r op e rt y us e d i n t he bu s i n e ss o r op e r a ti o n s o f NWKT .

 

Sec t i on 4 . 19 B ank A ccoun t s . NWKT h a s p r o v i ded OZOP w i t h a n acc u r a t e and co m p l e t e l i s t of t he na m es and l oca t i o n s of ea c h bank or o t her f i nan c i a l i n s t i t u t i on a t w h i ch NWKT h as e it her an a c cou n t (i n w h i ch case a c cou n t numbe r s ha v e been p r o v i ded) o r s a f e d ep os i t bo x , a nd t he na m es o f a l l P e r so n s a u t h o ri z ed t o d ra w t h e r eon or w h o ha v e acc e ss t h e r e t o, r e s p e c ti v e l y , and t he na m es of a l l P e r s ons, i f an y , now h o l d i ng po w e r s o f a t t o r n ey or co m pa r a b l e d e l e g a t i on of a u t h o r i t y fr om NWKT and a s umma r y s t a t e m ent t h e r eo f .

 

Sec t i on 4 . 20 O ff i ce r , Di r e c t or and Pro m o t e r ' s I n f o r m a ti o n . D u r i ng t he p a s t f i v e ( 5 ) y ea r s, n e it her NWKT no r , t o t he k no wl ed g e of t h e NWKT P a r t i e s , any of i t s r e s pec t i v e o f f i c e r s o r d ir e c t o r s , has b e en t h e su b j e c t of :

 

( a) a ban k r up t cy pe t i t i on f il e d by or a g a i nst a ny bus i n e ss of w h i c h NWKT o r s u ch o t he r pe r son w as a g ene r al p ar t n e r or exec u t i v e o f f i c e r e it h er a t t h e t i m e of t he b a n k r up t cy or wi t h i n t w o y ea r s p r i or t o t h a t t i m e;

 

( b) a con v i c ti on i n a c ri m i nal p r ocee d i ng or a pen d i ng c r i m i nal p r o c ee d i ng ( ex c l u d i ng t r a f f i c v i o l a t i ons and o t her m i nor o f f en s e s ) ;

 

( c) any o r de r , j ud g m en t , or d e c r ee, n ot s ubs e q ue n tl y r e v e r s e d, su s p e nded o r v aca t ed, of any cou r t o f co m pe t ent j u r i s d i c t i on, p er m anen tl y or t e m po r a r i l y en j o i n i n g , b a r r i n g , su s p e nd i ng or o t h e r wi se li m it i ng NWKT or any su c h o t h e r pe r son f r om i n v o l v e m ent i n any t y pe of bus i n e s s, s ec u r i ti e s or ban k i ng ac ti v i ti e s; or

 

( d) a f i n d i ng by a co u r t of c o m pe t ent j u r i s d i c ti on ( i n a c i v i l a c ti o n ) , t he S EC , o r t he C o mm od it y Futu r es Tra d i ng C o m m i s si on t o h a v e v i o l a t ed a f e d e r al or s t a t e s ec u r i ti e s o r co m m o d i t i es La w , a n d t he j ud g m ent has n o t be e n r e v e r s e d, su s p ended, or v ac a t ed.

 

Sec t i on 4 . 21 Li m it ed R e p r e s e n t a ti o n s a nd W a r r a n ti e s . Ex c ept f or t h e r ep r e s e n t a t i ons and w a r r an t i es exp r e s s l y s e t f o r t h i n t h i s A rt i c l e I V ( a s m od i f i ed by t he NWKT S c hed u l e s ) and t he o t h e r a g r e e m en t s a n d docu m en t s de l i v e r ed i n co nnec t i on h e r ew i t h , n e it h er NWKT any of i t s A f f i l i a t es or a ny Pe r s on a c ti ng on beha l f o f any of t he f o re g o i ng m a k es or has m ade any o t her ex p r e s s or i m p li ed r e pr e s e n t a t i on or w a rr a n t y t o t he OZOP Pa r t i es as t o t he ac c u r a cy or co m p l e t e n e s s of any i n f o r m a ti o n r e g a r d i ng NWKT , t he NWKT S t oc k , t he t r an s ac t i o n s c on t e m p l a t ed h e r eby o r a ny o t h e r m a t t e r , and NWKT d i s c l a i m s a n d t he OZOP P a r t i es s h a l l not be e n t it l ed t o r e l y upon any o t her r ep r e s e n t a ti o ns o r w a r r an t i e s , w he t h er m ade by on beha l f of NWKT o r any of i t s r e s p e c t i v e Af f i l i a t es o r any Pe r son ac t i ng on beha l f o f t h e f o r e g o i n g .

 

A rt i c l e V . ADD ITI O N A L C O VE N AN T S OF T H E P A R T I E S

 

Sec t i on 5 . 01 A c ti o n s a t and Fo l l o w i ng t he Clo s i n g .

 

( a) I mm ed i a t e l y f o ll o w i ng t he C l os i n g , t he NWKT B o a r d s ha l l t a k e su c h a c t i on to name t he c u r r ent d ir e c t o r s o f OZOP as o f t he Cl os i n g to the MWKT board , a nd i m m ed i a t e l y t h e r e a ft e r Denis Razvodovskij sh al l r e s i g n as a d ir e c t o r of NWKT and t he n ewly con st i t u t ed NWKT B oa r d sh a l l comprised of the current directors of OZOP as of the Closing .

 

( b) Si m u lt ane o us l y wi t h t h e ex ecu t i on and d e li v e r y o f t h i s A g r ee m ent by t he Pa r t i es at t he C l o s i n g , and upon r e a s o n ab l e r eque s t by any of t he o t h e r P a r t i es p os t - C l os i n g , NWKT , OZOP and OZOP Sha r e h o l d e r s sh a l l e x e c u t e, ac k no w l ed g e, and de l i v er ( o r sh a l l en s u r e t o be exe c u t e d, ac k no w l ed g ed, and d e l i v e r ed ) , any and a l l ce r t i f i c a t e s , op i n i ons, fi n an c i al s t a t e m en t s, s c h e du l e s , a g r ee m en t s, r e s o l u t i o n s, r u l i n g s or o t h e r i n s tr u m en t s r e qu i r ed by t h i s A g r ee m ent t o be so d e l i v e r e d at or p ri o r t o t he C l o s i n g , t o g e t her wi t h su c h o t h er i t e m s as m a y be r eason a b l y r eque s t ed by t he Pa r t i es and t h e i r r e s pe c ti v e l e g al coun s el i n o r d e r t o e f f e c t u a t e o r e v i de n ce t he t r an s ac t i o n s con t e m p l a t ed h e r eby

 

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A rt i c l e V I . I ND E M N I F I C A TIO N

 

Sec t i on 6 . 01 I nd e m n ifi c a ti o n of NWKT .

 

(a) OZOP he r eby a g r e e s t o i nde m n if y and h o l d h ar m l e s s t o t h e f u l l e s t e x t e n t pe r m i t t ed by app l i ca b l e Law NWKT , ea c h of i t s A f f i l i a t es a n d each o f it s a nd t h e i r r e s p e c ti v e m e m be r s, m ana g e r s pa r t ne r s, d i r e c t o r s, o f f i c e r s, e m p l o y ees, s t oc k ho l d e r s, a ttor ne y s and a g en t s and p er m itt ed a s s i g nees ( ea c h a “ NWKT Ind e m n i f i ed P a r ty ) , a g a i n s t a n d i n r e s pect of any and a l l o u t - o f - p oc k et l os s , co s t , pay m en t s, de m and, p en a l t y , f o rf e i t u r e, ex p en s e, l i a b i l it y , j ud g m en t , d e f i c i e ncy or d a m a g e, and d i m i nu ti o n i n v a l u e or c l a i m (i nc l ud i ng ac t u a l co s t s o f i n v e s t i g a t i on and a t t o r n e y s’ f e es a n d o t h er co s t s a n d ex p en s e s) ( a l l of t he f o r e g o i ng c o ll e c t i v e l y , L os s e s ”) i nc u r r ed o r s u s t a i ned by any NWKT I nd e m n ifi ed P a r t y as a r e s u l t of o r i n conn e c t i on w i t h any (i ) b r ea c h or i n ac c u r acy , or t h e a l l e g ed b r e a ch o r i n acc u r a c y , of a n y of t he r e p r e s en t a t i ons and w a rr a n t i es r e g a r d i ng OZOP con t a i n e d i n A rt i c l e I I he r e i n or i n any of t he ad d i t i o n al a g r ee m en t s or any ce r t i f i c a t e or o t h e r w r i ti ng de l i v e r e d pu r s u ant h e r e to , or ( i i ) no nf u l f i l l m en t , or t h e a l l e g ed non f u l f il l m en t , of any of t he co v enan t s t o be pe r f o r m ed by OZOP u nder t h i s A g r ee m ent or i n any of t he a dd i ti o nal a g r ee m en t s or a ny ce r t i fi c a t e or o t h er w r i t i ng de l i v e r ed p u r s u ant he r e t o .(

 

b) Each o f t he OZOP Sh a r e ho l d e r s h e r eby a g r e e s t o, s ev e r a ll y a n d n o t j o i n t l y , i n d e m n if y and h o l d ha r m l e s s t o t he f u l l e s t e x t e n t pe r m it t ed by app li c ab l e L a w each NWKT I nde m n ifi ed P a rt y , a g a i n st a n d i n r e s p e c t o f a ny and a l l L o s s e s i n c u r r ed or su s t a i ned by any NWKT I nde m n ifi ed P a rt y as a r e s u l t of or i n c o nne c t i on wi t h any ( i ) b r e a ch o r i na c cu r ac y , or t h e a l l e g ed b r e ach o r i n a cc ur acy of a ny of t he r ep r e s e n t a t i ons a n d w a r r a n t i es r e g a r d i ng su c h OZOP Sha r eho l der con t a i n ed i n A rt i c l e II I he r e i n or i n any of t he a dd i t i on a l a g r ee m en t s or any ce r t i f i c a t e or o t h e r w r i ti ng de l i v e r ed pu r s u ant h e r e t o, or ( i i ) non f u l f i ll m en t , or t h e a ll e g ed non f u l f i ll m ent, o f any o f t he co v enan t s t o b e p e rf o r m ed by su c h OZOP Sha r e h o l de r und e r t h i s A g r ee m ent or i n any of t he a dd i ti o nal a g r ee m en t s o r any ce r t i fi c a t e or o t h er w r i t i ng de l i v e r ed p u r s u ant he r e t o.

 

Sec t i on 6 . 02 I nd e m n ifi c a ti o n of OZOP and OZOP Sh a r eh o l d e r s. E a ch o f t he NWKT Pa r t i e s h e r eby a g r e e s t o , j o i n t l y and s e v e r a ll y , i n d e m n if y and ho l d h a r m l e s s t o t he f u l l e st e x t e n t pe r m itt e d by app l i ca b l e Law t he OZOP Sh a r e h o l d e r s , OZOP and each of it s o f f i c e r s, d ir e c t o r s, e m p l o y ees, s t oc k ho l d e r s , a t t o r ne y s a n d a g en t s a nd p e r m itt e d a s s i g nees ( e a ch a “ OZOP In d e m n i fi ed P a r ty ) , a g a i n st a nd i n r e s p ect of a ny and a l l L os s es i nc u rr e d o r s u s t a i n ed by any OZOP I nde m n ifi ed Pa rt y as a r e su l t o f o r i n conne c t i on wi t h any ( i ) b r e a ch or i n a ccu r ac y , or t he a l l e g ed b r e a ch or i n a ccu r ac y , of any of t h e r ep r e s e n t a t i ons and w a r r a n t i es of e i t h e r o f t he NWKT P a r t i es co n t a i ned i n Se c t i on 1 .0 3 ( e) or A r ti c l e I V he r e i n or i n any of t h e ad d i t i on a l a g r ee m en t s or any ce r t i f i c a t e or o t h e r w r i ti ng de l i v e r e d pu r s u ant h e r e t o, or ( i i ) non f u l f i l l m en t , or t h e a l l e g ed non f u l f i l l m en t , of a ny of t he co v ena n t s t o be p e rf or m ed b y e it her o f t h e NWKT Pa r t i es und e r t h i s A g r ee m ent o r i n a ny of t he a dd i t i onal a g r e e m en t s or a ny ce r t i f i c a t e o r o t h er w r i t i ng de l i v e r ed p u r s u ant he r e to .

 

Sec t i on 6 . 03 Expi r a t i on a nd T i m e L i m it .

 

( a) T he o b li g a t i ons of OZOP und e r S e c t i on 6.01 ( a) wi t h r e sp e c t t o any b r e a ches of t h e r ep r e s e n t a t i ons and w a r r an t i es sh a l l ex p i r e i m m ed i a t e l y a ft e r c o nsu m m a ti on of t h e C l o s i n g , e x ce p t w it h r e s p e ct t o any b r eac he s of t he r ep r e s e n t a t i ons and w a rr a n t i es r e g a r d i ng OZOP i n Sec t i on 2.05 or Se c ti on 8.0 1 , w h i c h, i n e ach ca s e, s h a l l s u r v i v e t he C l o s i ng f o r a p e r i od of t w o ( 2 ) y ea r s fr om t he C l o s i ng D a t e and any i ndemn if i c a ti on c l a i m a s s e r t ed i n a c co r d ance w i t h t he p r o v i s i o n s o f t h i s Sec t i on 6 . 03 ( a ) w h i ch r ema i ns un r e so l v ed as o f su c h ti m e sh a l l su r v i v e and co n ti n u e un t i l s u c h c l a i m i s r e s o l v ed a n d p a i d, i f a pp l i c a b l e.

 

( b) T he o b li g a t i ons of ea c h OZOP Sha r eh o l der un d er Sec t i on 6 .01 ( b ) w it h r e sp e c t t o any b r eac he s of t he r e p r e s en t a t i ons an d w a rr a n t i es r e g a r d i ng su c h OZOP Sh a r eh o l d er sh a l l exp i r e i m m ed i a t e l y a ft e r con s u mm a ti on of t he Cl os i n g , except wi t h r e sp e ct t o a ny b r e a ches o f t h e r ep r e s e n t a t i ons and w a r r a n ti e s r e g a r d i ng su c h OZOP Sha r eho l der i n Se c ti o n 3.04 or Se c t i on 8.01, w h i ch, i n each c a s e, s ha l l su r v i v e t he C l o s i ng f or a pe ri od o f t w o ( 2 ) y ea r s f r om t he C l os i ng D a t e and any i nde m n i f i c a t i on c l a i m a s s e r t ed i n ac co r dan c e w it h t he p r o v i s i o ns of t h i s Sec t i on 6.03 ( b ) w h i ch r e m a i ns un r e s o l v ed as of s uch t i m e sh al l s u r v i v e and c on t i nue u n t i l su c h c l a i m i s r e s o l v ed and p a i d, i f ap p l i c ab l e . Se c t i on 6.02 w i t h r e sp e c t t o any b r e a ches of t h e r ep r e s e n t a t i ons and w a r r an t i es sh a l l ex p i r e i m m ed i a t e l y a ft e r c o nsu m m a ti on of t h e C l o s i n g , e x ce p t w it h r e sp e ct t o any b r e ac hes of t h e r e p r e s en t a t i ons and w a rr a n t i es r e g a r d i ng NWKT i n Sec t i o n 4.05 ( a ) , S e c t i on 4.0 5 ( b ) , S e c t i on 4.0 5 ( c), Se c ti o n 4.1 5 , Sec t i on 4. 1 6 and S e c t i on 8 . 01 a l l of w h i c h sh a l l s u r v i v e t he C l o s i ng f o r a pe r i od o f t w o ( 2 ) y ea r s f r om t he C l os i ng D a t e and any i nde m n ifi c a t i on c l a i m a s s e r t ed i n acc o r da n ce w it h t he p r o v i s i ons of t h i s S e c t i on 6.03 ( c) w h i ch r e m a i ns u n r e so l v ed as of s u ch ti m e sh a l l s u r v i v e and c o n t i nue un t i l s u ch c l a i m i s r e so l v ed and p a i d, i f app l i c ab l e .

 

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Sec t i on 6 . 04 Pro c e d u re . The f o l l o w i n g sh al l a p p l y w it h r e s p e c t t o a l l c l a i m s by any OZOP I nd e m n ifi ed P a rt y or NWKT I nde m n ifi ed Pa r t y f or i n d e m n i f i c a t i on:

 

( a) A n i nde m n i f i ed P a r t y sh a l l g i v e t he i n d e m n if y i ng Pa rt y p r o m pt no t i ce ( an I n d e m n i fi ca t i on N o ti c e ”) o f any t h ir d - pa rt y A c ti o n w i t h r e sp e c t t o w h i c h su c h i n d e m n if i ed Pa r t y s e e k s i nde m n i f i c a ti o n pu r su a n t t o Sec t i on 6.01 o r Se c t i on 6.02 ( a “ T h i r d- P ar t y Cl a i m ) , w h i ch s ha l l de s c ri b e i n r ea s ona b l e de t a i l t he Lo s s t h a t h a s b een or m ay be su f f e r ed by t h e i n de m n ifi ed P a rt y . T he f a il u r e t o g i v e t he I nd e m n ifi c a ti on N o t i ce sh a l l no t i m pa i r any of t h e ri g h t s or bene f i t s of s u ch i nde m n i f i ed P a r t y under S e c t i on 6. 0 1 o r Se c t i on 6 . 0 2 , exce p t t o t he ex t ent s u ch fa il u r e m a t e ri a l l y and ad v e r s e l y a f f e c t s t he a b i l it y of t he i n d e m n if y i ng Pa rt y t o de f end s uch c l a i m or i nc r ea s es t h e a m ount of s u ch l i a b i li t y .

 

( b) I n t he case o f any T h i r d - Pa rt y C l a i m s as t o w h i ch i n de m n ifi c a t i on i s s o u g ht by any i nde m n if i ed Pa rt y , su c h i n d e m n ifi ed P a r t y sh al l be e n t i t l ed, a t t h e s o l e ex p en s e and li a b i l i t y of t he i n d e m n if y i ng Pa rt y , t o e x e r c i s e f u l l co n t r ol of t he d e f en s e, co m p r o m i se o r s e tt l e m ent of any T h i r d - Pa rt y C l a i m un l e s s t h e i n d e m n if y i ng Pa rt y , w it h i n a r e a son a b l e t i m e a ft e r t he g i v i ng of an I nde m n ifi c a ti on N o ti c e by t he i nde m n i f i ed P a rt y ( b u t i n any e v ent wi t h i n t en ( 1 0 ) da y s t h e r e a f t e r ) , s ha l l ( i ) d e l i v er a w ri t t en c on f ir m a ti o n t o su c h i nde m n if i ed Pa r t y t hat t he i nde m n if i ca t i on p r o v i s i o ns of Sec t i on 6. 0 1 or Se c ti o n 6.02 a r e ap p l i c ab l e t o s u ch A c t i on a n d t h e i nde m n if y i ng Pa rt y w i l l i nde m n if y su c h i nde m n i f i ed P a rt y i n r e s p ect o f su c h A c t i on p u r s u ant t o t h e t e r m s of t h i s A rt i c l e V I and, no t wi t h s t an d i ng an y t h i ng t o t h e c o n t r a r y , s h a l l d o so w it h out a s s e r t i ng any ch a ll e n g e, de f en s e, li m it a ti o n on t he i nde m n if y i ng Pa rt y s l i ab il it y f or Lo s s e s, c oun t e r c l a i m or o f f s e t , ( i i ) n o t if y su c h i nde m n i f i ed P a rt y i n w r i ti ng of t he i n t e n t i on o f t h e i nde m n if y i ng Pa rt y t o a s s u m e t he de f en s e t he r eo f , and ( i i i ) r e t a i n l e ga l cou n s e l r e a s o n ab l y s a t i s f a c t o r y t o su c h i n d e m n ifi e d P a rt y t o cond u ct t he d e f e nse o f s u ch T h ir d - Pa rt y C l a i m .

 

( c) I f t he i nde m n if y i ng Pa rt y a s su m es t he d e f e n se of any su c h T h ir d - Pa rt y C l a i m pu r su a nt t o S e c t i on 6.04 ( b) , t h e n t he i nde m n if i ed Pa rt y sh a l l co o pe r a t e w it h t he i n d e m n if y i ng Pa rt y i n any m anner r ea s ona b l y r eq u e s t ed i n co n nec t i on w i t h t he de f en s e , a n d t h e i nde m n i f i ed P a r t y sh a l l ha v e t h e ri gh t to b e k ept f u l l y i n f o r m ed by t he i n d e m n if y i ng Pa rt y and t h e i r l e ga l c o uns e l w i t h r e sp e ct t o t h e s t a t us of a ny l e g al p r o c eed i n g s, to t he e x t e n t not i nc o ns i s t ent with the preservation of a t t o r ne y - c li ent o r w o r k p r o duct p r i v il e g e. I f t he i n d e m n if y i ng Pa r t y so a s su m es t h e d e f en s e o f any su c h T h i r d - Pa rt y C l a i m , t he i nde m n i f i ed Pa r t y sh a l l hav e t he r i g ht t o e m p l oy s e p a r a t e co u ns e l a nd t o pa r t i c i p a t e i n ( b u t not c o n tr o l ) t he d e f en s e, co m p r o m i s e , or s e t tl e m ent t h e r eo f , but t he f ees a nd expen s es of su c h cou n s e l e m p l o y ed by t he i n de m n i f i ed P a r t y sh a l l b e a t t he e xpen s e of su c h i nde m n i f i ed P a r t y un l e ss ( i ) t h e i nde m n if y i ng Pa r t y h a s a g r eed t o pay su c h f ees a nd ex p en s e s, o r ( i i ) t h e na m ed pa rt i es t o a n y su c h T h i r d - Pa rt y C l a i m (i nc l u d i ng any i m p l eaded p a r t i e s ) i n c l ude a n i nde m n i f i ed P a r t y and t he i nde m n if y i ng Pa rt y and t he i nde m n ifi ed P a rt y s h a l l h a v e been ad v i s ed by it s coun s el t h a t t h e r e m ay be a con f l i ct o f i n t e r e s t be t w e e n su c h i nde m n i f i ed Pa rt y and t h e i nde m n if y i ng Pa r t y i n t he c ondu c t o f t he d e f e n se t h e r e o f , and i n any s u ch ca s e t he r e a s o n ab l e f e e s and ex p en s e s o f su c h s e p a r a t e coun s el sh a l l b e b o r ne b y t he i nde m n if y i ng Pa r t y.

 

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( d) I f t he i nde m n if y i ng Pa rt y e l e c t s t o a s s u m e t he de f e n se of any T h ir d - Pa rt y C l a i m pu r su a n t t o Sec t i on 6.0 4 ( b ) , t h e i nde m n i f i ed Pa r t y sh a l l n o t p a y , or pe r m i t t o be p a i d, any p a r t of a ny c l a i m or de m and a r i s i ng f r om su c h a s s e r t ed l i a b i l it y un l e s s t he i nde m n ifyi ng Pa rt y w it h d r a w s fr om or f a i l s t o v i g o r ous l y p r os e cu t e t h e de f e n se of s uch a s s e r t ed li a b i l it y , or un l e s s a j ud g m ent i s en t e r e d a g a i nst t h e i nde m n i f i ed P a r t y f or su c h l i a b i l it y . I f t h e i nde m n if y i ng Pa rt y do e s n o t e l e ct t o d e f en d , or if , a f t e r co m m enc i ng or u nde r t a k i ng any su c h d e f e ns e, t h e i nde m n if y i ng Pa r t y f a il s t o a d equ a t e l y p r os e cu t e o r wi t hd r aw s uc h de f en s e , t h e i nde m n i f i ed Pa r t y sh a l l ha v e t he ri g ht t o un d e r t a k e t h e de f e n se or s e t t l e m ent t h e r e o f , a t t he i n de m n if y i ng Pa r t y s e x pen s e. N o t wi t h s t a n d i n g an y t h i ng t o t he co n t r a r y , t he i nde m n if y i ng Pa rt y sh al l n ot be en t i t l e d t o co n tr o l , b u t m ay pa rti c i pa t e i n, and t h e i nde m n i f i ed P a r t y ( at t h e e x pen s e of t he i n de m n if y i ng Pa r t i e s ) sh a l l b e e n t i t l ed t o ha v e so l e co n t ro l o v e r , t he d e f en s e or s e t tl e m ent of ( x ) t h a t pa r t of any Thi r d P a rt y C l a i m (i ) t h a t s e e k s a t e m po r a r y r e s tr a i n i ng o r d e r , a p r e l i m i na r y o r p e r m anent i n j un c ti on or sp e c i fi c p e rf o r m ance a g a i n st t h e i nde m n i f i ed P a rt y , or ( i i ) t o t he e x t e n t su c h T h i r d Pa r t y C l a i m i n v o l v es c ri m i nal a ll e g a ti ons a g a i n s t t he i n de m n if i ed Pa r t y or ( y ) t he e n t ir e T h i r d Pa r t y C l a i m i f su c h T h ir d P a rt y C l a i m w ou l d i m pose li a b i l i t y on t he p a r t o f t he i nde m n ifi ed Pa r t y . I n t he ev ent t he i n d e m n ifi e d Pa r t y r e t a i n s co n t r ol o f t he T h i r d - Pa rt y C l a i m , t he i nde m n if i ed Pa r t y w il l n o t s e t t l e t he s u b j ect c l a i m w it ho u t t h e p r i o r w ri t t en co n s e n t of t h e i nd e m n if y i ng Pa rt y , w h i ch co n s e nt w i l l n ot be u n r e a s on a b l y w it h h e l d o r de l a y ed.

 

(e) I f t he i nde m n ifi e d Pa r t y unde r t a k es t he d e f e nse o f any su c h T h i r d - Pa rt y C l a i m pu r su a nt t o Se c t i on 6.04 ( b ) and p r o pos e s t o s e t tl e t he s a m e p ri o r t o a f i n a l j u dg m ent t h e r eon or t o f org o appeal w it h r e s p ect t h e r e t o, t hen t he i n d e m n ifi ed P a rt y sh a l l g i v e t he i nde m n if y i ng Pa rt y p r o m pt w r i tt e n no t i c e t he r eof and t he i nde m n if y i ng Pa rt y sh a l l ha v e t h e r i g ht t o p a r t i c i p a t e i n t he s e t t l e m en t , a s su m e or r ea s su m e t he d e f en s e t h e r e of or p r o s ec u t e s u ch ap p e a l , i n e ach c a s e at t he i nd e m n if y i ng Pa rt y s expen s e. T h e i nde m n if y i n g Pa rt y sh al l no t , wi t ho u t t he p ri o r w r i t t en con s ent o f su c h i n d e m n ifi e d Pa rt y s e t t l e o r co m p r o m i se or c ons e nt t o e n tr y of any j u dg m ent w i t h r e sp ec t t o any su c h T h ir d - Pa rt y C l a i m (i ) i n w h i ch any r e li e f o t h e r t han t he pa y m ent of m o n ey da m a g es i s or m ay be sou g ht a g a i nst s u ch i n d e m n i f i ed Pa r t y , ( i i ) i n w h i ch s uch T h ir d P a rt y Cl a i m co u l d be r e a s o n ab l y expe c t ed t o i m pose or c r ea t e a m one t a r y li a b i l i t y on t h e pa r t o f t he i nde m n i f i ed P a rt y ( s uch as a n i nc r ea s e i n t h e i nde m n i f i ed Pa rt y s i nco m e T a x ) o t h e r t han t he m one t a r y c l a i m of t he t h i r d p a rt y i n su c h T h i rd - Pa rt y C l a i m be i ng pa i d pu r s u ant t o su c h s e t tl e m ent or j ud g m en t , or ( i i i ) w h i ch does no t i n c l ude as an unco n d i ti on al t e r m t he r e of t h e g i v i ng by t he c l a i m an t , pe r son condu c ti ng s uch i n v e s t i g a ti on o r i n i t i a ti ng s u ch he a ri n g , p l a i n t i f f or p e t i t i on e r t o s u ch i n d e m n ifi e d Pa rt y of a r e l e a s e fr om a l l l i ab il it y w it h r e sp e ct t o s u ch T h i r d - Pa rt y C l a i m and a l l o t h er A c t i o n s ( k no w n or un k no w n) a r i s i ng or w h i ch m i g ht a r i s e out o f t he s a m e f ac t s.

 

Sec t i on 6 . 05 Pe ri o d i c P a y m en t s . A ny indemnification required by t h i s A r ti c l e V I f or co s t s, d i sb u r s e m en t s o r e xpe n s e s of a ny i nde m n i f i ed P a rt y i n con n ec t i on wi t h i n v e s t i g a t i n g , p r ep a r i ng t o de f end or d e f en d i ng any A c t i on s h a l l b e m ade by pe r i o d i c p a y m en t s by t he i nde m n if y i ng Pa rt y t o e a ch i nde m n if i ed Pa rt y du r i ng t he cou r se of t he i n v e s t i g a ti on o r d e f e n s e , as a n d w hen b i l l s a r e r e ce i v ed or c os t s, d i sb u r s e m en t s or expe n s e s a r e i nc u r r ed.

 

Sec t i on 6 . 06 I nsu r anc e . A ny i n de m n if i c a t i on pa y m en t s h e r e u nder s ha l l t a k e i n t o a cco u nt any i nsu r a n c e p r oc e eds o r o t h e r t h i r d - pa r t y r e i m bu r s e m ent a c t u a ll y r ece i v ed.

 

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A rt i c l e V II . D I S P U T E R E S OL U T I O N

 

Sec t i on 7 . 01 A r b i t r a ti o n.

 

(a) T he P a r ti e s sh a l l p r o m p tl y sub m i t any d i sp u t e, c l a i m , or co n tr o v e r sy a ri s i ng out of or r e l a t i ng t o t h i s A g r ee m ent (i n c l u d i ng w it h r e s p ect t o t he m ean i n g , e f f ec t , v a li d it y , t e r m i na t i o n, i n t e r p r e t a ti o n , pe r f o r m ance, o r e n f o r ce m ent o f t h i s A g r ee m en t ) o t h e r t h an S e c t i on 8 .05 o r S e c t i on 8. 0 6 or any a l l e g ed b r e a ch t he r eof (i nc l ud i ng any ac ti on i n t o rt , con t r a c t , eq u it y , or o t h e r w i s e ) , t o b i n d i ng a r b i t r a t i on b e f o r e o n e a r b i t r a t or ( t he “ A r b i t ra t o r ) . The arbitrator shall have at least ten (10) years experience in the area of securities law and contract law. Bi nd i ng a r b i t ra t i on sh a l l be t h e so l e m eans of r e s o l v i ng any d i s p u t e , c l a i m , or con t r o v e r sy a r i s i ng o ut o f o r r e l a t i ng t o t h i s A g r ee m ent ( i n c l u d i ng w it h r e s p ect t o t he m e a n i n g , e f f e c t , v a li d it y , t e r m i na ti on, i n t e r p r e t a ti on, pe r f o r m ance o r en f o r ce m ent o f t h i s A g r ee m en t ) o r a ny a ll e g ed b r e a ch t he r e o f ( i n c l u d i ng any c l a i m i n t o rt , co n tr a c t , equ i t y , or o t he r w i s e ) .(

 

b) I f t he Pa rti e s cann o t a g r ee u pon t he A r b i t r a t or wi t h i n t e n ( 10) B u s i ne s s D a y s of t he co m m ence m ent of t he e f f o r t s t o so a g r ee on an A r b i t r a t o r , e a ch o f t he P a r t i es s h a l l s e l ect one a r b i t r a t or and t he t w o a r b i t r a t o r s so s e l e c t ed s h a l l s el e ct t he A r b i t r a t o r .

 

( c) T he l aws o f t he S t a t e of California sh a l l ap p l y t o any a r b i t r a ti o n h e r eu n de r . I n any a r b i t r a ti o n he r e u nd e r , t h i s A g r ee m ent and any a g r ee m ent con t e m p l a t ed h e r e by sh a l l b e g o v e r ned by t he l aws of t he S t a t e of California a pp li cab l e t o a c o n t r a c t ne g o t i a t e d, s i g ned, and w h o ll y t o be pe r f o r m ed i n t he St a t e of California, w h i ch l a w s t he A r b i t r a t or s h a l l a p p l y i n r en d e r i ng h i s or h e r de c i s i on. The A r b i t r a t or s h a l l i s s u e a w r i t t en d e c i s i on, s e t t i ng f o rt h f i n d i n g s of f a ct and con c l u s i o n s of l aw, w i t h i n s i x t y ( 60) da y s a f t er he o r s he s h a l l h a v e been s e l e c t e d . T he A r b i t r a t or sh a l l ha v e no a u t h o r i t y t o award p u n i ti v e or o t h er ex e m p l a r y da m a g e s . The arbitration shall be held i n a cc o r da n ce w it h and und e r t he t hen - cu rr e nt p r o v i s i ons o f t he r u l e s o f t he A m e ri can A r b i tr a t i on A s so c i a ti o n , e x c e pt a s o t h e r wi s e p r o v i ded h e r e i n. Any arbitration initiated by any party to this Agreement or any other agreement contemplated hereby or associated with this Agreement shall be initiated and held in San Diego County, California. All parties agree to the venue of arbitration stated herein, and further agree to waive any challenge to venue in San Diego County, California.

 

(d) O n app l i c a t i on t o t he A r b i tr a t o r , any Pa r t y sh a l l ha v e ri g h t s t o d i s co v e r y t o t h e s a m e ex t e n t a s w ou l d b e p r o v i ded und e r t h e Fed e r a l R u l es of C i v i l P r oced u r e, and t he Fe d e r a l R u l es of E v i den c e sh a l l a pp l y t o any a r b i t r a t i on und e r t h i s A g r ee m en t ; p r o v i ded, ho w e v e r , t h a t t h e A r b i t r a t o r s h a l l li m i t any d i s co v e r y or e v i d e nce su c h t h at h i s d e c i s i on s h a l l be r end e r ed wi t h i n t he p e ri o d r e f e r r ed t o i n Se c t i on 7.0 1 ( c ) .

 

(e ) T he A r b i t r a t o r m a y , at h i s o r her d i s c r e t i on and at t he e xpen s e of t he P a rt y w ho w i l l be a r t h e c o s t o f t he a r b i t r a t i on, e m p l oy expe r t s t o a s s i s t h i m or her i n h i s o r h e r d e t e r m i n a ti o ns.

 

( f ) T he co s t s o f t he a r b i t r a t i o n p r o c ee d i ng and any p r o c eed i ng i n cou r t t o co n f i r m any a r b i tr a t i on award or t o o b t a i n r e l i e f , as ap p li c ab l e (i n c l u d i ng a c t ua l a t t o r ne y s’ f e e s and c o s t s ) , sh a l l be b o r ne by t he uns u cc e s s f ul P a r t y and s h a l l be awa r ded a s p a r t of t he A r b i t r a t o r s d e c i s i on, un l e s s t h e A r b i t r a t or sh a l l o t h e r wi se a ll o ca t e s u ch c o s t s i n s uch d ec i s i on. The d e t e r m i na t i on of t h e A r b i t r a t o r sh a l l be f i n a l and b i n d i ng u p on t h e Pa r t i es and n o t s ub j ect t o a p pe a l .

 

(g) A ny j ud g m ent upon any award r e n de r ed by t he A r b i t r a t o r m ay be en t e r ed i n and en f o r ced by any cou r t of co m pe t e n t j u ri s d i c t i on. T h e Pa r t i es ex p r e s s l y con s e n t t o t he no n - exc l u s i v e j u r i s d i c ti on o f t he co u r t s ( Fe d e r a l and s t a t e ) in San Diego country , California t o en f o r ce any award of t he A r b i tr a t o r or t o r e n der any p r o v i s i on a l , t e m po r a r y , or i n j unc t i v e r e li e f i n conne c t i on wi t h or i n a i d of t h e A r b i t r a t i on. T h e P a r t i es e xp r e s s l y con s e n t t o t he pe r son a l a n d su b j e ct m a t t er j u r i s d i c ti o n of t h e A r b i t r a t or t o a r b i tr a t e any and a l l m a t t e r s t o be sub m it t ed t o a r b i t r a t i on h e r eu n de r . N o n e of t he P a r t i es h e r e t o sh a l l cha l l en g e any a r b i t r a ti o n he r eu n der on t he g r ounds t hat any pa r t y nec e s s a r y t o s u ch a r b i t r a t i on (i n c l u d i ng t he Pa r t i e s ) sh a l l h a v e been a bs en t fr om su c h a r b i tr a t i on f or a ny r easo n , i nc l ud i ng t h a t s uch P a rt y s h a l l h a v e been t he s ub j e ct of any ban k r up t c y , r eo r g an i za ti on, or i n s o l v ency p r oce e d i n g .

 

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Sec t i on 7 . 02 Wa i v er of Ju r y Tr i a l ; Exe m p l a r y D a m a g e s .

 

( a) E A C H P AR T Y H E R E T O H E R E B Y W A I V E S , T O T H E F U L L E S T E X T E N T P E R M I TT ED B Y A P P L I CAB LE L A W, A N Y R I G H T I T MAY HA V E T O A T R I A L B Y J UR Y I N AN Y L EGA L P ROC E E D I N G D I R E C T LY O R I ND I R E C T LY A R I S I N G OU T O F O R R E L A T I N G T O T H I S AGR E E ME N T O R T H E T RAN S AC T I ON S C ON T EMP L A T E D , I NC L U D I N G T H E CO M M I T ME N T L E T T E R , T H E F E E L E T T E R , T H E P ER F OR MA N C E T H E R E O F O R T H E F I NAN C I NG S C O N T E M P LA T ED T H E R E B Y ( W H E T H ER BA S E D O N CON T RA C T , T OR T O R AN Y O T H ER T H E O RY ) . E A C H P AR T Y H E R E T O ( A ) C E R T I F I ES T HA T N O R E PR E S E N T A T I V E, A G E N T O R A T T ORN E Y O F AN Y O T H ER P AR T Y HA S R E PR E S E N T E D , E X P R E S S LY O R O T H E R W I S E , T H A T S UC H O T H ER P AR T Y WO U LD NO T , I N T H E E V E N T O F L I T I GA T I ON , S E EK T O E N F ORC E T H E F OR E G O I N G W A I V ER AN D ( B ) AC K NO WLE D G ES T HA T I T AN D T H E O T H ER P AR T I ES H E R E T O HA V E B E E N I NDUC ED T O E N T ER I N T O T H I S AGR E E ME N T BY , A MO N G O T H ER T H I NG S, T H E MU T UA L W A I V E R S AN D C E R T I F I CA T I ON S I N T H I S Sec ti on 7.0 2 ( a ) .(

 

b) Each of t he P a r t i es ac k no w l ed g e t h a t e a ch has b een re p r e s en t ed i n c onn e c t i on wit h t he s i g n i ng of t h i s w a i v er by i nde p ende n t l e g al c oun s el s e l e c t ed by t he r e sp e c t i v e Pa rt y and t ha t su c h P a rt y has d i s c u s s e d t he l e g al c o ns e qu ences and i m po r t o f t h i s w a i v er w it h l e g al co u ns e l . E a ch of t h e Pa r t i es f u r t h e r a c k no w l ed g e t h a t ea ch h a s r ead a nd u nd e r s t an d s t he m ean i ng of t h i s w a i ve r a n d g r a n t s t h i s w a i v er k no w i n g l y , v o l un t ar il y , wi t ho u t d u r e ss and on l y a f t e r c on s i de r a t i on of t h e c ons e q u enc e s o f t h i s wa i v er w it h l e g al cou n s el .

 

A rt i c l e V III . M I S C ELL AN EO U S

 

Sec t i on 8 . 01 B r o k e rs . NWKT a n d OZOP Pa r t i e s a g r ee t h at t he r e w e r e no f i nd e r s or b r o k e r s i n v o l v ed i n b ri n g i ng t h e Pa rt i es t o g e t h er o r w ho w e r e i n s tr u m en t al i n t he n e g o ti a ti o n, e x ec u ti on or con s u mm a ti on o f t h i s A g r ee m en t . NWKT and t he OZOP P a r t i es e ach ag r ee t o i n demn if y t he o t her a g a i nst any c l aim by any t h i r d p e r son o t h e r t h an t h o s e de s c ri b ed abo v e f o r any c o m m i s si on, b r o k e r a g e, or f i nde r s f ee a r i s i ng fr om t he tr a ns a c t i ons con t emp l a t ed h e r e by ba s ed on any a l l e g ed a g r ee m ent or un d e r s t an d i ng be t w e en t h e i ndemn if y i ng Pa rt y and su c h t h ir d p e r son, w h e t h e r e xp r e s s or i m p li ed fr om t he a c t i ons o f t he i ndemn if y i ng Pa rt y .

 

Sec t i on 8 . 02 G o v e r n i ng Law. T h i s A g r e e m ent sh a l l be g o v e r ned b y , en f o r ced, a n d con s tr u ed u n der and i n ac c o r d ance wi t h t he l a w s of t he S t a t e of California , w it ho u t g i v i ng e ff e c t t o t he p ri n c i p l es o f con f l i c t s o f l aw t he r eund e r . Each of t h e Pa r t i es h e r eby i r r e v oca b l y con s en t s a n d a g r e e s t hat ( a) any l e g al o r eq u i t a b l e ac t i on o r p r oc e ed i n g s a r i s i n g under or i n conn e c t i on w i t h t h i s A g r e e m ent i n i t i a t ed or b r ou g ht by any of t h e OZOP Pa r t i es sh a l l b e b r o u g ht e x c l u s i v e l y i n t he s t a t e o r f ed e r a l co u r t s of t he U n i t ed S t a t es wit h j u r i s d i c ti on i n San Diego County, California , and ( b ) a ny l e g al o r e qu i t a b l e a c ti o n or p r o ce e d i n g s a r i s i ng under o r i n con n ec t i on wi t h t h i s A g r ee m ent i n i t i a t ed or b r ou g ht by any of t he NWKT Pa r t i es sh a l l b e b r o u g ht exc l u s i v e l y i n t he s t a t e or f ede r al c o u r t s o f t he U n i t ed St a t es wi t h j u r i s d i c t i on i n San Diego County, California. B y execu t i on and d e li v e r y of t h i s A g r ee m en t , ea c h P a rt y h e r e t o i r r e v ocab l y s u b m it s t o and a c ce p t s, wi t h r e s p ect t o a ny su c h a c t i on or p r o c ee d i n g , g ene r a ll y a n d unc o nd i t i on a ll y , t he j u ri s d i c ti on o f t he a f o r e s a i d cou r ts , and i r r e v oca b l y w a i v es any and a l l r i g h t s su c h Pa rt y m ay now or h e r e a f t er ha v e t o o b j e c t t o su c h j u r i s d i c ti on.

 

 

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Sec t i on 8 . 03 N o ti c e s .

 

( a) A ny no ti ce or o t h er co m m u n i c a t i ons r eq u i r ed o r p e r m itt e d h e r eu n der sh a l l be i n w ri t i ng and sh a l l be su f fi c i e n tl y g i v en i f pe r s ona l l y de li v e r ed t o i t or s e n t by e m a i l w it h r e t u r n r ec e i pt r eq u e s t ed a n d r ec e i v e d , o v e r n i g ht co u r i er or r e g i s t e r e d m a i l or ce r t i f i ed m a il , po s t a g e p r e p a i d, add r e s s ed a s f o l l o w s :

 

I f t o NWKT :

 

Newmarkt Corp .

A tt n : Denis Razvodovskij , President, Treasurer, Secretary and Director

1408, 5348 Vegas Drive,

89108 Las Vegas, NV, USA

Email: denis@newmarktcorp.com

 

If t o OZOP :

 

Ozop Surgical, Inc

A tt n : Michael Chermak , CEO

Suite 150, 500 La Terraza Blvd.

Escondido, CA 92025, USA

E m a il : michael@ozopsurgical.com

 

W it h a cop y , i n w h i c h cop y sha l l no t cons tit u t e no t i ce , t o :

 

Anderson-Hayes, PC

Attn: Ryan Anderson, Esq.

P.O. Box 752

6106 Paseo Delicias, Suite E

Rancho Santa Fe , C A 92067

E m a il : ryan@andersonhayes.com

 

A n y P ar t y m ay cha n g e it s a ddres s f o r no t i ce s hereund e r upo n no t i c e t o e a c h o t h e r P ar t y i n t h e m anne r f o r g i v i n g no ti ce s hereunder .

 

( b) A ny no ti ce he r eun d er sh a l l be dee m ed t o ha v e b e en g i v en ( i ) u pon r e c e i p t , i f p e r s o na l l y de li v e r ed, ( i i ) on t he day a f t er d i sp a t c h , i f s ent by o v e r n i g ht c ou r i er , ( i i i ) upon d i sp a t ch, i f t r an s m itt ed by e m a i l w it h r e ce i pt co n f i r m ed by r e c i p i ent and ( i v ) t h r ee ( 3 ) da y s a f t e r m a i l i n g , i f s ent by r e g i s t e r ed o r ce r t i fi e d m a il .

 

Sec t i on 8 . 04 A tt o r ne y s ’ F e e s . I n t he e v ent t h a t any P a rt y i n s t it u t e s any a c ti on or s u i t t o en f o r ce t h i s A g r ee m ent or t o s e cu r e r e l i ef f r om any de f au l t h e r e u nder or b r each h e r e o f, t he p r e v a i l i ng P a rt y s h a l l b e r e i m bu r s e d by t he l o s i ng Pa rt y f or a l l co s t s, i n c l u d i ng r eas o na b l e a tt o r ne y s f e e s, i nc u rr ed i n c o nne c t i on t he r ew i t h a n d i n en f o r c i ng or c o l l ec t i ng any j ud g m ent r end e r ed t h e r e i n.

 

Sec t i on 8 . 05 C on fi d en t i a l i t y . Each P a rt y a g r ees t h a t , u n l e ss a nd u n t i l t h e t r a n s a c t i ons c on t e m p l a t ed by t h i s A g r ee m ent ha v e been c onsu m m a t ed, i t and i t s r ep r e s e n t a t i v es w i l l h o l d i n s t r i c t con f i d e nce a l l d a t a a nd i n f o r m a ti on o b t a i ned wi t h r e s p e ct t o an o t h e r Pa r t y or any sub s i d i a r y t he r eof fr om a n y r ep r e s e n t a ti v e, o f f i c e r , d i r e c t o r or e m p l o y ee, or f r om any bo o k s or r ec o r ds or fr om pe r so n al i ns p ec t i on, of su c h o t h e r Pa r t y , and sh a l l n o t use s u ch d a t a or i n f o r m a ti o n or d i s c l ose t he s a m e t o o t h e r s, ex c ept ( i ) t o t he e x t e n t su c h da t a or i n f o r m a ti on i s pub l i s h ed, i s a m a tt er o f pub l i c k no w l e dg e, or i s r eq u ir ed by Law t o be pub l i sh e d ; or ( i i ) t o t he e x t e n t t h a t su c h d a t a o r i n f o r m a ti on m ust be u s ed o r d i s c l o s ed i n o r der t o con s u m m a t e t he tr a n s a c t i o n s con t e m p l a t ed by t h i s A g r e e m en t . OZOP and NWKT agree that each Party may request, but are not obligated to request, that any and/or all persons associated with or involved in the negotiation and/or execution of this Agreement be required to sign a separate non-disclosure agreement to be drafted by the requesting Party. I n t he e v ent of t he ter m i na ti o n of t h i s A g r ee m en t , each P a rt y sh a l l r e t ur n t o t he a p p l i ca b l e o t her P a r t y a l l docu m en t s and o t h er m a t e ri a l s ob t a i n ed by i t or on it s beh a l f a n d sh a l l de s t r oy a l l c op i e s , d i g e s t s, w o r k pape r s, a b s t r a c t s o r o t her m a t e ri a l s r e l a t i ng t he r e t o, a n d each P a rt y w i l l con t i nue t o co m p l y w it h t h e co n fi d en t i a l i t y p r o v i s i o ns s e t f o r t h h e r e i n.

 

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Sec t i on 8 . 06 Publ i c A nnoun c e m en t s a n d Fi l i n g s . U n l e s s r eq u ir e d by app li ca b l e Law o r r eg u l a t o r y au t h o r i t y , NWKT w i l l not i s s ue a ny r epo r t , s t a t e m ent or p r e s s r e l ea s e t o t he g ene r a l pub l i c, t o t h e tr a d e, t o t he g ene r a l t r a d e or t r ade p r e s s, o r t o any t h i r d pa rt y ( o t h er t han i t s ad v i so r s and r ep r e s e n t a ti v es i n conne c t i on w it h t he t r an s a c t i ons co n t e m p l a t ed he r eb y ) or f i l e any docu m en t , r e l a t i ng t o t h i s A g r eement without the express written consent of OZOP. Cop i e s of any su c h f i li n g s, pub l i c an n oun c e m en t s or d i s c l os u r e s proposed by NWKT , i n c l u d i n g a n y announce m en t s or d i s c l os u r es manda t ed by Law or r e g u l a t o r y au t h o r i ti e s , sh a l l be d e l i v e r ed t o e a ch OZOP.

 

Sec t i on 8 . 07 Sched u l e s ; K no w l e d g e . Each Pa r t y i s p r e s u m ed t o ha v e f u l l k no w l ed g e of a l l i n f o r m a ti on s e t f o r t h i n t he o t h e r P a rt y’ s s c h edu l es d e l i v e r ed p u r s u ant t o t h i s A g r e e m en t .

 

Sec t i on 8 . 08 T h ir d P a r t y B ene f i c i a r i e s . T h i s c on t r a c t i s s t r i c t l y be tw een NWKT , OZOP a nd OZOP Sha r e h o l d e r s and, no o t h e r P e r son and n o d i r ec t o r , o f f i c e r , s t oc k h o l der ( o t h e r t han t he OZOP Sha r e h o l d e r s ) , e m p l o y ee, a g en t , i n dep e nde n t co n t r a c t or o r a ny o t her Pe r son s ha l l be d ee m ed t o b e a t h i r d - pa rt y bene f i c i a r y of t h i s A g r ee m en t .

 

Sec t i on 8 . 09 Expens e s . Su b j e ct t o Sec ti on 8.04, w he t h er or n o t t h e Exchan g e i s c o n su m m a t ed, each of NWKT and OZOP w i l l b e ar t h e i r o w n r e sp e c t i v e ex p en s e s , i n c l ud i ng l e g a l , a c c o un t i ng and p r o f e s s i o n a l f ees, i n cu r r ed i n c o nne c t i on w it h t he E x chan g e o r any of t h e o t her t r an s ac t i o n s c o n t e m p l a t ed h e r eb y .

 

Sec t i on 8 . 10 Ent i r e A g r ee m e n t ; D e fi n i t i on s ; I n t e r p r e t a t i o n . T h i s Agreement represents the en ti r e a g re e m en t be t w ee n t h e P a r ti e s re l a ti n g t o t h e su b j ec t m a tt e r t hereo f an d su p ers e de s a l l p r i o r a g ree m en t s , unders t and i n g s an d ne g o ti a ti ons , w r it t e n o r ora l , w it h respec t t o suc h su b j e c t m a tt er . D ef i ne d t er m s use d here i n w i t hou t d e f i n i ti o n s h a l l ha v e t h e m e an i n g g i v e n i n E xh i b i t B . U n l es s t h e e x pres s co n t ex t o t her w i s e requ i re s :

 

(a) t he w o r ds “h e r e o f ,” he r e i n,” and “h e r e u nde r ” a n d w o r ds o f s i m il ar i m po rt , w hen us e d i n t h i s A g r ee m en t , sh a l l r e f e r t o t h i s A g r ee m ent as a w ho l e and not t o a ny pa r t i c u l a r p r o v i s i o n o f t h i s A g r ee m en t ; (

 

b) t e r m s d e fi n ed i n t he s i n g u l ar sh a l l ha v e a co m pa r a b l e m ean i ng w hen u s e d i n t h e p l u r a l , a nd v i ce v e r s a ;

 

( c) t he t e r m s D o l l a r s” and $” m ean U n it ed S t a t es D o l l a r s;

 

( d) r e f e r e nces herein to a specific Section , Sub s ec t i o n , R e c it a l , Sch e du l e or E x h ib i t s h a l l r e f e r , r e s p ec t i v e l y , t o S e c t i ons, S ubs e c ti o ns, R e c i t a l s, Sc h e d u l es or Ex h i b i t s of t h i s A g r ee m en t ;

 

( e) w he r e v er t he w o r d i n c l u d e,” “ i n c l u d e s ,” o r i n c l u d i n g i s us e d i n t h i s A g r e e m en t , i t s h a l l b e dee m ed t o be f o ll o w ed by t he words “w i t ho u t l i m it a t i o n ”;

 

(f ) r e f e r e nces he r e i n t o any g ender sh a l l i n c l ude each o t he r g ende r ;

 

( g ) r e f e r e nces h e r e i n t o any Pe r son s h a l l i n c l u d e s uch Pe r son s he i r s, e x e c u t o r s, pe r son a l r ep r e s e n t a ti v e s , a d m i n i s t r a t o r s, s u cc e s s o r s a nd a s si g n s ; p r o v i ded, howe v e r , t hat no t h i ng con t a i n ed i n t h i s S e c t i on 8.10 i s i n t e n ded t o a u t h o ri z e any a s s i g n m ent or tr a ns f er not o t he r w i se pe r m i t t ed by t h i s A g r ee m en t ;

 

( h) r e f e r e nces h e r e i n t o a Pe r s o n i n a p a r ti c u l a r c ap a c i t y or capa c i t i e s s h a l l e xc l ude su c h Pe r son i n a ny o t h e r c a pa c it y ;

 

(i ) r e f e r e nces he r e i n t o any c o n tr a ct o r a g r ee m ent ( i n c l u d i ng t h i s A g r ee m en t ) m ean su c h co n t r a c t or a g r ee m ent as a m ended, su p p l e m en t ed o r m od i f i ed fr o m ti m e t o ti m e i n a c co r da n ce wi t h t he t e r m s t he r eo f ;

 

( j ) w it h r e sp e ct t o t he d e t er m i na ti on of a ny pe ri od o f ti m e, t he w o r d “ f r o m m eans “ fr om and i n c l ud i n g ” and t he wo r ds t o” and “un ti l e ach m eans “ t o b u t e x c l ud i n g ”;

 

( k ) r e f e r e nces h e r e i n t o any L aw or any l i cen s e m ean s uch Law or l i cen s e a s a m ended, m o d i fi e d, cod i fi e d, r een a c t ed, s upp l e m en t ed or sup e r s e d ed i n w ho l e or i n p a r t , and i n e f f e ct fr om ti m e t o ti m e; and

 

(l ) r e f e r e nces h e r e i n t o any L a w sh a l l b e d e e m ed a l s o t o r e f e r t o a l l r u l es and r e g u l a ti ons p r o m u l g a t ed t he r eun d e r .

 

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Sec t i on 8 . 11 Sur v i v a l ; Ter m i na t i o n . T h e co v ena n t s of t h e r e s p ec ti v e Pa r t i e s , a n d t he r e p r e se n t a ti o n s and w a r r an t i es i n S ec t i on 3.0 4 , S ec t i on 4.0 5 ( c ) a nd S ec t i on 8.0 1 , s h a l l su r v i v e t he Cl os i ng D a t e and t h e con s u mm a ti on of t he tr a ns a c ti o n s h e r e i n con t e m p l a t ed f o r a p e r i od o f t w o y ea r s , and a l l o t h e r r ep r e s e n t a t i ons a nd w a r r a n t i es sh a l l n ot s u r v i v e t he C l o s i ng D a t e.

 

Sec t i on 8 . 12 A m end m en t ; W a i v e r ; R e m ed i e s; A g en t .

 

( a) A t any ti m e p ri o r t o t he C l o s i ng D a t e, t h i s A g r ee m ent m ay be a m ended, m od ifi ed, s upe r s e d e d , t e r m i n a t ed o r ca n c e ll e d, a n d any of t he t e r m s, c o v enan t s, r ep r e s e n t a t i ons, w a rr a n ti es or con d i t i o n s he r e o f m ay be wai v ed, on l y by a wr i t t en i n s tr u m ent e x ecu t ed by a l l of t he Pa r t i es he r e t o.

 

( b) E v e r y ri g ht and r e m edy p r ov i ded he r e i n sh a l l b e cu m u l a ti v e w it h e v e r y o t her r i g ht and r e m ed y , w he t h e r con f e r r ed h e r e i n, a t l aw, o r i n eq u it y , a nd m ay be en f o r c ed conc u r r en t l y h e r ew i t h, and n o w a i v er by any Pa rt y of t h e pe r f o r m ance of a ny ob l i g a ti on by t he o t h er sh a l l b e con s t r ued a s a w a i v er of t he s a m e or any o t her d e f a u l t t hen, t h e r e t o f o r e, or t h e r e a f t er o cc u r r i ng or ex i s t i n g .

 

( c) N e it h er any f a i l u r e o r de l ay i n ex e r c i s i ng a ny ri g ht or re m e d y he r eu n der o r i n r e q u i r i ng s a ti s f a c t i on of any co n d i ti o n h e r e i n n o r any cou r se o f d e a li ng sh a l l con s t i t u t e a w a i v er of or p r e v ent any Pa r t y fr om en f o r c i ng any ri g ht or r e m edy or fr om r equ ir i ng s ati s f a c t i on of any con d i t i on. N o no ti c e t o o r de m and on a Pa r t y w a i v es or o t h e r w i se a f f e c t s any ob l i g a ti on of t h a t Pa r t y or i m pa i r s any ri g ht o f t he P a rt y g i v i ng su c h no ti ce or m a k i ng su c h de m and, i nc l u d i ng any ri g ht t o t a k e a n y ac ti on wi t ho u t no t i ce o r de m and not o t h e rw i se r eq u ir e d by t h i s A g r ee m en t . N o exe r c i se o f any ri g ht o r r e m edy w it h r e s p e ct t o a b r e ach of t h i s A g r ee m ent sh a l l p r e c l u de exe r c i se of any o t h er r i g ht or r e m ed y , as app r o p r i a t e t o m a k e t he a g g ri e v ed P a rt y w ho l e w it h r e s pect t o s u ch b r eac h , or s ub s eque n t ex e r c i s e of any ri g ht or r e m edy w it h r e s p e c t t o any o t h e r b r ea ch .

 

( d) N o t w i t hs t an d i ng an y t h i ng e l se co n t a i ned he r e i n, no P a rt y sh a l l s e e k , nor s h a l l a n y Pa rt y be l i a b l e f o r , co n s e q u en t i a l , p un i ti v e or exe m p l a r y da m a g e s , under any t o rt , co n t r a c t , e qu it y , or o t her l e g al t he o r y , w it h r e s p e ct t o any b r e a ch ( or a ll e g ed b r e ac h ) o f t h i s A g r ee m ent o r any p r ov i s i on h e r eof o r any m a tt e r o t he r w i se r e l a ti ng he r e t o or a r i s i ng i n con n ec t i on h e r e w it h.

 

Sec t i on 8 . 13 OZOP Sh a r eh o l d e r s A p po i n t m ent of At t o r ne y s i n Fac t .

 

( a) Each OZOP Sha r eh o l d er he r eby appo i n t s, a u t h o r i z e s , e m po w e r s, m a k e s , and de si g na t e s ea c h of t he C h i ef Exec u t i v e Of f i cer and C h i ef Fi n an c i a l O f f i c e r of OZOP ( e a ch, a n A gen t ) a s h i s , her o r it s a g ent and a t t o r ne y i n f a c t wi t h po w er of a t t o r ney ( wi t h f u l l po w e r o f s u bs t it u ti o n ) , t o b e exe r c i s ed by e it h er A g en t , ac t i ng s i n g l y or j o i n tl y , at any ti m e upon and a f t e r t h e ex e cu t i on and de l i v e r y of t h i s A g r ee m ent by su c h OZOP Sha re ho l d e r : ( i ) t o ne g o t i a t e, s i g n, da t e, an d / or de l i v er any and a l l o t h er a g r ee m en t s, ce r t i f i c a t e s , i n s tr u m en t s or o t h e r docu m en t s a s m a y be r eq u ir e d or n ec e s s a r y t o c o nsu m m a t e t he E x chan g e p u r su a nt t o t h e t e r m s of t h i s A g r ee m ent (t he “ A d d i t i on a l E x change D ocu m e n t s ”) f or and i n t h e na m e and on b eh a l f o f su c h OZOP Sha r e h o l d e r ; a n d ( i i ) t o c o nduct or p e rf o r m any and a l l o t her a c ti v i ti e s o r a c t i o ns w h i ch m ay be dee m ed nece s s a r y or de s i r ab l e by A g ent or as r e a s o n ab l y r equ e s t ed by NWKT t o con s u mm a t e t he Exchan g e i n ac c o r d ance w it h t he t e r m s he r eof, p r o v i ded, ho w e v e r , t h a t su c h po w er of a t t o r ney does not g r an t , n o r sh a l l i t b e d e e m ed t o g r a n t , t h e ri g ht t o c han g e a ny of t he t e r m s o f t he E xch a n g e.

 

( b) Each A dd i ti o nal E x chan g e D ocu m ent ne g o ti a t ed, s i g ned, da t ed, an d / or d e l i v e r ed by an A g ent as a g ent and a tt o r ney i n f act f o r su c h OZOP Sha r eh o l d er i n a cc o r da n ce wi t h t h e t er m s of t he po w er of a t t o r ney g r an t ed i n t h i s S ec t i on 8.13 s h a l l be l e g a ll y b i n d i ng upon and en f o r c ea b l e a g a i n st s u ch OZOP Sha r eh o l d e r i n a cco r d an c e w i t h i t s t e r m s, a nd each o t h er a c t i v it y or a c ti on t a k en by t he A g ent pu r s u ant t o t h e po w e r of a t to r ney g r an t ed i n t h i s Sec t i on 8.13 sh a l l b e l e g a l l y b i nd i ng upon and e n f o r cea b l e a g a i n s t s uc h OZOP Sh a r eh o l d e r .

 

( c) T he po w e r of a tt o r ney g r a n t ed i n t h i s S e c t i on 8 . 13 a n d t he a g ency c r e a t e d h e r eby m a y be r e v o k ed and t e r m i n a t ed as t o a OZOP Sh a r eh o l d e r a t any t i m e by a w ri t i ng s i g ned by su c h OZOP Sha r e h o l d er w h i c h e x pr e s sl y r e v o k es and t e r m i n a t es t h e po w e r o f a t t o r n ey and a g ency g r an t e d i n t h i s Se c t i on 8. 1 3 i n co m p l i ance w it h ap p l i ca b l e La w , p r o v i ded t h a t a ny ac t i ons t ak en p ri or t o s u ch r e v oca t i on sh a l l be una f f ec t ed by s u ch r e v oca t i on and a l l s u ch ac t i on sh a l l be a n d r e m a i n i n f u l l f o r c e and e f f e c t .

 

( d) Each A g ent a n d h i s or her e st a t e, he i r s, ben e f i c i a r i e s , su c c e s s o rs , a s s i g n s , a t t o r n ey s, and pe r son a l r ep r e s e n t a ti v es ( c o ll e c t i v e l y , t he A gent P a r t i e s ) a r e he r eby r e l e a s e d a nd f o r e ve r d i s ch a r g ed by each OZOP Sha r eho l der and h i s, h e r , o r i t s e s t a t e, h e i r s, be n e f i c i a r i e s , su c c e s s o r s , a s s i g n s , an d pe r s o nal r e p r e s en t a t i v e s , as app l i ca b l e, f r om any and a l l li a b i l i t y and fr om any a nd a l l c l a i m s or de m ands of a l l k i nds a r i s i n g out o f t he a c t s o r o m i s s i o ns o f su c h A g ent p u r s ua n t t o t he po w e r o f a t t o r ney g r an t ed i n t h i s Se c ti on 8. 1 3, ex c ept f or wi l l f ul m i s c ond u ct or g r o s s ne g li g ence. N o bo n d sh a l l be r e qu i r ed o f a n A g en t , a n d e a ch OZOP Sh a r eh o l d e r s h a l l i n de m n if y t h e A g ent Pa r t i es w it h r e s p e c t t o any and a l l da m a g e s , l os s e s, and ex p e n s e s i nc u r r ed o r s u f f e r ed by an A g ent i n h i s capa c it y as A g en t , o t h er t h a n f or su c h A g en t s w i l lf u l m i s c onduct or g r o s s n e g li g enc e .

 

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Sec t i on 8 . 14 A r m ’s Length B ar g ai n in g ; N o Pre s u m ption A g ain s t D ra f ter. T h i s Agreement h as b e en ne g o ti a t ed at a r m s - l en g t h by pa r t i es of equ a l b a r g a i n i ng s tr en g t h, ea c h r ep r e s e n t ed by coun s el or h a v i ng had b u t d ec l i n e d t he o ppo r t un it y t o be r e p r e s e n t ed by coun s e l a n d ha v i ng p a r t i c i p a t ed i n t he d r a f ti ng of t h i s A g r ee m en t . T h i s A g r e ement c r e a t es no fi d uc i a r y or o t her s pe c i a l r e l a t i ons h i p b e tw een t h e P a r t i e s , and no su c h r e l a t i ons h i p o t h e r w i s e ex i s t s. N o p r e s u m p ti on i n f a v or of o r a g a i n st a ny Pa r t y i n t he co n s t r u c ti o n or i n t e r p r e t a t i on o f t h i s A g r e e m ent or any p r o v i s i on h e r e of s h a l l be m ade b a s e d up on w h i ch Pe r son m i g ht ha v e d r a f t ed t h i s A g r ee m ent or su c h p r o v i s i on.

 

Sec t i on 8 . 15 H ead i n g s. T he hea d i n g s c o n t a i ned i n t h i s A g r e e m ent a r e i n t ended s o l e l y f or con v en i e nc e and s h a l l n o t a f f e c t t he ri g h t s o f t h e P a r t i e s .

 

Sec t i on 8 . 16 Exhi b it s and S che d u l e s. A ny m a tt e r , i n f o r m a ti on or i t em d i s c l os e d i n t he Sched u l es de l i v er ed u nd e r any sp e c i fi c r e p r e s en t a t i on, w a rr a n t y or co v ena n t or S ched u l e nu m ber h e r e of , sh a l l be dee m ed t o ha v e been d i s c l o s e d f o r a l l p u r po s es of t h i s A g r ee m ent i n r e spon s e t o e v e r y r ep r e s e n t a t i on, w a rr a n t y or co v enant i n t h i s A g r ee m ent w he r e i t s a pp l i c a t i on i s r e a son a b l y appa r ent on t h e f ace o f t he d i s c l os u r e, e v en i n t he ab s ence o f an ex p li c i t c r o s s r e f e r ence. T he i n c l u s i on of any m a tt e r , i n f o r m a ti on o r it em i n any Sched u l e t o t h i s A g r ee m ent sh a l l not be d ee m ed t o c o ns t it u t e an ad m i s s i on o f any li a b i l it y by NWKT t o an y t h ir d pa r t y or o t h e r w i s e i m p l y , t hat any su c h m a t t e r , i n f o r m a ti on or i t em i s m a t e ri a l or c r ea t es a m easu r e f o r m a t e r i a l i t y f or t he pu r pos e s of t h i s A g r ee m en t .

 

Sec t i on 8 . 17 N o A s si g n m ent or D e l e g a ti o n . N o Pa r t y m ay a s s i g n any ri g ht or d e l e g a t e any ob li g a t i on he r e u nd e r , i nc l ud i ng by m e r g e r , co n so l i d a t i on, o pe r a ti on of l aw, or o t h e r wi s e , w i t hout t he w r i t t en cons e nt of t he a l l o f t h e o t h er P a r ti es and any pu r p o r t ed a s s i g n m ent or de l e g a t i on wi t h o ut su c h c ons e nt s h a l l be v o i d, i n add i t i on t o c o ns ti t u ti ng a m a t e ri a l b r each o f t h i s A g r ee m en t . T h i s A g r ee m ent s h a l l be b i n d i ng on t he p e r m it t ed s u cc e s s o r s a n d a s s i g ns of t he P a r ti e s.

 

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Sec t i on 8 . 18 C o m m e r c i a ll y R easo n ab l e Ef f o rt s . Su b j e ct t o t he t e r m s and cond i t i ons h e r e i n p r o v i ded, each OZOP Pa r t y and NWKT sh a l l use t h e i r r e s p e c ti v e co m m e r c i a ll y r e a son a b l e e ff o r t s t o p e r f o r m or f u l f i l l a l l con d i t i o n s and o b li g a t i ons t o be pe r f o r m ed or f u l f i l l ed by i t und e r t h i s A g r ee m ent so t h a t t he tr a n s a c t i ons c on t e m p l a t ed he r eby sh a l l be consu m m a t ed as soon a s p r a c t i ca b l e , a nd t o t a k e, or ca u se t o be t a k en, a l l a c ti o n s a n d t o do, or c au s e t o be d one, a l l t h i n g s nece s s ar y , p r op e r or a dv i s a b l e und e r a p p l i c a b l e La w s and r e g u l a ti o n s t o co n su m m a t e and m a k e e ff e c ti v e t h i s A g r ee m ent and t he tr a ns a c ti o n s co n t e m p l a t e d he r e i n.

 

Sec t i on 8 . 19 Fur t h er A s s u r ances. In addition to the actions, obligations, and promises contained herein, each Party agrees, on the demand of any other Party, to execute and deliver any instrument, furnish any information or perform any other act reasonably necessary to carry out the provisions and intent of this Agreement without undue delay, so that the transaction contemplated herein may be fully executed and effectuated. Additionally, should any representation on the part of NWKT be untrue, misleading, or otherwise cause OZOP to assume a liability or increase in outstanding shares not disclosed herein, whether known or unknown by NWKT, NWKT shall do all that is necessary to resolve such liability and/or increase in outstanding shares not disclosed herein, including but not limited to, assuming the liability and/or purchasing the the aforementioned outstanding shares of NWKT for the sole purpose of transferring those shares to OZOP to be retired.

 

Sec t i on 8 . 20 Spec i f i c P e rf o r m ance. T h e Pa r t ie s a g r ee t h at i rr e pa r ab l e da m a g e w ou l d o ccur i n t h e e v e n t t h a t any of t he p r o v i s i ons of t h i s A g r ee m ent w e r e n o t pe r f o r m ed by t hem i n acco r d a nce wi t h t he t e r m s he r e o f or w e r e o t he r w i se b r eac h ed and t h a t ea c h Pa rt y he r e t o s h a l l be e n t i tl e d t o an i n j u nc t i on o r i n j u nc t i o n s, sp e c i fi c p e r f o r m ance and o t h e r eq u i t ab l e r e l i ef t o p r e v ent b r e ac h es of t he p r o v i s i o ns h e r e o f a n d t o en f o r c e s p e c i fi c a l l y t he t e r m s a nd p r o v i s i o ns h e r e o f , w it ho u t t he p r o o f of a c t u a l da m a g e s , i n add it i on t o any o t h e r r e m edy t o w h i ch t hey a r e e n t i t l ed at l aw or i n equ i t y . E a ch P a r t y a g r ees t o w a i v e any r eq u i r e m ent f or t he s e cu r it y or po s ti ng o f any bond i n con n ec t i on wi t h any su c h eq u i t ab l e r e m ed y , and a g r ees t h a t i t wil l not opp o se t he g r an t i ng of an i n j un c ti o n, sp e c i f i c pe r f o r m ance or o t her eq u it a b l e r e l i e f on t h e ba s i s t h a t ( a) t he o t h er P a rt y has an adequ a t e r e m edy at l aw, o r ( b ) an award of s pe c i f i c pe r f o r m ance i s n o t a n app r o p r i a t e r e m edy f or a ny r ea s on a t l aw or e qu i t y .

 

Sec t i on 8 . 21 C oun t e r p a rt s . Th i s A g r e e m ent m a y be e x ec u t ed i n m u lti p l e c o un t e r p a r t s, each of w h i c h sh a l l b e d e e m ed an o r i g i nal and a l l of w h i ch t a k en t o g e t her sh a l l be but a s i n g l e i n s tr u m en t . T h e e x ec u t i o n and d e li v e r y o f a f a c si m il e or o t h e r e l e c tr o n i c t r a n s m i s si on of a s i g na t u r e t o t h i s A g r ee m e n t sh a l l con s t i t u t e de l i v e r y of an ex e cu t ed or i g i nal and s h a l l be b i n d i ng upon t h e p e r son w h o se s i g na t u r e a ppe a r s on t he tr a n s m itt e d cop y .

 

Section 8.22 No Drafting Party . Each party has participated in negotiating and drafting this agreement such that if an ambiguity or a question of intent or interpretation arises, this agreement is to be construed as if the parties had drafted this document jointly. The Rule of Interpreting the Document against the Drafter is inapplicable to this agreement.

 

 

[ S i g n a t u r e s A p pear on F o l l o w i ng Pa g e ]

 

  24  

 

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written above.

 

 

OZOP Surgical, Inc.

 

 

By: /s/ Michael Chermak

Michael Chermak, Chief Executive Officer

 

 

Confirmed and agreed to this 13 day of April, 2018 by:

 

 

/s/ Denis Razvodovskij

Denis Razvodovskij

 

 

Newmarkt Corp.

 

 

By: /s/ Denis Razvodovskij

Denis Razvodovskij, President

 

 

  25  

 

EX H I B IT A

 

OZOP S hareho l der s OZOP S t o ck an d E xchan g e S hare s

 

 

OZOP Shareholder Name No. of OZOP Common Stock Held No. of NWKT Common Stock to be Issued
Eric Siu 10,854,987 10,854,987
Michael Chermak 5,359,223 5,359,223
RWO Medical Consulting LLC 5,000,000 5,000,000
Salman J. Chaudhry 2,685,790 2,685,790
Barry Hollander 1,000,000 1,000,000
Jonathan Spangler 100,000 100,000
TOTAL 25,000,000 25,000,000

 

  26  

 

EX H I B IT B

 

D e f i ned T e r m s

 

T he f o ll o w i ng t e r m s, a s us e d he r e i n, ha v e t he f o ll o w i n g m ean i n g s

 

( a) “ A c t i on m eans any l e g al ac t i on, s u it , c l a i m , i n v e sti g a t i on, he a ri ng o r p r o c ee d i ng , i nc l ud i ng a ny aud i t , c l a i m or a s s e s s m ent f or T a x es o r o t h e r w i s e .

 

( b) “ A ffi l i a t e m eans, w it h r es pect t o any Pe r s on, a ny o t h er P e r son d i r e c t l y or i nd i r e c tl y C on t r o l l i n g , C on tr o l l ed b y , or u n der c o m m on C on tr ol wi t h s u ch P e r so n .

 

( c) “ A utho r it y m eans any g o v e r n m en t a l , r e g u l a t o r y or a d m i n i s t r a t i v e bod y , a g ency or a u t ho r it y , any cou r t or j u d i c i a l a u t h o r i t y , any a r b i t r a t o r , o r any pu b l i c, p r i v a t e o r i ndu s tr y r e g u l a t o r y a u t h o r i t y , w he t h e r i n t e r n a t i on a l , n a ti o na l , F e de r a l , s t a t e , or l o c a l .

 

( d) “ B u s i n e ss D a y m eans a n y day t hat i s not a S a t u r day , Sunday or o t h er day on w h i c h b an k i ng i n s t i t u t i ons i n F l o ri d a a r e a u t ho r i z ed o r r e qu i r ed by l a w or ex e cu t i v e o r d er t o c l o s e.

 

( e) “ C ont r o l ” of a P e r s on m eans t he p os s e s s i on, d i r e c tl y or i nd i r e c t l y , of t he po w e r t o d i r e c t o r cau s e t he d ir e c t i on o f t h e m anage m ent and po l i c i es of s u ch Pe r son, w h e t h er t h r o u g h t he o w ne r sh i p o f v o ti ng s e cu r i t i e s , by con t r a c t , or o t h e r w i s e . C on t r o ll e d , “ C ont r o l li n g ” and u n d er c om m on C ont r ol w i th h a v e co r r e l a ti v e m ean i n g s. W it h o ut l i m iti ng t he f o r e g o i ng a Pe r son ( t h e “ C ont r o l l ed P e r s o n ) sh a l l be dee m ed C on tr o l l ed by ( a) any o t her P e r son (t h e “ 1 0 % O w n e r ) ( i ) o w n i ng bene f i c i a ll y , as m eant i n R u l e 1 3 d - 3 under t he Exc h an g e A c t , s ec u r i t i e s en t i tl i ng su c h Pe r son t o ca s t 1 0 % or m o r e of t h e v o t es f or e l ec t i on of d ir e c t o r s o r e q u i v a l e nt g o v e r n i ng au t h o r i t y of t he C on t r o l l ed P e r son or ( i i ) en ti tl e d t o b e a l l oc a t ed o r r ec e i v e 1 0 % o r m o r e of t h e p r o f it s, l os s e s , or d i s t r i bu t i o n s o f t he C o n tr o l l ed P e r s o n; ( b ) an o f f i c e r , d i r e c t o r , g ene r a l pa r t n e r , p a r t ner ( o t h e r t han a li m it e d pa r t n e r) , m ana g e r , or m e m ber ( o t h e r t han a m e m ber ha v i ng n o m ana g e m ent au t h o r i t y t h a t i s not a 1 0 % Ow ner ) of t he C o n t r o l l ed P e r so n ; o r ( c ) a spou s e, pa r en t , l i n ea l de s c e nda n t , s i b l i n g , aun t , unc l e , n i e c e, n ephe w , m o t her - i n - l aw, f a t h e r - i n - l aw, s i s t e r - i n - l aw, or b r o t h e r - i n - l aw of a n A f f i l i a t e of t he C o n t r o l l ed Pe r son o r a t r u s t f or t h e b en e f i t o f a n A f f i l i a t e of t he C on tr o l l ed P e r son or o f w h i ch a n A f f i l i a t e o f t he Co n t r o l l ed P e r son i s a t r u s t ee.

 

(f) “ E ncumb r anc e m eans a ny cha r g e, c l a i m , co m m u n it y p r op e rt y i n t e r e s t , p l e d g e, con d i t i o n , equ i t a b l e i n t e r e s t , li e n ( s t a t u t o r y or o t h e r) , o p t i o n , s e c u r i t y i n t e r e s t , m o rt g a g e, eas e m en t , enc r o ach m en t , r i g ht of w a y , ri g ht of f i r s t r e f us a l , or r e s t r i c t i on of a ny k i nd, i nc l ud i ng any r e st r i c t i on on us e , v o t i n g , t r an s f e r , r ec e i p t o f i nco m e or ex e r c i se o f any o t h e r a t t r i bu t e of o w n e r s h i p.

 

( g ) “ E n f or c eab il it y E x cep t i o n s m eans app l i c ab l e b ank r up t c y , i n s o l v enc y , m o r a t o r i um or o t h e r s i m il ar La w s a f f e c t i ng t he en f o r ce m ent o f c r e d it o r s’ ri g h t s g en e r a l l y and su b j e ct t o t he qua l i f i c a t i on t h at t he a v a i l ab i l i t y of eq u it a b l e r e m ed i es i s su b j e c t t o t h e d i s c r e t i on o f t h e co ur t be f o r e wh i ch any p r oce e d i n g t he r e f o r e m ay be b r ou g h t .

 

( h) “ ER IS A m eans t he E m p l o y ee R e t i r e m ent I nc o m e S ecu r it y A ct o f 1974, a s a m ended, and t h e r e g u l a t i o n s t h e r eund e r .

 

(i ) “ E x change A c t m eans t he Secu r i t i e s Exc h an g e Act o f 1934, a s a m ended.

 

( j ) “ L a w m eans a ny do m e st i c or f o r e i g n, f e de r a l , s t a t e, m un i c i p a l i t y or l oc a l l aw, s t a t u t e, o r d i na n ce, code, r u l e, or r e g u l a t i on.

 

( k ) “ L i en m eans a ny m o rt g age, l i en, p l e d g e, ch a r g e, s ec u r i t y i n t e r e st o r e ncu m b r an c e of any k i nd i n r e s p ect o f su c h a s s e t , a n d any cond i t i on a l s a l e or v o ti ng a g r ee m ent or p r ox y , i nc l u d i ng any a g r ee m ent t o g i v e any of t h e f o r e g o i n g .

 

(l ) “ Ma t e r i al A dv e r s e E ff e c t ” or Ma t er i al A dv e r s e C h ang e m eans a m a t e ri a l a nd ad v e r se chan g e or a m a t e r i a l and ad v e r se e f f ec t , i n d i v i du a ll y or i n t h e a gg r e g a t e, on t h e con d i ti on ( f i na n c i al o r o t h e r w i s e ) , n e t w o r t h, m ana g e m en t , ea r n i n g s, ca s h fl o w s, bus i n e s s, o p e r a t i ons or p r ope r t i es of a Pa rt y t a k en as a w h o l e, w h e t her or n o t a r i s i ng f r om tr a n s a c t i o n s i n t he o r d i n a r y co u r se of bu s i ne s s.(

 

m ) “ O r d e r m eans any dec r e e , o r d e r , j ud g m en t , w rit , award, i n j un c ti on, r u l e o r c on s e nt of o r by an Au t ho r it y .

 

(n) “ Perso n m eans an i nd i v i d ua l , c o r po r a t i on, p a r t ne r sh i p (i n c l u d i ng a g ene r al pa rt ne r s h i p, l i m it e d pa r t ne r sh i p or l i m it ed li a b i l i t y pa r t ne r sh i p ) , li m it e d li ab i l i t y co m pan y , a s so ci a t i o n, t r ust or o t h er en t it y or o r g an i z a t i on, i nc l ud i ng a g o v e r n m en t , do m e sti c o r f o r e i g n, or po li ti c al sub d i v i s i on t he r eo f , or an a g ency or i n s t r u m en t a l i t y t he r eo f .

 

( o) “ S EC m eans t he U n i t ed S t a t es S e cu r i t i e s a nd E xcha ng e C o m m i s si on. ( p) “ Secu r i t i es A c t m eans t he Secu r i t i e s Act of 1 9 33, a s a m ended.

 

( q) “ T ax R e t urn m eans any r e t u r n, i n f o r m a ti on r e t u r n, d ec l a r a ti o n, c l a i m f or r e f und or c r e d i t , r ep o r t or any s i m il ar s t a t e m en t , and any a m en d m ent t he r e t o, i n c l u d i ng any a tt ac h ed s c hed u l e a n d suppo rt i ng i n f o r m a ti on, w h e t h e r on a s e pa r a t e , co n so li da t e d , co m b i ned, un i t a r y o r o t h e r b a s i s , t ha t i s f i l ed o r r eq u i r ed t o be f i l ed w i t h a ny Tax i ng A u t h o r i t y i n con n ec t i on wi t h t he d e t e r m i n a ti o n , a s s e s s m en t , c o l l ec t i on or pa y m ent of a T a x or t he ad m i n i s tr a t i on of any Law r e l a t i ng t o any T ax.

 

(r ) “ T a x ( e s) m eans any f e de r a l , s t a t e, l o c al or f o re i g n t ax, ch a r g e, f e e , l e v y, cu s t o m , du t y , de f i c i enc y , or o t h er a s s e s s m ent of any k i nd o r n a t u r e i m pos e d by any T ax i ng A u t ho r i t y (i n c l u d i ng any i nco m e ( net or g r os s ) , g r oss r e c e i p t s, p r o f i t s, w i n d f a l l p r o f i t , s a l e s, us e , g oods and s er v i c e s , ad v a l o r e m , fr anc h i s e , li c en se , w it hh o l d i n g , e m p l oy m e n t , so c i al s ec u r i t y , w o r k e r s co m pen s a ti o n , une m p l oy m ent co m pen s a t i on, e m p l oy m en t , pa y r o l l , t r an s f e r , e x c i s e, i m po rt , r e a l p r o p e r t y , pe r s o nal p r o p e r t y , i n t an g i b l e p r op e rt y , occu p anc y , r eco r d i n g , m i n i m u m , a lt e r n a t i v e m i n i m u m , en v ir on m en t a l or e s t i m a t ed t ax ) , i n c l u d i ng any li a b i l it y t he r e f or a s a tr a ns f e r e e ( i nc l u d i ng under Sec t i on 6 901 o f t he C o d e or s i m il ar p r o v i s i on of a pp l i ca b l e L aw) o r s u cc e s s o r , a s a r e s u l t of T r ea s u r y R e g u l a t i on Se c t i o n 1.150 2 - 6 or s i m il a r p r o v i s i on of ap p l i ca b l e L aw or a s a r e s u l t o f any T ax s h a r i n g , i nde m n i f i c a t i o n or s i m il a r a g r e e m en t , t o g e t h e r wi t h any i n t e r e s t , p en a lt y , a d d i ti o n s t o t ax o r ad d i t i o n al a m ount i m pos e d w it h r e s pe c t t he r e t o.

 

( s) “ T a x i ng A utho r it y m ea n s t he I n t e r nal R e v enue S e r v i c e and any o t h e r A u t h o r i t y r e spon s i b l e f o r t he c o l l e c ti o n, a s s e s s m ent o r i m pos i t i on o f any T ax o r t he ad m i n i s t r a t i on o f any L a w r e l a t i ng t o any T a x .

 

(t) “ OZOP M a t e r i a l C on t ract m eans any co n tr a c t , ag r ee m en t , fr a nc h i s e , l i ce n se a g r ee m en t , de b t i n s tr u m ent or o t h er c o m m it m ent t o w h i ch OZOP i s a pa r t y or by w h i ch i t or a ny of it s a s s e t s, p r odu c t s, t e chn o l o gy , or p r ope r ti e s a r e bo u nd and w h i ch ( i ) wi l l r e m a i n i n e f f e ct f or m o r e t h a n s i x ( 6) m on t hs a f t er t he d a t e o f t h i s A g r ee m ent o r ( i i ) i nv o l v es a gg r e g a t e o b l i g a ti o ns o f a t l e a st t e n t hou s and d o l l a r s ( $ 1 0,00 0 ) .

 

( u) “ NWKT Ma t e r i a l C o n t r a ct m eans any con t r ac t , a g r ee m en t , f r anc h i s e , l i ce n se a g r ee m en t , de b t i n s tr u m ent or o t h e r co m m it m ent t o w h i ch NWKT i s a pa rt y or by w h i ch i t or a n y of it s a s s e t s, p r odu c t s, t e chn o l o gy , or p r ope r ti e s a r e bo u nd and w h i ch ( i ) wi l l r e m a i n i n e f f e ct f or m o r e t h a n s i x ( 6) m on t hs a f t er t he d a t e o f t h i s A g r ee m ent o r ( i i ) i nv o l v es a gg r e g a t e ob l i g a ti o ns o f a t l e a st t e n t hou s and d o l l a r s ( $ 1 0,00 0 )

 

 

27

Exhibit 10.1

 

 

REDEMPTION AGREEMENT

 

THIS REDEMPTION AGREEMENT (the "Agreement") is made and entered into effective April 13, 2018, by and among Newmarkt Corp., a Nevada corporation ("NWKT"), and Denis Razvodovskij, an individual (the "Shareholder").

 

RECITALS:

 

A. The Shareholder owns 2,000,000 shares of common stock of NWKT (the "NWKT Shares").

 

B. NWKT desires to redeem, and Shareholder desires to sell, all of the Shareholder’s NWKT Shares for an amount equal to three hundred fifty thousand dollars ($350,000) (a “Treasury Purchase Transaction”).

 

C. The Shareholder desires to consummate the Treasury Purchase Transaction upon the terms and conditions set forth herein.

 

E. It is the intention of the parties hereto that: (i) NWKT shall acquire the NWKT Shares solely for the consideration set forth below (the "Redemption"); and (ii) the Exchange shall qualify as a transaction exempt from registration or qualification under the Securities Act of 1933, as amended (the "Securities Act").

 

  NOW, THEREFORE , in consideration of the mutual covenants, agreements, representations and warranties contained in this Agreement, the parties hereto agree as follows:

 

 

SECTION 1. REDEMPTION OF SHARES AND OTHER TRANSACTIONS

 

1.1 Redemption of Shares . On the Closing Date (as hereinafter defined), the Shareholder shall tender the NWKT Shares to NWKT and NWKT shall pay a purchase price equal to $0.175 per NWKT Share so tendered for a total purchase price of $350,000.00 (“Purchase Price”). Shareholder has directed, and NWKT agrees to such direction on the terms and conditions below, that NWKT shall pay the Purchase Price to Vavilon Invest, LP, a limited partnership organized under the laws of Scotland (“Vavilon”).

 

1.2 Delivery of NWKT Shares . On the Closing Date, the Shareholder will deliver to NWKT the certificates representing the NWKT Shares, duly endorsed for tra nsfer (or with executed stock powers) so as to convey good and marketable title to the NWKT Shares to NWKT as described in that Share Exchange Agreement

by and among NWKT, Shareholder, OZOP Surgical, Inc., and the shareholders of OZOP Surgical, Inc.

 

 

SECTION 2. PAYMENT OF PURCHASE PRICE TO VAVILON INVEST, LP AND INDEMNIFICATION OF NWKT

 

2.1 Payment to Vavilon . Shareholder understands and agrees that his right to receive the Purchase Price has been assigned to Vavilon, pursuant to a written instruction by Shareholder, for disbursement to Shareholder according to terms understood and agreed to by Shareholder and Vavilon thereafter. NWKT agrees to transfer the Purchase Price to Vavilon and Shareholder agrees that such payment shall satisfy any and all payment obligation NWKT may have to Shareholder to execute the Treasury Purchase Transaction.

 

2.2 Transfer of NWKT Shares. Shareholder agrees that upon the transfer of the Purchase Price to Vavilon, Shareholder shall immediately deliver the NWKT Shares owned by him, duly endorsed for transfer so as to convey good and marketable title to the NWKT Shares to NWKT as described in that Share Exchange Agreement by and among NWKT, Shareholder, OZOP Surgical, Inc., and the shareholders of OZOP Surgical, Inc.

 

2.3 Release of NWKT Following Payment of Purchase Price . Shareholder agrees that upon Vavilon’s receipt of the Purchase Price, Shareholder hereby forever releases, discharges, and forever extinguishes any right to payment for the NWKT Shares. Shareholder agrees that NWKT, nor its directors, officers, agents, and Shareholders (“Releasees”), shall have no obligation to Shareholder in ensuring that Vavilon pays any of the Purchase Price to Shareholder, and Shareholder hereby agrees to accept all risk of nonpayment by Vavilon following NWKT delivering the Purchase Price to Vavilon.

 

2.4 Indemnification and Hold Harmless . Shareholder shall fully indemnify, hold harmless and defend (collectively “indemnify” and “indemnification”) NWKT and its directors, officers, employees, agents, stockholders and Affiliates (collectively, “Indemnified Parties”) from and against all claims, demands, actions, suits, damages, liabilities, losses, settlements, judgments, costs and expenses (including but not limited to reasonable attorney’s fees and costs), whether or not involving a third party claim, which arise out of or relate to (1) any breach of any representation or warranty of Shareholder contained in this Agreement, (2) any failure of Vavilon to pay any portion of the Purchase Price to Shareholder, and/or (3) any breach or violation of any covenant or other obligation or duty of Shareholder under this Agreement or under applicable law.

 

2.5 Covenant Not to Sue . In addition to the release, indemnification, and NWKT shares transferred as valuable consideration for the Purchase Price, Shareholder hereby covenants and agrees never, individually or with any other person or in any way, voluntarily to commence, aid in any way, prosecute or cause to be commenced or prosecuted against NWKT or Releasees, or any of them, any action or proceeding based upon any claim which is released by this Agreement.

 

 

SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER

 

 The Shareholder represents and warrants to NWKT as follows:

 

3.1 Information on Shareholder . Shareholder is an "accredited investor," as such term is defined in Regulation D promulgated under the Securities Act, and is experienced in investments and business matters , has made investments of a speculative nature and has such knowledge and experience in financial, tax and other business matters as to enable him to evaluate the merits and risks of, and to make an informed investment decision with respect to, this Agreement.

 

3.2 Ownership of NWKT Shares and Authorization of Agreement . Shareholder is the sole record and beneficial owner of his/her/its NWKT Shares, all of which shares are owned free and clear of all rights, claims, liens and encumbrances, and have not been sold, pledged, assigned or otherwise transferred except pursuant to this Agreement. There are no outstanding subscriptions, rights, options, warrants or other agreements obligating Shareholder to sell or transfer to any third person any of the NWKT Shares owned by Shareholder, or any interest therein. Shareholder has the power to enter into this Agreement and to carry out his, her or its obligations hereunder. This Agreement has been duly executed by Shareholder and constitutes the valid and binding obligation of Shareholder, enforceable against Shareholder in accordance with its terms.

 

3.3     Review of Excel 1934 Exchange Act Filings; Access to Information . Shareholder represents and warrants that it has (i) reviewed the reports filed by NWKT under the Securities Exchange Act of 1934 (hereinafter defined as the “SEC Reports”) on the SEC EDGAR system; (ii) received such information and other documents as has been requested by Shareholder regarding NWKT; (iii) carefully reviewed and understands all of such information; and (iv) made any decision to execute and become a party to this Agreement based solely upon such Shareholder’s review of such information.

 

 

SECTION 4. COVENANTS

 

4.1. Examinations and Investigations . Prior to the Closing, the parties acknowledge that they have been entitled, through their employees and representatives, to make such investigation and verification of the assets, properties, business and operations, books, records and financial condition of the other, including communications with suppliers, vendors and customers, as they each may reasonably require.

 

4.2. Expenses . Each party hereto agrees to pay its own costs and expenses incurred in negotiating this Agreement and consummating the transactions described herein.

 

4.3. Further Assurances . The parties shall execute such documents and other papers and take such further action as may be reasonably required or desirable to carry out the provisions hereof and the transactions contemplated hereby. Each such party shall use its best efforts to fulfill or obtain in the fulfillment of the conditions to the Closing, including, without limitation, the execution and delivery of any documents or other papers, the execution and delivery of which are necessary or appropriate to the Closing.

 

4.4 Stock Certificates and Consideration . At the Closing, the Shareholder shall have delivered the certificates representing the NWKT Shares duly endorsed (or with executed stock powers) so as to make NWKT the sole owner thereof.

 

 

SECTION 5. THE CLOSING

 

 The closing (the "Closing") shall take place at such other time and place as is mutually agreed upon by NWKT and the Shareholder (the “Closing Date”). At the Closing, the parties shall provide each other with such documents as may be necessary or appropriate and customary in transactions of this sort in order to consummate the transactions contemplated hereby, including evidence of due authorization of the Agreement and the transactions contemplated hereby.

 

 

SECTION 6. SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER

 

 NWKT shall have the right to rely fully upon the representations, warranties, covenants and agreements of the Shareholder contained in this Agreement or in any document delivered to NWKT or any of its representatives, in connection with the transactions contemplated by this Agreement. All such representations, warranties, covenants and agreements shall survive the execution and delivery hereof and the Closing hereunder for 12 months following the Closing.

 

 

SECTION 7. MISCELLANEOUS

 

7.1 Waivers . The waiver of a breach of this Agreement or the failure of any party hereto to exercise any right under this Agreement shall in no event constitute a waiver as to any future breach whether similar or dissimilar in nature or as to the exercise of any further right under this Agreement.

 

7.2 Amendment . This Agreement may be amended or modified only by an instrument of equal formality signed by the parties or the duly authorized representatives of the respective parties.

 

7.3 Assignment . This Agreement is not assignable except by operation of law.  

 

7.4 Notices .  Until otherwise specified in writing, the mailing addresses of both parties of this Agreement shall be as follows:

 

To: 

NWKT Corp.

500 La Terraza Blvd, Ste. 150

Escondido, CA 92025

Attention: Michael Chermak, CEO

 

With a copy to:

 

Anderson Hayes, P.C.

P.O. Box 752

Rancho Santa Fe, CA 92067

Attn: Ryan Anderson, Esq.

 

To:

Denis Razvodovskij

1408, 5348 Vegas Drive

Las Vegas, NV 89108

 

Any notice or statement given under this Agreement shall be deemed to have been given if sent by registered mail addressed to the other party at the address indicated above or at such other address as may be furnished in writing to the addressor.

 

7.5 Governing Law; Venue . This Agreement shall be governed and construed in accordance with the laws of the State of California, without regard to the conflicts of law provisions thereof. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the County of San Diego, State of California, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. If any provision of this agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this agreement in that jurisdiction or the validity or enforceability of any provision of this agreement in any other jurisdiction. EACH PARTY HERETO IRREVOCABLY WAIVES ANY RIGHT TO TRIAL BY JURY.

 

7.6 Publicity . No publicity release or announcement concerning this Agreement or the transactions contemplated hereby shall be issued by either party hereto at any time from the signing hereof without advance approval in writing of the form and substance thereof by the other party.

 

7.7 Entire Agreement . This Agreement and the collateral agreements executed in connection with the consummation of the transactions contemplated herein contain the entire agreement among the parties with respect to the Exchange and related transactions, and supersede all prior agreements, written or oral, with respect thereto.

 

7.8 Headings . The headings in this Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.

 

7.9 Severability of Provisions . The invalidity or unenforceability of any term, phrase, clause, paragraph, restriction, covenant, agreement or other provision of this Agreement shall in no way affect the validity or enforcement of any other provision or any part thereof.

 

7.10 Counterparts . This Agreement may be executed in any number of counterparts, each of which, when so executed, shall constitute an original copy hereof, but all of which together shall consider but one and the same document.

 

7.11 No Drafting Party . Each party has participated in negotiating and drafting this agreement such that if an ambiguity or a question of intent or interpretation arises, this agreement is to be construed as if the parties had drafted this document jointly. The Rule of Interpreting the Document against the Drafter is inapplicable to this agreement.

 

7.12 Attorneys’ Fees. In the event that any Party institutes any action or suit to enforce this Agreement or to secure relief from any default hereunder or breach hereof, the prevailing Party shall be reimbursed by the losing Party for all costs, including reasonable attorneys’ fees, incurred in connection therewith and in enforcing or collecting any judgment rendered therein.

 

IN WITNESS WHEREOF , the parties have executed this Agreement on the date first above written.

 

NEWMARKT CORP.

 

By:  /s/ Michael Chermak                               Date: April 13, 2018

Name: Michael Chermak

Title: CEO

 

SHAREHOLDER:

 

By:  /s/ Denis Razvodovskij                           Date: April 13, 2018

Name: Denis Razvodovskij

Exhibit 10.2

 

 

SECURITIES PURCHASE AGREEMENT

 

This SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of APRIL 13TH, 2018 , by and between NEWMARKT CORP. , a NEVADA Corporation , with headquarters located 500 La Terraza Blvd., Suite 150, Escondido, CA 92025 (the “Company”), and CAREBOURN CAPITAL, L.P. , a Delaware limited partnership (the “Buyer”).

 

WHEREAS :

 

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

 

B. Buyer desires to purchase and the Company desires to issue and sell, upon the terms and conditions set forth in this Agreement a 12% convertible note of the Company, in the form attached hereto as Exhibit A , in the aggregate principal amount of US$442,175.00 (together with any note(s) issued in replacement thereof or as a dividend thereon or otherwise with respect thereto in accordance with the terms thereof, the “Note”), that may be convertible into shares of common stock, US$0.001 par value per share, of the Company (the “Common Stock”), upon the terms and subject to the limitations and conditions set forth in such Note. This Agreement, the Note, the Securities Purchase Agreement, Officer’s Certificate, Board Resolution, Disbursement Memorandum, and such other agreements entered into between the Company and Buyer in connection with the sale of the Note are collectively referred to hereinafter as the “Transaction Documents”.

 

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

 

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

 

1. PURCHASE AND SALE OF NOTE .

 

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

 

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

 

c. Closing Date . Subject to the satisfaction (or written waiver) of the conditions thereto set forth in Sections 6 and Section 7 below, the date and time of the issuance and sale of the Note pursuant to this Agreement (the “Closing Date”) shall be 4:30 P.M., Eastern Standard Time on or about APRIL 13 TH , 2018 , or such other mutually agreed upon time. The closing of the transactions contemplated by this Agreement (the “Closing”) shall occur on the Closing Date at such location as may be agreed to by the parties.

 

2. REPRESENTATIONS AND WARRANTIES OF THE BUYER . The Buyer represents and warrants to the Company that:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY . The Company represents and warrants to the Buyer that:

 

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

 

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

 

c. Capitalization . As of the date hereof, the authorized capital stock of the Company consists of: (i) 75,000,000 shares of Common Stock, US$0.001 par value per share, of which 25,797,500 shares are issued and outstanding; and (ii)-0- AUTHORIZED PREFERRED shares of preferred stock, US$0.001 par value per share, of which -0- PREFERRED OUTSTANDING shares are issued and outstanding; Except as disclosed in the SEC Documents, no shares are reserved for issuance pursuant to the Company’s stock option plans, no shares are reserved for issuance pursuant to securities (other than the Note) exercisable for, or convertible into or exchangeable for shares of Common Stock and 4,100,000 shares are reserved for issuance upon conversion of the Note. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and non-assessable. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in the SEC Documents, as of the effective date of this Agreement, (i) there are no outstanding options, warrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Note or the Conversion Shares. The Company has filed in its SEC Documents true and correct copies of the Company’s Certificate of Incorporation as in effect on the date hereof (“Certificate of Incorporation”), the Company’s By-laws, as in effect on the date hereof (the “By-laws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto. The Company shall provide the Buyer with a written update of this representation signed by the Company’s Chief Executive on behalf of the Company as of the Closing Date.

 

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

 

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

 

f. No Conflicts . The execution, delivery and performance of this Agreement, the Note by the Company and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance and reservation for issuance of the Conversion Shares) will not (i) conflict with or result in a violation of any provision of the Certificate of Incorporation or By-laws, or (ii) violate or conflict with, or result in a breach of any provision of, or constitute a default (or an event which with notice or lapse of time or both could become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture, patent, patent license or instrument to which the Company or any of its Subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations and regulations of any self-regulatory organizations to which the Company or its securities are subject) applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected (except for such conflicts, defaults, terminations, amendments, accelerations, cancellations and violations as would not, individually or in the aggregate, have a Material Adverse Effect). Neither the Company nor any of its Subsidiaries is in violation of its Certificate of Incorporation, By-laws or other organizational documents and neither the Company nor any of its Subsidiaries is in default (and no event has occurred which with notice or lapse of time or both could put the Company or any of its Subsidiaries in default) under, and neither the Company nor any of its Subsidiaries has taken any action or failed to take any action that would give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any of its Subsidiaries is a party or by which any property or assets of the Company or any of its Subsidiaries is bound or affected, except for possible defaults as would not, individually or in the aggregate, have a Material Adverse Effect. The businesses of the Company and its Subsidiaries, if any, are not being conducted, and shall not be conducted so long as the Buyer owns any of the Securities, in violation of any law, ordinance or regulation of any governmental entity. Except as specifically contemplated by this Agreement and as required under the 1933 Act and any applicable state securities laws, the Company is not required to obtain any consent, authorization or order of, or make any filing or registration with, any court, governmental agency, regulatory agency, self-regulatory organization or stock market or any third party in order for it to execute, deliver or perform any of its obligations under this Agreement, the Note in accordance with the terms hereof or thereof or to issue and sell the Note in accordance with the terms hereof and to issue the Conversion Shares upon conversion of the Note. All consents, authorizations, orders, filings and registrations which the Company is required to obtain pursuant to the preceding sentence have been obtained or effected on or prior to the date hereof. The Company is not in violation of the listing requirements of the OTC Markets Group Inc. (the “OTC Markets”) or any similar quotation system, and does not reasonably anticipate that the Common Stock will be delisted by the OTC Markets or any similar quotation system, in the foreseeable future. The Company and its Subsidiaries are unaware of any facts or circumstances which might give rise to any of the foregoing.

 

g. SEC Documents; Financial Statements . The Company has timely filed all reports, schedules, forms, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “1934 Act”) (all of the foregoing filed prior to the date hereof and all exhibits included therein and financial statements and schedules thereto and documents (other than exhibits to such documents) incorporated by reference therein, being hereinafter referred to herein as the “SEC Documents”). The Company has delivered to the Buyer true and complete copies of the SEC Documents or they have been publicly available, except for such exhibits and incorporated documents. As of their respective dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. None of the statements made in any such SEC Documents is, or has been, required to be amended or updated under applicable law (except for such statements as have been amended or updated in subsequent filings prior the date hereof). As of their respective dates, the financial statements of the Company included in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto. Such financial statements have been prepared in accordance with United States generally accepted accounting principles, consistently applied, during the periods involved and fairly present in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). Except as set forth in the financial statements of the Company included in the SEC Documents, the Company has no liabilities, contingent or otherwise, other than (i) liabilities incurred in the ordinary course of business subsequent to November 14, 2012, and (ii) obligations under contracts and commitments incurred in the ordinary course of business and not required under generally accepted accounting principles to be reflected in such financial statements, which, individually or in the aggregate, are not material to the financial condition or operating results of the Company. The Company is subject to the reporting requirements of the 1934 Act. For the avoidance of doubt, filing of the documents required in this Section 3(g) via the SEC’s Electronic Data Gathering, Analysis, and Retrieval system (“EDGAR”) shall satisfy all delivery requirements of this Section 3(g).

 

h. Absence of Certain Changes . Since January 31 st , 2018 , there has been no material adverse change and no material adverse development in the assets, liabilities, business, properties, operations, financial condition, results of operations, prospects or 1934 Act reporting status of the Company or any of its Subsidiaries.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

q. No Brokers . The Company has taken no action which would give rise to any claim by any person for brokerage commissions, transaction fees or similar payments relating to this Agreement or the transactions contemplated hereby, with the exception of the fees identified in the Placement Agent Agreement entered into by the Company with Moody Capital Solutions, Inc.

 

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

 

s. Environmental Matters .

 

(i) There are, to the Company’s knowledge, with respect to the Company or any of its Subsidiaries or any predecessor of the Company, no past or present violations of Environmental Laws (as defined below), releases of any material into the environment, actions, activities, circumstances, conditions, events, incidents, or contractual obligations which may give rise to any common law environmental liability or any liability under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 or similar federal, state, local or foreign laws and neither the Company nor any of its Subsidiaries has received any notice with respect to any of the foregoing, nor is any action pending or, to the Company’s knowledge, threatened in connection with any of the foregoing. The term “Environmental Laws” means all federal, state, local or foreign laws relating to pollution or protection of human health or the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata), including, without limitation, laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants contaminants, or toxic or hazardous substances or wastes (collectively, “Hazardous Materials”) into the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as well as all authorizations, codes, decrees, demands or demand letters, injunctions, judgments, licenses, notices or notice letters, orders, permits, plans or regulations issued, entered, promulgated or approved thereunder.

 

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

 

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

 

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

 

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

 

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

 

w. Solvency . The Company (after giving effect to the transactions contemplated by this Agreement) is solvent ( i.e. , its assets have a fair market value in excess of the amount required to pay its probable liabilities on its existing debts as they become absolute and matured) and currently the Company has no information that would lead it to reasonably conclude that the Company would not, after giving effect to the transaction contemplated by this Agreement, have the ability to, nor does it intend to take any action that would impair its ability to, pay its debts from time to time incurred in connection therewith as such debts mature. The Company did not receive a qualified opinion from its auditors with respect to its most recent fiscal year end and, after giving effect to the transactions contemplated by this Agreement, does not anticipate or know of any basis upon which its auditors might issue a qualified opinion in respect of its current fiscal year. For the avoidance of doubt any disclosure of the Borrower’s ability to continue as a “going concern” shall not, by itself, be a violation of this Section 3(w).

 

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

 

y. Breach of Representations and Warranties by the Company . If the Company breaches any of the representations or warranties set forth in this Section 3 and in addition to any other remedies available to the Buyer pursuant to this Agreement, it will be considered an Event of Default as that term is defined in the Note.

 

4. COVENANTS .

 

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

 

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

 

c. Use of Proceeds . The Company shall use the proceeds from the sale of the Note for working capital and other general corporate purposes and shall not, directly or indirectly, use such proceeds for any loan to or investment in any other corporation, partnership, enterprise or other person (except in connection with its currently existing direct or indirect Subsidiaries or pending merging partner(s)).

 

d. Right of First Offer . For amounts less than the current Principal Balance owed to Buyer by the Company, the Company shall have first delivered to the Buyer, within the earlier of i) at least seventy two (72) hours following the Company’s decision to initiate a Future Offering or ii) within seventy two (72) hours of the Company’s receipt of such Future Offering (as defined herein), written notice describing the proposed Future Offering, including the terms and conditions thereof, and providing the Buyer an option during the seventy two (72) hour period following delivery of such notice to purchase the securities being offered in the Future Offering on the same terms as contemplated by such Future Offering (the limitations referred to in this sentence and the preceding sentence are collectively referred to as the “Right of First Offer”) (and subject to the exceptions described below), the Company will not conduct any bridge debt financing (including debt with an equity component) (“Future Offerings”) during the period beginning on the Closing Date and ending twelve (12) months following the Closing Date. In the event the terms and conditions of a proposed Future Offering are amended in any respect after delivery of the notice to the Buyer concerning the proposed Future Offering, the Company shall deliver a new notice to the Buyer describing the amended terms and conditions of the proposed Future Offering and the Buyer thereafter shall have an option during the seventy two (72) hour period following delivery of such new notice to purchase its pro rata share of the securities being offered on the same terms as contemplated by such proposed Future Offering, as amended. The foregoing sentence shall apply to successive amendments to the terms and conditions of any proposed Future Offering. The Right of First Offer shall not apply to any transaction involving (i) issuances of securities in a firm commitment underwritten public offering (excluding a continuous offering pursuant to Rule 415 under the 1933 Act), (ii) issuances to employees, officers, directors, contractors, consultants or other advisors approved by the Board, (iii) issuances to strategic partners or other parties in connection with a commercial relationship, or providing the Company with equipment leases, real property leases or similar transactions approved by the Board (iv) issuances of securities as consideration for a merger, consolidation or purchase of assets, or in connection with any strategic partnership or joint venture (the primary purpose of which is not to raise equity capital), or in connection with the disposition or acquisition of a business, product or license by the Company. The Right of First Offer also shall not apply to the issuance of securities upon exercise or conversion of the Company’s options, warrants or other convertible securities outstanding as of the date hereof or to the grant of additional options or warrants, or the issuance of additional securities, under any Company stock option or restricted stock plan approved by the shareholders of the Company.

 

e. Expenses . At the Closing, the Company shall reimburse Buyer in an amount not to exceed $25,000.00 for expenses incurred by them in connection with the negotiation, preparation, execution, delivery and performance of this Agreement and the other agreements to be executed in connection herewith (“Documents”), including, without limitation, reasonable attorneys’ and consultants’ fees and expenses, transfer agent fees, fees for stock quotation services, fees relating to any amendments or modifications of the Documents or any consents or waivers of provisions in the Documents, fees for the preparation of opinions of counsel, escrow fees, and costs of restructuring the transactions contemplated by the Documents. The Company’s obligation to reimburse Buyer’s expenses with respect to this transaction shall be limited to the above identified $25,000.00 , which such amount shall be withheld from the proceeds paid to the Company upon the closing of this transaction.

 

f. Financial Information . The Company agrees to send or make available the following reports to the Buyer until the Buyer transfers, assigns, or sells all of the Securities: (i) within ten (10) days after the filing with the SEC, a copy of its Annual Report on Form 10-K its Quarterly Reports on Form 10-Q and any Current Reports on Form 8-K; (ii) within one (1) day after release, copies of all press releases issued by the Company or any of its Subsidiaries; and (iii) contemporaneously with the making available or giving to the shareholders of the Company, copies of any notices or other information the Company makes available or gives to such shareholders. For the avoidance of doubt, filing the documents required in (i) above via EDGAR or releasing any documents set forth in (ii) above via a recognized wire service shall satisfy the delivery requirements of this Section 4(f).

 

g. Listing . The Company shall promptly secure the listing of the Conversion Shares upon each national securities exchange or automated quotation system, if any, upon which shares of Common Stock are then listed (subject to official notice of issuance) and, so long as the Buyer owns any of the Securities, shall maintain, so long as any other shares of Common Stock shall be so listed, such listing of all Conversion Shares from time to time issuable upon conversion of the Note. The Company will obtain and, so long as the Buyer owns any of the Securities, maintain the listing and trading of its Common Stock on the OTC Markets or any equivalent replacement exchange, the Nasdaq National Market (“Nasdaq”), the Nasdaq SmallCap Market (“Nasdaq SmallCap”), the New York Stock Exchange (“NYSE”), or the NYSE MKT and will comply in all respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the Financial Industry Regulatory Authority (“FINRA”) and such exchanges, as applicable. The Company shall promptly provide to the Buyer copies of any material notices it receives from the OTC Markets and any other exchanges or quotation systems on which the Common Stock is then listed regarding the continued eligibility of the Common Stock for listing on such exchanges and quotation systems.

 

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

 

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

 

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

 

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

l. Breach of Covenants. If the Company breaches any of the covenants set forth in this Section 4, and in addition to any other remedies available to the Buyer pursuant to this Agreement, it will be considered an event of default under Section 3.3 of the Note.

 

5. Transfer Agent Instructions . Prior to registration of the Conversion Shares under the 1933 Act or the date on which the Conversion Shares may be sold pursuant to Rule 144 without any restriction as to the number of Securities as of a particular date that can then be immediately sold, all such certificates shall bear the restrictive legend specified in Section 2(g) of this Agreement.  The Company warrants that: (i) no stop transfer instructions to give effect to Section 2(f) hereof (in the case of the Conversion Shares, prior to registration of the Conversion Shares under the 1933 Act or the date on which the Conversion Shares may be sold pursuant to Rule 144 without any restriction as to the number of Securities as of a particular date that can then be immediately sold), will be given by the Company to its transfer agent and that the Securities shall otherwise be freely transferable on the books and records of the Company as and to the extent provided in this Agreement and the Note; (ii) it will not direct its transfer agent not to transfer or delay, impair, and/or hinder its transfer agent in transferring (or issuing) (electronically or in certificated form) any certificate for Conversion Shares to be issued to the Buyer upon conversion of or otherwise pursuant to the Note as and when required by the Note and this Agreement; and (iii) it will not fail to remove (or directs its transfer agent not to remove or impairs, delays, and/or hinders its transfer agent from removing) any restrictive legend (or to withdraw any stop transfer instructions in respect thereof) on any certificate for any Conversion Shares issued to the Buyer upon conversion of or otherwise pursuant to the Note as and when required by the Note and this Agreement.  Nothing in this Section shall affect in any way the Buyer’s obligations and agreement set forth in Section 2(g) hereof to comply with all applicable prospectus delivery requirements, if any, upon re-sale of the Securities.  If the Buyer provides the Company, at the cost of the Buyer, with (i) an opinion of counsel in form, substance and scope customary for opinions in comparable transactions, to the effect that a public sale or transfer of such Securities may be made without registration under the 1933 Act and such sale or transfer is effected or (ii) the Buyer provides reasonable assurances that the Securities can be sold pursuant to Rule 144, the Company shall permit the transfer, and, in the case of the Conversion Shares, promptly instruct its transfer agent to issue one or more certificates, free from restrictive legend, in such name and in such denominations as specified by the Buyer.  The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Buyer, by vitiating the intent and purpose of the transactions contemplated hereby.  Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Section may be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Section, that the Buyer shall be entitled, in addition to all other available remedies, to an injunction restraining any breach and requiring immediate transfer, without the necessity of showing economic loss and without any bond or other security being required.

 

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

 

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

 

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

 

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

 

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

 

7. CONDITIONS PRECEDENT TO THE BUYER’S OBLIGATION TO PURCHASE . The obligation of the Buyer hereunder to purchase the Note at the Closing is subject to the satisfaction, at or before the Closing Date of each of the following conditions, provided that these conditions are for the Buyer’s sole benefit and may be waived by the Buyer at any time in its sole discretion:

 

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

 

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

 

 

c. The Buyer shall have received a share reservation agreement signed by the Company and its transfer agent in a form satisfactory to the Buyer and its counsel.

 

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

 

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

 

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

 

g. The Conversion Shares shall have been authorized for quotation on the OTC Markets or any similar quotation system and trading in the Common Stock on the OTC Markets or any similar quotation system shall not have been suspended by the SEC or the OTC Markets or any similar quotation system.

 

h. The Buyer shall have received an officer’s certificate described in Section 7(d) above, dated as of the Closing Date.

 

8. GOVERNING LAW; MISCELLANEOUS .

 

a. Governing Law . Except in the case of the Mandatory Forum Selection provisions in Section 8(b) below, which clause shall be governed and interpreted in accordance with Florida law, this Agreement and all other Transaction Documents shall be delivered and accepted in and shall be deemed to be contracts made under and governed by the internal laws of the State of Minnesota, and for all purposes shall be construed in accordance with the laws of such state, without giving effect to the choice of law provisions of such state.

b. Mandatory Forum Selection . Any action brought by either party against the other concerning the transactions contemplated by this Agreement shall be brought only in the state courts of Minnesota or in the federal courts located in the state of Minnesota. The parties to this Agreement hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens . The Company and Buyer waive trial by jury. The prevailing party shall be entitled to recover from the other party its reasonable attorney's fees and costs. In the event that any provision of this Agreement or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement. Each party hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this Agreement or any other Transaction Document by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.

 

c. Counterparts . This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which shall constitute one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party. This Agreement, once executed by a party, may be delivered to the other party hereto by facsimile transmission or by e-mail delivery of a “.pdf’ format file or other similar format file, such signature shall be deemed an original for all purposes and shall create a valid and binding obligation of the party executing same with the same force and effect as if such facsimile or “.pdf’ signature page was an original thereof.

 

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

 

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

 

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

 

g. Notices . All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party shall have specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be:

 

If to the Company, to:

 

NEWMARKT CORP.

500 La Terraza Blvd. Suite 150

Escondido, CA 92025

Attn: Mark Chermak / CEO

Email: michael@ozopsurgical.com

 

 

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

 

If to the Buyer, to:

 

CAREBOURN CAPITAL, L.P.

8700 Black Oaks Lane N.

Maple Grove MN 55311

Attn: Chip Rice, Managing Member

Email: info@carebourncapital.com

 

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

 

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

 

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

 

j. Survival . The representations and warranties of the Company and the agreements and covenants set forth in this Agreement notwithstanding any investigation by Buyer shall survive the closing hereunder and shall be deemed to be continuing representations and warranties until such time as the Company have fulfilled all of its obligations to Buyer hereunder and under all other Transaction Documents, and Buyer has been indefeasibly paid in full and disposed of any and all Conversion Shares held by Buyer.

 

k. The Company agrees to indemnify and hold harmless the Buyer and all their officers, directors, employees and agents for loss or damage arising as a result of or related to any breach by the Company of any of its representations, warranties and covenants set forth in this Agreement or any of its covenants and obligations under this Agreement, including advancement of expenses as they are incurred.

 

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

 

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

 

n. Remedies .

 

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

 

(ii) In addition to any other remedy provided herein or in any document executed in connection herewith, Borrower shall pay Holder for all costs, fees and expenses in connection with any litigation, contest, dispute, suit or any other action to enforce any rights of Holder against Borrower in connection herewith, including, but not limited to, costs and expenses and attorneys' fees, and costs and time charges of counsel to Holder. 

 

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

 

p. Role of Counsel . The Company acknowledges its understanding that this Agreement and other agreements entered into in connection with the Agreement were prepared at the request of the Buyer by [Legal & Compliance, LLC], legal counsel for the Buyer and that such law firm or any of its attorneys did not represent the Company in conjunction with this Agreement, the Transaction Documents or any of the related transactions. The Company, as further evidenced by its signature below, acknowledges that is has had the opportunity to obtain the advice of independent counsel of their choosing prior to the execution of this Agreement and that it has availed itself of this opportunity to the extent the Company deemed necessary and advisable. By its signature below, the Company represents and warrants that they it understands the terms and conditions of this Agreement.

 

 

 

 

 

[- Signature page follows -] 

 

 
 

 

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

 

 

NEWMARKT CORP  

 

By: /s/ Michael Chermak

Name: MICHAEL CHERMAK

Title: CEO

 

 

CAREBOURN CAPITAL, L.P.

 

By: Carebourn Partners, LLC,

a Minnesota limited liability company,

its General Partner

 

By:  /s/ Chip Rice

Name: Chip Rice

Title: Managing Member

 

 

AGGREGATE SUBSCRIPTION AMOUNT:

 

Aggregate Principal Amount of Note: $442,175.00
   
Aggregate Purchase Price: $384,500.00

Exhibit 10.3

 

 

NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS NOTENOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

 

 

Principal Amount: $US442,175.00 Issue Date: APRIL 13 TH , 2018
Purchase Price: $US384,500.00  
Original Issue Discount: $US57,675.00  

 

 

CONVERTIBLE PROMISSORY NOTE

 

FOR VALUE RECEIVED , NEWMARKT CORP. a NEVADA corporation (hereinafter called the “Borrower”), hereby promises to pay to the order of CAREBOURN CAPITAL, L.P. , a Delaware limited partnership, or registered assigns (the “Holder”) the sum of $US442,175.00 together with any interest as set forth herein, on APRIL 13 TH , 2019 (the “Maturity Date”), and to pay interest on the unpaid principal balance hereof at the rate of 12% (The “Interest Rate”) per annum from the date hereof (the “Issue Date”) until the same becomes due and payable, whether at maturity or upon acceleration or by prepayment or otherwise. Interest shall commence accruing on the date that the Note is fully paid and shall be computed on the basis of a 365-day year and the actual number of days elapsed. All payments due hereunder (to the extent not converted into common stock, $US0.001 par value per share (the “Common Stock”) in accordance with the terms hereof) shall be made in lawful money of the United States of America. All payments shall be made at such address as the Holder shall hereafter give to the Borrower by written notice made in accordance with the provisions of this Note. Whenever any amount expressed to be due by the terms of this Note is due on any day which is not a business day, the same shall instead be due on the next succeeding day which is a business day and, in the case of any interest payment date which is not the date on which this Note is paid in full, the extension of the due date thereof shall not be taken into account for purposes of determining the amount of interest due on such date. As used in this Note, the term “business day” shall mean any day other than a Saturday, Sunday or a day on which commercial banks in the city of New York, New York are authorized or required by law or executive order to remain closed. Each capitalized term used herein, and not otherwise defined, shall have the meaning ascribed thereto in that certain Securities Purchase Agreement dated the date hereof, pursuant to which this Note was originally issued (the “Purchase Agreement”).

 

This Note carries an original issue discount of $US57,675.00 (the “OID”). In addition, the Borrower shall authorize the Holder, pursuant to a disbursement memorandum dated on or around the Issue Date, to pay $US25,000.00 (the “Transactional Expense Amount”) to the Holder or the Holder’s designee, to cover the Holder’s accounting fees, due diligence fees, monitoring (including but not limited to ACH monitoring costs), and/or other transactional costs incurred in connection with the purchase of the Note, as well as $9,500.00 (the “Legal Fee”) to Holder’s attorney, to cover Holder’s legal review fees in connection with the purchase and sale of the Note, all of which are included in the initial principal balance of this Note. The Purchase Price of this Note shall be $US384,500.00 , computed as follows: $US442,175.00 initial principal balance less the OID. Accordingly, the net amount to be received by the Company shall be $US350,000.00 , computed as follows: the purchase price of $US384,500.00 , less the Transactional Expense Amount & Legal Fee.

 

This Note is free from all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive rights or other similar rights of shareholders of the Borrower and will not impose personal liability upon the holder thereof.

 

The following terms shall apply to this Note:

 

ARTICLE I. CONVERSION RIGHTS

 

1.1 Conversion Right . The Holder shall have the right from time to time, and at any time following the date of this Note and ending on the later of: (i) the Maturity Date and (ii) the date of payment of the Default Amount (as defined in Article III) pursuant to Section 1.6(a) or Article III, each in respect of the remaining outstanding principal amount of this Note to convert all or any part of the outstanding and unpaid principal amount of this Note into fully paid and non- assessable shares of Common Stock, as such Common Stock exists on the Issue Date, or any shares of capital stock or other securities of the Borrower into which such Common Stock shall hereafter be changed or reclassified at the conversion price (the “Conversion Price”) determined as provided herein (a “Conversion”); provided, however, that in no event shall the Holder be entitled to convert any portion of this Note in excess of that portion of this Note upon conversion of which the sum of (1) the number of shares of Common Stock beneficially owned by the Holder and its affiliates (other than shares of Common Stock which may be deemed beneficially owned through the ownership of the unconverted portion of the Notes or the unexercised or unconverted portion of any other security of the Borrower subject to a limitation on conversion or exercise analogous to the limitations contained herein) and (2) the number of shares of Common Stock issuable upon the conversion of the portion of this Note with respect to which the determination of this proviso is being made, would result in beneficial ownership by the Holder and its affiliates of more than 4.99% of the outstanding shares of Common Stock. For purposes of the proviso to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Regulations 13D-G thereunder, except as otherwise provided in clause (1) of such proviso, provided, further, however, that the limitations on conversion may be waived by the Holder upon, at the election of the Holder, not less than 61 days’ prior notice to the Borrower, and the provisions of the conversion limitation shall continue to apply until such 61st day (or such later date, as determined by the Holder, as may be specified in such notice of waiver). The number of shares of Common Stock to be issued upon each conversion of this Note shall be determined by dividing the Conversion Amount (as defined below) by the applicable Conversion Price then in effect on the date specified in the notice of conversion, in the form attached hereto as Exhibit A (the “Notice of Conversion”), delivered to the Borrower by the Holder in accordance with Section 1.4 below; provided that the Notice of Conversion is submitted by facsimile or e-mail (or by other means resulting in, or reasonably expected to result in, notice) to the Borrower before 6:00 p.m., New York, New York time on such conversion date (the “Conversion Date”). The term “Conversion Amount” means, with respect to any conversion of this Note, the sum of (1) the principal amount of this Note to be converted in such conversion plus (2) at the Holder’s option, accrued and unpaid interest, if any, on such principal amount at the interest rates provided in this Note to the Conversion Date, plus (34) at the Holder’s option, any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof.

 

1.2 Conversion Price.

 

Calculation of Conversion Price . The conversion price (the “Conversion Price”) shall equal the Variable Conversion Price (as defined herein) (subject to equitable adjustments for stock splits, stock dividends or rights offerings by the Borrower relating to the Borrower’s securities or the securities of any subsidiary of the Borrower, combinations, recapitalization, reclassifications, extraordinary distributions and similar events). The "Variable Conversion Price" shall mean 55% multiplied by the Market Price (as defined herein) (representing a discount rate of 45% ). In the case that shares of the Borrower’s common stock are not deliverable via DWAC following the conversion of any amount hereunder, an additional Ten Percent (10%) discount shall be added to the amount being converted at such time. In the event that the Borrower fails to meet the requirements of sections 3.17 & 3.18 (ACH), an additional Five percent (5%) discount shall be added to the amount being converted at such time. “Market Price” means the lowest Trading Price (as defined below) for the Common Stock during the twenty-five (25) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. “Trading Price” means, for any security as of any date, the lowest price quoted on the OTC Markets operated by the OTC Markets Group, Inc. or applicable trading market (the “OTC”) as reported by a reliable reporting service (“Reporting Service”) designated by the Holder (i.e. Bloomberg) or, if the OTC Markets is not the principal trading market for such security, the closing bid price of such security on the principal securities exchange or trading market where such security is listed or traded. If the Trading Price cannot be calculated for such security on such date in the manner provided above, the Trading Price shall be the fair market value as mutually determined by the Borrower and the holders of a majority in interest of the Notes being converted for which the calculation of the Trading Price is required in order to determine the Conversion Price of such Notes. “Trading Day” shall mean any day on which the Common Stock is tradable for any period on the OTC Markets, or on the principal securities exchange or other securities market on which the Common Stock is then being traded.

 

1.3 Authorized Shares . The Borrower covenants that during the period the conversion right exists, the Borrower will reserve from its authorized and unissued Common Stock a sufficient number of shares, free from preemptive rights, to provide for the issuance of Common Stock upon the full conversion of this Note issued pursuant to the Purchase Agreement. The Borrower is required at all times to have authorized and reserved five times the number of shares that is actually issuable upon full conversion of the Note (based on the Conversion Price of the Notes in effect from time to time) (the “Reserved Amount”). The Reserved Amount shall be increased from time to time in accordance with the Borrower’s obligations pursuant to Section 4(g) of the Purchase Agreement. The Borrower represents that upon issuance, such shares will be duly and validly issued, fully paid and non-assessable. In addition, if the Borrower shall issue any securities or make any change to its capital structure which would change the number of shares of Common Stock into which the Notes shall be convertible at the then current Conversion Price, the Borrower shall at the same time make proper provision so that thereafter there shall be a sufficient number of shares of Common Stock authorized and reserved, free from preemptive rights, for conversion of the outstanding Notes. The Borrower (i) acknowledges that it has irrevocably instructed its transfer agent to issue certificates for the Common Stock issuable upon conversion of this Note, and (ii) agrees that its issuance of this Note shall constitute full authority to its officers and agents who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for shares of Common Stock in accordance with the terms and conditions of this Note.

 

If, at any time the Borrower does not maintain the Reserved Amount it will be considered an Event of Default under Article III of the Note. However, upon receipt of written notice from the Holder of Borrower’s failure to maintain the Reserved Amount, the Borrower shall have three (3) days to cure any deficiencies in the Reserved Amount.

 

1.4 Method of Conversion .

 

(a) Mechanics of Conversion . Subject to Section 1.1, this Note may be converted by the Holder in whole or in part at any time from time to time after One Hundred Eighty Days following the Issue Date, by (A) submitting to the Borrower a Notice of Conversion (by facsimile, e-mail or other reasonable means of communication dispatched on the Conversion Date prior to 6:00 p.m., New York, New York time) and (B) subject to Section 1.4(b), surrendering this Note at the principal office of the Borrower.

 

(b) Surrender of Note Upon Conversion . Notwithstanding anything to the contrary set forth herein, upon conversion of this Note in accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to the Borrower unless the entire unpaid principal amount of this Note is so converted. The Holder and the Borrower shall maintain records showing the principal amount so converted and the dates of such conversions or shall use such other method, reasonably satisfactory to the Holder and the Borrower, so as not to require physical surrender of this Note upon each such conversion. In the event of any dispute or discrepancy, such records of the Borrower shall, prima facie, be controlling and determinative in the absence of manifest error. Notwithstanding the foregoing, if any portion of this Note is converted as aforesaid, the Holder may not transfer this Note unless the Holder first physically surrenders this Note to the Borrower, whereupon the Borrower will forthwith issue and deliver upon the order of the Holder a new Note of like tenor, registered as the Holder (upon payment by the Holder of any applicable transfer taxes) may request, representing in the aggregate the remaining unpaid principal amount of this Note. The Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of a portion of this Note, the unpaid and unconverted principal amount of this Note represented by this Note may be less than the amount stated on the face hereof.

 

(c) Payment of Taxes . The Borrower shall not be required to pay any tax which may be payable in respect of any transfer involved in the issue and delivery of shares of Common Stock or other securities or property on conversion of this Note in a name other than that of the Holder (or in street name), and the Borrower shall not be required to issue or deliver any such shares or other securities or property unless and until the person or persons (other than the Holder or the custodian in whose street name such shares are to be held for the Holder’s account) requesting the issuance thereof shall have paid to the Borrower the amount of any such tax or shall have established to the satisfaction of the Borrower that such tax has been paid.

 

(d) Delivery of Common Stock Upon Conversion . Upon receipt by the Borrower from the Holder of a facsimile transmission or e-mail (or other reasonable means of communication) of a Notice of Conversion meeting the requirements for conversion as provided in this Section 1.4, the Borrower shall issue and deliver or cause to be issued and delivered to or upon the order of the Holder certificates for the Common Stock issuable upon such conversion within three (3) business days after such receipt (the “Deadline”) (and, solely in the case of conversion of the entire unpaid principal amount hereof, surrender of this Note) in accordance with the terms hereof and the Purchase Agreement.

 

(e) Obligation of Borrower to Deliver Common Stock . Upon receipt by the Borrower of a Notice of Conversion, the Holder shall be deemed to be the holder of record of the Common Stock issuable upon such conversion, the outstanding principal amount and the amount of accrued and unpaid interest on this Note shall be reduced to reflect such conversion, and, unless the Borrower defaults on its obligations under this Article I, all rights with respect to the portion of this Note being so converted shall forthwith terminate except the right to receive the Common Stock or other securities, cash or other assets, as herein provided, on such conversion. If the Holder shall have given a Notice of Conversion as provided herein, the Borrower’s obligation to issue and deliver the certificates for Common Stock shall be absolute and unconditional, irrespective of the absence of any action by the Holder to enforce the same, any waiver or consent with respect to any provision thereof, the recovery of any judgment against any person or any action to enforce the same, any failure or delay in the enforcement of any other obligation of the Borrower to the holder of record, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder of any obligation to the Borrower, and irrespective of any other circumstance which might otherwise limit such obligation of the Borrower to the Holder in connection with such conversion. The Conversion Date specified in the Notice of Conversion shall be the Conversion Date so long as the Notice of Conversion is received by the Borrower before 6:00 p.m., New York, New York time, on such date.

 

(f) Delivery of Common Stock by Electronic Transfer . In lieu of delivering physical certificates representing the Common Stock issuable upon conversion, provided the Borrower is participating in the Depository Trust Company (“DTC”) Fast Automated Securities Transfer (“FAST”) program, upon request of the Holder and its compliance with the provisions contained in Section 1.1 and in this Section 1.4, the Borrower shall use its best efforts to cause its transfer agent to electronically transmit the Common Stock issuable upon conversion to the Holder by crediting the account of Holder’s Prime Broker with DTC through its Deposit Withdrawal Agent Commission (“DWAC”) system.

 

(g) Failure to Deliver Common Stock Prior to Deadline . Without in any way limiting the Holder’s right to pursue other remedies, including actual damages and/or equitable relief, the parties agree that if delivery of the Common Stock issuable upon conversion of this Note is not delivered by the Deadline (other than a failure due to the circumstances described in Section 1.3 above, which failure shall be governed by such Section) the Borrower shall pay to the Holder $2,000 per day in cash, for each day beyond the Deadline that the Borrower fails to deliver such Common Stock. Such cash amount shall be paid to Holder by the fifth day of the month following the month in which it has accrued or, at the option of the Holder (by written notice to the Borrower by the first day of the month following the month in which it has accrued), shall be added to the principal amount of this Note, in which event interest shall accrue thereon in accordance with the terms of this Note and such additional principal amount shall be convertible into Common Stock in accordance with the terms of this Note. The Borrower agrees that the right to convert is a valuable right to the Holder. The damages resulting from a failure, attempt to frustrate, interference with such conversion right are difficult if not impossible to qualify. Accordingly the parties acknowledge that the liquidated damages provision contained in this Section 1.4(g) are justified.

 

1.5 Concerning the Shares . The shares of Common Stock issuable upon conversion of this Note may not be sold or transferred unless (i) such shares are sold pursuant to an effective registration statement under the Act or (ii) the Borrower or its transfer agent shall have been furnished with an opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions) to the effect that the shares to be sold or transferred may be sold or transferred pursuant to an exemption from such registration or (iii) such shares are sold or transferred pursuant to Rule 144 under the Act (or a successor rule) (“Rule 144”) or (iv) such shares are transferred to an “affiliate” (as defined in Rule 144) of the Borrower who agrees to sell or otherwise transfer the shares only in accordance with this Section 1.5 and who is an Accredited Investor (as defined in the Purchase Agreement). Except as otherwise provided in the Purchase Agreement (and subject to the removal provisions set forth below), until such time as the shares of Common Stock issuable upon conversion of this Note have been registered under the Act or otherwise may be sold pursuant to Rule 144 without any restriction as to the number of securities as of a particular date that can then be immediately sold, each certificate for shares of Common Stock issuable upon conversion of this Note that has not been so included in an effective registration statement or that has not been sold pursuant to an effective registration statement or an exemption that permits removal of the legend, shall bear a legend substantially in the following form, as appropriate:

 

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

 

The legend set forth above shall be removed and the Borrower shall issue to the Holder a new certificate therefore free of any transfer legend if (i) the Borrower or its transfer agent shall have received an opinion of counsel, in form, substance and scope customary for opinions of counsel in comparable transactions, to the effect that a public sale or transfer of such Common Stock may be made without registration under the Act, which opinion shall be accepted by the Company so that the sale or transfer is effected or (ii) in the case of the Common Stock issuable upon conversion of this Note, such security is registered for sale by the Holder under an effective registration statement filed under the Act or otherwise may be sold pursuant to Rule 144 without any restriction as to the number of securities as of a particular date that can then be immediately sold. In the event that the Company does not accept the opinion of counsel provided by the Buyer with respect to the transfer of Securities pursuant to an exemption from registration, such as Rule 144 or Regulation S, at the Deadline, it will be considered an Event of Default pursuant to Section 3.2 of the Note.

 

1.6 Effect of Certain Events .

 

(a) Effect of Merger, Consolidation, Etc . At the option of the Holder, the sale, conveyance or disposition of all or substantially all of the assets of the Borrower, the effectuation by the Borrower of a transaction or series of related transactions in which more than 50% of the voting power of the Borrower is disposed of, or the consolidation, merger or other business combination of the Borrower with or into any other Person (as defined below) or Persons when the Borrower is not the survivor shall either: (i) be deemed to be an Event of Default (as defined in Article III) pursuant to which the Borrower shall be required to pay to the Holder upon the consummation of and as a condition to such transaction an amount equal to the Default Amount (as defined in Article III) or (ii) be treated pursuant to Section 1.6(b) hereof. “Person” shall mean any individual, corporation, limited liability company, partnership, association, trust or other entity or organization.

 

(b) Adjustment Due to Merger, Consolidation, Etc . If, at any time when this Note is issued and outstanding and prior to conversion of all of the Notes, there shall be any merger, consolidation, or an exchange of shares, recapitalization or reorganization pursuant to a merger or consolidation, or other similar event, as a result of which shares of Common Stock of the Borrower shall be changed into the same or a different number of shares of another class or classes of stock or securities of the Borrower or another entity, or in case of any sale or conveyance of all or substantially all of the assets or more than 50% of the total outstanding shares of the Borrower other than in connection with a plan of complete liquidation of the Borrower, then the Holder of this Note shall thereafter have the right to receive upon conversion of this Note, upon the basis and upon the terms and conditions specified herein and in lieu of the shares of Common Stock immediately theretofore issuable upon conversion, such stock, securities or assets which the Holder would have been entitled to receive in such transaction had this Note been converted in full immediately prior to such transaction (without regard to any limitations on conversion set forth herein), and in any such case appropriate provisions shall be made with respect to the rights and interests of the Holder of this Note to the end that the provisions hereof (including, without limitation, provisions for adjustment of the Conversion Price and of the number of shares issuable upon conversion of the Note) shall thereafter be applicable, as nearly as may be practicable in relation to any securities or assets thereafter deliverable upon the conversion hereof. The Borrower shall not affect any transaction described in this Section 1.6(b) unless (a) it first gives, to the extent practicable, thirty (30) days prior written notice (but in any event at least fifteen (15) days prior written notice) of the record date of the special meeting of shareholders to approve, or if there is no such record date, the consummation of, such merger, consolidation, exchange of shares, recapitalization, reorganization or other similar event or sale of assets (during which time the Holder shall be entitled to convert this Note) and (b) the resulting successor or acquiring entity (if not the Borrower) assumes by written instrument the obligations of this Section 1.6(b). The above provisions shall similarly apply to successive consolidations, mergers, sales, transfers or share exchanges.

 

(c) Adjustment Due to Distribution . If the Borrower shall declare or make any distribution of its assets (or rights to acquire its assets) to holders of Common Stock as a dividend, stock repurchase, by way of return of capital or otherwise (including any dividend or distribution to the Borrower’s shareholders in cash or shares (or rights to acquire shares) of capital stock of a subsidiary (i.e., a spin-off)) (a “Distribution”), then the Holder of this Note shall be entitled, upon any conversion of this Note after the date of record for determining shareholders entitled to such Distribution, to receive the amount of such assets which would have been payable to the Holder with respect to the shares of Common Stock issuable upon such conversion had such Holder been the holder of such shares of Common Stock on the record date for the determination of shareholders entitled to such Distribution.

 

(f) Notice of Adjustments . Upon the occurrence of each adjustment or readjustment of the Conversion Price as a result of the events described in this Section 1.6, the Borrower, at its expense, shall promptly compute such adjustment or readjustment and prepare and furnish to the Holder of a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Borrower shall, upon the written request at any time of the Holder, furnish to such Holder a like certificate setting forth (i) such adjustment or readjustment, (ii) the Conversion Price at the time in effect and (iii) the number of shares of Common Stock and the amount, if any, of other securities or property which at the time would be received upon conversion of the Note.

 

1.8 Status as Shareholder . Upon submission of a Notice of Conversion by a Holder, (i) the shares covered thereby (other than the shares, if any, which cannot be issued because their issuance would exceed such Holder’s allocated portion of the Reserved Amount or Maximum Share Amount) shall be deemed converted into shares of Common Stock and (ii) the Holder’s rights as a Holder of such converted portion of this Note shall cease and terminate, excepting only the right to receive certificates for such shares of Common Stock and to any remedies provided herein or otherwise available at law or in equity to such Holder because of a failure by the Borrower to comply with the terms of this Note. Notwithstanding the foregoing, if a Holder has not received certificates for all shares of Common Stock prior to the tenth (10th) business day after the expiration of the Deadline with respect to a conversion of any portion of this Note for any reason, then (unless the Holder otherwise elects to retain its status as a holder of Common Stock by so notifying the Borrower) the Holder shall regain the rights of a Holder of this Note with respect to such unconverted portions of this Note and the Borrower shall, as soon as practicable, return such unconverted Note to the Holder or, if the Note has not been surrendered, adjust its records to reflect that such portion of this Note has not been converted. In all cases, the Holder shall retain all of its rights and remedies (including, without limitation, (i) the right to receive Conversion Default Payments pursuant to Section 1.3 to the extent required thereby for such Conversion Default and any subsequent Conversion Default and (ii) the right to have the Conversion Price with respect to subsequent conversions determined in accordance with Section 1.3) for the Borrower’s failure to convert this Note.

 

1.9 Prepayment . Notwithstanding anything to the contrary contained in this Note, the Borrower may prepay the amounts outstanding hereunder pursuant to the following terms and conditions, and subject to the Holder’s acceptance in Holder’s sole discretion:

 

(a) At any time during the period beginning on the Issue Date and ending on the date which is one hundred and eighty (180) days following the Issue Date, the Borrower shall have the right, exercisable on not less than twenty (20) Trading Days prior written notice to the Holder of the Note to prepay the outstanding Note (principal and accrued interest), in full by making a payment to the Holder of an amount in cash equal to 130%, multiplied by the sum of: (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note.

 

(b) At any time during the period beginning the day which is one hundred and eighty one (181) days following the Issue Date and ending on the date which is three hundred sixty-four (364) days following the Issue Date, the Borrower shall have the right, exercisable on not less than twenty (20) Trading Days prior written notice to the Holder of the Note to prepay the outstanding Note (principal and accrued interest), in full by making a payment to the Holder of an amount in cash equal to 150%, multiplied by the sum of: (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note.

 

(c) After the expiration of three hundred sixty-four (364) days, the Borrower shall have no right of prepayment.

 

Any notice of prepayment hereunder (an “Optional Prepayment Notice”) shall be delivered to the Holder of the Note at its registered addresses and shall state: (1) that the Borrower is exercising its right to prepay the Note, and (2) the date of prepayment which shall be not more than twenty (20) Trading Days from the date of the Optional Prepayment Notice. On the date fixed for prepayment (the “Optional Prepayment Date”), the Borrower shall make payment of the applicable prepayment amount to or upon the order of the Holder as specified by the Holder in writing to the Borrower at least one (1) business day prior to the Optional Prepayment Date. If the Borrower delivers an Optional Prepayment Notice and fails to pay the applicable prepayment amount due to the Holder of the Note within two (2) business days following the Optional Prepayment Date, the Borrower shall forever forfeit its right to prepay the Note pursuant to this Section 1.9. Notwithstanding anything to the contrary in this Note, the Borrower’s right to prepay the amounts outstanding under this Note, in accordance with the terms and conditions of this Note, is expressly conditional upon the Holder’s written acceptance, in Holder’s sole discretion, of such applicable prepayment during the time that the Borrower is exercising their right to prepay this Note.

 

ARTICLE II. CERTAIN COVENANTS

 

2.1 Distributions on Capital Stock . So long as the Borrower shall have any obligation under this Note, the Borrower shall not without the Holder’s written consent (a) pay, declare or set apart for such payment, any dividend or other distribution (whether in cash, property or other securities) on shares of capital stock other than dividends on shares of Common Stock solely in the form of additional shares of Common Stock or (b) directly or indirectly or through any subsidiary make any other payment or distribution in respect of its capital stock except for distributions pursuant to any shareholders’ rights plan which is approved by a majority of the Borrower’s disinterested directors.

 

2.3 Sale of Assets . So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder’s written consent, sell, lease, exchange (including but not limited to an exchange for assets of equal or greater value)   or otherwise dispose of any significant portion of its assets outside the ordinary course of business. Any consent to the disposition of any assets may be conditioned on a specified use of the proceeds of disposition.

 

2.4 Advances and Loans . So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder’s written consent, lend money, give credit or make advances to any person, firm, joint venture or corporation, including, without limitation, officers, directors, employees, subsidiaries and affiliates of the Borrower, except loans, credits or advances (a) in existence or committed on the date hereof and which the Borrower has informed Holder in writing prior to the date hereof, (b) made in the ordinary course of business, (c) made to a pending merging partner pursuant to an agreement of merger or (c) not in excess of $100,000.

 

ARTICLE III. EVENTS OF DEFAULT

 

If any of the following events of default (each, an “Event of Default”) shall occur:

 

3.1 Failure to Pay Principal or Interest . The Borrower fails to pay the principal hereof or interest thereon when due on this Note, whether at maturity, upon acceleration or otherwise, following a five (5) day cure period.

 

3.2 Conversion and the Shares . The Borrower fails to issue shares of Common Stock to the Holder (or announces or threatens in writing that it will not honor its obligation to do so) upon exercise by the Holder of the conversion rights of the Holder in accordance with the terms of this Note, fails to transfer or cause its transfer agent to transfer (issue) (electronically or in certificated form) any certificate for shares of Common Stock issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note, the Borrower directs its transfer agent not to transfer or delays, impairs, and/or hinders its transfer agent in transferring (or issuing) (electronically or in certificated form) any certificate for shares of Common Stock to be issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note, or fails to remove (or directs its transfer agent not to remove or impairs, delays, and/or hinders its transfer agent from removing) any restrictive legend (or to withdraw any stop transfer instructions in respect thereof) on any certificate for any shares of Common Stock issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note (or makes any written announcement, statement or threat that it does not intend to honor the obligations described in this paragraph) and any such failure shall continue uncured (or any written announcement, statement or threat not to honor its obligations shall not be rescinded in writing) for three (3) business days after the Holder shall have delivered a Notice of Conversion. It is an obligation of the Borrower to remain current in its obligations to its transfer agent. It shall be an event of default of this Note, if a conversion of this Note is delayed, hindered or frustrated due to a balance owed by the Borrower to its transfer agent. If at the option of the Holder, the Holder advances any funds to the Borrower’s transfer agent in order to process a conversion, such advanced funds shall be paid by the Borrower to the Holder within forty eight (48) hours of a demand from the Holder.

 

3.3 Breach of Covenants . The Borrower breaches any covenant or other material term or condition contained in this Note and any collateral documents including but not limited to the Purchase Agreement and such breach continues for a period of ten (10) days after written notice thereof to the Borrower from the Holder.

 

3.4 Breach of Representations and Warranties . Any representation or warranty of the Borrower made herein or in any agreement, statement or certificate given in writing pursuant hereto or in connection herewith (including, without limitation, the Purchase Agreement), shall be false or misleading in any material respect when made and the breach of which has (or with the passage of time will have) a material adverse effect on the rights of the Holder with respect to this Note or the Purchase Agreement.

 

3.5 Receiver or Trustee . The Borrower or any subsidiary of the Borrower shall make an assignment for the benefit of creditors, or apply for or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business, or such a receiver or trustee shall otherwise be appointed.

 

3.6 Judgments . Any money judgment, writ or similar process shall be entered or filed against the Borrower or any subsidiary of the Borrower or any of its property or other assets for more than $50,000, and shall remain unvacated, unbonded or unstayed for a period of twenty (20) days unless otherwise consented to by the Holder, which consent will not be unreasonably withheld.

 

3.7 Bankruptcy . Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings, voluntary or involuntary, for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Borrower or any subsidiary of the Borrower.

 

3.8 Delisting of Common Stock . The Borrower shall fail to maintain the listing of the Common Stock on at least one of the OTC Markets or an equivalent replacement exchange, the Nasdaq National Market, the Nasdaq SmallCap Market, the New York Stock Exchange, or the American Stock Exchange.

 

3.9 Failure to Comply with the Exchange Act . The Borrower shall fail to comply with the reporting requirements of the Exchange Act; and/or the Borrower shall cease to be subject to the reporting requirements of the Exchange Act.

 

3.10 Liquidation . Any dissolution, liquidation, or winding up of Borrower or any substantial portion of its business.

 

3.11 Cessation of Operations . Any cessation of operations by Borrower or Borrower admits it is otherwise generally unable to pay its debts as such debts become due, provided, however, that any disclosure of the Borrower’s ability to continue as a “going concern” shall not be an admission that the Borrower cannot pay its debts as they become due.

 

3.12 Maintenance of Assets . The failure by Borrower to maintain any material intellectual property rights, personal, real property or other assets which are necessary to conduct its business (whether now or in the future).

 

3.13 Financial Statement Restatement . The restatement of any financial statements filed by the Borrower with the SEC for any date or period from two years prior to the Issue Date of this Note and until this Note is no longer outstanding, if the result of such restatement would, by comparison to the unrestated financial statement, have constituted a material adverse effect on the rights of the Holder with respect to this Note or the Purchase Agreement.

 

3.14 Reverse Splits . The Borrower effectuates a reverse split of its Common Stock without twenty (20) days prior written notice to the Holder.

 

3.15 Replacement of Transfer Agent . In the event that the Borrower proposes to replace its transfer agent, the Borrower fails to provide, prior to the effective date of such replacement, a fully executed Irrevocable Transfer Agent Instructions in a form as initially delivered pursuant to the Purchase Agreement (including but not limited to the provision to irrevocably reserve shares of Common Stock in the Reserved Amount) signed by the successor transfer agent to Borrower and the Borrower.

 

3.16 Cross-Default . Notwithstanding anything to the contrary contained in this Note or other related or companion documents, a breach or default by the Borrower of any covenant or other term or condition contained any other financial instrument, including but not limited to all convertible promissory notes, already issued, or issued in the future, by the Borrower, to the Holder or any other 3 rd party, after the passage of all applicable notice and cure or grace periods, shall, at the option of the Holder, be considered a default under this Note.

 

3.17 ACH Account Change . The Borrower changes it bank account to an account that differs from the bank account specified on Exhibit B attached hereto, without (i) prior signed written consent of the Holder and (ii) Borrower’s execution of a signed authorization agreement for preauthorized payments that is exactly the same as the form attached hereto as Exhibit B (except for the new bank account information) with respect to the new bank account.

 

3.18 ACH Payment Default . The Borrower blocks, rejects, or otherwise restricts any action taken by Holder pursuant to Holder’s rights under this Note with respect to the Borrower’s bank account, including but not limited to Holder’s withdrawal of the Specific Daily Repayment Amount (as defined in Exhibit B attached hereto) pursuant to an ACH debit transaction or otherwise from the Borrower’s bank account, or the Holder’s withdrawal of the Specific Daily Repayment Amount from the Borrower’s bank account pursuant to an ACH debit transaction or otherwise is rejected for any reason.

 

3.19 Event of Default . Upon the occurrence of any Event of Default specified in Sections 3.1, 3.2, 3.3, 3.4, 3.5, 3.6, 3.7, 3.8, 3.9, 3.10, 3.11, 3.12, 3.13, 3.14, 3.15, and/or 3.16, exercisable through the delivery of written notice to the Borrower by such Holders (the “Default Notice”), , the Note shall become immediately due and payable and the Borrower shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to the greater of (i) 150% times the sum of (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note to the date of payment (the “Mandatory Prepayment Date”) plus any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof (the then outstanding principal amount of this Note to the date of payment plus the amounts referred to in clauses (x) and, (y) shall collectively be known as the “Default Sum”), and all other amounts payable hereunder shall immediately become due and payable, all without demand, presentment or notice, all of which hereby are expressly waived, together with all costs, including, without limitation, legal fees and expenses, of collection, and the Holder shall be entitled to exercise all other rights and remedies available at law or in equity.

 

If the Borrower fails to pay the Default Amount within five (5) business days of written notice that such amount is due and payable, then the Holder shall have the right at any time, so long as the Borrower remains in default (and so long and to the extent that there are sufficient authorized shares), to require the Borrower, upon written notice, to immediately issue, in lieu of the Default Amount, the number of shares of Common Stock of the Borrower equal to the Default Amount divided by the Conversion Price then in effect.

 

ARTICLE IV. MISCELLANEOUS

 

4.1 Failure or Indulgence Not Waiver . No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privileges. All rights and remedies existing hereunder are cumulative to, and not exclusive of, any rights or remedies otherwise available.

 

4.2 Notices . All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party shall have specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be:

 

If to the Borrower, to:

 

NEWMARKT CORP

500 La Terraza Blvd., Suite 150

Escondido, CA 92025

Attn: Michael Chermak / CEO

Email: michael@ozopsurgical.com

 

If to the Holder:

 

CAREBOURN CAPITAL, L.P.

8700 Black Oaks Lane N

Maple Grove, Minnesota 55311

Attn: Chip Rice, Managing Member

Email: info@carebourncapital.com

 

4.3 Amendments . This Note and any provision hereof may only be amended by an instrument in writing signed by the Borrower and the Holder. The term “Note” and all reference thereto, as used throughout this instrument, shall mean this instrument (and the other Notes issued pursuant to the Purchase Agreement) as originally executed, or if later amended or supplemented, then as so amended or supplemented.

 

4.4 Assignability . This Note shall be binding upon the Borrower and its successors and assigns, and shall inure to be the benefit of the Holder and its successors and assigns. Each transferee of this Note must be an “accredited investor” (as defined in Rule 501(a) of the 1933 Act). Notwithstanding anything in this Note to the contrary, this Note may be pledged as collateral in connection with a bona fide margin account or other lending arrangement.

 

4.5 Cost of Collection . If default is made in the payment of this Note, the Borrower shall pay the Holder hereof costs of collection, including reasonable attorneys’ fees.

 

4.6 Governing Law .

 

(a). Except in the case of the Mandatory Forum Selection provisions in Section 4.6(b) below, which clause shall be governed and interpreted in accordance with Minnesota law, this Agreement and all other Transaction Documents shall be delivered and accepted in and shall be deemed to be contracts made under and governed by the internal laws of the State of Minnesota, and for all purposes shall be construed in accordance with the laws of such State, without giving effect to the choice of law provisions of such state. This Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota without regard to principles of conflicts of laws.

 

(b). Mandatory Forum Selection. Any action brought by either party against the other concerning the transactions contemplated by this Note shall be brought only in the state courts or federal courts located in the state of Minnesota, County of Hennepin. The parties to this Note hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens . The Borrower and Holder waive trial by jury. The prevailing party shall be entitled to recover from the other party its reasonable attorney's fees and costs. In the event that any provision of this Note or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement. Each party hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this Agreement or any other Transaction Document by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.

 

4.7 Certain Amounts . Whenever pursuant to this Note the Borrower is required to pay an amount in excess of the outstanding principal amount (or the portion thereof required to be paid at that time) plus accrued and unpaid interest, the Borrower and the Holder agree that the actual damages to the Holder from the receipt of cash payment on this Note may be difficult to determine and the amount to be so paid by the Borrower represents stipulated damages and not a penalty and is intended to compensate the Holder in part for loss of the opportunity to convert this Note and to earn a return from the sale of shares of Common Stock acquired upon conversion of this Note at a price in excess of the price paid for such shares pursuant to this Note. The Borrower and the Holder hereby agree that such amount of stipulated damages is not plainly disproportionate to the possible loss to the Holder from the receipt of a cash payment without the opportunity to convert this Note into shares of Common Stock.

 

4.8 Usury Savings Clause . Notwithstanding any provision in this Note or the other Transaction Documents to the contrary, the total liability for payments of interest and payments in the nature of interest, including, without limitation, all charges, fees, exactions, or other sums which may at any time be deemed to be interest, shall not exceed the limit imposed by the usury laws of the jurisdiction governing this Note or any other applicable law. In the event the total liability of payments of interest and payments in the nature of interest, including, without limitation, all charges, fees, exactions or other sums which may at any time be deemed to be interest, shall, for any reason whatsoever, result in an effective rate of interest, which for any month or other interest payment period exceeds the limit imposed by the usury laws of the jurisdiction governing this Note, all sums in excess of those lawfully collectible as interest for the period in question shall, without further agreement or notice by, between, or to any party hereto, be applied to the reduction of the outstanding principal balance due hereunder immediately upon receipt of such sums by the Holder hereof, with the same force and effect as though the Company had specifically designated such excess sums to be so applied to the reduction of the principal balance then outstanding, and the Holder hereof had agreed to accept such sums as a penalty-free payment of principal; provided, however, that the Holder may, at any time and from time to time, elect, by notice in writing to the Company, to waive, reduce, or limit the collection of any sums in excess of those lawfully collectible as interest, rather than accept such sums as a prepayment of the principal balance then outstanding. It is the intention of the parties that the Company does not intend or expect to pay, nor does the Holder intend or expect to charge or collect any interest under this Note greater than the highest non-usurious rate of interest which may be charged under applicable law.

 

4.9 Purchase Agreement . By its acceptance of this Note, each party agrees to be bound by the applicable terms of the Purchase Agreement.

 

4.10 Notice of Corporate Events . Except as otherwise provided below, the Holder of this Note shall have no rights as a Holder of Common Stock unless and only to the extent that it converts this Note into Common Stock. The Borrower shall provide the Holder with prior notification of any meeting of the Borrower’s shareholders (and copies of proxy materials and other information sent to shareholders). In the event of any taking by the Borrower of a record of its shareholders for the purpose of determining shareholders who are entitled to receive payment of any dividend or other distribution, any right to subscribe for, purchase or otherwise acquire (including by way of merger, consolidation, reclassification or recapitalization) any share of any class or any other securities or property, or to receive any other right, or for the purpose of determining shareholders who are entitled to vote in connection with any proposed sale, lease or conveyance of all or substantially all of the assets of the Borrower or any proposed liquidation, dissolution or winding up of the Borrower, the Borrower shall mail a notice to the Holder, at least twenty (20) days prior to the record date specified therein (or thirty (30) days prior to the consummation of the transaction or event, whichever is earlier), of the date on which any such record is to be taken for the purpose of such dividend, distribution, right or other event, and a brief statement regarding the amount and character of such dividend, distribution, right or other event to the extent known at such time. The Borrower shall make a public announcement of any event requiring notification to the Holder hereunder substantially simultaneously with the notification to the Holder in accordance with the terms of this Section 4.9.

 

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

 

4.12 Right of First Refusal . If at any time while this Note is outstanding, the Borrower has a bona fide offer of capital or financing from any 3 rd party, the Borrower must first offer such opportunity to the Holder to provide such capital or financing to the Borrower on the same terms as each respective 3 rd party’s terms. Should the Holder be unwilling or unable to provide such capital or financing to the Borrower within 15 days from receipt of written notice of the offer (the “Offer Notice”) from the Borrower, then the Borrower may obtain such capital or financing from that respective 3 rd party upon the same terms and conditions offered by the Borrower to the Holder, which transaction must be completed within 30 days after the date of the Offer Notice. If the Borrower does not complete such transaction within such time period, then the Borrower must again offer the capital or financing opportunity to the Holder on the same terms, and the process detailed above shall be repeated.

 

4.13 ACH Payment Authorization . Borrower irrevocably authorizes Holder’s right to withdraw (through an ACH debit or otherwise) $US850.00 to commence in two week from funding date and to last for a 30 day period. Remaining 210 day period the per day amount will increase to $US1,100.00 (the “Specific Daily Repayment Amount”) (subject to adjustment as provided herein) from the Borrower’s bank account (initially, the bank account identified on Exhibit B attached hereto, but also including any subsequent bank account of the Borrower if such account is changed) (the “Bank Account”), on each business day, until this Note is satisfied in full. Borrower shall provide Holder with all required access codes to effectuate any and all ACH debit transactions as provided for in this Note. Borrower understands that it is responsible for ensuring that at least the Specific Daily Repayment Amount remains in its Bank Account on each business day until this Note is satisfied in full, and that the Borrower shall be responsible for any charges incurred by the Holder resulting from a rejected ACH attempt, insufficient funds in the Bank Account, and/or all related bank charges. Such charges shall be immediately added to the outstanding balance of the Note. The Specific Daily Repayment Amount shall automatically adjust to such prorated higher amount based upon the addition of charges to the outstanding balance of Note, as well as to reflect any penalties incurred or events of defaults triggered under the terms of the Note (to be calculated as follows: the total outstanding amount under the Note (including but not limited to all principal, interest, charges, penalties, and additions due to any event of default) divided by the number of business days remaining prior to the Maturity Date). Holder shall not be responsible for any overdrafts or rejected transactions that result from Holder’s ACH debiting of the Specific Daily Repayment Amount as provided in this Note and the exhibits hereto. Holder may debit the Specific Daily Repayment Amount each business day.

 

The Holder shall be permitted to aggregate the Specific Daily Repayment Amount of all convertible promissory notes then issued by the Borrower to the Holder, and withdraw such aggregated amount from the Borrower’s bank account, in the interest of reducing overall fees associated with the ACH debit transactions.

 

The Holder may, from time to time, provide a schedule to the Borrower via electronic mail (each a “Schedule”) to michael@ozopsurgical.com , showing the outstanding balance of the Note as well as all ACH debits, conversion amounts, and/or all other adjustments as provided in the Note (the “Schedule”). If the Borrower does not respond to the Holder, via electronic mail to info@carebourncapital.com , stating that the respective Schedule is accurate or disputing the amounts contained therein (with objective documentation unequivocally supporting such dispute), within two (2) business days of receipt of the respective Schedule, then the Borrower shall be deemed to have irrevocably approved the amounts contained in such respective Schedule.

 

4.14 Terms of Future Financings.  So long as this Note is outstanding, upon any issuance by the Borrower or any of its subsidiaries of any security with any term more favorable to the holder of such security or with a term in favor of the holder of such security that was not similarly provided to the Holder in this Note, then the Borrower shall notify the Holder of such additional or more favorable term and such term, at Holder’s option, shall become a part of the transaction documents with the Holder.  The types of terms contained in another security that may be more favorable to the holder of such security include, but are not limited to, terms addressing conversion discounts, prepayment rate, conversion lookback periods, interest rates, original issue discounts, stock sale price, private placement price per share, and warrant coverage.

[SIGNATURE PAGE FOLLOWS]

 
 

 

IN WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by its duly authorized officer this APRIL 13 TH , 2018 .

 

 

NEWMARKT CORP.

 

 

 

By: /s/ Michael Chermak

Name: Michael Chermak

Title: CEO

 

 

 

 
 

EXHIBIT A: NOTICE OF CONVERSION

 

The undersigned hereby elects to convert $______________________ principal amount of the Note (defined below) into that number of shares of Common Stock to be issued pursuant to the conversion of the Note (“Common Stock”) as set forth below, of NEWMARKT CORP., a NEVADA corporation (the “Borrower”) according to the conditions of the convertible note of the Borrower dated as of APRIL 13 TH , 2018 (the “Note”), as of the date written below. No fee will be charged to the Holder for any conversion, except for transfer taxes, if any.

 

Box Checked as to applicable instructions:  
     
The Borrower shall electronically transmit the Common Stock issuable pursuant to this Notice of Conversion to the account of the undersigned or its nominee with DTC through its Deposit Withdrawal Agent Commission system (“DWAC Transfer”).
     
  Name of DTC Prime Broker:      
  Account Number:     
     
The undersigned hereby requests that the Borrower issue a certificate or certificates for the number of shares of Common Stock set forth below (which numbers are based on the Holder’s calculation attached hereto) in the name(s) specified immediately below or, if additional space is necessary, on an attachment hereto:
     
  CAREBOURN CAPITAL, L.P.   
  8700 Black Oaks Lane N  
  Maple Grove, Minnesota 55311  
  Attention: Certificate Delivery    
  612.889.4671  
     
  Date of Conversion:            _____________
  Applicable Conversion Price:     $____________
  Number of Shares of Common Stock to be Issued    
  Pursuant to Conversion of the Notes:     _____________
  Amount of Principal Balance Due remaining  
  Under the Note after this conversion:     _____________
     
  CAREBOURN CAPITAL, L.P.   
  By: Carebourn Partners, LLC,  
  a Minnesota limited liability company,  
  its General Partner  
     
     
  By: _____________________________  
  Name: Chip Rice  
  Title:   Managing Member  

 

 

     

 

EXHIBIT B

(see attached)

 

 

AUTHORIZATION AGREEMENT FOR PREAUTHORIZED PAYMENTS

 

NEWMARKT CORP. , a NEVADA corporation (the “Company”), hereby irrevocably authorizes Carebourn Capital, L.P. (the “Holder”), to initiate debit and credit entries to its checking account indicated below (the “Account”) and the depository named below (the “Depository”), to debit or credit the same to such Account. The Company further authorizes the Holder to debit said Account for such total outstanding amount of the convertible promissory note issued by the Company to Holder on APRIL 13 TH , 2018 (the “Note”), upon an Event of Default (as defined in the Note). The Company hereby represents and certifies that the Account is used for commercial and/or business purposes only.

Depository Name: _____________________________

Name of Bank Account: _________________________

Bank Address: _________________________________

_________________________________

Routing/ABA Number: __________________________

Account Number: ______________________________

A copy of a voided check for the Account is attached hereto as Exhibit “C”. This authority is to remain in full force and effect until the Holder confirms in a signed writing that the Note has been satisfied in full, and in a manner as to afford the Depository a reasonable opportunity to act on it.

 

/s/ Michael Chermak

Signature

 

Name: Michael Chermak
Title: CEO

 
 

 

EXHIBIT C

(see attached)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     

 

 

EXHIBIT D

(see attached)

 

Representations and Warranties Regarding Anti-Money Laundering; OFAC.

1.1. The Borrower should check the Office of Foreign Assets Control (“OFAC”) website at http://www.treas.gov/ofac before making the following representations.
1.2. The Borrower represents that the cash amounts to be paid to Carebourn Capital, L.P. (the “Holder”) under the convertible promissory note dated APRIL 13 TH , 2018 (the “Note”), by the Borrower, were not and are not directly or indirectly derived from activities that contravene U.S. federal or state or international laws and regulations, including anti-money laundering laws and regulations. U.S. federal regulations and executive orders administered by OFAC prohibit, among other things, the engagement in transactions with, and the provision of services to, certain foreign countries, territories, entities and individuals. The lists of OFAC prohibited countries, territories, persons and entities can be found on the OFAC website at http://www.treas.gov/ofac. In addition, the programs administered by OFAC (the “OFAC Programs”) prohibit dealing with individuals [1] or entities in certain countries regardless of whether such individuals or entities appear on the OFAC lists.
1.3. To the best of the Borrower’s knowledge, none of: (1) the Borrower; (2) any person controlling or controlled by the Borrower; (3) if the Borrower is a privately-held entity, any person having a beneficial interest in the Borrower; or (4) any person for whom the Borrower is acting as agent or nominee is a country, territory, individual or entity named on an OFAC list, or a person or entity prohibited under the OFAC Programs.
1.4. To the best of the Borrower’s knowledge, none of: (1) the Borrower; (2) any person controlling or controlled by the Borrower; (3) if the Borrower is a privately-held entity, any person having a beneficial interest in the Borrower; or (4) any person for whom the Borrower is acting as agent or nominee is a senior foreign political figure [2] , or any immediate family [3] member or close associate [4] of a senior foreign political figure, as such terms are defined in the footnotes below.

1.5. Borrower hereby represents and warrants that the cash payments under the Note are to be made on its own behalf or, if applicable, and such cash payments do not directly or indirectly contravene United States federal, state, local or international laws or regulations applicable to Borrower, including anti-money laundering laws.
1.6. If the Borrower is affiliated with a non-U.S. banking institution (a “Foreign Bank”), or if the Borrower receives deposits from, makes payments on behalf of, or handles other financial transactions related to a Foreign Bank, the Borrower represents and warrants to the Holder that: (1) the Foreign Bank has a fixed address, other than solely an electronic address, in a country in which the Foreign Bank is authorized to conduct banking activities; (2) the Foreign Bank maintains operating records related to its banking activities; (3) the Foreign Bank is subject to inspection by the banking authority that licensed the Foreign Bank to conduct banking activities; and (4) the Foreign Bank does not provide banking services to any other Foreign Bank that does not have a physical presence in any country and that is not a regulated affiliate.
1.7. Upon the written request from the Holder, Borrower agrees to provide all information to the Holder to enable the Holder to comply with all applicable anti-money laundering statutes, rules, regulations and policies. Borrower understands and agrees that the Holder may release confidential information about Borrower and, if applicable, any of its affiliates, directors, officers, trustees, beneficiaries and grantors related thereto, to any person if the Holder, in its sole discretion, determines that such disclosure is necessary to comply with applicable statutes, rules, regulations and policies.

 

IN WITNESS WHEREOF, Borrower has caused this representation letter to be signed in its name by its duly authorized officer this APRIL 13 TH , 2018 .

 

 

NEWMARKT CORP.

 

 

 

By: /s/ Michael Chermak

Name: Michael Chermak

Title: CEO

 

 

 

 

 


[1] These individuals include specially designated nationals, specially designated narcotics traffickers and other parties subject to OFAC sanctions and embargo programs.

[2] A “senior foreign political figure” is defined as a senior official in the executive, legislative, administrative, military or judicial branches of a foreign government (whether elected or not), a senior official of a major foreign political party, or a senior executive of a foreign government-owned corporation. In addition, a “senior foreign political figure” includes any corporation, business or other entity that has been formed by, or for the benefit of, a senior foreign political figure.

[3] “Immediate family” of a senior foreign political figure typically includes the figure’s parents, siblings, spouse, children and in-laws.

[4] A “close associate” of a senior foreign political figure is a person who is widely and publicly known to maintain an unusually close relationship with the senior foreign political figure, and includes a person who is in a position to conduct substantial domestic and international financial transactions on behalf of the senior foreign political figure.

Exhibit 10.4

 

PLEDGE AGREEMENT

PLEDGE AGREEMENT (this " Agreement "), dated as of April __, 2018, made by [_____________] (referred to herein as the " Pledgor "), in favor of Carebourn Capital, L.P., with an address at 8700 Black Oaks Lane N., Maple Grove, MN 55311 (" Pledgee ").

WHEREAS:

A. On or around April __, 2018, Newmarkt, Corp., a Nevada corporation (the “Company”) issued [___] shares of its common stock, par value $0.001 per share to Pledgor (the “Common Stock” or “Pledged Shares”);

B. The Pledgor still owns all right, interest, and title to the Pledged Shares, and has not sold, assigned, transferred, or otherwise conveyed any interest in any of the Pledged Shares.

C. There are currently 25,797,500 shares of Common Stock issued and outstanding, consisting of, in part, the Pledged Shares, and accordingly.

D. Pledgee has agreed to loan certain monies to the Company, pursuant to that certain convertible promissory note, in the principal amount of $____________.00 (the “Note”), which was issued to the Pledgee by the Company on or around the date of this Agreement; and

E. Pledgor will materially benefit by the transactions contemplated by the Note; and

F. It is a condition precedent to the loan that Pledgor shall have executed and delivered to Pledgee a pledge agreement providing for the pledge to the Pledgee of, and the grant to the Pledgee of a security interest in, all of the Pledged Shares.

NOW, THEREFORE, in consideration of the premises and the agreements herein contained and in order to induce the Pledgee to make the loan described above, the Pledgor hereby agrees with the Pledgee as follows:

SECTION 1. Definitions . All terms used in this Agreement which are defined in the Note, Article 8 or Article 9 of the Uniform Commercial Code (the " UCC ") currently in effect in the State of Nevada and which are not otherwise defined herein shall have the same meanings herein as set forth therein; provided, that terms used herein which are defined in the UCC as in effect in the State of Nevada on the date hereof shall continue to have the same meaning notwithstanding any replacement or amendment of such statute.

SECTION 2. Pledge and Grant of Security Interest . As collateral security for all of the Obligations (as defined in Section 3 hereof), the Pledgor hereby pledges and assigns to Pledgee, and grants to Pledgee a continuing security interest in, the Pledgor's right, title and interest in and to the Pledged Shares, the certificates representing such Pledged Shares, all options and other rights, contractual or otherwise, in respect thereof and all dividends, distributions, cash, instruments, investment property and other property (including but not limited to, any stock dividend and any distribution in connection with a stock split) from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the Pledged Shares (collectively, the " Pledged Collateral ").

SECTION 3. Security for Obligations . The security interest created hereby in the Pledged Collateral constitutes continuing collateral security for all of the obligations under the Note and related transaction documents (the " Obligations "), whether now existing or hereafter incurred, including but not limited to the following:

 

SECTION 4. Delivery of the Pledged Collateral .

(a) Pledgee shall hold the Pledged Shares for its benefit and Pledgor further agrees to execute such other documents and to take such other actions as Pledgee deems reasonably necessary or desirable to create and perfect the security interests intended to be created hereunder, including, without limitation, duly executed undated stock powers endorsed in blank, with medallion guarantee(s), to effect the foregoing and to permit Pledgee to exercise any of its rights and remedies hereunder.

(b) If Pledgor shall receive, by virtue of its being or having been an owner of any Pledged Collateral, any (i) stock certificate (including, without limitation, any certificate representing a stock dividend or distribution in connection with any increase or reduction of capital, reclassification, merger, consolidation, sale of assets, combination of shares, stock split, spin-off or split-off), promissory note or other instrument, (ii) option or right, whether as an addition to, substitution for, or in exchange for, any Pledged Collateral, or otherwise, (iii) dividends or interest payable in cash or in securities or other property, (iv) dividends, interest and other distributions paid or payable other than in cash in respect of, and instruments and other property received, receivable or otherwise distributed in respect of or in exchange for, any Pledged Collateral, (v) dividends or other distributions in connection with a partial or total liquidation or dissolution or in connection with a reduction of capital, capital surplus or paid-in surplus, or (vi) cash paid, payable or otherwise distributed in redemption of, or in exchange for, any Pledged Collateral, such stock certificate, promissory note, instrument, option, right, property, payment or distribution constituting Pledged Collateral shall be, and shall forthwith be delivered to Pledgee to hold as, Pledged Collateral and shall be received in trust for the benefit of the Pledgee, shall be segregated from Pledgor's other property and shall be delivered forthwith to Pledgee in the exact form received, with any necessary endorsement and/or appropriate stock powers duly executed in blank, to be held by the Pledgee as Pledged Collateral and as further collateral security for the Obligations.

(c) If an event occurs that entitles the Pledgee to exercise its rights under this Agreement and acquire the Pledged Shares, then Pledgee shall have the right to acquire such Pledged Collateral, at the sole election of the Pledgee, upon not less than 61 days’ prior notice to the Pledgor.

SECTION 5. Representations and Warranties . The Pledgor represents and warrants as follows:

(a) The execution, delivery and performance by the Pledgor of this Agreement and the exercise by Pledgee of any of its rights and remedies in accordance with the terms of this Agreement and applicable securities law will not contravene any law or any contractual restriction binding on or affecting the Pledgor or any of its properties and do not and will not result in or require the creation of any lien upon or with respect to any of its properties other than pursuant to this Agreement.

(b) The Pledgor is and will be at all times the beneficial owner of the Pledged Collateral free and clear of any lien or option except for the security interest created by this Agreement.

(c) No authorization or approval or other action by, and no notice to or filing with, any governmental authority or other regulatory body is required for the grant by the Pledgor, or the perfection, of the security interest purported to be created hereby in the Pledged Collateral or the exercise by Pledgee of any of its rights and remedies hereunder, except as may be required in connection with any sale of any Pledged Collateral by laws affecting the offering and sale of securities generally, including the foreclosure procedures sanctioned under the interpretations of the securities laws.

(d) This Agreement creates a valid security interest in favor of the Pledgee in the Pledged Collateral, as security for the Obligations. Such security interest is, or in the case of Pledged Collateral in which the Pledgor obtains rights after the date hereof, will be, a perfected, first priority security interest. All action necessary to perfect and protect such security interest has been duly taken, except for Pledgee's having possession of security certificates constituting Pledged Collateral after the date hereof and obtaining control of uncertificated securities and security entitlements constituting Pledged Collateral after the date hereof.

SECTION 6. Covenants as to the Pledged Collateral . So long as any of the Obligations shall remain outstanding and/or until the Note is satisfied in its entirety, the Pledgor shall, unless Pledgee shall otherwise consent in writing:

(a) keep adequate records concerning the Pledged Collateral and permit Pledgee or any agents or representatives of Pledgee at any reasonable time and from time to time to examine and make copies of and abstracts from such records;

(b) at its expense, promptly deliver to Pledgee a copy of each notice or other communication received by it in respect of the Pledged Collateral;

(c) at its expense, defend Pledgee's right, title and security interest in and to the Pledged Collateral against the claims of any person or entity;

(d) at its expense, at any time and from time to time, promptly execute and deliver all further instruments and documents and take all further action that may be necessary or desirable or that Pledgee may reasonably request in order to (i) perfect and protect the security interest purported to be created hereby, or (ii) enable Pledgee to exercise and enforce its rights and remedies hereunder in respect of the Pledged Collateral;

(e) not sell, assign (by operation of law or otherwise), transfer, exchange or otherwise dispose of any Pledged Collateral or any interest therein;

(f) not create or suffer to exist any lien upon or with respect to any Pledged Collateral except for the security interest created hereby;

(g) not make or consent to any amendment or other modification or waiver with respect to any Pledged Collateral or enter into any agreement or permit to exist any restriction with respect to any Pledged Collateral other than pursuant hereto;

(h) not take or fail to take any action which would in any manner impair the value or enforceability of Pledgee's security interest in any Pledged Collateral (including but not limited to taking any action that would result in the Pledgor to no longer be the Chairman of the Board of Directors of the Company.

SECTION 7. Voting Rights, Etc. in Respect of the Pledged Collateral .

(a) So long as no Event of Default or event which, with the giving of notice or lapse of time or both, would constitute an Event of Default, shall have occurred and be continuing:

(i) the Pledgor may exercise any and all voting and other consensual rights pertaining to any Pledged Collateral for any purpose not inconsistent with the terms of the Note; and

(ii) Pledgee will execute and deliver (or cause to be executed and delivered) to the Pledgor all such proxies and other instruments as Pledgor may reasonably request for the purpose of enabling Pledgor to exercise the voting and other rights which it is entitled to exercise pursuant to paragraph Section 7(a)(i) hereof.

(b) Upon the occurrence and during the continuance of an Event of Default or an event which, with the giving of notice or the lapse of time or both, would constitute an Event of Default:

(i) all rights of the Pledgor to exercise the voting and other consensual rights which it would otherwise be entitled to exercise pursuant to Section 7(a)(i) hereof shall cease, and additionally, upon not less than 61 days’ prior notice to the Pledgor by Pledgee, all such rights shall thereupon become vested in the Pledgee, which shall thereupon have the sole right to exercise such voting and other consensual rights; and

(ii) without limiting the generality of the foregoing, Pledgee may, at its option upon not less than 61 days’ prior notice to the Pledgor by Pledgee, exercise any and all rights of conversion, exchange, subscription or any other rights, privileges or options pertaining to any Pledged Collateral as if it were the absolute owner thereof, including, without limitation, the right to exchange, in its discretion, any and all of such Pledged Collateral upon the merger, consolidation, reorganization, recapitalization or other adjustment of the Company, or upon the exercise of any right, privilege or option pertaining to any Pledged Collateral, and, in connection therewith, to deposit and deliver any and all of the Pledged Collateral with any committee, depository, transfer agent, registrar or other designated agent upon such terms and conditions as it may determine, subject to the beneficial ownership limitations contained herein.

SECTION 8. Additional Provisions Concerning the Pledged Collateral .

(a) The Pledgor hereby authorizes Pledgee to file, without the signature of the Pledgor where permitted by law, one or more financing or continuation statements, and amendments thereto, relating to the Pledged Collateral.

(b) The Pledgor hereby irrevocably appoints Pledgee as the Pledgor's attorney-in-fact and proxy, with full authority, exercisable only during the existence of an Event of Default, in the place and stead of the Pledgor and in the name of the Pledgor or otherwise, from time to time in Pledgee's discretion, to take any action and to execute any instrument which Pledgee may deem necessary or advisable to accomplish the purposes of this Agreement (subject to the rights of the Pledgor under Section 7(a) hereof), including, without limitation, to receive, endorse and collect all instruments made payable to the Pledgor representing any dividend or other distribution in respect of any of Pledgee's Pledged Collateral and to give full discharge for the same. This power is coupled with an interest and is irrevocable until all of the Obligations are satisfied in full.

(c) If the Pledgor fails to perform any agreement or obligation contained herein, Pledgee itself may perform, or cause performance of, such agreement or obligation with respect to Pledged Collateral, and the expenses of Pledgee incurred in connection therewith shall be payable by the Pledgor pursuant to Section 10 hereof and shall be secured by the Pledged Collateral.

(d) So long as any of the Obligations shall remain outstanding, the Company shall not issue any shares of its preferred stock or designate any other series of preferred stock unless the Pledgee has provided written consent in a signed writing.

SECTION 9. Remedies Upon Default . If any Event of Default shall have occurred and be continuing, in the event the proceeds of any such sale, collection or realization are insufficient to pay all amounts to which the applicable Pledgee is legally entitled, the Pledgor shall be liable for the deficiency, together with interest thereon at the highest rate specified in the Note for interest on overdue principal thereof or such other rate as shall be fixed by applicable law, together with the costs of collection and the reasonable fees of any attorneys employed by Pledgee to collect such deficiency.

SECTION 10. Indemnity and Expenses .

(a) The Pledgor agrees to indemnify and hold harmless Pledgee and all of its stockholders, partners, members, officers, directors, employees and direct or indirect investors and any of the foregoing persons' agents or other representatives (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) from and against any and all third-party claims, damages, losses, liabilities, obligations, penalties, costs and expenses (including, without limitation, reasonable attorney's fees and disbursements) to the extent that they arise out of or otherwise result from this Agreement (including, without limitation, enforcement of this Agreement), except, as to any such indemnified person or entity, claims, losses or liabilities resulting solely and directly from such person or entity's gross negligence or willful misconduct as determined by a final judgment of a court of competent jurisdiction and except to the extent that such claims, losses or liabilities result from failure of such indemnified person or entities to comply with the securities laws.

(b) The Pledgor will pay to Pledgee upon demand the amount of any and all costs and expenses, including the fees and disbursements of Pledgee's counsel and of any experts and agents, which Pledgee may incur in connection with (i) the custody, preservation, use or operation of, or the sale of, collection from, or other realization upon, any of Pledged Collateral, (ii) the exercise or enforcement of any of the rights of Pledgee hereunder or (iii) the failure by Pledgor to perform or observe any of the provisions hereof.

SECTION 11. Notices . Whenever notice is required to be given under this Agreement, unless otherwise provided herein, such notice shall be given in accordance with the terms of the Note.

 

SECTION 12. Security Interest Absolute . To the extent permitted by law, all rights of Pledgee and the Pledgor hereunder shall be absolute and unconditional irrespective of: (i) any lack of validity or enforceability of any ancillary agreement or any other agreement or instrument relating thereto, (ii) any change in the time, manner or place of payment of, or in any other term in respect of, all or any of the Obligations, or any other amendment or waiver of or consent to any departure from any guaranty, for all or any of the Obligations, or (iii) any other circumstance which might otherwise constitute a defense available to, or a discharge of, the Pledgor in respect of the Obligations. All authorizations and agencies contained herein with respect to any of the Pledged Collateral are irrevocable and powers coupled with an interest.

 

SECTION 13. Miscellaneous .

(a) No amendment of any provision of this Agreement shall be effective unless it is in writing and signed by the Pledgor and Pledgee, and no waiver of any provision of this Agreement, and no consent to any departure by the Pledgor therefrom, shall be effective unless it is in writing and signed by Pledgee, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

(b) No failure on the part of Pledgee to exercise, and no delay in exercising, any right hereunder or under any ancillary agreement shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right. The rights and remedies of the Pledgee provided herein and in the ancillary agreements are cumulative and are in addition to, and not exclusive of, any rights or remedies provided by law. The rights of the Pledgee under any ancillary agreement against any party thereto are not conditional or contingent on any attempt by Pledgee to exercise any of its rights under any other document against such party or against any other person or entity.

(c) Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof or thereof or affecting the validity or enforceability of such provision in any other jurisdiction.

(d) This Agreement shall create a continuing security interest in the Pledged Collateral and shall (i) remain in full force and effect until the satisfaction in full or release of the Obligations and (ii) be binding on the Pledgor and its successors and assigns and shall inure, together with all rights and remedies of the Pledgee hereunder, to the benefit of the Pledgee and its successors, transferees and assigns; provided that no such transfer or assignment shall be valid if it is in violation of applicable securities laws. Without limiting the generality of clause (ii) of the immediately preceding sentence, subject to compliance with the applicable securities laws and applicable provisions of the ancillary agreements, Pledgee may assign or otherwise transfer all or any portion of the Note, and its rights under the ancillary agreements, to any other person or entity, and such other person or entity shall thereupon become vested with all of the benefits in respect thereof granted to Pledgee herein or otherwise unless such benefit is unavailable due to the status of such transferee or otherwise under applicable law. Upon any such permitted assignment or transfer, all references in this Agreement to Pledgee shall mean the assignee of Pledgee. None of the rights or obligations of the Pledgor hereunder may be assigned or otherwise transferred without the prior written consent of Pledgee.

(e) Upon the satisfaction in full of the Obligations, (i) this Agreement and the security interest created hereby shall terminate and all rights to the Pledged Collateral, if any shall be remaining, shall revert to the Pledgor, and (ii) the Pledgee will, upon the Pledgor's request and at the Pledgor's expense, (A) return to the Pledgor such of the Pledged Collateral as shall not have been sold or otherwise disposed of, dealt with or applied pursuant to the terms hereof and of the ancillary agreements and (B) execute and deliver to the Pledgor, without recourse, representation or warranty, such documents as the Pledgor shall reasonably request to evidence such termination.

(f) All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of Nevada, without regard to the principles of conflicts of law thereof. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the Hennepin County, Minnesota, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. If either party shall commence a Proceeding to enforce any provisions of this Agreement, then the prevailing party in such Proceeding shall be reimbursed by the other party for its attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such proceeding.

(g) Pledgor has entered into this Agreement with the advice of its own legal counsel. Accordingly, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement.

SECTION 14. Representations and Warranties of Company .

 

(a) The obligations of the Company under the Note are secured by the Pledged Shares, pursuant to this Agreement. Until the Note is satisfied in full, pursuant to the terms of the Note, the Pledgor shall not be able to transfer or otherwise dispose of any of the Pledged Shares, and the Company shall not effectuate any such transfer or disposition. Until the Note is satisfied in full, pursuant to the terms of the Note, unless signed written consent is obtained by the Pledgee, the Company shall not (i) issue any shares of preferred stock, (ii) effectuate any reverse split with respect to the Common Stock, and (iii) take any action that would cause the Pledgor to no longer be the Chairman of the Board of Directors of the Company.

 

 

[Signature page to follow]

 
 

IN WITNESS WHEREOF, the Pledgor has caused this Agreement to be executed and delivered by its officer thereunto duly authorized, as of the date first above written. 

 

CAREBOURN CAPITAL, L.P.

 

By: ________________________________

Name: Chip Rice

Title: Managing Member

 

 

ACCEPTED AND AGREED:

 

 

Newmarkt, Corp.

 

 

By: _______________________________

Name: Michael Chermak

Title: Chief Executive Officer