SHARE EXCHANGE AGREEMENT

 

 

 

 

 

 

 

 

 

 

 

 

(i) Schedule 2.01(q) lists the following contracts and other agreements (“Material Agreements”) to which either the Company or the Selling Shareholders are a party: (a) any agreement (or group of related agreements) for the lease of real or personal property, including capital leases, to or from any person providing for annual lease payments in excess of $10,000 (b) any licensing agreement, or any agreement forming a partnership, strategic alliances, profit sharing or joint venture; (c) any agreement (or group of related agreements) under which it has created, incurred, assumed, or guaranteed any indebtedness for borrowed money in excess of $10,000, or under which a security interest has been imposed on any of its assets, tangible or intangible; (d) any profit sharing, stock option, stock purchase, stock appreciation, deferred compensation, severance, or other material plan or arrangement for the benefit of its current or former officers and managers or any of the Company’s employees; (e) any employment or independent contractor agreement providing annual compensation in excess of $10,000 or providing post-termination or severance payments or benefits or that cannot be cancelled without more than 30 days’ notice; (f) any agreement with any current or former officer, director, shareholder or affiliate of the Company; (g) any agreements relating to the acquisition (by merger, purchase of stock or assets or otherwise) by the Company of any operating business or material assets or the capital stock of any other person; (h) any agreements for the sale of any of the assets of the Company, other than in the ordinary course of business; (i) any outstanding agreements of guaranty, surety or indemnification, direct or indirect, by the Company; (j) any royalty agreements, licenses or other agreements relating to Intellectual Property (excluding licenses pertaining to “off-the-shelf” commercially available software used pursuant to shrink-wrap or click-through license agreements on reasonable terms for a license fee of no more than $10,000); and (k) any other agreement under which the consequences of a default or termination could reasonably be expected to have a material adverse effect on the Company.

 

(ii) The Company has made available to Pubco either an original or a correct and complete copy of each written Material Agreement. Except as set forth on Schedule 2.01(q), with respect to each Material Agreement to which the Company or the Selling Shareholders are a party thereto: (A) the agreement is the legal, valid, binding, enforceable obligation of the Company or any of the Selling Shareholders and is in full force and effect in all material respects, subject to bankruptcy and equitable remedies exceptions; (B)(1) neither the Company nor the Selling Shareholders party thereto is in material breach or default thereof, (2) no event has occurred which, with notice or lapse of time, would constitute a material breach or default of, or permit termination, modification, or acceleration under, the Material Agreement; or (3) the Company has not received any notice or has any knowledge that any other party is, in default in any respect under any Material Agreement; and (C) neither the Company nor the Selling Shareholders have repudiated any material provision of the agreement.

 

(r) Material Agreement Defaults. The Company is not, or has not, received any notice or has any knowledge that any other party is, in default in any respect under any Material Agreements; and there has not occurred any event that with the lapse of time or the giving of notice or both would constitute such a material default. For purposes of this section, a Material Agreement includes agreements which, if breached by the Company or the Selling Shareholders in such a manner would (i) permit any other party to cancel or terminate the same (with or without notice of passage of time), (ii) provide a basis for any other party to claim money damages (either individually or in the aggregate with all other such claims under that contract) from the Company or the Selling Shareholders, or (iii) give rise to a right of acceleration of any material obligation or loss of any material benefit under any such contract, agreement or commitment.

 

(s) Tax Returns and Tax Payments.

 

(i) The Company has filed with the appropriate taxing authorities all Tax Returns required to be filed by it (taking into account all applicable extensions). All such Tax Returns are true, correct and complete in all respects. All Taxes due and owing by the Company have been paid (whether or not shown on any Tax Return and whether or not any Tax Return was required). The unpaid Taxes of the Company did not, as of the License Date, exceed the reserve for Tax liability (excluding any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the face of the Company Financial Statements (rather than in any notes thereto). Since the Balance Sheet Date, the Company has not incurred any liability for Taxes outside the ordinary course of business consistent with past custom and practice. As of the Closing Date, the unpaid Taxes of the Company will not exceed the reserve for Tax liability (excluding any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the books and records of the Company.

 
 

(ii) No material claim for unpaid Taxes has been made or become a lien against the property of the Company or is being asserted against the Company, and no extension of the statute of limitations on the assessment of any Taxes has been granted to the Company and is currently in effect.

 

(iii) As used herein, “Taxes” shall mean all taxes of any kind, including, without limitation, those on or measured by or referred to as income, gross receipts, sales, use, ad valorem, franchise, profits, license, withholding, payroll, employment, excise, severance, stamp, occupation, premium value added, property or windfall profits taxes, customs, duties or similar fees, assessments or charges of any kind whatsoever, together with any interest and any penalties, additions to tax or additional amounts imposed by any governmental authority, domestic or foreign. As used herein, “Tax Return” shall mean any return, report or statement required to be filed with any governmental authority with respect to Taxes.

 

(t) Environmental Matters. The Company is in compliance with all Environmental Laws in all material respects. The Company holds all permits and authorizations required under applicable Environmental Laws, unless the failure to hold such permits and authorizations would not have a material adverse effect on the Company, and is compliance with all terms, conditions and provisions of all such permits and authorizations in all material respects. The Company has no liability, absolute or contingent, under any Environmental Law that if enforced or collected would have a material adverse effect on the Company. “Environmental Laws” means all applicable foreign, federal, state and local statutes, rules, regulations, ordinances, orders, decrees and common law relating in any manner to contamination, pollution or protection of human health or the environment, and similar state laws. “Hazardous Material” means any toxic, radioactive, corrosive or otherwise hazardous substance, including petroleum, its derivatives, by-products and other hydrocarbons, or any substance having any constituent elements displaying any of the foregoing characteristics, which in any event is regulated under any Environmental Law.

 

(u) Accounts Receivable. All of the accounts receivable of the Company that are reflected in the Company Financial Statements or the accounting records of the Company as of the Closing Date (collectively, the “Company Accounts Receivable”) represent or will represent valid obligations arising from sales actually made or services actually performed in the ordinary course of business and are not subject to any defenses, counterclaims, or rights of set off other than those arising in the ordinary course of business and for which adequate reserves have been established. The Company Accounts Receivable are fully collectible to the extent not reserved for on the balance sheet on which they are shown.

 

(v) Full Disclosure. All of the representations and warranties made by the Company in this Agreement, and all statements set forth in the certificates delivered by the Company at the Closing pursuant to this Agreement, are true, correct and complete in all material respects and do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make such representations, warranties or statements, in light of the circumstances under which they were made, misleading. The copies of all documents furnished by the Company pursuant to the terms of this Agreement are complete and accurate copies of the original documents. The schedules, certificates, and any and all other statements and information, whether furnished in written or electronic form, to Pubco or its representatives by or on behalf of any of the Company or its affiliates in connection with the negotiation of this Agreement and the transactions contemplated hereby do not contain any material misstatement of fact or omit to state a material fact or any fact necessary to make the statements contained therein not misleading.

 

2.02 Representations and Warranties of Pubco. Pubco represents and warrants to the Company and the Selling Shareholders as follows:

 

(a) Organization, Standing and Corporate Power. Pubco is duly organized, validly existing and in good standing under the laws of the State of Nevada and has the requisite corporate power and authority and all government licenses, authorizations, permits, consents and approvals required to own, lease and operate its properties and carry on its business as now being conducted. Pubco is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the nature of its business or the ownership or leasing of its properties makes such qualification or licensing necessary, other than in such jurisdictions where the failure to be so qualified or licensed (individually or in the aggregate) would not have a material adverse effect with respect to Pubco. Shares of common stock of Pubco, par value $0.0001 (“Pubco Common Stock”), are quoted on the OTCQB marketplace, operated by OTC Market Group, Inc. under the symbol “GRPH.”

 

(b) Subsidiaries. Pubco does not own directly or indirectly, any equity or other ownership interest in any company, corporation, partnership, joint venture or otherwise.

 

(c) Capital Structure of Pubco. As of the date of this Agreement, the authorized capital stock of Pubco consists of 300,000,000 shares of Pubco Common Stock, $0.0001 par value, of which 28,979,227 shares of Pubco Common Stock are issued and outstanding, and 10,000,000 shares of preferred stock, $0.0001 par value (“Pubco Preferred Stock”), of which no shares are issued or outstanding, and no shares of Pubco Common Stock or Pubco Preferred Stock are issuable upon the exercise of warrants, convertible notes, options or otherwise except as set forth in the Pubco SEC Documents (as defined herein). Except as set forth above, no shares of capital stock or other equity securities of Pubco are issued, reserved for issuance or outstanding. All shares which may be issued pursuant to this Agreement will be, when issued, duly authorized, validly issued, fully paid and nonassessable, free and clear of all liens, claims, rights, charges, encumbrances, and security interests of whatsoever nature or type, not subject to preemptive rights, and issued in compliance with all applicable state and federal laws concerning the issuance of securities.

 

(d) Corporate Authority; Noncontravention. Pubco has all requisite corporate and other power and authority to enter into this Agreement and to consummate the transactions contemplated by this Agreement. The execution and delivery of this Agreement by Pubco and the consummation by Pubco of the transactions contemplated hereby have been (or at Closing will have been) duly authorized by all necessary corporate action on the part of Pubco. This Agreement has been duly executed and when delivered by Pubco shall constitute a valid and binding obligation of Pubco, enforceable against Pubco in accordance with its terms, except as such enforcement may be limited by bankruptcy, insolvency or other similar laws affecting the enforcement of creditors’ rights generally or by general principles of equity. The execution and delivery of this Agreement do not, and the consummation of the transactions contemplated by this Agreement and compliance with the provisions hereof will not, conflict with, or result in any breach or violation of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of or “put” right with respect to any obligation or to loss of a material benefit under, or result in the creation of any lien upon any of the properties or assets of Pubco under, (i) its articles of incorporation, bylaws, or other charter documents of Pubco (ii) any loan or credit agreement, note, bond, mortgage, indenture, lease or other agreement, instrument, permit, concession, franchise or license applicable to Pubco, its properties or assets, or (iii) subject to the governmental filings and other matters referred to in the following sentence, any judgment, order, decree, statute, law, ordinance, rule, regulation or arbitration award applicable to Pubco, its properties or assets, other than, in the case of clauses (ii) and (iii), any such conflicts, breaches, violations, defaults, rights, losses or liens that individually or in the aggregate could not have a material adverse effect with respect to Pubco or could not prevent, hinder or materially delay the ability of Pubco to consummate the transactions contemplated by this Agreement.

 

(e) Government Authorization. No consent, approval, order or authorization of, or registration, declaration or filing with, or notice to, any Governmental Entity, is required by or with respect to Pubco in connection with the execution and delivery of this Agreement by Pubco, or the consummation by Pubco of the transactions contemplated hereby, except, with respect to this Agreement, any filings under the Nevada Statutes, the Securities Act or the Exchange Act.

 

(f) Financial Statements. The financial statements of Pubco included in the reports, schedules, forms, statements and other documents filed by Pubco with the Securities and Exchange Commission (“SEC”) (collectively, and in each case including all exhibits and schedules thereto and documents incorporated by reference therein, the “Pubco SEC Documents”), comply as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with U.S. generally accepted accounting principles (except, in the case of unaudited quarterly statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and fairly present the financial position of Pubco as of the dates thereof and the results of operations and changes in cash flows for the periods then ended (subject, in the case of unaudited quarterly statements, to normal year-end audit adjustments as determined by Pubco’s independent accountants). Pubco has not incurred any liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise) except those reasonable expenses accrued in the normal course of business operations.. As of their respective dates or, if amended, as of the date of the last such amendment, each of the Pubco SEC Documents, including any financial statements or schedules included therein (i) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading, (ii) were complete and accurate in all material respects, and (iii) complied in all material respects with the applicable requirements of the Exchange Act and the Securities Act, as the case may be, and the applicable rules and regulations of the SEC thereunder.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5.03 Notice of Indemnification. Promptly after the receipt by any indemnified party (the “Indemnitee”) of notice of the commencement of any action or proceeding against such Indemnitee, such Indemnitee shall, if a claim with respect thereto is or may be made against any indemnifying party (the “Indemnifying Party”) pursuant to this Article V, give such Indemnifying Party written notice of the commencement of such action or proceeding and give such Indemnifying Party a copy of such claim and/or process and all legal pleadings in connection therewith. The failure to give such notice shall not relieve any Indemnifying Party of any of its indemnification obligations contained in this Article V, except where, and solely to the extent that, such failure actually and materially prejudices the rights of such Indemnifying Party. Such Indemnifying Party shall have, upon request within thirty (30) days after receipt of such notice, but not in any event after the settlement or compromise of such claim, the right to defend, at its own expense and by its own counsel reasonably acceptable to the Indemnitee, any such matter involving the asserted liability of the Indemnitee; provided, however, that if the Indemnitee determines that there is a reasonable probability that a claim may materially and adversely affect it, other than solely as a result of money payments required to be reimbursed in full by such Indemnifying Party under this Article V or if a conflict of interest exists between Indemnitee and the Indemnifying Party, the Indemnitee shall have the right to defend, compromise or settle such claim or suit; and, provided, further, that such settlement or compromise shall not, unless consented to in writing by such Indemnifying Party, which shall not be unreasonably withheld, be conclusive as to the liability of such Indemnifying Party to the Indemnitee. In any event, the Indemnitee, such Indemnifying Party and its counsel shall cooperate in the defense against, or compromise of, any such asserted liability, and in cases where the Indemnifying Party shall have assumed the defense, the Indemnitee shall have the right to participate in the defense of such asserted liability at the Indemnitee’s own expense. In the event that such Indemnifying Party shall decline to participate in or assume the defense of such action, prior to paying or settling any claim against which such Indemnifying Party is, or may be, obligated under this Article V to indemnify an Indemnitee, the Indemnitee shall first supply such Indemnifying Party with a copy of a final court judgment or decree holding the Indemnitee liable on such claim or, failing such judgment or decree, the terms and conditions of the settlement or compromise of such claim. An Indemnitee’s failure to supply such final court judgment or decree or the terms and conditions of a settlement or compromise to such Indemnifying Party shall not relieve such Indemnifying Party of any of its indemnification obligations contained in this Article V, except where, and solely to the extent that, such failure actually and materially prejudices the rights of such Indemnifying Party. If the Indemnifying Party is defending the claim as set forth above, the Indemnifying Party shall have the right to settle the claim only with the consent of the Indemnitee.

 

 

 

6.01 Notices. Any and all notices and other communications hereunder shall be in writing and shall be deemed duly given to the party to whom the same is so delivered, sent or mailed at addresses and contact information set forth below (or at such other address for a party as shall be specified by like notice.) Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be deemed given and effective on the earliest of: (a) on the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto prior to 5:30 p.m. (Pacific Standard Time) on a business day, (b) on the next business day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto on a day that is not a business day or later than 5:30 p.m. (Pacific Standard Time) on any business day, (c) on the second business day following the date of mailing, if sent by a nationally recognized overnight courier service, or (d) if by personal delivery, upon actual receipt by the party to whom such notice is required to be given.

 

If to Pubco:

Graphite Corp.

Attention: Brian Goss – President and Chief Executive Officer

1031 Railroad Street, Suite 102A

Elko, Nevada 89801

with a copy to:

 

Greenberg Traurig, LLP

Attention: Mark C. Lee, Esq.

1201 K Street, Suite 1100

Sacramento, California 95814

Facsimile: (916) 448-1709

 

If to the Company:

Advance Graphene Ltd.

Attention: Mark Radon

1 Nachal Maor, Suite 2

Ramat Bet Shemesh, Israel 99623

Facsimile: +972 2 ###-###-####

 

 

 

 

 

[Signature Page Follows]

 

 

 

 

 

 

	Selling Shareholder:
	If an individual:   By: ___________________________   Name:_________________________
	If an entity:
	By: ___________________________   Entity Name:____________________   Signatory Name:_________________   Title: _________________________

 

 

 

List of Selling Shareholders		Exchange Shares
Sukhmohan Singh Athwal		6,500,000
Syra Kaur Athwal		6,500,000
Talal Yassin		6,500,000
Six Capital Limited		6,500,000
Changing the World Technologies Ltd.		84,000,000
Dr. Borenstien Ltd.		10,000,000

August __, 2014

 

Graphite Corp.

1031 Railroad Street, Suite 102A

Elko, Nevada 89801

 

 

Ladies and Gentlemen:

 

Pursuant to a Share Exchange Agreement (the “Agreement”) dated as of August __, 2014 (the “Agreement Date”), the undersigned (the “Shareholder”) shall receive from Graphite Corp., a Nevada corporation (“Pubco”), shares of Pubco common stock (the “Securities”) in consideration of the Shareholder’s ownership of capital stock of Advance Graphene Ltd., a company incorporated under the laws of the State of Israel (the “Company”) pursuant to a voluntary share exchange transaction in accordance with the Nevada Revised Statutes (the “Exchange”). Capitalized terms used herein but not defined will have the meanings ascribed to them in the Agreement. The Shareholder whose signature appears below, represents and warrants to Pubco that, as of the date first written above and as of the Closing Date, the statements contained in this Shareholder Representation Letter are, and will be, correct and complete:

 

1.	REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER.

 

1.1.

“Accredited” Investor. The Exchange pursuant to the Agreement, and the distribution of the Securities to the Shareholder at the Closing, are intended to be exempt from registration under the Securities Act of 1933, as amended (the “Act”). Unless the Shareholder checks the “no” box on the signature page hereof indicating that the Shareholder is not an Accredited Investor, the Shareholder represents and warrants that the Shareholder falls within one of the following definitions of Accredited Investor:

 

 

_______

(a)

The Shareholder is a natural person whose individual net worth, or joint net worth with spouse, exceeds $1,000,000.

 

Explanation. In calculating net worth, you include all of your assets (other than your primary residence) whether liquid or illiquid, such as cash, stock, securities, personal property and real estate based on the fair market value of such property MINUS all debts and liabilities (other than a mortgage or other debt secured by your primary residence). In the event that the amount of any mortgage or other indebtedness secured by your primary residence exceeds the fair market value of the residence, that excess liability should also be deducted from your net worth. Any mortgage or indebtedness secured by your primary residence incurred within 60 days before the time of the sale of the Securities offered hereunder, other than as a result of the acquisition of the primary residence, shall also be deducted from your net worth.

 

_______

(b)

The Shareholder is a natural person who had an individual income in excess of $200,000 in each of the last two years or joint income with spouse in excess of $300,000 in each of those years and reasonably expects to reach the same income level in the current year.

 

_______

(c)

The Shareholder is either a director or executive officer of Pubco.

 

_______

(d)

The Shareholder is a corporation or other entity with total assets in excess of US$5,000,000, not formed for the specific purpose of acquiring the Securities.

 

_______

(e)

The Shareholder is an entity, all of the equity owners of which are as specified in (a) or (b) above.

 

The Shareholder further certifies that: (i) the Shareholder has the capacity to protect the Shareholder’s interests in this investment; (ii) the Shareholder is able to bear the economic risks of this investment; and (iii) the amount of the investment does not exceed 10% of the Shareholder’s net worth or joint net worth with spouse.

 

1.2.	Regulation S; Non-U.S. Person Status. For purposes of compliance with the Regulation S exemption for the acquisition of the Securities by non-U.S. Persons, the Shareholder makes the following representations, warranties and covenants:

 

(a)           The Shareholder is a person or entity that is outside the United States and is not a “US Person,” as such term is defined in Rule 902(k) of Regulation S.1

 

(b)           The Shareholder is not acquiring the Securities for the account or benefit of a US Person.

 

(c)           The Shareholder has been independently advised as to the applicable holding period imposed in respect of the Securities by securities legislation in the jurisdiction in which it resides and confirms that no representation has been made respecting the applicable holding periods for the Securities in such jurisdiction and it is aware of the risks and other characteristics of the Securities and of the fact that holders of Securities may not be able to resell the Securities except in accordance with applicable securities legislation and regulatory policy.

 

(d)           To the knowledge of the Shareholder, without having made any independent investigation, neither Pubco or the Company nor any person acting for Pubco or the Company, has conducted any “directed selling efforts” in the United States as the term “directed selling efforts” is defined in Rule 902 of Regulation S, which, in general, means any activity undertaken for the purpose of, or that could reasonably be expected to have the effect of, conditioning the marketing in the United States for any of the Securities being offered. Such activity includes, without limitation, the mailing of printed material to investors residing in the United States, the holding of promotional seminars in the United States, and the placement of advertisements with radio or television stations broadcasting in the United States or in publications with a general circulation in the United States, which discuss the offering of the Securities. To the knowledge of the Shareholder, the Securities were not offered to the Shareholder through, and the Shareholder is not aware of, any form of general solicitation or general advertising, including without limitation, (i) any advertisement, article, notice or other communication published in any newspaper, magazine or similar media or broadcast over television or radio, and (ii) any seminar or meeting whose attendees have been invited by any general solicitation or general advertising.

____________________

 

(e)           The Shareholder will offer, sell or otherwise transfer the Securities, only (i) pursuant to a registration statement that has been declared effective under the Act, (ii) pursuant to offers and sales that occur outside the United States within the meaning of Regulation S in a transaction meeting the requirements of Rule 904 (or other applicable Rule) under the Act, or (iii) pursuant to another available exemption from the registration requirements of the Act, subject to Pubco’s right prior to any offer, sale or transfer pursuant to clauses (ii) or (iii) to require the delivery of an opinion of counsel, certificates or other information reasonably satisfactory to Pubco for the purpose of determining the availability of an exemption.

 

(f)           The Shareholder will not engage in hedging transactions involving the Securities unless such transactions are in compliance with the Act.

 

(g)           The Shareholder represents and warrants that the Shareholder is not a citizen of the United States and is not, and has no present intention of becoming, a resident of the United States (defined as being any natural person physically present within the United States for at least 183 days in a 12-month consecutive period or any entity who maintained an office in the United States at any time during a 12-month consecutive period). The Shareholder understands that Pubco may rely upon the representations and warranty of this paragraph as a basis for an exemption from registration of the Securities under the Act, and the provisions of relevant state securities laws.

 

(h)           The Shareholder hereby represents that he, she or it has satisfied and fully observed the laws of the jurisdiction in which he, she or it is located or domiciled, in connection with the acquisition of the Securities, including (i) the legal requirements of the Shareholder’s jurisdiction for the acquisition of the Securities, (ii) any foreign exchange restrictions applicable to such acquisition, (iii) any governmental or other consents that may need to be obtained, and (iv) the income tax and other tax consequences, if any, which may be relevant to the holding, redemption, sale, or transfer of the Securities; and further, the Shareholder agrees to continue to comply with such laws as long as he, she or it shall hold the Securities.

 

1.3.

Holding For Own Account. The Shareholder is acquiring an interest in the Securities for the Shareholder’s own account, for investment purposes only, and not with a view toward the resale or distribution thereof within the meaning of the Act, except pursuant to effective registrations or qualifications relating thereto under the Act and applicable state securities or blue sky laws or pursuant to an exemption therefrom.

 

1.4.

Unregistered Securities; Restrictions on Transfer. The Shareholder understands that: (a) the Securities have not been registered under the Act or the securities laws of any state or other jurisdiction in reliance upon exemptions from such registration requirements for non-public offerings; (b) the Securities may not be sold, pledged or otherwise transferred except pursuant to effective registrations or qualifications relating thereto under the Act and other applicable securities laws or pursuant to an exemption therefrom; and (c) neither Pubco or the Company are under any obligation to register or qualify the Securities under the Act or any other applicable securities laws, or to take any action to make any exemption from any such registration provisions available. The Shareholder understands that the Shareholder may not transfer any Securities unless such Securities are registered under the Act or qualified under applicable state securities laws or unless with respect to the Securities, in the reasonable opinion of counsel to Pubco, exemptions from such registration and qualification requirements are available. Pubco may require an opinion to such effect from counsel to the Shareholder reasonably satisfactory to Pubco. The Shareholder has also been advised that exemptions from registration and qualification may not be available or may not permit the Shareholder to transfer all or any of the Securities in the amounts or at the times proposed by the Shareholder.

 

 

1.5.

Securities Law Restrictions. The Shareholder will not sell, assign or transfer any of the Securities received by the Shareholder in connection with the Agreement except (a) pursuant to an effective registration statement under the Act, (b) in conformity with the volume and other limitations of Securities and Exchange Commission Rule (“SEC”) Rule 144 promulgated under the Act (“Rule 144”), or (c) in a transaction which, in the opinion of independent counsel to the Shareholder delivered to Pubco and satisfactory to Pubco, is not required to be registered under the Act. Pubco shall not have any obligation to effect a transfer of any Securities that is not in compliance with applicable federal and state securities laws.

 

1.6.

Rule 144; Legends. The Shareholder has been advised and acknowledges that Rule 144, which permits certain limited sales of unregistered securities, is not presently available with respect to the Securities and, in any event, requires that the Securities be held for a minimum of six months (and the sale thereof may be subject to certain volume and other limitations under Rule 144), after they have been purchased and paid for (within the meaning of Rule 144), before they may be resold under Rule 144. The Shareholder understands that Rule 144 may indefinitely apply to and restrict transfer of the Securities if the Shareholder is an “affiliate” of Pubco and “current public information” about Pubco (as defined in Rule 144) is not publicly available. The Shareholder further understands that, if applicable, sales under Rule 144 are not available to the Shareholder during such time as Pubco remains a “shell company” (as defined in Rule 405 promulgated under the 1933 Act).

 

Pubco may place any legend contemplated by the Agreement, one or more of the legends below, or such other legends as it may reasonably deem appropriate, on each certificate or instrument representing Securities:

 

 

1.7.

Shareholder’s Business Experience. The Shareholder has, alone or together with the Shareholder’s representative, if any, such knowledge and experience in financial and business matters so that the Shareholder is capable of evaluating the relative merits and risks of the investment in the Securities that is represented by the Agreement and the transactions contemplated thereby. The Shareholder has adequate means of providing for its, his or her current economic needs and possible personal contingencies, has no need for liquidity in its, his or her investment in Pubco and is able financially to bear the risks of such investment.

 

1.8.

Availability of Information. The Shareholder acknowledges that the Shareholder has had access to all information regarding Pubco and its present and prospective business, assets, liabilities and financial condition that the Shareholder reasonably considers important in making the decision to acquire the Securities pursuant to the Exchange, and that all documents, records and books pertaining to the investment in Pubco resulting from the Agreement and requested by the Shareholder or the Shareholder’s representative, if any, have been made available or delivered to the Shareholder, to the extent that Pubco possesses such information or can obtain such information without unreasonable efforts or expense.

 

 

1.9.

Opportunity to Ask Questions. The Shareholder or the Shareholder’s representative, if any, has had an opportunity to discuss Pubco’s business, management and financial affairs with Pubco’s management and to ask questions of and receive answers from Pubco, or a person or persons acting on behalf of Pubco, concerning the business of Pubco. The Shareholder acknowledges that all such questions, if any, have been answered to the Shareholder’s satisfaction.

 

1.10.

Shareholder Representation Letter. The Shareholder has carefully read this Shareholder Representation Letter and, to the extent the Shareholder believes necessary, has discussed with the Shareholder’s counsel the representations, warranties and agreements that the Shareholder makes herein and the applicable limitations upon the Shareholder’s resale of the Securities.

 

1.11.

Pubco Information. The Shareholder is also aware of and acknowledges the following:

 

 

1.12.

Stop Transfer Instructions; No Requirement to Transfer. The Shareholder agrees that, in order to ensure compliance with the restrictions referred to herein, Pubco may issue appropriate “stop transfer” instructions to its transfer agent. Pubco shall not be required (a) to transfer or have transferred on its books any Securities that have been sold or otherwise transferred in violation of any of the provisions of this Shareholder Representation Letter or the Agreement or (b) to treat as owner of such Securities or to accord the right to vote or pay dividends to any shareholder or other transferee to whom such Securities shall have been so transferred in violation of any provision of this Shareholder Representation Letter or the Agreement.

 

1.13.

No Public Solicitation. The Shareholder represents that at no time was the Shareholder presented with or solicited by any general mailing, leaflet, public promotional meeting, newspaper or magazine article, radio or television advertisement, or any other form of general advertising or general solicitation in connection with the transactions contemplated by the Agreement.

 

1.14.

Principal Residence. The address shown under the Shareholder’s signature on the signature page hereof is the Shareholder’s principal residence.

 

1.15.

Indemnification. The Shareholder will indemnify and hold harmless Pubco and the Company and their respective officers, directors, managers and counsel, from and against any and all damages, losses, liabilities or expenses (including all legal fees and costs) directly or indirectly incurred, resulting or arising out of the breach of any of the representations, warranties or covenants given or made in this Shareholder Representation Letter.

 

 

1.16.

Authorization of Transaction. The Shareholder has full power and authority to execute and deliver this Shareholder Representation Letter and to perform the Shareholder’s obligations hereunder.

 

1.17.

Disposition of Securities. The Shareholder is not a party to any option, warrant, purchase right, or other contract or commitment that could require the Shareholder to sell, transfer, or otherwise dispose of any of the Securities.

 

2.	SHARE EXCHANGE AGREEMENT. The Shareholder agrees that the Securities will be subject to and bound by, all of the provisions of the Agreement relating to the Securities.

 

3.

ENTIRE AGREEMENT. The Agreement and this Shareholder Representation Letter constitute the entire agreement and understanding of the parties with respect to the subject matter of this Shareholder Representation Letter, and supersede all prior understandings and agreements, whether oral or written, between or among the parties hereto with respect to the specific subject matter hereof.

 

4.	COUNTERPARTS. This Shareholder Representation Letter may be executed in several counterparts, each of which shall be an original, but all of which together shall constitute one and the same agreement.

 

5.	EFFECT OF HEADINGS. The section headings herein are for convenience only and shall not affect the construction or interpretation of this Shareholder Representation Letter.

 

6.	GOVERNING LAW; CONSENT TO JURISDICTION. This Shareholder Representation Letter shall be governed by, and construed in accordance with, the internal laws of the State of Nevada applicable to contracts executed in and to be performed by residents of Nevada within that State.

 

7.

NO TAX REPRESENTATIONS. The Shareholder represents, warrants and acknowledges that the Shareholder is not relying on Pubco or the Company for any tax advice concerning the federal or state income or other tax consequences of the transactions contemplated by the Agreement or the Shareholder’s receipt of the Securities, and that the Shareholder has consulted such advisors as the Shareholder deems necessary or appropriate to understand the tax consequences of the investment represented by the Securities.

 

[Signature Page Follows]

 

 

 

 

 

 

1. Definitions

 

1.1 Agent. For the purposes of this Agreement, “agent” of the Company means any person who is or was a director or an officer of the Company or a subsidiary of the Company; or is or was serving at the request of the Company or a subsidiary of the Company as a director or an officer of another foreign or domestic corporation, partnership, joint venture, trust, or other enterprise or an affiliate of the Company. The term “enterprise” includes any employee benefit plan of the Company, its subsidiaries, affiliates, and predecessor corporations.

 

1.2 Company. For purposes of this Agreement, the “Company” includes, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger that, if its separate existence had continued, would have had power and authority to indemnify its directors or officers so that any person who is or was a director or an officer of such constituent corporation, or is or was serving at the request of such constituent corporation as a director or an officer of another corporation, partnership, joint venture, trust, or other enterprise, shall stand in the same position under this Agreement with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued.

 

1.3 Expenses. For the purposes of this Agreement, “expenses” includes all direct and indirect costs of any type or nature whatsoever (including, without limitation, all attorneys’ fees and related disbursements and other out-of-pocket costs) actually and reasonably incurred by the Indemnitee in connection with the investigation, defense, or appeal of a proceeding or establishing or enforcing a right to indemnification or advancement of expenses under this Agreement, Section 7502 or otherwise; provided, however, that expenses shall not include any judgments, fines, ERISA excise taxes or penalties, or amounts paid in settlement of a proceeding.

 

1.4 Fines. For purposes of this Agreement, references to “fines” includes any excise taxes assessed on a person with respect to any employee benefit plan.

 

1.5 Liabilities. For purposes of this Agreement, “liabilities” means judgments, fines, ERISA execute taxes or penalties, and amounts paid in settlement in connection with a proceeding.

 

1.6 Other Enterprises. For purposes of this Agreement, “other enterprises” includes employee benefit plans.

 

1.7 Proceeding. For the purposes of this Agreement, “proceeding” means any threatened, pending, or completed action, suit, or other proceeding, whether civil, criminal, administrative, or investigative.

 

1.8 Subsidiary. For purposes of this Agreement, “subsidiary” means any corporation of which more than 50% of the outstanding voting securities is owned directly or indirectly by the Company, by the Company and one or more of its subsidiaries, or by one or more of the Company’s subsidiaries.

 

1.9 Serving at the Request of the Company. For purposes of this Agreement, “serving at the request of the Company” includes any service as a director or an officer of the Company that imposes duties on, or involves services by, such director or officer with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the Company” as referred to in this Agreement.

 

2. Agreement to Serve. The Indemnitee agrees to serve and/or continue to serve as an agent of the Company, at the will of the Company (or under separate agreement, if such agreement exists), in the capacity the Indemnitee currently serves as an agent of the Company, faithfully and to the best of his ability, so long as he is duly appointed or elected and qualified in accordance with the applicable provisions of the charter documents of the Company or any subsidiary of the Company; provided, however, that the Indemnitee may at any time and for any reason resign from such position (subject to any contractual obligation that the Indemnitee may have assumed apart from this Agreement), and the Company and any subsidiary shall have no obligation under this Agreement to continue the Indemnitee in any such position.

 

3. Directors’ and Officers’ Insurance. The Company shall, to the extent that the Board determines it to be economically reasonable, maintain a policy of directors’ and officers’ liability insurance (“D&O Insurance”), on such terms and conditions as may be approved by the Board.

 

4. Mandatory Indemnification. Subject to Section 9 below, the Company hereby agrees to hold harmless and indemnify the Indemnitee to the fullest extent permitted by law, as such may be amended from time to time. In furtherance of the foregoing indemnification, and without limiting the generality thereof:

 

4.1 Third-Party Actions. If the Indemnitee is a person who was or is a party or is threatened to be made a party to any proceeding (except an action by or in the right of the Company) by reason of the fact that the Indemnitee is or was an agent of the Company, or by reason of anything done or not done by the Indemnitee in any such capacity, against any and all expenses and liabilities of any type whatsoever incurred by the Indemnitee in connection with such proceeding if (a) the Indemnitee acted in good faith and in a manner the Indemnitee reasonably believed to be in, or not opposed to, the best interests of the Company and, with respect to any criminal action or proceeding, had no reasonable cause to believe the Indemnitee’s conduct was unlawful, or (b) the Indemnitee, if a director or an officer of the Company, did not act or fail to act in a manner that constituted a breach of the Indemnitee’s fiduciary duties as a director or an officer or such Indemnitee’s breach of those duties did not involve intentional misconduct, fraud, or a knowing violation of law; and

 

4.2 Derivative Actions. If the Indemnitee is a person who was or is a party or is threatened to be made a party to any proceeding by or in the right of the Company to procure a judgment in its favor by reason of the fact that the Indemnitee is or was an agent of the Company, or by reason of anything done or not done by the Indemnitee in any such capacity, against any and all expenses and liabilities incurred by the Indemnitee in connection with such proceeding if (a) the Indemnitee acted in good faith and in a manner the Indemnitee reasonably believed to be in, or not opposed to, the best interests of the Company, or (b) the Indemnitee, if a director or an officer of the Company, did not act or fail to act in a manner that constituted a breach of the Indemnitee’s fiduciary duties as a director or an officer or such Indemnitee breach of those duties involved intentional misconduct, fraud, or a knowing violation of law; except that no indemnification under this subsection shall be made in respect of any claim, issue, or matter as to which the Indemnitee shall have been adjudged by a court of competent jurisdiction, after the exhaustion of all appeals therefrom, to be liable to the Company or for amounts paid in settlement to the Company, unless and only to the extent that the court in which such proceeding was brought or another court of competent jurisdiction determines upon application that, in view of all the circumstances of the case, the Indemnitee is fairly and reasonable entitled to indemnity for such expenses as the court deems proper; and

 

4.3 Exception for Amounts Covered by Insurance. Notwithstanding the foregoing, the Company shall not be obligated to indemnify the Indemnitee for expenses or liabilities of any type whatsoever (including, but not limited to, judgments, fines, ERISA excise taxes or penalties, and amounts paid in settlement) to the extent such have been paid to the Indemnitee by D&O Insurance.

 

4.4 Indemnification for Expenses as a Witness. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of the Indemnitee’s status as an agent of the Company, a witness, or is made (or asked) to respond to discovery requests, in any proceeding to which Indemnitee is not a party, the Indemnitee shall be indemnified against all expenses and liabilities of any type whatsoever actually and reasonably incurred by him or her or on his or her behalf in connection therewith.

 

5. Partial Indemnification and Contribution.

 

5.1 Partial Indemnification. If the Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of any expenses or liabilities of any type whatsoever incurred by the Indemnitee in connection with a proceeding but is not entitled, however, to indemnification for all of the total amount thereof, then the Company shall nevertheless indemnify the Indemnitee for such total amount except as to the portion thereof to which the Indemnitee is not entitled to indemnification.

 

5.2 Contribution. If the Indemnitee is not entitled to the indemnification provided in Section 4 for any reason other than the statutory limitations set forth in the Nevada Revised Statutes, then in respect of proceeding in which the Company is jointly liable with the Indemnitee (or would be if joined in such proceeding), the Company shall contribute to the amount of expenses and liabilities paid or payable by the Indemnitee in such proportion as is appropriate to reflect (a) the relative benefits received by the Company on the one hand and the Indemnitee on the other hand from the transaction from which such proceeding arose and (b) the relative fault of the Company on the one hand and of the Indemnitee on the other hand in connection with the events that resulted in such expenses, as well as any other relevant equitable considerations. The relative fault of the Company on the one hand and of the Indemnitee on the other hand shall be determined by reference to, among other things, the parties’ relative intent, knowledge, access to information, and opportunity to correct or prevent the circumstances resulting in such expenses, judgments, fines, or settlement amounts. The Company agrees that it would not be just and equitable if contribution pursuant to this Section 5 were determined by pro rata allocation or any other method of allocation which does not take account of the foregoing equitable considerations.

 

6. Mandatory Advancement of Expenses.

 

6.1 Advancement. Subject to Section 9 below, the Company shall pay as incurred and in advance of the final disposition of a civil or criminal proceeding all expenses incurred by the Indemnitee in connection with defending any such proceeding to which the Indemnitee is a party or is threatened to be made a party by reason of the fact that the Indemnitee is or was an agent of the Company or by reason of anything done or not done by the Indemnitee in any such capacity. The Indemnitee hereby undertakes to promptly repay such amounts advanced only if, and to the extent that, it shall ultimately by determined that the Indemnitee is not entitled to be indemnified by the Company under the provisions of this Agreement, the Articles of Incorporation or Bylaws of the Company, the Nevada Revised Statutes, or otherwise. The advances to be made hereunder shall be paid by the Company to the Indemnitee within thirty (30) days following delivery of a written request therefor by the Indemnitee to the Company.

 

6.2 Exception. Notwithstanding the foregoing provisions of this Section 6, the Company shall not be obligated to advance any expenses to the Indemnitee arising from a lawsuit filed directly by the Company against the Indemnitee if an absolute majority of the members of the Board reasonably determines in good faith, within thirty (30) days of the Indemnitee’s request to be advanced expenses, that the facts known to them at the time such determination is made demonstrate clearly and convincingly that the Indemnitee acted in bad faith. If such a determination is made, the Indemnitee may have such decision reviewed in the manner set forth in Section 8.5 hereof, with all references therein to “indemnification” being deemed to refer to “advancement of expenses,” and the burden of proof shall be on the Company to demonstrate clearly and convincingly that, based on the facts known at the time, the Indemnitee acted in bad faith. The Company may not avail itself of this Section 6.2 as to a given lawsuit if, at any time after the occurrence of the activities or omissions that are the primary focus of the lawsuit, the Company has undergone a change in control. For this purpose, a “change in control” shall mean a given person of group of affiliated persons or groups increasing their beneficial ownership interest in the Company by at least twenty (20) percentage points without advance Board approval.

 

7. Notice and Other Indemnification Procedures.

 

7.1 Notification. Promptly after receipt by the Indemnitee of notice of the commencement of or the threat of commencement of any proceeding, the Indemnitee shall, if the Indemnitee believes that indemnification with respect thereto may be sought from the Company under this Agreement, notify the Company of the commencement or threat of commencement thereof.

 

7.2 Insurance. If, at the time of the receipt of a notice of the commencement of a proceeding pursuant to Section 7.1 hereof, the Company has D&O Insurance in effect, the Company shall give prompt notice of the commencement of such proceeding to the insurers in accordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such proceeding in accordance with the terms of such D&O Insurance policies.

 

7.3 Defense. In the event the Company shall be obligated to advance the expenses for any proceeding against the Indemnitee, the Company, if appropriate, shall be entitled to assume the defense of such proceeding, with counsel approved by the Indemnitee (which approval shall not be unreasonably withheld), upon the delivery to the Indemnitee of written notice of its election to do so. After delivery of such notice, approval of such counsel by the Indemnitee and the retention of such counsel by the Company, the Company will not be liable to the Indemnitee under this Agreement for any fees of counsel subsequently incurred by the Indemnitee with respect to the same proceeding, provided that (a) the Indemnitee shall have the right to employ the Indemnitee’s own counsel in any such proceeding at the Indemnitee’s expense; (b) the Indemnitee shall have the right to employ the Indemnitee’s own counsel in connection with any such proceeding, at the expense of the Company, if such counsel serves in a review, observer, advice, and counseling capacity and does not otherwise materially control or participate in the defense of such proceeding; and (c) if (i) the employment of counsel by the Indemnitee has been previously authorized by the Company, (ii) the Indemnitee shall have reasonably concluded that there may be conflict of interest between the Company and the Indemnitee in the conduct of any such defense, or (iii) the Company shall not, in fact, have employed counsel to assume the defense of such proceeding, then the fees and expenses of the Indemnitee’s counsel shall be at the expense of the Company.

 

8. Determination of Right to Indemnification.

 

8.1 Success on Merits. To the extent the Indemnitee has been successful on the merits or otherwise in defense of any proceeding referred to in Section 4.1 or 4.2 of this Agreement or in the defense of any claim, issue, or matter described therein, the Company shall indemnify the Indemnitee against expenses actually and reasonably incurred by the Indemnitee in connection with the investigation, defense, or appeal of such proceeding, or such claim, issue, or matter, as the case may be.

 

 

 

 

 

 

GRAPHITE CORP.			INDEMNITEE:
By:
Name:
Title:

 

 

 

 

Officers:

1. Brian Goss – President, Chief Executive Officer, Chief Financial Officer, Treasurer

2. Jeanne Goss – Secretary

Directors:

Directors:

1. Mark Radon

Officers:

1. Mark Radom

 

 

 

1.

Patent application no. 61/887,469 entitled "A Method for the Large Scale Production of Graphene," filed on October, 7 2013; and all divisions, continuations, continuations-in-part, re-examinations and reissues of the above; and all patents which may be granted pursuant to any of the foregoing patent application.

2.	All intellectual property licensed to the Company pursuant to the License Agreement, dated as of July 1, 2014, between Graphene Materials Ltd. and Advance Graphene Ltd., including the “Licensed IP” and the “Licensed Products in the Field only” as defined therein.

 

1.	License Agreement, dated as of July 1, 2014, between Graphene Materials Ltd. and Advance Graphene Ltd.