Exhibit 10.1

 

EXECUTION COPY

  

SHARE PURCHASE AGREEMENT

  

AMONG

  

SINGLE TOUCH SYSTEMS, INC.,

  

SINGLE TOUCH INTERACTIVE, INC.,

  

DOUBLEVISION NETWORKS, INC.

  

AND

  

THE SHAREHOLDERS OF

 

DOUBLEVISION NETWORKS, INC.

 

Dated July 24, 2014

 

 

 

 

TABLE OF CONTENTS

  

Article   Page       Article I SALE AND PURCHASE OF SHARES   1 Article II
PURCHASE PRICE AND PAYMENT   1 Article III CLOSING AND TERMINATION   2 Article
IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY   3 Article V  REPRESENTATIONS
AND WARRANTIES OF SELLERS   13 Article VI REPRESENTATIONS AND WARRANTIES OF
PURCHASER   15 Article VII COVENANTS   17 Article VIII CONDITIONS TO CLOSING  
19 Article IX DOCUMENTS TO BE DELIVERED   21 Article X INDEMNIFICATION   21
Article XI MISCELLANEOUS   24

 

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SHARE PURCHASE AGREEMENT

 

THIS SHARE PURCHASE AGREEMENT is made effective as of July 24, 2014 (the
“Agreement”), among Single Touch Systems, Inc., a Delaware corporation (the
“Parent”), Single Touch Interactive, Inc., a Nevada corporation and a
wholly-owned subsidiary of the Parent (the “Sub and, together with the Parent,
the “Purchaser”), DoubleVision Networks, Inc., a New York corporation (the
“Company”), and the shareholders of the Company listed on the signature pages
hereof (collectively the “Sellers”).

 

W I T N E S S E T H:

 

WHEREAS, the Sellers own an aggregate of 665,373 shares of common stock, $0.001
par value, after the conversion and exercise of common stock equivalents
described in Section 4.3 (the “Shares”), of the Company, which Shares constitute
all of the issued and outstanding shares of capital stock of the Company; and

 

WHEREAS, the Sellers desire to sell to Purchaser, and the Purchaser desires to
purchase from the Sellers, the Shares for the purchase price and upon the terms
and conditions hereinafter set forth;

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements hereinafter contained, the parties hereby agree as follows:

 

Article I
SALE AND PURCHASE OF SHARES

 

1.1 Sale and Purchase of Shares

 

Upon the terms and subject to the conditions contained herein, on the Closing
Date each Seller shall sell, assign, transfer, convey and deliver to the
Purchaser, and the Purchaser shall purchase from each Seller, all Shares of the
Company owned by such Seller set forth opposite such Seller's name on Schedule
1.1 attached hereto.

 

Article II
PURCHASE PRICE AND PAYMENT

 

Amount of Purchase Price. The purchase price for the Shares shall be an amount
equal to $3,600,000 of the Parent’s common stock (the “Purchaser Securities”)
valued at $0.45 per share (the “Purchase Price”), subject to adjustment as set
forth herein.

 

Payment of Purchase Price On the Closing Date, the Purchaser shall pay the
Purchase Price to the Sellers which shall be allocated among the Sellers in
accordance with their pro rata ownership of the Shares as set forth on Schedule
1.1.

 

2.3 Purchase Price Adjustment.

 

The Purchase Price, or Additional Consideration as applicable, shall be reduced
for any the following:

 

(a) the amount of any of the Company’s receivables as of June 30, 2014 that have
not been collected as of October 31, 2014.

 

(b) the amount of any liability, other than accounts payable arising in the
ordinary course of business, not disclosed to the Purchaser on or before the
Closing Date but applicable to the Company’s activities on or before the Closing
Date including but not limited to customer claims for breach of warranty or
contract, violation of third party intellectual property right and claims
pertaining to employees;

 

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(c) the amount of any tax liability arising out of transactions entered into
prior to the Closing Date;

 

(d) the amount of any debt or loan on the Company’s books, other than current
trade payables, assumed by the Purchaser; and

 

(e) the amount of any liabilities in excess of expenses consistent with past
practice.

 

2.4 Additional Consideration. The Purchaser shall pay an additional $1,000,000
(the “Earn-out Consideration”) to the Sellers if the Company, Purchaser or any
existing affiliates thereof, achieve $3,000,000 in Company Revenue in the
aggregate. Company Revenue shall equal revenue for only media placement (as
indicated in the Purchaser’s financial statements) generated by the Company,
Purchaser or any existing affiliates for the twelve months from August 1, 2014
to July 31, 2015, calculated in accordance with GAAP (“Revenue”), less (a) any
amounts included in Revenue that remain uncollected as of September 15, 2015,
(b) 50% of collected Revenue, on an individual invoice basis, for which does not
achieve a gross margin of 65% or greater (gross margins shall equal the
difference of Revenues less the cost of such Revenues divided by such Revenues);
provided, however, that Revenue which does not achieve a 65% gross margin due to
commissions or revenue sharing paid to a channel partner (e.g., Titan
Advertising), when the commissions or revenue sharing paid is equal to 50% or
less of the Revenue generated with the channel partner, then such Revenue shall
not be excluded from the calculation of Company Revenue, and (c) the marketing
costs, directly attributable to the Revenue, incurred by the Company during the
twelve months from August 1, 2014 to July 31, 2015 that exceed 10% of Revenue.
If the Purchaser acquires another business (“Newco”) prior to July 31, 2015,
revenues derived from Newco customers that exist on the closing date of the
acquisition shall not be included in Company Revenues. The Company shall provide
the Sellers with the Company Revenue on or before August 31, 2015. Sellers shall
have thirty (30) days after receipt of the calculation a statement of the
Company Revenue to review same. If within thirty (30) of delivery of the
statement of Company Revenue by Purchaser to Sellers, Purchaser receives a
written objection from Sellers, then Purchaser and Sellers shall attempt to
reconcile their differences diligently and in good faith and any resolution by
them shall be finding and conclusive. If the Sellers and the Purchaser are
unable to reach a resolution within ten (10) business days of the Purchaser’s
receipt of the Sellers’ written notice, the Sellers and the Purchaser shall
submit such dispute for resolution to the Independent Accounting Firm which
shall determine and report to the parties, and such report shall be final,
binding and conclusive on the parties hereto. The Earn-out Consideration shall
be paid in shares of the Purchaser’s common stock (valued at the average closing
price for the ninety days ending July 31, 2015). The Earn-out Consideration
shall be paid on or before November 1, 2015. Any Earn-Out Consideration payable
to the Sellers shall be made by shares of the Purchaser’s common stock issued
and registered in the name of each Seller and allocated among the Sellers in
accordance with their pro rata ownership of the Shares as set forth on Schedule
1.1.

 

Article III
CLOSING AND TERMINATION

 

3.1 Closing Date.

 

Subject to the satisfaction of the conditions set forth in Sections 7.1 and 7.2
hereof (or the waiver thereof by the party entitled to waive that condition),
the closing of the sale and purchase of the Shares provided for in Section 1.1
hereof (the "Closing") shall take place at the offices of Sichenzia Ross
Friedman Ference LLP (or at such other place as the parties may designate in
writing) simultaneously with the full execution and delivery of this Agreement.
The date on which the Closing shall be held is referred to in this Agreement as
the "Closing Date".

  

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Article IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

The Company and Matthew Wiggins and Nicholas Fisser (Matthew Wiggins and
Nicholas Fisser being referred to herein as the “Designated Sellers”) hereby
jointly and severally represent and warrant to the Purchaser that:

 

4.1. Organization and Good Standing of the Company. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation as set forth above. Except as otherwise
provided herein, the Company is not required to be qualified to transact
business in any other jurisdiction where the failure to so qualify would have an
adverse effect on the business of the Company.

 

4.2. Authority.

 

(a) The Company has full power and authority (corporate and otherwise) to carry
on its business and has all permits and licenses that are necessary to the
conduct of its business or to the ownership, lease or operation of its
properties and assets, except where the failure to have such permits and
licenses would not have a material adverse effect on the Company’s business or
operations (“Material Adverse Effect”).

 

(b) The execution of this Agreement and the delivery hereof to the Purchaser and
the sale contemplated herein have been, or will be prior to Closing, duly
authorized by the Company’s Board of Directors and by the Company’s shareholders
having full power and authority to authorize such actions.

 

(c) Subject to any consents required under Section 4.7 below, the Designated
Sellers and the Company have the full legal right, power and authority to
execute, deliver and carry out the terms and provisions of this Agreement; and
this Agreement has been duly and validly executed and delivered on behalf of the
Designated Sellers and the Company and constitutes a valid and binding
obligation of each Designated Seller and the Company enforceable in accordance
with its terms.

 

(d) Neither the execution and delivery of this Agreement, the consummation of
the transactions herein contemplated, nor compliance with the terms of this
Agreement will violate, conflict with, result in a breach of, or constitute a
default under any statute, regulation, indenture, mortgage, loan agreement, or
other agreement or instrument to which the Company or any Designated Seller is a
party or by which it is bound, any charter, regulation, or bylaw provision of
the Company, or any decree, order, or rule of any court or governmental
authority or arbitrator that is binding on the Company or any Seller in any way,
except where such would not have a Material Adverse Effect.

 

4.3. Shares.

 

(a) The Company’s authorized capital stock consists of 1,500,000 shares of
Common Stock, par value $0.001 per share, of which 627,873 shares have been
issued to Sellers d (the “Outstanding Common Stock”), and 175,000 shares of
Preferred Stock, par value $0.001 per share, of which 37,500 shares have been
issued to Sellers (the “Outstanding Preferred Stock”). The Outstanding Common
Stock and the Outstanding Preferred Stock constitute the Shares as defined
above. All of the Shares are duly authorized, validly issued, fully paid and
non-assessable.

 

(b) There are no authorized or outstanding subscriptions, options, warrants,
calls, contracts, demands, commitments, convertible securities or other
agreements or arrangements of any character or nature whatever under which any
Designated Seller or the Company are or may become obligated to issue, assign or
transfer any shares of capital stock of the Company. Upon the delivery to
Purchaser on the Closing Date of the certificate(s) representing the Shares,
Purchaser will have good, legal, valid, marketable and indefeasible title to all
the then issued and outstanding shares of capital stock of the Company, free and
clear of any liens, pledges, encumbrances, charges, agreements, options, claims
or other arrangements or restrictions of any kind.

 

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4.4. Basic Corporate Records. The copies of the Articles of Incorporation of the
Company, (certified by the Secretary of State or other authorized official of
the jurisdiction of incorporation), and the Bylaws of the Company, as the case
may be (certified as of the date of this Agreement as true, correct and complete
by the Company’s secretary or assistant secretary), all of which have been
delivered to the Purchaser, are true, correct and complete as of the date of
this Agreement.

 

4.5. Minute Books. The minute books of the Company, which shall be exhibited to
the Purchaser between the date hereof and the Closing Date, each contain true,
correct and complete minutes and records of all meetings, proceedings and other
actions of the shareholders, Boards of Directors and committees of such Boards
of Directors of the Company, if any, except where such would not have a Material
Adverse Effect and, on the Closing Date, will, to the best of Designated
Sellers’ knowledge, contain true, correct and complete minutes and records of
any meetings, proceedings and other actions of the shareholders, respective
Boards of Directors and committees of such Boards of Directors of each such
corporation.

 

4.6. Subsidiaries and Affiliates. The Company does not have any ownership,
voting or profit and loss sharing percentage interest in any other corporations,
partnerships, businesses, entities, enterprises or organizations.

 

4.7. Consents. Except as set forth in Schedule 4.7, no consents or approvals of
any public body or authority and no consents or waivers from other parties to
leases, licenses, franchises, permits, indentures, agreements or other
instruments are (i) required for the lawful consummation of the transactions
contemplated hereby, or (ii) necessary in order that the business currently
conducted by the Company can be conducted by the Purchaser in the same manner
after the Closing as heretofore conducted by the Company, nor will the
consummation of the transactions contemplated hereby result in creating,
accelerating or increasing any liability of the Company, except where the
failure of any of the foregoing would not have a Material Adverse Effect.

 

4.8. Financial Statements. The Company has delivered, or will deliver prior to
Closing, to the Purchaser copies of the Financial Statements (as defined
below”), which include all notes and schedules attached thereto), all of which
are true, complete and correct, have been prepared from the books and records of
the Company in accordance with generally accepted accounting principles (“GAAP”)
consistently applied with past practice and fairly present the financial
condition, assets, liabilities and results of operations of the Company as of
the dates thereof and for the periods covered thereby. “Financial Statements”
shall mean the audited balance sheet of the Company as at December 31, 2013, and
the related reviewed statements of operations, and of cash flows of the Company
for the year then ended and (ii) the unaudited compiled balance sheet of the
Company as of March 31, 2014 and the related compiled statement of operations of
the Company for the three month period then ended.

 

In such Financial Statements, the statements of operations do not contain any
income not earned in the ordinary course of business except as set forth in
Schedule 4.8, and the financial statements for the interim periods indicated
include all adjustments, which consist of only normal recurring accruals,
necessary for such fair presentation. There are no facts, to the best of
Designated Sellers’ knowledge that, under generally accepted accounting
principles consistently applied, would alter the information contained in the
foregoing Financial Statements in any material way.

 

4.9. Records and Books of Account. The records and books of account of the
Company reflect all material items of income and expense and all material
assets, liabilities and accruals, have been, and to the Closing Date will be,
regularly kept and maintained in conformity with GAAP applied on a consistent
basis with preceding years.

 

4.10. Absence of Undisclosed Liabilities. Except as and to the extent reflected
or reserved against in the Company’s Financial Statements or disclosed in
Schedule 4.10, there are no liabilities or obligations of the Company of any
kind whatsoever, whether accrued, fixed, absolute, contingent, determined or
determinable, and including without limitation (i) liabilities to former,
retired or active employees of the Company under any pension, health and welfare
benefit plan, vacation plan or other plan of the Company, (ii) tax liabilities
incurred in respect of or measured by income for any period prior to the close
of business on the Balance Sheet Date, or arising out of transactions entered
into, or any state of facts existing, on or prior to said date, and
(iii) contingent liabilities in the nature of an endorsement, guarantee,
indemnity or warranty, and there is no condition, situation or circumstance
existing or which has existed that could reasonably be expected to result in any
liability of the Company, other than liabilities and contingent liabilities
incurred in the ordinary course of business since June 30, 2014, and those
disclosed in the Company’s financial statements, dated June 30, 2014, copies of
which have been delivered to Purchaser, consistent with the Company’s recent
customary business practice, none of which is materially adverse to the Company.

 

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4.11 Taxes.

 

(a) Except as set forth in Schedule 4.11:

 

(i) all Tax Returns required to be filed by the Company (or any Designated
Seller on behalf of the Company) for any pre-Closing tax period have been (or
will be) timely filed and such Tax Returns are true, complete and correct in all
material respects;

 

(ii) all Taxes due and owing by the Company (or any Designated Seller on behalf
of the Company) for any pre-Closing tax period (whether or not shown on any Tax
Return) have been timely paid or appropriate reserves have been set aside in
accordance with GAAP;

 

(iii) the Company (or any Designated Seller on behalf of the Company) have
withheld and paid each Tax required to have been withheld and paid in connection
with amounts paid or owing to any employee, former employee, independent
contractor, creditor, customer, shareholder or other party, and each of them has
complied with all information reporting and backup withholding provisions of
applicable law;

 

(iv) no extensions or waivers of statutes of limitations have been given or
requested with respect to any Taxes of the Company (or any Designated Seller on
behalf of the Company) and there are no extensions of time within which to file
any Tax Return;

 

(v) all Tax deficiencies asserted, or assessments made, against the Company (or
any Designated Seller on behalf of the Company) as a result of any examinations
by any governmental authority have been fully paid and, to the Designated
Sellers’ Knowledge, there are no Tax deficiencies or assessments threatened with
respect to the Company or any of its Subsidiaries;

 

(vi) no claim that the Company is or, to the Designated Sellers’ Knowledge, may
be, subject to taxation has been made by a governmental authority in a
jurisdiction where the Company does not file Tax Returns;

 

(vii) there are no pending actions and, to the Designated Sellers’ Knowledge,
there are no pending or threatened, audits, examinations or investigations by
any governmental authority concerning the Company;

 

(viii) there are no Tax administrative proceedings or Tax litigation against the
Company;

 

(ix) the is not a party to any Tax allocation, Tax indemnity or Tax sharing
agreements or similar arrangements;

 

(x) the Company has collected all sales, use or value added taxes required to be
collected by applicable law, and has timely remitted, or will remit on a timely
basis, such amounts to the appropriate governmental authority;

 

(xi) the Company is not and never been, a member of a consolidated, affiliated,
combined or unitary Tax group;

 

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(xii) the Company will not be required to include in a post-Closing tax period
taxable income attributable to income that accrued in a pre-Closing tax period
but was not recognized in any such period for any reason, including (i) the
installment method of accounting, (ii) the long-term contract method of
accounting or (iii) a “closing agreement” as described in Code §7121 (or any
provision of any state, local or foreign Tax law having similar effect); and

 

(xiii) since their respective formation, the Company has never (including any
predecessors) (i) owned the stock of any corporation, (ii) owned a membership
interest in any limited liability company, or (iii) been a member of any
partnership or joint venture.

 

(b) The Company has been a validly electing S Corporation within the meaning of
Code §1361 and §1362 at all times since incorporation, and the Company will be
an S corporation for federal, state and local Tax purposes up to and including
the Closing Date.

 

(c) “Tax” or “Taxes” means any tax of any kind whatsoever, including any
federal, state, local or foreign income, capital gains, gift or estate, gross
receipts, commercial activity, sales, use, value-added, production, ad valorem,
transfer, documentary, franchise, net worth, capital, registration, profits,
license, lease, service, service use, withholding, payroll, employment,
unemployment, estimated, excise, severance, environmental, stamp, occupation,
premium, property (real or personal), real property gains, intangibles, windfall
profits, customs, duties or other tax, fee, assessment, escheatment or charge of
any kind whatsoever, including tax for which a taxpayer is responsible by reason
of any tax-sharing agreement, or Treasury Regulations Section 1.1502-6 (and any
comparable provision of state, local or foreign Tax law), or as a successor by
reason of contract, indemnity or otherwise, together with any interest,
additions, fine or penalty with respect thereto and any interest in respect of
such interest, additions, fines or penalties.

 

4.12. Accounts Receivable. The accounts receivable of the Company shown on the
Balance Sheet Date, and those to be shown in the Financial Statements, are, and
will be, actual bona fide receivables from transactions in the ordinary course
of business representing valid and binding obligations of others for the total
dollar amount shown thereon, and as of the Balance Sheet Date were not (and
presently are not) subject to any recoupments, set-offs, or counterclaims. All
such accounts receivable are, and will be collectible in amounts not less than
the amounts (net of reserves) carried on the books of the Company, including the
Financial Statements, and will be paid in accordance with their terms. Except as
listed on Schedule 4.12 hereto, all such accounts receivable are and will be
actual bona fide receivables from transactions in the ordinary course of
business.

 

4.13. Inventory. The inventories of the Company are located at the locations
listed on Schedule 4.13 attached hereto. The inventories of the Company shown on
its Balance Sheet (net of reserves) are carried at values which reflect the
normal inventory valuation policy of the Company of stating the items of
inventory at average cost in accordance with generally accepted accounting
principles consistently applied. Inventory acquired since the Balance Sheet Date
has been acquired in the ordinary course of business and valued as set forth
above. The Company will maintain the inventory in the normal and ordinary course
of business from the date hereof through the Closing Date. Notwithstanding the
foregoing, the Company is using commercially reasonable best efforts to sell
slow moving inventory prior to the Closing Date.

 

4.14. Machinery and Equipment. Except for items disposed of in the ordinary
course of business, all machinery, tools, furniture, fixtures, equipment,
vehicles, leasehold improvements and all other tangible personal property
(hereinafter “Fixed Assets”) of the Company currently being used in the conduct
of its business, or included in determining the net book value of the Company on
the Balance Sheet Date, together with any machinery or equipment that is leased
or operated by the Company, are in fully serviceable working condition and
repair. Said Fixed Assets shall be maintained in such condition from the date
hereof through the Closing Date. Except as described on Schedule 4.14 hereto,
all Fixed Assets owned, used or held by the Company are situated at its business
premises and are currently used in its business. Schedule 4.14 describes all
Fixed Assets owned by or an interest in which is claimed by any other person
(whether a customer, supplier or other person) for which the Company is
responsible (copies of all agreements relating thereto being attached to said
Schedule 4.14), and all such property is in the Company’s actual possession and
is in such condition that upon the return of such property in its present
condition to its owner, the Company will not be liable in any amount to such
owner. There are no outstanding requirements or recommendations by any insurance
company that has issued a policy covering either (i) such Fixed Assets or
(ii) any liabilities of the Company relating to operation of the Business, or by
any board of fire underwriters or other body exercising similar functions,
requiring or recommending any repairs or work to be done on any Fixed Assets or
any changes in the operations of the Business, any equipment or machinery used
therein, or any procedures relating to such operations, equipment or machinery.
All Fixed Assets of the Company are set forth on Schedule 4.14 hereto.

 

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4.15. Real Property Matters. The Company does not own any real property as of
the date hereof and has not owned any real property during the three years
preceding the date hereof.

 

4.16. Leases. All leases of real and personal property of the Company are
described in Schedule 4.16, are in full force and effect and constitute legal,
valid and binding obligations of the respective parties thereto enforceable in
accordance with their terms, except as limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting generally
the enforcement of creditor’s rights, and have not been assigned or encumbered.
The Company has performed in all material respects the obligations required to
be performed by it under all such leases to date and it is not in default in any
material respect under any of said leases, except as set forth in Schedule 4.16,
nor has it made any leasehold improvements required to be removed at the
termination of any lease, except signs. No other party to any such lease is in
material default thereunder. Except as noted on Schedule 4.16, none of the
leases listed thereon require the consent of a third party in connection with
the transfer of the Shares.

 

4.17. Proprietary Rights. Schedule 4.17 sets forth a complete and correct list
of: (i) all patented or registered Proprietary Rights of the Company and all
pending patent applications or other applications for registration of
Proprietary Rights of the Company; (ii) all trade names and unregistered
trademarks and designs used by the Company; (iii) all material unregistered
copyrights and computer software owned or used by the Company; and (iv) all
licenses or similar agreements to which the Company is a party either as
licensee or licensor for the Proprietary Rights other than agreements pursuant
to which the Company has licensed off-the-shelf commercial software available
for not more than $5,000 per application.

 

(a) The Company has, or has rights to use, all patents, patent applications,
trademarks, trademark applications, service marks, trade names, trade secrets,
inventions, copyrights, licenses and other intellectual property rights and
similar rights as necessary or material for use in connection with their
respective businesses and which the failure to so have could reasonably be
expected to have a Material Adverse Effect (collectively, the “Intellectual
Property Rights”); (ii) the Company has not received a notice (written or
otherwise) that any of the Intellectual Property Rights violates or infringes
upon the rights of any Person; (iii) all such Intellectual Property Rights are
enforceable and there is no existing infringement by another Person of any of
the Intellectual Property Rights, except where the failure to be so enforceable
or for such infringements as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect; and (iv) the Company
has taken reasonable security measures to protect the secrecy, confidentiality
and value of all of their intellectual properties, except where failure to do so
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.

 

4.18. Insurance Policies. There is set forth in Schedule 4.18 lists each policy
of fire, liability, business interruption, and other forms of insurance and all
fidelity bonds and surety bonds held by or applicable to the Company with
respect to its properties, assets, directors, officers, employees and business
at any time within the past three (3) years, which schedule sets forth in
respect of each such policy: the policy name, policy number, carrier, term, type
of coverage, deductible amount or self-insured retention amount, limits of
coverage, and annual premium. No event relating to the Company has occurred
which could reasonably be expected to result in a retroactive or prospective
upward adjustment of premiums under any such policies. Such policies are in
amounts and with coverage(s) which are generally customary in the Company’s
industry and consistent with the Company’s past practices. The Company has not
received written notice of cancellation or termination in respect of any such
policy from, and, to the Knowledge of Seller, no cancellation or termination of
any such policy is pending or threatened by, the Company’s current insurers.

 

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4.19. Banking and Personnel Lists. The Company will deliver to the Purchaser
prior to the Closing Date the following accurate lists and summary descriptions
relating to the Company:

 

(i) The name of each bank in which the Company has an account or safe deposit
box and the names of all persons authorized to draw thereon or have access
thereto.

 

(ii) The names, current annual salary rates and total compensation for the
preceding fiscal year of all of the present directors and officers of the
Company, and any other direct or indirect employees whose current base accrual
salary or annualized hourly rate equivalent is $40,000 or more, together with a
summary of the bonuses, percentage compensation and other like benefits, if any,
paid or payable to such persons for the last full fiscal year completed,
together with a schedule of changes since that date, if any.

 

4.20. Lists of Contracts, Etc. There is included in Schedule 4.20 a list of the
following items (whether written or oral) relating to the Company, which list
identifies and fairly summarizes each item:

 

(i) All employment agreements with any officer, director, employee or
consultant; and all employee pension, health and welfare benefit plans, group
insurance, bonus, profit sharing, severance, vacation, hospitalization, and
retirement plans, post-retirement medical benefit plans, and any other plans,
arrangements or custom requiring payments or benefits to current or retiring
employees.

 

(ii) All joint venture contracts of the Company or affiliates relating to the
Business;

 

(iii) All contracts of the Company relating to (a) obligations for borrowed
money, (b) obligations evidenced by bonds, debentures, notes or other similar
instruments, (c) obligations to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary course of
business, (d) obligations under capital leases, (e) debt of others secured by a
lien on any asset of the Company, and (f) debts of others guaranteed by the
Company.

 

(iv) All agreements of the Company relating to the supply of advertising
inventory and raw materials for and the distribution of the products of its
business, including without limitation all sales agreements, manufacturer’s
representative agreements and distribution agreements of whatever magnitude and
nature, and any commitments therefor;

 

(v) All contracts that individually provide for aggregate future payments to or
from the Company of $25,000 or more, to the extent not included in (i) through
(iv) above;

 

(vi) All contracts of the Company that have a term exceeding one year and that
may not be cancelled without any liability, penalty or premium, to the extent
not included in (i) through (v) above;

 

(vii) A complete list of all outstanding powers of attorney granted by the
Company; and

 

(viii) All other contracts of the Company material to the business, assets,
liabilities, financial condition, results of operations or prospects of the
Business taken as a whole to the extent not included above.

 

Except as set forth in Schedule 4.20, (i) all contracts, agreements and
commitments of the Company set forth in Schedule 4.20 are valid, binding and in
full force and effect, and (ii) neither the Company nor, to the best of the
Designated Sellers’ knowledge, any other party to any such contract, agreement,
or commitment has materially breached any provision thereof or is in default
thereunder. Except as set forth in Schedule 4.20, the sale of the Shares by the
Sellers in accordance with this Agreement will not result in the termination of
any contract, agreement or commitment of the Company set forth in Schedule 4.20,
and immediately after the Closing, each such contract, agreement or commitment
will continue in full force and effect without the imposition or acceleration of
any burdensome condition or other obligation on the Company resulting from the
sale of the Shares by the Sellers. True and complete copies of the contracts,
leases, licenses and other documents referred to in this Schedule 4.20 will be
delivered to the Purchaser, certified by the Secretary or Assistant Secretary of
the Company as true, correct and complete copies, not later than four weeks from
the date hereof or ten business days before the Closing Date, whichever is
sooner.

 

8

 

 

There are no pending disputes with customers or vendors of the Company regarding
quality or return of goods involving amounts in dispute with any one customer or
vendor, whether for related or unrelated claims, in excess of $5,000 except as
described on Schedule 4.20 hereto, all of which will be resolved to the
reasonable satisfaction of Purchaser prior to the Closing Date. The Company has
not received notice from any of its customers or vendors will terminate or
materially alter their business relationship with the Company after completion
of the transactions contemplated by this Agreement.

 

4.21. Compliance With the Law. To its knowledge, the Company is not in violation
of any applicable federal, state, local or foreign law, regulation or order or
any other, decree or requirement of any governmental, regulatory or
administrative agency or authority or court or other tribunal (including, but
not limited to, any law, regulation order or requirement relating to securities,
properties, business, products, manufacturing processes, advertising, sales or
employment practices, terms and conditions of employment, occupational safety,
health and welfare, conditions of occupied premises, product safety and
liability, civil rights, or environmental protection, including, but not limited
to, those related to waste management, air pollution control, waste water
treatment or noise abatement), except where such would not have a Material
Adverse Effect. Except as set forth in Schedule 4.21, the Company has not been
and is not now charged with, or to the best knowledge of the Designated Sellers
or the Company under investigation with respect to, any violation of any
applicable law, regulation, order or requirement relating to any of the
foregoing, nor, to the best knowledge of any Seller or the Company after due
inquiry, are there any circumstances that would or might give rise to any such
violation. The Company has filed all reports required to be filed with any
governmental, regulatory or administrative agency or authority.

 

4.22. Litigation; Pending. Except as specifically identified on the Balance
Sheet or footnotes thereto or set forth in Schedule 4.22:

 

(i) There are no legal, administrative, arbitration or other proceedings or
governmental investigations pending or, to the best knowledge of the Designated
Sellers or the Company, threatened, against the Sellers or the Company, relating
to its business or the Company or its properties (including leased property), or
the transactions contemplated by this Agreement, nor is there any basis known to
the Company or any Seller for any such action.

 

(ii) There are no judgments, decrees or orders of any court, or any governmental
department, commission, board, agency or instrumentality binding upon the
Designated Sellers or the Company relating to its business or the Company the
effect of which is to prohibit any business practice or the acquisition of any
property or the conduct of any business by the Company or which limit or control
or otherwise adversely affect its method or manner of doing business.

 

(iii) There are no charges of discrimination (relating to sex, age, race,
national origin, handicap or veteran status) or unfair labor practices pending
or, to the best knowledge of the Designated Sellers or the Company, threatened
before any governmental or regulatory agency or authority or any court relating
to employees of the Company.

 

4.23. Absence of Certain Changes or Events. The Company has not, since the
Balance Sheet Date, and except in the ordinary course of business consistent
with past practice and/or except as described on Schedule 4.23:

 

(i) Incurred any material obligation or liability (absolute, accrued, contingent
or otherwise), except in the ordinary course of its business consistent with
past practice or in connection with the performance of this Agreement, and any
such obligation or liability incurred in the ordinary course is not materially
adverse, except for claims, if any, that are adequately covered by insurance;

 

9

 

 

(ii) Discharged or satisfied any lien or encumbrance, or paid or satisfied any
obligations or liability (absolute, accrued, contingent or otherwise) other than
(a) liabilities shown or reflected on the Balance Sheet, and (b) liabilities
incurred since the Balance Sheet Date in the ordinary course of business that
were not materially adverse;

 

(iii) Increased or established any reserve or accrual for taxes or other
liability on its books or otherwise provided therefor, except (a) as disclosed
on the Balance Sheet, or (b) as may have been required under generally accepted
accounting principles due to income earned or expense accrued since the Balance
Sheet Date and as disclosed to the Purchaser in writing;

 

(iv) Mortgaged, pledged or subjected to any lien, charge or other encumbrance
any of its assets, tangible or intangible;

 

(v) Sold or transferred any of its assets or cancelled any debts or claims or
waived any rights, except in the ordinary course of business and which has not
been materially adverse;

 

(vi) Disposed of or permitted to lapse any patents or trademarks or any patent
or trademark applications material to the operation of its business;

 

(vii) Incurred any significant labor trouble or granted any general or uniform
increase in salary or wages payable or to become payable by it to any director,
officer, employee or agent, or by means of any bonus or pension plan, contract
or other commitment increased the compensation of any director, officer,
employee or agent;

 

(viii) Authorized any capital expenditure for real estate or leasehold
improvements, machinery, equipment or molds in excess of $5,000.00 in the
aggregate;

 

(ix) Except for this Agreement or as otherwise disclosed herein or in any
schedule to this Agreement, entered into any material transaction;

 

(x) Issued any stocks, bonds, or other corporate securities, or made any
declaration or payment of any dividend or any distribution in respect of its
capital stock; or

 

(xi) Experienced damage, destruction or loss (whether or not covered by
insurance) individually or in the aggregate materially and adversely affecting
any of its properties, assets or business, or experienced any other material
adverse change or changes individually or in the aggregate affecting its
financial condition, assets, liabilities or business.

 

4.24. Employee Benefit Plans.

 

(a) Schedule 4.24 lists a description of the only Employee Programs (as defined
below) that have been maintained (as such term is further defined below) by the
Company at any time during the five (5) years prior to the date hereof.

 

(b) For purposes of this Section 4.24:

 

(i) “Employee Program” means (A) all employee benefit plans within the meaning
of ERISA Section 3(3), including, but not limited to, multiple employer welfare
arrangements (within the meaning of ERISA Section 3(40)), plans to which more
than one unaffiliated employer contributes and employee benefit plans (such as
foreign or excess benefit plans) which are not subject to ERISA; and (B) all
stock option plans, bonus or incentive award plans, severance pay policies or
agreements, deferred compensation agreements, supplemental income arrangements,
vacation plans, and all other employee benefit plans, agreements, and
arrangements not described in (A) above. In the case of an Employee Program
funded through an organization described in Code Section 501(c)(9), each
reference to such Employee Program shall include a reference to such
organization;

 

10

 

 

(ii) An entity “maintains” an Employee Program if such entity sponsors,
contributes to, or provides (or has promised to provide) benefits under such
Employee Program, or has any obligation (by agreement or under applicable law)
to contribute to or provide benefits under such Employee Program, or if such
Employee Program provides benefits to or otherwise covers employees of such
entity (or their spouses, dependents, or beneficiaries);

 

(iii) An entity is an “affiliate” of the Company for purposes of this
Section 4.24 if it would have ever been considered a single employer with the
Company under ERISA Section 4001(b) or part of the same “controlled group” as
the Company for purposes of ERISA Section 302(d)(8)(C); and

 

(iv) “Multiemployer Plan” means a (pension or non-pension) employee benefit plan
to which more than one employer contributes and which is maintained pursuant to
one or more collective bargaining agreements.

 

4.25. Product Warranties and Product Liabilities. The product warranties and
return policies of the Company in effect on the date hereof and the types of
products to which they apply are described on Schedule 4.25 hereto. Schedule
4.25 also sets forth all product liability claims involving amounts in
controversy in excess of $5,000 that are currently either pending or, to the
best of the Designated Sellers’ and the Company’s knowledge, threatened against
the Company. The Company has not paid in the aggregate, or allowed as credits
against purchases, or received claims for more than one percent (1%) per year of
gross sales, as determined in accordance with GAAP consistently applied, during
the past three years pursuant to obligations under any warranty or any product
liability claim with respect to goods manufactured, assembled or furnished by
the Company. The future cost of performing all such obligations and paying all
such product liability claims with respect to goods manufactured, assembled or
furnished prior to the Closing Date will not exceed the average annual cost
thereof for said past three year period.

 

4.26. Assets. The assets of the Company are located at the locations listed on
Schedule 4.26 attached hereto. Except as described in Schedule 4.26, the assets
of the Company are, and together with the additional assets to be acquired or
otherwise received by the Company prior to the Closing, will at the Closing Date
be, sufficient in all material respects to carry on the operations of the
business as now conducted by the Company. The Company is the only business
organization through which the Business is conducted. Except as set forth in
Schedule 4.16 or Schedule 4.26, all assets used by the Designated Sellers and
the Company to conduct the Business are, and will on the Closing Date be, owned
by the Company.

 

4.27. Absence of Certain Commercial Practices. Except as described on Schedule
4.27, neither the Company nor any Seller has made any payment (directly or by
secret commissions, discounts, compensation or other payments) or given any
gifts to another business concern, to an agent or employee of another business
concern or of any governmental entity (domestic or foreign) or to a political
party or candidate for political office (domestic or foreign), to obtain or
retain business for the Company or to receive favorable or preferential
treatment, except for gifts and entertainment given to representatives of
customers or potential customers of sufficiently limited value and in a form
(other than cash) that would not be construed as a bribe or payoff.

 

4.28. Licenses, Permits, Consents and Approvals. The Company has, and at the
Closing Date will have, all licenses, permits or other authorizations of
governmental, regulatory or administrative agencies or authorities
(collectively, “Licenses”) required to conduct the Business, except for any
failures of such which would not have a Material Adverse Effect. All Licenses of
the Company are listed on Schedule 4.28 hereto. At the Closing, the Company will
have all such Licenses which are material to the conduct of the Business and
will have renewed all Licenses which would have expired in the interim. Except
as listed in Schedule 4.28, no registration, filing, application, notice,
transfer, consent, approval, order, qualification, waiver or other action of any
kind (collectively, a “Filing”) will be required as a result of the sale of the
Shares by Sellers in accordance with this Agreement (a) to avoid the loss of any
License or the violation, breach or termination of, or any default under, or the
creation of any lien on any asset of the Company pursuant to the terms of, any
law, regulation, order or other requirement or any contract binding upon the
Company or to which any such asset may be subject, or (b) to enable Purchaser
(directly or through any designee) to continue the operation of the Company and
the Business substantially as conducted prior to the Closing Date. All such
Filings will be duly filed, given, obtained or taken on or prior to the Closing
Date and will be in full force and effect on the Closing Date.

 

11

 

 

4.29. Environmental Matters. Except as set forth on Schedule 4.29 hereto, the
operations of the Company, to the best knowledge of the Designated Sellers, are
in compliance with all applicable Laws promulgated by any governmental entity
which prohibit, regulate or control any hazardous material or any hazardous
material activity (“Environmental Laws”) and all permits issued pursuant to
Environmental Laws or otherwise except for where noncompliance or the absence of
such permits would not, individually or in the aggregate, have a Material
Adverse Effect;

 

4.30 Broker. Except as specified in Schedule 4.30, neither the Company nor any
Seller has retained any broker in connection with any transaction contemplated
by this Agreement. Purchaser and the Company shall not be obligated to pay any
fee or commission associated with the retention or engagement by the Company or
Sellers of any broker in connection with any transaction contemplated by this
Agreement.

 

4.31. Related Party Transactions. Except as described in Schedule 4.31, all
transactions during the past five years between the Company and any current or
former shareholder or any entity in which the Company or any current or former
shareholder had or has a direct or indirect interest have been fair to the
Company as determined by the Board of Directors. No portion of the sales or
other on-going business relationships of the Company is dependent upon the
friendship or the personal relationships (other than those customary within
business generally) of any Seller, except as described in Schedule 4.31. During
the past five years, the Company has not forgiven or cancelled, without
receiving full consideration, any indebtedness owing to it by any Seller.

 

4.32 USA PATRIOT Act. The Company and the Designated Sellers certify that the
Company has not been designated, and is not owned or controlled, by a “suspected
terrorist” as defined in Executive Order 13224. The Company and the Sellers
hereby acknowledge that the Purchaser seeks to comply with all applicable laws
concerning money laundering and related activities. In furtherance of those
efforts, the Company and the Sellers hereby represent, warrant and agree that:
(i) none of the cash or property that the Sellers have contributed or paid or
will contribute and pay to the Company has been or shall be derived from, or
related to, any activity that is deemed criminal under United States law; and
(ii) no contribution or payment by the Company to the Purchaser, to the extent
that they are within the Company’s control shall cause the Purchaser to be in
violation of the United States Bank Secrecy Act, the United States International
Money Laundering Control Act of 1986 or the United States International Money
Laundering Abatement and Anti-Terrorist Financing Act of 2001. The Sellers shall
promptly notify the Purchaser if any of these representations ceases to be true
and accurate regarding the Sellers or the Company. The Sellers agree to provide
the Purchaser any additional information regarding the Company that the
Purchaser reasonably requests to ensure compliance with all applicable laws
concerning money laundering and similar activities.

 

4.33. Disclosure. No statement, representation or warranty by the Company in
this Agreement or in any schedule, certificate, opinion, instrument, or other
document furnished or to be furnished to the Purchaser by the Company pursuant
hereto or in connection with the transactions contemplated hereby contains or
will contain any untrue statement of a material fact or omits or will omit to
state a material fact required to be stated therein or necessary to make the
statements contained therein not misleading or necessary in order to provide a
prospective purchaser of the business of the Company with full and fair
disclosure concerning the Company, its business, and the Company’s affairs.

 

12

 

 

Article V

REPRESENTATIONS AND WARRANTIES OF SELLERS

 

Each Seller, severally and not jointly, hereby represents and warrants to the
Purchaser as of the Closing Date (other than the representations and warranties
which are as of a specified date, which speak only as of such date) as follows:

 

5.1 Good Title.  The Shares held by such Seller are owned free and clear of any
liens, restriction on sale, transfer or voting (other than restrictions imposed
by applicable securities laws), preemptive right, option or other right to
purchase of any person.  Upon the consummation of the sale of such the Shares by
such Seller as contemplated hereby, the Purchaser shall have valid title to such
Shares and shall be the record owner thereof, free and clear of any lien,
restriction on sale, transfer or voting (other than restrictions imposed by
applicable securities laws), preemptive right, option or other right to purchase
of any person

 

5.2 Organization; Power; Authority.  Such Seller is a natural person or a legal
entity of the type set forth next to such Seller’s name on the signature page
hereto. Such Seller has taken, or shall take prior to the Closing, all actions
necessary for the authorization, execution, delivery and performance of this
Agreement. If such Seller is not a natural Person, such  Seller has been duly
organized and is validly existing and in good standing under the laws of the
jurisdiction of its organization and has all requisite power and authority to
(a) execute, deliver and perform its obligations under this Agreement and to
carry out the transactions contemplated hereby and (b) enter into this Agreement
to consummate the transactions contemplated hereby and thereby, and to sell and
transfer such Seller’s Shares without the consent or approval of any other
person.  If such Seller is a natural person, he or she is competent and has all
requisite legal capacity, power and authority to (a) execute, deliver and
perform its obligations under this Agreement and to carry out the transactions
contemplated hereby and (b) enter into this Agreement to consummate the
transactions contemplated hereby, and to sell and transfer such Seller’s Shares
without the consent or approval of any other person.

 

5.3 Enforceability. This Agreement has been duly authorized, executed and
delivered by such Seller, and this Agreement is a valid and binding obligation
of such Seller, enforceable against such Seller in accordance with its terms.

 

5.4 Absence of Claims by Seller.  Such Seller does not have any claim against
the Company, contingent or unconditional, fixed or variable under any contract
or on any other basis whatsoever, whether in equity or law, including, without
limitation any director, management, advisory, monitoring and similar fees,
costs and, subject to payment of the Convertible Note in accordance with this
Agreement, there are no outstanding loans between the Company, on the one hand,
and such Seller.

 

5.5 No Breach.  The execution, delivery and performance by such Seller of this
Agreement and the consummation of the transactions contemplated hereby do not
violate any of the governing and organizational documents of such Seller, if
applicable, do not conflict with or result in any breach of, constitute a
default under, result in a violation of, result in the creation of any lien,
upon any of such Seller’s assets, or require any authorization, consent,
approval, exemption or other action by or notice to any governmental entity or
other third person, under the provisions of any contract to which such Seller or
any of such Seller’s assets are is bound.

 

5.6 Litigation.  There are no actions pending or, to such Seller’s knowledge,
threatened against such Seller or any of its assets, at law or in equity, or
before or by any governmental entity which challenges or seeks to enjoin, alter
or materially delay the consummation of the transactions contemplated hereby.

 

13

 

 

5.7 Access to Information; Disclaimer.  Each Seller acknowledges and agrees that
it (a) has had an opportunity to discuss the business and affairs of Purchaser
with Purchaser, (b) has had reasonable access to the books and records of
Purchaser, (c) has been afforded the opportunity to ask questions of and receive
answers from officers of Purchaser and (d) has conducted its own independent
investigation of the Purchaser, its respective businesses and the transactions
contemplated hereby, and has not relied on any representation, warranty or other
statement by any Person on behalf of Purchaser, other than the representations
and warranties of Purchaser expressly contained in Article 7, and that all other
representations and warranties are specifically disclaimed.  Without limiting
the foregoing, each Seller further acknowledges and agrees that none of
Purchaser or any of its employees, affiliates, advisors, agents or other
representatives has made any representation or warranty concerning any
estimates, projections, forecasts, business plans or other forward-looking
information regarding Purchaser or its businesses and operations.  Each Seller
hereby acknowledges that there are uncertainties inherent in attempting to
develop such estimates, projections, forecasts, business plans and other
forward-looking information with which such Seller is familiar, that such Seller
is taking full responsibility for making their own evaluation of the adequacy
and accuracy of all estimates, projections, forecasts, business plans and other
forward-looking information furnished to them (including the reasonableness of
the assumptions underlying such estimates, projections, forecasts, business
plans and other forward-looking information), and that such Seller will have no
claim against Purchaser, any of its employees, affiliates, advisors, agents or
other representatives with respect thereto.

 

5.8 Available Information Each Seller represents that such Seller has reviewed
filings made by the Purchaser with the U.S. Securities and Exchange Commission
(the “SEC Documents”) and that such Seller has such knowledge and experience in
financial and business matters that such Seller is capable of utilizing the
information set forth therein, concerning Purchaser to evaluate the risk of
investing in Purchaser. Each Seller has before the Closing hereunder, been
afforded the opportunity to review and is familiar with the SEC Documents and
has based his decision to invest solely on the information contained therein,
and the information contained within this Agreement and has not been furnished
with any other literature, prospectus or other information except as included in
the SEC Documents or this Agreement.  Each Seller has been given the opportunity
to ask questions about Purchaser and is satisfied that any information about
Purchaser and the Earn-Out Consideration have been answered to such Seller’s
satisfaction. Each Seller understands that no federal or state agency has
approved or disapproved, nor will approve or disapprove, prior to the issuance
of, the Earn-Out Consideration, passed upon or endorsed the merits of the
transfer of such shares set forth within this Agreement or made any finding or
determination as to the fairness of such shares for investment.

 

5.9 Securities Representations.  Each Seller hereby confirms that the securities
to be acquired by the Sellers hereunder (subject to the terms and conditions
herein) will be acquired for investment for the Seller’s own account, not as a
nominee or agent, and not with a view to the resale or distribution of any part
thereof (other than pursuant to the registration statement contemplated hereby),
and that the Seller has no present intention of selling, granting any
participation in, or otherwise distributing the same (other than pursuant to the
registration statement contemplated hereby).  Each Seller further represents
that the Seller does not presently have any contract, undertaking, agreement or
arrangement with any Person to sell, transfer or grant participations to such
Person or to any third Person, with respect to any of such securities.  Each
Seller understands that the securities to be acquired, subject to the terms and
conditions herein, have not been, and until registered in compliance with this
Agreement, will not be, registered under the Securities Act, by reason of a
specific exemption from the registration provisions of the Securities Act which
depends upon, among other things, the bona fide nature of the investment intent
and the accuracy of the Seller’s representations as expressed herein.  The
Seller understands that, until registered in compliance with this Agreement, the
securities are “restricted securities” under applicable U.S. federal and state
securities laws and that, pursuant to these laws, the Seller must hold the
securities indefinitely unless they are registered with the Securities and
Exchange Commission and qualified by state authorities, or an exemption from
such registration and qualification requirements is available.  The Seller
acknowledges that Purchaser has no obligation to register or qualify the
securities for resale except as set forth in this Agreement. The Seller
understands that the securities may, until registered in accordance with this
Agreement, be notated with a customary Securities Act legend.  Each Seller
represents that he is an accredited investor as defined in Rule 501(a) of
Regulation D promulgated under the Securities Act.

 

14

 

 

5.10 Acknowledgment of Restricted Securities. Each Seller has read and
understands the following:

 

THE PURCHASER SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT, OR ANY STATE SECURITIES LAWS AND ARE BEING OFFERED AND SOLD IN
RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SAID ACT AND SUCH
LAWS. THE PURCHASER SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY
AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SAID
ACT AND SUCH LAWS PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. THE PURCHASER
SECURITIES HAVE NOT BEEN RECOMMENDED, APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY OTHER REGULATORY
AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE
MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THE MEMORANDUM OR THIS
SUBSCRIPTION AGREEMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL

  

Article VI
REPRESENTATIONS AND WARRANTIES OF PURCHASER

 

Each Purchaser hereby represents and warrants to the Sellers as of the Closing
Date (other than the representations and warranties which are as of a specified
date, which speak only as of such date) as follows:

 

6.1 Organization and Good Standing.

 

Each Purchaser is a corporation duly organized, validly existing and in good
standing under the laws of its incorporation.

 

6.2 Authority.

 

a) The execution and delivery of this Agreement and the consummation of the
transactions contemplated herein have been, or will prior to Closing be, duly
and validly approved and acknowledged by all necessary corporate action on the
part of the Purchaser.

 

(b) The execution of this Agreement and the delivery hereof to the Sellers and
the purchase contemplated herein have been, or will be prior to Closing, duly
authorized by the Purchaser’s Board of Directors having full power and authority
to authorize such actions.

 

6.3 Conflicts; Consents of Third Parties.

 

(a) The execution and delivery of this Agreement, the acquisition of the Shares
by Purchaser and the consummation of the transactions herein contemplated, and
the compliance with the provisions and terms of this Agreement, are not
prohibited by the Articles of Incorporation or Bylaws of the Purchaser and will
not violate, conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under, any court order, indenture,
mortgage, loan agreement, or other agreement or instrument to which the
Purchaser is a party or by which it is bound.

 

(b) No consent, waiver, approval, order, permit or authorization of, or
declaration or filing with, or notification to, any person or governmental body
is required on the part of the Purchaser in connection with the execution and
delivery of this Agreement or the Purchaser Documents or the compliance by
Purchaser with any of the provisions hereof or thereof.

 

15

 

 

6.4 Litigation.

 

There are no legal proceedings pending or, to the best knowledge of the
Purchaser, threatened that are reasonably likely to prohibit or restrain the
ability of the Purchaser to enter into this Agreement or consummate the
transactions contemplated hereby.

 

6.5 Investment Intention. The Purchaser is acquiring the Shares for its own
account, for investment purposes only and not with a view to the distribution
(as such term is used in Section 2(11) of the Securities Act of 1933, as amended
(the "Securities Act") thereof. Purchaser understands that the Shares have not
been registered under the Securities Act and cannot be sold unless subsequently
registered under the Securities Act or an exemption from such registration is
available.

 

6.6 USA PATRIOT Act. The Purchaser certifies that neither the Purchaser nor any
of its subsidiaries has been designated, and is not owned or controlled, by a
“suspected terrorist” as defined in Executive Order 13224. The Purchaser hereby
acknowledges that the Company and the Sellers seek to comply with all applicable
laws concerning money laundering and related activities. In furtherance of those
efforts, the Purchaser hereby represent, warrant and agree that: (i) none of the
cash or property that the Purchaser has contributed or paid or will contribute
and pay to the Sellers has been or shall be derived from, or related to, any
activity that is deemed criminal under United States law; and (ii) no
contribution or payment by the Purchaser or any of its subsidiaries to the
Sellers, to the extent that they are within the Purchaser’s control shall cause
the Sellers or the Company to be in violation of the United States Bank Secrecy
Act, the United States International Money Laundering Control Act of 1986 or the
United States International Money Laundering Abatement and Anti-Terrorist
Financing Act of 2001. The Purchaser shall promptly notify the Sellers if any of
these representations ceases to be true and accurate regarding the Purchaser or
any of its subsidiaries. The Purchaser agrees to provide the Sellers any
additional information regarding the Purchaser or any of its subsidiaries that
the Sellers reasonably requests to ensure compliance with all applicable laws
concerning money laundering and similar activities.

 

6.7 Acknowledgment of Restricted Securities. The Purchaser has read and
understands the following:

 

THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT,
OR ANY STATE SECURITIES LAWS AND ARE BEING OFFERED AND SOLD IN RELIANCE ON
EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SAID ACT AND SUCH LAWS. THE
SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT
BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SAID ACT AND SUCH LAWS
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. THE SECURITIES HAVE NOT BEEN
RECOMMENDED, APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION,
ANY STATE SECURITIES COMMISSION OR ANY OTHER REGULATORY AUTHORITY, NOR HAVE ANY
OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING
OR THE ACCURACY OR ADEQUACY OF THE MEMORANDUM OR THIS SUBSCRIPTION AGREEMENT.
ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL

 

16

 

 

Article VII
COVENANTS

 

7.1 Preservation of Records.

 

The Sellers and the Purchaser agree that each of them shall preserve and keep
the records held by it relating to the business of the Company for a period of
three years from the Closing Date and shall make such records and personnel
available to the other as may be reasonably required by such party in connection
with, among other things, any insurance claims by, legal proceedings against or
governmental investigations of the Sellers or the Purchaser or any of their
Affiliates or in order to enable the Sellers or the Purchaser to comply with
their respective obligations under this Agreement and each other agreement,
document or instrument contemplated hereby or thereby.

 

7.2 Publicity.

 

None of the Sellers nor the Purchaser shall issue any press release or public
announcement concerning this Agreement or the transactions contemplated hereby
without obtaining the prior written approval of the other party hereto, which
approval will not be unreasonably withheld or delayed, unless, in the sole
judgment of the Purchaser or the Sellers, disclosure is otherwise required by
applicable Law or by the applicable rules of any stock exchange on which the
Purchaser lists securities, provided that, to the extent required by applicable
law, the party intending to make such release shall use its best efforts
consistent with such applicable law to consult with the other party with respect
to the text thereof.

 

7.3 Use of Name.

 

The Sellers hereby agrees that upon the consummation of the transactions
contemplated hereby, the Purchaser and the Company shall have the sole right to
the use of the name "DoubleVision Networks, Inc." and the Sellers shall not, and
shall not cause or permit any Affiliate to, use such name or any variation or
simulation thereof.

 

7.4 Consulting Agreements.

 

On or prior to the Closing Date, each of Nicholas Fisser and Matthew Wiggins
shall enter into a consulting agreement with the Company, substantially in the
form of agreement attached hereto as Exhibit B (the “Consulting Agreements”).
The Company shall enter into long-term incentive compensation arrangements with
Jon Lowen and Evan Turner consistent with the Company’s current long-term
incentive compensation arrangements.

 

7.5 Preferred Stock.

 

On or prior to the Closing Date, all of the Company’s Preferred Stock shall be
converted into the Company’s Common Stock

 

7.6 Stock Option Plan.

 

Prior to the Closing Date, all vested options issued under the Company’s 2010
Omnibus Incentive Plan shall be exercised into the Company’s common stock and
all unvested options issued under the Company’s 2010 Omnibus Incentive Plan
shall be cancelled.

 

7.7 Extinguishment of Debt.

 

Prior to the Closing Date, the following obligations shall be paid, extinguished
and have a zero balance:

 

(a) all obligations for borrowed money, including the Convertible Promissory
Note to First Trilogy, LLC (the “First Trilogy Note”);

 

(b) all amounts due to Nicholas Fisser and Matthew Wiggins; and

 

(c) payroll liabilities for all periods through the Closing Date,

 

(d) contemporaneously with the Closing and after receipt of the Shares, the
Company shall pay $400,000 to First Trilogy, LLC, or its designee, in partial
payment of the First Trilogy Note.

 

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7.8 Tax Election.

 

The parties intend for the transactions contemplated herein to qualify as a type
B reorganization pursuant to Section 368(a)(1)(B) of the Code.

 

7.9 Tax Matters.

 

(a) The Sellers shall severally, and not jointly, indemnify, defend, save and
hold harmless Purchaser (and, following the Closing, the Company and each of its
Subsidiaries) from any Losses attributable to (i) all Taxes (or the nonpayment
thereof) of the Company prior to closing; (ii) all Taxes under Code §1374 for
the pre-Closing tax period; (iii) all Taxes of any member of an affiliated,
consolidated, combined or unitary group of which the Company (or any predecessor
or current or former Affiliate of any of the foregoing) is or was a member on or
prior to the Closing Date, including pursuant to Treasury Regulation
Section 1.1502-6 (or any analogous provision of state, local or foreign Tax
law), and (iv) any and all Taxes of any Person (other than the Company) imposed
on the Company as a transferee or successor, by contract or pursuant to any law,
which Taxes relate to an event or transaction occurring on or before the
Closing.

 

(b) In the case of any taxable period beginning on or before the Closing Date
and ending after the Closing Date (the “Straddle Tax Period”), the amount of any
Taxes based on or measured by income or receipts of the Company for the
pre-Closing tax period shall be determined based on an interim closing of the
books as of the close of business on the Closing Date and the amount of other
Taxes of the Company and each of its Subsidiaries for a Straddle Tax Period that
relates to the pre-Closing tax period shall be deemed to be the amount of such
Tax for the entire taxable period multiplied by a fraction, the numerator of
which is the number of days in the taxable period ending on (and including) the
Closing Date and the denominator of which is the number of days in such Straddle
Tax Period.

 

(c) The Sellers will prepare, or cause to be prepared, and file, or cause to be
filed, any tax returns of the Company for all pre-Closing tax periods, including
Straddle Tax Periods, ending on the Closing Date. Purchaser will prepare, or
cause to be prepared, and file, or cause to be filed, any Tax Returns of the
Company for other Straddle Tax Periods. With respect to Tax Returns to be
prepared by the Sellers or the Purchaser pursuant to this Section 7.9(c),
(i) except as required by applicable law, such Tax Returns will be filed in a
manner consistent with past practice and no position will be taken, election
made or method adopted inconsistent with positions taken, elections made or
methods used in prior periods in filing such Tax Returns, (ii) the party
preparing such a Tax Return will provide a copy of such Tax Return at least
thirty (30) days before it is due, taking into consideration extensions of time
to file, to the other party for review and approval (which approval will not be
unreasonably withheld, conditioned or delayed), and (iii) for each Tax Return,
each party will remit payment to the filing party the appropriate share of Taxes
owed (if any) by the remitting party no later than five (5) days prior to the
due date of filing each such Tax Return.

 

(d) Purchaser and the Sellers shall cooperate fully, as and to the extent
reasonably requested by the other party, in connection with the filing of Tax
Returns pursuant to this Section 7.9 and any audit, litigation or other
proceeding with respect to Taxes relating to a period of time prior to the
Closing Date. Such cooperation shall include the retention and (upon the other
party’s request) the provision of records and information that are reasonably
relevant to any such audit, litigation or other proceeding and making employees
available on a mutually convenient basis, at a reasonable cost to requesting
party, to provide additional information and explanation of any material
provided hereunder. The Company agrees to (i) retain all books and records with
respect to Tax matters pertinent to the Company or any of its Subsidiaries
relating to any taxable period beginning before the Closing Date until the
expiration of the statute of limitations (and, to the extent notified by
Purchaser, any extensions thereof) of the respective taxable periods, and to
abide by all record retention agreements entered into with any governmental
authority, and (ii) give the other party reasonable written notice prior to
destroying or discarding any such books and records and, if the other party so
requests, shall allow the other party to take possession of such books and
records.

 

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(e) Purchaser, the and the Sellers further agree, upon request, to use their
best efforts to obtain any certificate or other document from any governmental
authority or any other Person as may be necessary to mitigate, reduce or
eliminate any Tax that could be imposed (including, but not limited to, with
respect to the transactions contemplated hereby).

 

(f) Purchaser and the Sellers agree, upon request, to promptly provide the other
party with all information that either Party may be required to report pursuant
to Code §6043 or 6043A, or Treasury Regulations promulgated thereunder.

 

(g) All tax-sharing agreements or similar agreements with respect to or
involving the Company Subsidiaries shall be terminated as of the Closing Date
and, after the Closing Date, neither the Company nor any of its Subsidiaries
shall be bound thereby or have any liability thereunder.

 

(h) All transfer, documentary, sales, use, stamp, registration and other such
Taxes, and all conveyance fees, recording charges and other fees and charges
(including any penalties and interest) incurred in connection with the
consummation of the transactions contemplated by this Agreement, if any, shall
be borne by the Sellers.

 

7.10 Removal of Restrictive Legend on Purchaser Securities. Subject to the terms
of the applicable Lock Up Agreement, the Purchaser will provide each Seller with
such documentation and opinions as may be reasonably required in order for the
Sellers to sell, or otherwise remove the restrictive legend from the Purchaser
Securities under Rule 144.

 

Article VIII
CONDITIONS TO CLOSING

 

8.1 Conditions Precedent to Obligations of Purchaser.

 

The obligation of the Purchaser to consummate the transactions contemplated by
this Agreement is subject to the fulfillment, on or prior to the Closing Date,
of each of the following conditions (any or all of which may be waived by the
Purchaser in whole or in part to the extent permitted by applicable law):

 

(a) all representations and warranties of the Sellers contained herein shall be
true and correct as of the date hereof;

 

(b) all representations and warranties of the Sellers contained herein qualified
as to materiality shall be true and correct, and the representations and
warranties of the Sellers contained herein not qualified as to materiality shall
be true and correct in all material respects, at and as of the Closing Date with
the same effect as though those representations and warranties had been made
again at and as of that time;

 

(c) the Sellers shall have performed and complied in all material respects with
all obligations and covenants required by this Agreement to be performed or
complied with by them on or prior to the Closing Date;

 

(d) the Purchaser shall have been furnished with certificates (dated the Closing
Date and in form and substance reasonably satisfactory to the Purchaser)
executed by each Seller certifying as to the fulfillment of the conditions
specified in Sections 8.1(a), 8.1(b) and 8.1(c) hereof;

 

(e) Certificates representing 100% of the Shares shall have been, or shall at
the Closing be, validly delivered and transferred to the Purchaser, free and
clear of any and all Liens;

 

(f) there shall not have been or occurred any Material Adverse Change;

 

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(g) the Sellers shall have obtained all consents and waivers referred to in
Section 4.7 hereof, in a form reasonably satisfactory to the Purchaser, with
respect to the transactions contemplated by this Agreement;

 

(h) no Legal Proceedings shall have been instituted or threatened or claim or
demand made against the Sellers, the Company, or the Purchaser seeking to
restrain or prohibit or to obtain substantial damages with respect to the
consummation of the transactions contemplated hereby, and there shall not be in
effect any order by a governmental body of competent jurisdiction restraining,
enjoining or otherwise prohibiting the consummation of the transactions
contemplated hereby;

 

(i) the Purchaser shall have received the written resignations of each director
of the Company;

 

(j) the Consulting Agreements shall have been executed by the Company and each
of Nicholas Fisser and Matthew Wiggins and the Company;

 

(k) the Lock-Up Agreement in the form of Exhibit A shall have been executed by
each of the Sellers other than Jonathan Lowen and Evan Turner; and

 

(l) all due diligence by the Company shall have been completed.

 

8.2 Conditions Precedent to Obligations of the Sellers.

 

The obligations of the Sellers to consummate the transactions contemplated by
this Agreement are subject to the fulfillment, prior to or on the Closing Date,
of each of the following conditions (any or all of which may be waived by the
Sellers in whole or in part to the extent permitted by applicable law):

 

(a) all representations and warranties of the Purchaser contained herein shall
be true and correct as of the date hereof;

 

(b) all representations and warranties of the Purchaser contained herein
qualified as to materiality shall be true and correct, and all representations
and warranties of the Purchaser contained herein not qualified as to materiality
shall be true and correct in all material respects, at and as of the Closing
Date with the same effect as though those representations and warranties had
been made again at and as of that date;

 

(c) the Purchaser shall have performed and complied in all material respects
with all obligations and covenants required by this Agreement to be performed or
complied with by Purchaser on or prior to the Closing Date;

 

(d) the Sellers shall have been furnished with certificates (dated the Closing
Date and in form and substance reasonably satisfactory to the Sellers) executed
by the Chief Executive Officer and Chief Financial Officer of the Purchaser
certifying as to the fulfillment of the conditions specified in Sections 8.2(a),
8.2(b) and 8.2(c);

 

(e) no Legal Proceedings shall have been instituted or threatened or claim or
demand made against the Sellers, the Company, or the Purchaser seeking to
restrain or prohibit or to obtain substantial damages with respect to the
consummation of the transactions contemplated hereby, and there shall not be in
effect any Order by a Governmental Body of competent jurisdiction restraining,
enjoining or otherwise prohibiting the consummation of the transactions
contemplated hereby; and

 

(f) the Consulting Agreements shall have been executed by the Company and each
of Nicholas Fisser and Matthew Wiggins.

 

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Article IX
DOCUMENTS TO BE DELIVERED

 

9.1 Documents to be Delivered by the Sellers.

 

At the Closing, the Sellers shall deliver, or cause to be delivered, to the
Purchaser the following:

 

(a) stock certificates representing the Shares, duly endorsed in blank or
accompanied by stock transfer powers and with all requisite stock transfer tax
stamps attached;

 

(b) the certificates referred to in Section 8.1(d) hereof;

 

(c) copies of all consents and waivers referred to in Section 8.1(g) hereof;

 

(d) Consulting Agreements, substantially in the form of Exhibit B hereto, duly
executed by each Seller;

 

(e) written resignations of each of the directors of the Company,

 

(f) certificate of good standing with respect to the Company issued by the
Secretary of State of the New York; and

 

(g) such other documents as the Purchaser shall reasonably request.

 

9.2 Documents to be Delivered by the Purchaser.

 

At the Closing, the Purchaser shall deliver to the Sellers the following:

 

(a) The Purchase Price;

 

(b) the certificates referred to in Section 8.2(d) hereof;

 

(c) such other documents as the Sellers shall reasonably request; and

 

(d) the payment on the First Trilogy Note in accordance with Section 7.7(d).

 

Article X
INDEMNIFICATION

 

10.1 Indemnification.

 

(a) Subject to Section 10.2 hereof, the Designated Sellers hereby agree to
jointly and severally indemnify and hold the Purchaser and its directors,
officers, employees, Affiliates, agents, successors and assigns (collectively,
the "Purchaser Indemnified Parties") harmless from and against:

 

(i) any and all liabilities of the Company of every kind, nature and
description, absolute or contingent, existing as against the Company prior to
and including the Closing Date or thereafter coming into being or arising by
reason of any state of facts existing, or any transaction entered into, on or
prior to the Closing Date, except to the extent that the same have been fully
provided for in the Balance Sheet, or disclosed in the notes thereto, disclosed
in the Schedules to this Agreement, or were incurred in the ordinary course of
business between the Balance Sheet date and the Closing Date;

 

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(ii) any and all losses, liabilities, obligations, damages, costs and expenses
based upon, attributable to or resulting from the failure of any representation
or warranty set forth in Article IV hereof, or any representation or warranty
contained in any certificate delivered by or on behalf of the Company pursuant
to this Agreement, to be true and correct in all respects as of the date made;

 

(iii) any and all notices, actions, suits, proceedings, claims, demands,
assessments, judgments, costs, penalties and expenses, including reasonable
attorneys' and other professionals' fees and disbursements (collectively,
"Expenses") incident to any and all losses, liabilities, obligations, damages,
costs and expenses with respect to which indemnification is provided under this
Section 10.1(a) (collectively, "Losses").

 

(b) Subject to Section 10.2 hereof, each Seller, severally and not jointly,
hereby agrees to indemnify and hold the Purchaser Indemnified Parties harmless
from and against:

 

(i) any and all losses, liabilities, obligations, damages, costs and expenses
based upon, attributable to or resulting from the failure of any representation
or warranty set forth in Article V made by such Seller hereof to be true and
correct in all respects as of the date made; and

 

(ii) any and all losses, liabilities, obligations, damages, costs and expenses
based upon, attributable to or resulting from the breach of any covenant or
other agreement on the part of such Seller under this Agreement.

 

(c) Subject to Section 10.2, Purchaser hereby agrees to indemnify and hold the
Sellers and their respective Affiliates, agents, successors and assigns
(collectively, the "Seller Indemnified Parties") harmless from and against:

 

(i) any and all Losses based upon, attributable to or resulting from the failure
of any representation or warranty of the Purchaser set forth in Section 6
hereof, or any representation or warranty contained in any certificate delivered
by or on behalf of the Purchaser pursuant to this Agreement, to be true and
correct as of the date made;

 

(ii) any and all Losses based upon, attributable to or resulting from the breach
of any covenant or other agreement on the part of the Purchaser under this
Agreement or arising from the ownership or operation of the Company from and
after the Closing Date; and

 

(iii) any and all Expenses incident to the foregoing.

 

10.2 Limitations on Indemnification for Breaches of Representations and
Warranties.

 

An indemnifying party shall not have any liability under Section 10.1(a)(ii) or
Section 10.1(b)(i) hereof unless the aggregate amount of Losses and Expenses to
the indemnified parties finally determined to arise thereunder based upon,
attributable to or resulting from the failure of any representation or warranty
to be true and correct, unless and until the indemnified parties have incurred
Losses for breaches of representations and warranties in excess of $50,000 in
the aggregate (the “Basket”) in which case the indemnification obligations shall
apply only to those Losses incurred in excess of the Basket. The maximum
indemnification obligation of each Seller with respect to a claim for
indemnification shall be limited to the consideration actually received by such
Seller pursuant to this Agreement.

 

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10.3 Indemnification Procedures.

 

(a) In the event that any Legal Proceedings shall be instituted or that any
claim or demand ("Claim") shall be asserted by any Person in respect of which
payment may be sought under Section 10.1 hereof (regardless of the Basket
referred to above), the indemnified party shall reasonably and promptly cause
written notice of the assertion of any Claim of which it has knowledge which is
covered by this indemnity to be forwarded to the indemnifying party. The
indemnifying party shall have the right, at its sole option and expense, to be
represented by counsel of its choice, which must be reasonably satisfactory to
the indemnified party, and to defend against, negotiate, settle or otherwise
deal with any Claim which relates to any Losses indemnified against hereunder.
If the indemnifying party elects to defend against, negotiate, settle or
otherwise deal with any Claim which relates to any Losses indemnified against
hereunder, it shall within five (5) days (or sooner, if the nature of the Claim
so requires) notify the indemnified party of its intent to do so. If the
indemnifying party elects not to defend against, negotiate, settle or otherwise
deal with any Claim which relates to any Losses indemnified against hereunder,
fails to notify the indemnified party of its election as herein provided or
contests its obligation to indemnify the indemnified party for such Losses under
this Agreement, the indemnified party may defend against, negotiate, settle or
otherwise deal with such Claim. If the indemnified party defends any Claim, then
the indemnifying party shall reimburse the indemnified party for the Expenses of
defending such Claim upon submission of periodic bills. If the indemnifying
party shall assume the defense of any Claim, the indemnified party may
participate, at his or its own expense, in the defense of such Claim; provided,
however, that such indemnified party shall be entitled to participate in any
such defense with separate counsel at the expense of the indemnifying party if,
(i) so requested by the indemnifying party to participate or (ii) in the
reasonable opinion of counsel to the indemnified party, a conflict or potential
conflict exists between the indemnified party and the indemnifying party that
would make such separate representation advisable; and provided, further, that
the indemnifying party shall not be required to pay for more than one such
counsel for all indemnified parties in connection with any Claim. The parties
hereto agree to cooperate fully with each other in connection with the defense,
negotiation or settlement of any such Claim.

 

(b) After any final judgment or award shall have been rendered by a court,
arbitration board or administrative agency of competent jurisdiction and the
expiration of the time in which to appeal therefrom, or a settlement shall have
been consummated, or the indemnified party and the indemnifying party shall have
arrived at a mutually binding agreement with respect to a Claim hereunder, the
indemnified party shall forward to the indemnifying party notice of any sums due
and owing by the indemnifying party pursuant to this Agreement with respect to
such matter and the indemnifying party shall be required to pay all of the sums
so due and owing to the indemnified party by wire transfer of immediately
available funds within 10 business days after the date of such notice.

 

(c) The failure of the indemnified party to give reasonably prompt notice of any
Claim shall not release, waive or otherwise affect the indemnifying party's
obligations with respect thereto except to the extent that the indemnifying
party can demonstrate actual loss and prejudice as a result of such failure.

 

10.4 Tax Treatment of Indemnity Payments.

 

The Sellers and the Purchaser agree to treat any indemnity payment made pursuant
to this Article 10 as an adjustment to the Purchase Price for federal, state,
local and foreign income tax purposes.

 

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Article XI
MISCELLANEOUS

 

11.1 Payment of Sales, Use or Similar Taxes.

 

All sales, use, transfer, intangible, recordation, documentary stamp or similar
Taxes or charges, of any nature whatsoever, applicable to, or resulting from,
the transactions contemplated by this Agreement shall be borne by the Sellers.

 

11.2 Survival of Representations and Warranties.

 

The parties hereto hereby agree that the representations and warranties
contained in this Agreement or in any certificate, document or instrument
delivered in connection herewith, shall survive the execution and delivery of
this Agreement, and the Closing hereunder, regardless of any investigation made
by the parties hereto; provided, however, that any claims or actions with
respect thereto (other than claims for indemnifications with respect to the
representation and warranties contained in Sections 4.3, 4.11 and 4.22 which
shall survive for periods coterminous with any applicable statutes of
limitation) shall terminate unless within twelve (12) months after the Closing
Date written notice of such claims is given to the Sellers or such actions are
commenced.

 

11.3 Expenses.

 

Except as otherwise provided in this Agreement, the Sellers and the Purchaser
shall each bear its own expenses incurred in connection with the negotiation and
execution of this Agreement and each other agreement, document and instrument
contemplated by this Agreement and the consummation of the transactions
contemplated hereby and thereby, it being understood that in no event shall the
Company bear any of such costs and expenses.

 

11.4 Specific Performance.

 

The Sellers acknowledge and agree that the breach of this Agreement would cause
irreparable damage to the Purchaser and that the Purchaser will not have an
adequate remedy at law. Therefore, the obligations of the Sellers under this
Agreement, including, without limitation, the Sellers' obligation to sell the
Shares to the Purchaser, shall be enforceable by a decree of specific
performance issued by any court of competent jurisdiction, and appropriate
injunctive relief may be applied for and granted in connection therewith. Such
remedies shall, however, be cumulative and not exclusive and shall be in
addition to any other remedies which any party may have under this Agreement or
otherwise.

 

11.5 Further Assurances.

 

The Sellers and the Purchaser each agrees to execute and deliver such other
documents or agreements and to take such other action as may be reasonably
necessary or desirable for the implementation of this Agreement and the
consummation of the transactions contemplated hereby.

 

11.6 Submission to Jurisdiction; Consent to Service of Process.

 

(a) The parties submit to the nonexclusive jurisdiction of the United States
District Court for the Southern District of New York and of any New York State
Court sitting in New York, New York for purposes of all legal proceedings
arising out of or relating to this this Agreement or any of the transactions
contemplated hereby and each party hereby irrevocably agrees that all claims in
respect of such dispute or any suit, action proceeding related thereto may be
heard and determined in such courts. The parties hereby irrevocably waive, to
the fullest extent permitted by applicable law, any objection which they may now
or hereafter have to the laying of venue of any such dispute brought in such
court or any defense of inconvenient forum for the maintenance of such dispute.
Each of the parties hereto agrees that a judgment in any such dispute may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.

 

(b) Each of the parties hereto hereby consents to process being served by any
party to this Agreement in any suit, action or proceeding by the mailing of a
copy thereof in accordance with the provisions of Section 11.10.

 

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11.7 Entire Agreement; Amendments and Waivers.

 

This Agreement (including the schedules and exhibits hereto) represents the
entire understanding and agreement between the parties hereto with respect to
the subject matter hereof and can be amended, supplemented or changed, and any
provision hereof can be waived, only by written instrument making specific
reference to this Agreement signed by the party against whom enforcement of any
such amendment, supplement, modification or waiver is sought. No action taken
pursuant to this Agreement, including without limitation, any investigation by
or on behalf of any party, shall be deemed to constitute a waiver by the party
taking such action of compliance with any representation, warranty, covenant or
agreement contained herein. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a further or
continuing waiver of such breach or as a waiver of any other or subsequent
breach. No failure on the part of any party to exercise, and no delay in
exercising, any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of such right, power or remedy
by such party preclude any other or further exercise thereof or the exercise of
any other right, power or remedy. All remedies hereunder are cumulative and are
not exclusive of any other remedies provided by law.

 

11.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.

 

11.9 Table of Contents and Headings.

 

The table of contents and section headings of this Agreement are for reference
purposes only and are to be given no effect in the construction or
interpretation of this Agreement.

 

11.10 Notices.

 

All notices and other communications under this Agreement shall be in writing
and shall be deemed given when delivered personally or mailed by certified mail,
return receipt requested, to the parties (and shall also be transmitted by
facsimile to the Persons receiving copies thereof) at the following addresses
(or to such other address as a party may have specified by notice given to the
other party pursuant to this provision):

 

(a)Purchaser:

 

James Orsini, President

100 Town Square Place, Suite 204

Jersey City, NJ 07310

Phone: (201) 275-0555

Facsimile: (201) 942-3091

 

Copy to:

 

Gregory Sichenzia, Esq.

Sichenzia Ross Friedman Ference LLP

1065 Avenue of the Americas

New York, New York 10018

Phone: (212) 930-9700

Facsimile: (212) 930-9725

 

(b)Sellers and Company:

 

Nicholas Fisser

Matthew Wiggins

286 Madison Avenue, Suite 1301

New York, New York 10017

Phone:

Facsimile:

 

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Copy to:

 

William Durkin, Esq.

Diserio Martin O'Connor & Castiglioni LL

One Atlantic Street

Stamford, CT 06901

Phone: (203) 358-0800

Facsimile: (203) 348-2321

 

The Sellers, by virtue of the execution and delivery of this Agreement, will be
deemed to have irrevocably constituted and appointed, effective as of the date
of this Agreement, Nicholas Fisser (together with his permitted respective
successors, collectively, the “Shareholder Representative”), as their true and
lawful agent and attorney-in-fact, and the Shareholder Representative, by his
execution of this Agreement shall be deemed to have accepted such appointment,
to enter into any agreement in connection with the transactions contemplated by
this Agreement, to exercise all or any of the powers, authority and discretion
conferred on him under any such agreement, to act as proxy for each Seller in
connection with any shareholder approvals required in connection with the
transactions contemplated by this Agreement, to waive or modify any terms and
conditions of any such agreement, to give and receive notices on their behalf,
and to be their exclusive representative with respect to any matter, suit,
claim, action or proceeding arising with respect to any transaction contemplated
by any such agreement, including, without limitation, the assertion,
prosecution, defense, settlement or compromise of any claim, action or
proceeding for which the Purchaser or any Seller may be entitled to
indemnification and the Shareholder Representative agrees to act as, and to
undertake the duties and responsibilities of, such agent and attorney-in-fact.
This power of attorney is coupled with an interest and is irrevocable. The
Shareholder Representative shall not be liable for any action taken or not taken
by him in his capacity as Shareholder Representative either (i) with the consent
of Sellers or (ii) in the absence of his own willful misconduct. If the
Shareholder Representative shall be unable or unwilling to serve in such
capacity, his successor shall be named by the Sellers owning a majority of the
shares of Company’s Shares outstanding immediately prior to the Closing Date who
shall serve and exercise the powers of Shareholder Representative hereunder.
Solely with respect to any actions taken by the Shareholder Representative in
his capacity as such, the Shareholder Representative shall have no liability to
the Purchaser, or any of its affiliates except for claims based upon fraud by
the Shareholder Representative.

 

11.11 Severability.

 

If any provision of this Agreement is invalid or unenforceable, the balance of
this Agreement shall remain in effect.

 

11.12 Binding Effect; Assignment.

 

This Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and permitted assigns. Nothing in this Agreement
shall create or be deemed to create any third party beneficiary rights in any
person or entity not a party to this Agreement except as provided below. No
assignment of this Agreement or of any rights or obligations hereunder may be
made by either the Sellers or the Purchaser (by operation of law or otherwise)
without the prior written consent of the other parties hereto and any attempted
assignment without the required consents shall be void;

 

[intentionally blank]

 

26

 

 

  SINGLE TOUCH SYSTEMS, INC.         By: /s/ Kurt Streams     Kurt Streams    
Chief Financial Officer         Single Touch Interactive, Inc.         By: /s/
Kurt Streams     Kurt Streams      Chief Financial Officer 

  

27

 

 

  SELLER:    

  

 

 

  

[Signature page for Sellers]

28

 

  

SCHEDULE 1.1

  

         Purchaser Seller  Shares  % of Total  Securities            Matthew
Wiggins   162,938    24.49%   1,959,057  Stephen F. Wiggins   162,938    24.49% 
 1,959,057  Nicholas Fisser   150,000    22.54%   1,803,500  The Ed & Leslie
Wilson Family Trust   20,112    3.02%   241,813  The Royce E. Wilson Trust 
 10,056    1.51%   120,907  The Ashley Elizabeth Wilson Trust   10,056    1.51% 
 120,907  Omid Ashtari   2,552    0.38%   30,683  Matthew Burr   10,335  
 1.55%   124,261  William Apfelbaum   13,862    2.08%   166,667  Jonathan Lowen 
 33,372    5.02%   401,243  Evan Turner   51,652    7.76%   621,029  The Ed &
Leslie Wilson Family Trust   12,500    1.88%   150,292  The Royce E. Wilson
Trust   6,250    0.94%   75,146  The Ashley Elizabeth Wilson Trust   6,250  
 0.94%   75,146  William Apfelbaum   12,500    1.88%   150,292                  
   Total   665,373    100.00%   8,000,000 

 

 

 

  

EXHIBIT A

 

FORM OF LOCK-UP AGREEMENT 

 

July 24, 2014

 

Ladies and Gentlemen:

  

The undersigned entered into a Share Purchase Agreement (the “Agreement”) with
Single Touch Systems, Inc. (the “Purchaser”), pursuant to which the undersigned
agreed to sell all of his shares of common stock of DoubleVision Networks, Inc.
to the Purchaser (the “Transaction”).

 

Upon the terms and subject to the conditions contained in the Agreement, the
Purchaser shall purchase shares of DoubleVision Networks, Inc. from the
undersigned for shares of the Purchaser’s common stock (“Common Stock”). The
undersigned understands that the Purchaser will proceed with the Transaction in
reliance on this Letter Agreement. Capitalized terms not otherwise defined
herein shall have the meanings ascribed to them in the Agreement. 

 

INSERT 1 - PARAGRAPHS ONE AND TWO FOR THE HOLDERS OF COMMON SHARES OTHER THAN
SHARES IDENTIFIED IN INSERT 2 AND INSERT 3 BELOW.

 

1. In recognition of the benefit that the Transaction will confer upon the
undersigned, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the undersigned agrees, for the
benefit of the Purchaser, that, during the period beginning on the closing of
the Transaction (the “Closing Date”) and ending on the one-year anniversary of
the Closing Date (“Anniversary Date”), the undersigned will not, directly or
indirectly, (i) offer, sell, offer to sell, contract to sell, hedge, pledge,
sell any option or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant to purchase or sell (or announce any
offer, sale, offer of sale, contract of sale, hedge, pledge, sale of any option
or contract to purchase, purchase of any option or contract of sale, grant of
any option, right or warrant to purchase or other sale or disposition), or
otherwise transfer or dispose of (or enter into any transaction or device that
is designed to, or could be expected to, result in the disposition by any person
at any time in the future), any of the Common Stock, beneficially owned, within
the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), by the undersigned on the date hereof or hereafter
acquired or (ii) enter into any swap or other agreement or any transaction that
transfers, in whole or in part, directly or indirectly, the economic consequence
of ownership of any Common Stock, whether any such swap or transaction described
in clause (i) or (ii) above is to be settled by delivery of any Company Security
(each of the foregoing, a “Prohibited Sale”)

 

2. Beginning on the day after the Anniversary Date, the undersigned shall be
entitled to facilitate a sale of the Common Stock with respect to one-twelfth
(1/12th) of the Common Stock received as the Equity Purchase Price during each
subsequent thirty (30) day period, resulting in all such shares being saleable
by the second anniversary of the Closing Date (the “Lockup Period”) (subject to
lawful resale restrictions conferred by federal and state securities rules and
regulations, and provided the exemption under Rule 144 is available).

 

 

 

 

INSERT 2 - PARAGRAPHS ONE AND TWO FOR 150,292 SHARES OWNED BY THE ED & LESLIE
WILSON FAMILY TRUST, 75,146 SHARES OWNED BY THE ROYCE E. WILSON TRUST, 75,146
SHARES OWNED BY THE ASHLEY ELIZABETH WILSON TRUST AND 150,292 SHARES OWNED BY
WILLIAM APFELBAUM.

 

1. In recognition of the benefit that the Transaction will confer upon the
undersigned, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the undersigned agrees, for the
benefit of the Purchaser, that, during the period beginning on the closing of
the Transaction (the “Closing Date”) and ending on the one-year anniversary of
the Closing Date (“Anniversary Date”), the undersigned will not, directly or
indirectly, (i) offer, sell, offer to sell, contract to sell, hedge, pledge,
sell any option or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant to purchase or sell (or announce any
offer, sale, offer of sale, contract of sale, hedge, pledge, sale of any option
or contract to purchase, purchase of any option or contract of sale, grant of
any option, right or warrant to purchase or other sale or disposition), or
otherwise transfer or dispose of (or enter into any transaction or device that
is designed to, or could be expected to, result in the disposition by any person
at any time in the future), any of the Common Stock, beneficially owned, within
the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), by the undersigned on the date hereof or hereafter
acquired or (ii) enter into any swap or other agreement or any transaction that
transfers, in whole or in part, directly or indirectly, the economic consequence
of ownership of any Common Stock, whether any such swap or transaction described
in clause (i) or (ii) above is to be settled by delivery of any Company Security
(each of the foregoing, a “Prohibited Sale”)

  

2. [RESERVED]

 

INSERT 3 - PARAGRAPHS ONE AND TWO FOR COMMON SHARES OWNED BY MATTHEW WIGGINS.

 

1. In recognition of the benefit that the Transaction will confer upon the
undersigned, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the undersigned agrees, for the
benefit of the Purchaser, that, during the period beginning on the closing of
the Transaction (the “Closing Date”) and ending on the second-year anniversary
of the Closing Date (“Anniversary Date”), the undersigned will not, directly or
indirectly, (i) offer, sell, offer to sell, contract to sell, hedge, pledge,
sell any option or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant to purchase or sell (or announce any
offer, sale, offer of sale, contract of sale, hedge, pledge, sale of any option
or contract to purchase, purchase of any option or contract of sale, grant of
any option, right or warrant to purchase or other sale or disposition), or
otherwise transfer or dispose of (or enter into any transaction or device that
is designed to, or could be expected to, result in the disposition by any person
at any time in the future), any of the Common Stock, beneficially owned, within
the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), by the undersigned on the date hereof or hereafter
acquired or (ii) enter into any swap or other agreement or any transaction that
transfers, in whole or in part, directly or indirectly, the economic consequence
of ownership of any Common Stock, whether any such swap or transaction described
in clause (i) or (ii) above is to be settled by delivery of any Company Security
(each of the foregoing, a “Prohibited Sale”)

 

2

 

 

2. [RESERVED]

 

3. Notwithstanding the foregoing, the undersigned (and any transferee of the
undersigned) may transfer any shares of Common Stock (i) by will or as a bona
fide gift or gifts, provided that prior to such transfer the donee or donees
thereof agree in writing to be bound by the restrictions set forth herein, (ii)
to non-profit organizations qualified as charitable organizations under Section
501(c)(3) of the Internal Revenue Code of 1986, as amended, (iii) if such
transfer occurs by operation of law, such as rules of descent and distribution
or statutes governing the effects of a merger, (iv) to any trust, partnership,
corporation or other entity formed for the direct or indirect benefit of the
undersigned or the immediate family of any transferee of the undersigned,
provided that prior to such transfer a duly authorized officer, representative
or trustee of such transferee agrees in writing to be bound by the restrictions
set forth herein, and provided further that any such transfer shall not involve
a disposition for value, provided that prior to such transfer the transferee
executes an agreement stating that the transferee is receiving and holding any
Common Stock subject to the provisions of this Letter Agreement. In addition,
the foregoing shall not prohibit privately negotiated transactions, provided the
transferees agree, in writing, to be bound to the terms of this Letter Agreement
for the balance of the Lockup Period.

  

4. This Letter Agreement shall be governed by and construed in accordance with
the laws of the State of New York.

 

5. This Letter Agreement will become a binding agreement among the undersigned
as of the date hereof. This Letter Agreement may be terminated by the mutual
agreement of the Company and the undersigned, and if not sooner terminated will
terminate upon the expiration date of the Lockup Period. This Letter Agreement
may be duly executed by facsimile and in any number of counterparts, each of
which shall be deemed an original, and all of which together shall be deemed to
constitute one and the same instrument. Signature pages from separate identical
counterparts may be combined with the same effect as if the parties signing such
signature page had signed the same counterpart. This Letter Agreement may be
modified or waived only by a separate writing signed by each of the parties
hereto expressly so modifying or waiving such agreement.

 

[Remainder of Page Intentionally Left Blank.]

 

3

 

 

  SELLER         By: ________________________________     Name:     Title:

   

ACCEPTED AND AGREED TO:

  

SINGLE TOUCH SYSTEMS, INC.

 

By: ________________________________  

Name:James Orsini

Title:President and Chief Executive Officer

 

 

4

 

 

EXHIBIT B

 

FORM OF CONSULTING AGREEMENT

 

THIS AGREEMENT (hereinafter the “Agreement”) is effective as of the ___ day of
____________, 2014, by and between Single Touch Interactive Inc., a Nevada
corporation (hereinafter “STI”), and __________ (hereinafter “Consultant”) (and
collectively hereinafter the “Parties”).

 

WITNESSETH:

 

In consideration of the mutual promises and covenants contained herein, the
Parties agree as follows:

 

1. CONSULTANCY. STI hereby engages Consultant as an independent contractor
consultant and Consultant hereby accepts its position as an independent
contractor consultant to STI upon the terms and conditions hereinafter set
forth.

 

2. TERM. The term of this Agreement shall be for two years from the date first
written above. Any extension of the term shall be agreed upon mutually with a
written amendment to this agreement. Notwithstanding the above, either Party may
terminate this Agreement at any time upon thirty days’ written notice. In the
event of such termination, Consultant shall be paid for any portion of the
consulting services that have been performed before the termination and earned
according to Section 3.

 

3. COMPENSATION. Upon achieving 50% of earnout revenues, STI shall compensate
Consultant $5,000 quarterly for the services provided as set forth in Section 4
of this agreement. Such amount shall be payable quarterly in arrears, upon
proper invoicing.

 

4. DUTIES AND OBLIGATIONS OF CONSULTANT. Whereas STI desires to act on potential
business opportunities in the Wireless Communications Industry and it is at the
request of STI that Consultant shall have the following duties and obligations
under this Agreement:

 

4.1 Technology Director. Consultant shall provide such consultation and advice
to STI’s Executive Vice President – Corporate Development as may be requested by
STI’s Executive Vice President – Corporate Development. Consultant shall act in
the capacity of “Technology Director”.

 

4.2 Efforts. Consultant shall use Consultant’s commercially reasonable efforts
to perform the consulting services such that the results are satisfactory to
STI. Consultant shall provide no less than ten (10) hours per month on such
activities.

 

4.3 Expenses. Consultant shall not be authorized to incur on behalf of STI any
expenses without the prior consent of STI’s Chief Financial Officer and will be
reimbursed monthly for approved expenses.

 

 

 

 

5. CONFIDENTIAL INFORMATION AND INVENTION ASSIGNMENT AGREEMENT.

 

Consultant shall execute the standard STI Confidential Information and Invention
Assignment Agreement.

  

6. INDEPENDENT CONTRACTOR.

 

Consultant’s relationship with STI will be that of an independent contractor and
not that of an employee.

 

6.1 Method of Provision of Services. Consultant shall be solely responsible for
determining the method, details and means of performing the consulting services.
Consultant may, at Consultant’s own expense, employ or engage the service of
such employees or subcontractors as Consultant deems necessary to perform the
consulting services required by this Agreement (the “Assistants”). Such
Assistants are not the employees of STI and Consultant shall be wholly
responsible for the professional performance of the consulting services by its
Assistants such that the results are satisfactory to STI. Consultant shall
expressly advise the Assistants of the terms of this Agreement, and shall
require each Assistant to execute STI’s standard Confidential Information and
Invention Assignment Agreement.

 

6.2 No Authority to Bind Company. Neither Consultant, nor any partner, agent or
employee of Consultant, has authority to enter into contracts that bind STI or
create obligations on the part of STI. Consultant agrees not to purport to do
so.

 

6.3 No Benefits. Consultant acknowledges and agrees that Consultant (as well as
Consultant’s Assistants) will not be eligible for any Company employee benefits
and, to the extent Consultant (or Consultant’s Assistants) otherwise would be
eligible for any STI employee benefits but for the express terms of this
Agreement, Consultant (on behalf of itself and its Assistants) hereby expressly
declines to participate in such STI employee benefits.

 

6.4 Withholding; Indemnification. Consultant shall have full responsibility for
applicable withholding taxes for all compensation paid to Consultant, his
partners, agents or his employees under this Agreement, and for compliance with
all applicable labor and employment requirements with respect to Consultant’s
self-employment, sole proprietorship or other form of business organization, and
Consultant’s partners, agents and employees, including state worker’s
compensation insurance coverage requirements and any US immigration visa
requirements. Consultant agrees to indemnify, defend and hold STI harmless from
any liability for, or assessment of, any claims or penalties with respect to
such withholding taxes, labor or employment requirements, including any
liability for, or assessment of, withholding taxes imposed on STI by the
relevant taxing authorities with respect to any compensation paid to Consultant
or Consultant’s partners, agents or his employees.

 

7. SUPERVISION OF CONSULTANT’S SERVICES. All of the consulting services to be
performed by Consultant will be as agreed between Consultant and STI’s Executive
Vice President – Corporate Development. Consultant will be required to report to
the Executive Vice President – Corporate Development concerning the consulting
services performed under this Agreement. The nature and frequency of these
reports will be left to the discretion of the Executive Vice President –
Corporate Development.

 

2

 

 

8. CONSULTING OR OTHER SERVICES FOR COMPETITORS. Consultant represents and
warrants that Consultant does not presently perform or intend to perform, during
the term of the Agreement, consulting or other services for, or engage in or
intend to engage in an employment relationship with, companies who businesses or
proposed businesses in any way involve products or services which would be
competitive with STI’s products or services, or those products or services
proposed or in development by STI during the term of the Agreement. If, however,
Consultant decides to do so, Consultant agrees that, in advance of accepting
such work, Consultant will promptly notify STI in writing, specifying the
organization with which Consultant proposes to consult, provide services, or
become employed by and to provide information sufficient to allow STI to
determine if such work would conflict with the terms of this Agreement,
including the terms of the Confidentiality Agreement, the interests of STI or
further services which STI might request of Consultant. If STI determines that
such work conflicts with the terms of this Agreement, STI reserves the right to
terminate this Agreement immediately.

 

9. CONFLICTS WITH THIS AGREEMENT. Consultant represents and warrants that
neither Consultant nor any of Consultant’s partners, employees or agents is
under any pre-existing obligation in conflict or in any way inconsistent with
the provisions of this Agreement. Consultant represents and warrants that
Consultant’s performance of all the terms of this Agreement will not breach any
agreement to keep in confidence proprietary information acquired by Consultant
in confidence or in trust before commencement of this Agreement. Consultant
warrants that Consultant has the right to disclose and/or or use all ideas,
processes, techniques and other information, if any, which Consultant has gained
from third parties, and which Consultant discloses to STI or uses in the course
of performance of this Agreement, without liability to such third parties.
Notwithstanding the foregoing, Consultant agrees that Consultant shall not
bundle with or incorporate into any deliveries provided to STI herewith any
third party products, ideas, processes, or other techniques, without the
express, written prior approval of STI. Consultant represents and warrants that
Consultant has not granted and will not grant any rights or licenses to any
intellectual property or technology that would conflict with Consultant’s
obligations under this Agreement. Consultant will not knowingly infringe upon
any copyright, patent, trade secret or other property right of any former
client, employer or third party in the performance of the consulting services
required by this Agreement.

 

10. GENERAL PROVISIONS.

 

10.1 Amendments. No amendment or modifications of this agreement shall be valid
unless made in writing and signed by all parties.

 

10.2 Assignment. This agreement shall not be assigned by any Party without the
express written consent of the other Party, which consent shall not be
unreasonably withheld. This provision shall not apply in the event a Party
changes its name or as part of the sale of the Party’s business.

 

3

 

 

10.3 Choice of Law. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of New Jersey, without regard to
principles of conflict of laws. The prevailing party in any litigation between
the parties in connection with this Agreement shall be entitled to the costs and
expenses associated with the litigation, including reasonable attorney’s fees.
Any and all actions arising out of this Agreement or termination therefrom shall
be brought and heard in the state and federal courts of the State of New Jersey
and the parties hereto hereby irrevocably submit to the exclusive jurisdiction
of any such courts.

 

10.4 Headings. Article and section headings contained in this Agreement are
included for convenience only and form no part of the agreement among the
parties.

 

10.5 Severability. If any provision of this Agreement is declared invalid by any
court or government agency, all other provisions shall remain in full force and
effect.

 

10.6 Waivers. Waiver by any Party of any breach or failure to comply with any
provision of this Agreement by any Party shall not be construed as, or
constitute, a continuing waiver of such provision or a waiver of any other
breach of or failure to comply with any other provision of this Agreement.

 

10.7 Entire Agreement. This Agreement constitutes the entire agreement between
STI and the Consultant with respect to the subject matter hereof and supersedes
all prior negotiations and agreements, whether written or oral, relating to the
subject matter hereof, other than as expressly set forth herein. Consultant
agrees that this Agreement may not be altered, amended, modified, or otherwise
changed in any respect except by another written agreement signed by both
Consultant and STI.

 

This Agreement may be executed in counterparts and by fax transmission, each
counterpart being deemed an original.

 

4

 

  

CONFIRMED AND AGREED ON THIS ___ DAY OF ___________, 2014.

 

Single Touch Systems Inc.

 

By: ________________________________

      Kurt Streams, Chief Financial Officer

 

 

By: ________________________________

      ____________,Consultant

 

 

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