Exhibit 10.1

  

EXCHANGE AGREEMENT

 

This EXCHANGE AGREEMENT (the “Agreement”) is entered into February 26, 2018, by
and among One Horizon Group, Inc., a Delaware corporation (“OHGI”), C-Rod, Inc.,
a Florida corporation (the “Company”), which includes any and all business
conducted under the trade names Mues Media and/or Velveteen Entertainment,
Christopher Robin Rodriguez (hereinafter, “Rodriguez”) and Patricia Nieto
Rodriguez (hereinafter, “Nieto”), the stockholders of the Company (together, the
“Stockholders”), upon the following premises:

 

Preliminary Statement

 

OHGI is a publicly traded corporation whose shares of common stock, par value
$0.0001 per share (“OHGI Common Stock”), are listed on the NASDAQ Capital Market
(“NASDAQ”) and registered under Section 12(b) of the Securities Exchange Act of
1934, as amended (“Exchange Act”).

 

The Stockholders own all of the outstanding shares of the capital stock of the
Company (the “Company Shares”). OHGI desires to acquire the Company Shares from
the Stockholders in exchange for $150,000 (the “Cash Exchange Consideration”)
and 1,000,000 shares of OHGI Common Stock (the “Initial Shares”), plus an
additional number of shares of OHGI Common Stock computed in accordance with the
provisions of Section 5.02 of this Agreement (“Additional Shares,” and together
with the Initial Shares, the “Exchange Shares”), and the Stockholders are
willing to exchange their Company Shares for the Cash Exchange Consideration and
the Exchange Shares, on the terms and subject to the conditions set forth herein
(“Exchange”).

 

The board of directors of OHGI (“Board of OHGI”) and the Company (the “Company
Board”) have determined that the transaction contemplated hereby is desirable
and in the best interests of OHGI’s shareholders and the Stockholders. This
Agreement is being entered into for the purpose of setting forth the terms and
conditions of the proposed Exchange.

 

NOW THEREFORE, on the stated premises and for and in consideration of the mutual
covenants and agreements hereinafter set forth and the mutual benefits to the
parties to be derived here from, and intending to be legally bound hereby, it is
hereby agreed as follows:

 

ARTICLE I 

REPRESENTATIONS, COVENANTS, AND WARRANTIES OF THE COMPANY

 

As an inducement to the consummation of the Exchange, the Company and the
Stockholders (collectively, the “Company Parties”), jointly and severally,
represent and warrant that, except as set forth in the schedules of exceptions
to the representations of the Company Parties annexed hereto (“Company
Disclosure Schedules”), as of the date hereof and the Closing Date (as defined
in Section 4.02 hereof):

 

1.01 Organization and Qualification.

 

(a) The Company is duly incorporated, validly existing, and in good standing
under the laws of the State of Florida and has the corporate power and is duly
authorized under all applicable laws, regulations, ordinances and orders of
public authorities, to carry on its business in all material respects as it is
now being conducted. The Company has not qualified to do business in any State
other than Florida. To the knowledge of the Company, no proceeding has been
instituted in any jurisdiction revoking, limiting or curtailing or seeking to
revoke, limit or curtail the power and authority or qualification of the Company
within such jurisdiction.

 

(b) The Company has made available to OHGI complete and correct copies of its
corporate documents as found at Sunbiz.org (collectively, the “Company Charter
Documents”). The execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated hereby will not, violate any
provision of the Company Charter Documents. The Company has taken all actions
required by law and the Company Charter Documents, or otherwise, to authorize
the execution and delivery of this Agreement.

 

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1.02 Power and Authority. The Company has all requisite power and authority to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby.

 

1.03 Authorization of Agreement; Due Execution and Delivery; Binding Agreement.
The execution, delivery and performance of this Agreement by the Company, and
the consummation of the transactions contemplated hereby, have been duly
authorized by the Company Board and no further corporate action is required, and
the Company Board has recommended that the Stockholders accept the Exchange.
This Agreement has been duly executed and delivered on behalf of the Company.
This Agreement constitutes a valid and binding obligation of the Company and the
Stockholders, enforceable in accordance with its terms, except that such
enforcement may be limited by bankruptcy, insolvency or other similar laws
affecting the enforcement of creditors, rights generally, and subject to the
qualification that the availability of equitable remedies is subject to the
discretion of the court before which any proceeding therefore may be brought.

 

1.04 No Conflict.  The execution of this Agreement and the consummation of the
transactions contemplated by this Agreement (i) will not violate any provision
of the Company Charter Document; (ii) will not, with or without notice, lapse of
time or both, result in the breach of any term or provision of, constitute a
default under, or terminate, accelerate or modify the terms of any indenture,
mortgage, deed of trust, or other material agreement, or instrument to which the
Company is a party or to which any of its assets, properties or operations are
subject; (iii) violate any provision of law, statute, rule, regulation or
executive order to which the Company is subject; or (iv) violate any judgment,
order, writ or decree of any court applicable to the Company.

 

1.05 Company Capital Stock. As of the date hereof, all of the authorized capital
stock of the Company issued and outstanding is owned by the Stockholders party
hereto. All of the Company Shares have been duly authorized, are fully paid and
non-assessable. None of the Company Shares were issued in violation of the
preemptive or other rights of any Stockholders or other person or entity.

 

1.06 Derivative Securities.  There are no existing options, warrants, calls, or
commitments of any character giving any person or entity the right to acquire
shares of the Company’s capital stock.

 

1.07 Financial Statements.

 

(a) The Company has made available to OHGI a correct copy of the financial
statements of the Company as of December 31, 2017 (the “Financial Statements”)
as well as access to financial information for the fiscal years ended December
31, 2017 and December 31, 2016 (collectively, the “Company Financial
Statements”).

 

(b) The Company Financial Statements are true and accurate and present fairly as
of their respective dates the financial results of the Company. As of December
31, 2017, the Company had sufficient working capital to enable the Company to
pay all liabilities as they fall due. The Company has no material liabilities,
direct or indirect, matured or not yet matured, contingent or otherwise.

 

(c) The Company has or is duly and punctually paying all governmental fees and
taxes that it has heretofore become liable to pay, which amounts up to and
including the tax year ending December 31, 2016, do not currently exceed more
than $6,000 in actual or potential liability. The Company has made any and all
proper declarations and returns for taxation purposes and all information
contained in such declarations and returns is true and complete and full
provision or reserves have been made in its financial statements for all
governmental fees and taxation.

 

(d) The books and records, financial and otherwise, of the Company are in all
material aspects complete and correct and have been maintained consistently
throughout the periods involved.

 

Section 1.08 Absence of Certain Changes or Events. Since December 31, 2017 (the
“Cut-Off Date”):

 

(a) There has not been (i) any material adverse change in the business,
operations, properties, assets or condition of the Company, or (ii) any damage,
destruction or loss suffered by the Company (whether or not covered by
insurance), materially and adversely affecting the business, operations,
properties, assets or condition of the Company.

 

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(b) The Company has not (i) amended the Company Charter Documents; (ii) declared
or made, or agreed to declare or make any payment of dividends or distributions
of any assets of any kind whatsoever to stockholders or purchased or redeemed,
or agreed to purchase or redeem, any of its capital stock except in
contemplation of this Agreement; (iii) waived any rights of value which in the
aggregate are outside of the ordinary course of its business or material
considering its business; (iv) made any material change in its method of
management, operation, or accounting; (v) entered into any transactions or
agreements other than in the ordinary course of business; (vi) made any accrual
or arrangement for or payment of bonuses or special compensation of any kind or
any severance or termination pay to any present or former officer or employee;
(vii) increased the rate of compensation payable or to become payable by it to
any of its officers or directors or any of its salaried employees whose monthly
compensation exceed $1,000; or (viii) made any increase in any profit sharing,
bonus, deferred compensation, insurance, pension, retirement, or other employee
benefit plan, payment, or arrangement, made to, for or with its officers,
directors, or employees.

 

(c) The Company has not (i) granted any options, warrants or rights to purchase,
or issued any of its securities; (ii) borrowed or agreed to borrow any funds or
incurred, or become subject to, any material obligation or liability (absolute
or contingent), except liabilities incurred in the ordinary course of business;
(iii) paid or agreed to pay any material obligations or liabilities (absolute or
contingent) other than current liabilities reflected in or shown on the Company
Balance Sheets and current liabilities incurred since the Cut-Off Date in the
ordinary course of business and professional and other fees and expenses in
connection with the preparation of this Agreement and the consummation of the
transaction contemplated hereby; (iv) sold or transferred, or agreed to sell or
transfer, any of its assets, properties, or rights (except assets, properties,
or rights not used or useful in its business which, in the aggregate have a
value of less than $1,000), or canceled, or agreed to cancel, any debts or
claims (except debts or claims which in the aggregate are of a value less than
$1,000); (v) made or permitted any amendment or termination of any contract,
agreement, or license to which it is a party if such amendment or termination is
material, considering its business; or (vi) issued, delivered or agreed to issue
or deliver, any stock, bonds or other corporate securities including debentures
(whether authorized and unissued or held as treasury stock), except in
connection or contemplation of this Agreement.

 

(d) The Company has not become subject to any law or regulation which materially
and adversely affects, or in the future, may adversely affect, its business,
operations, properties, assets or condition.

 

1.09 Liabilities. The Company represents and warrants that there are no lines of
credit and other indebtedness that has been incurred by the Company of any kind.

 

1.10 Litigation and Proceedings.  There are no actions, suits, proceedings, or
investigations pending or, to the knowledge of the Company after reasonable
investigation, threatened by or against the Company or affecting the Company or
its properties, at law or in equity, before any court or other governmental
agency or instrumentality, domestic or foreign, or before any arbitrator of any
kind.  The Company does not have any knowledge of any material default on its
part with respect to any judgment, order, injunction, decree, award, rule, or
regulation of any court, arbitrator, or governmental agency or instrumentality
or of any circumstances which, after reasonable investigation, would result in
the discovery of such a default.

 

1.11 Compliance. The Company to its knowledge is not: (i) in default under or in
violation of (and no event has occurred that has not been waived that, with
notice, lapse of time or both, would result in a default by the Company under),
nor has the Company received notice of a claim that it is in default under or
that it is in violation of, any indenture, loan or credit agreement or any other
agreement or instrument to which it is a party or by which it or any of its
properties is bound (whether or not such default or violation has been waived);
(ii) in violation of any judgment, decree or order of any court, arbitrator or
other governmental authority; or (iii) or has not been, in violation of any
statute, rule, ordinance or regulation of any governmental authority, including
without limitation all foreign, federal, state and local laws relating to taxes,
registration as a charitable organization, and employment and labor matters,
except in each case as could not have or reasonably be expected to result in a
material adverse effect: (A) on the legality, validity or enforceability of this
Agreement; (B) on the results of operations, assets, business, prospects or
condition (financial or otherwise) of the Company; or (C) on the ability of the
Company or the Stockholders to perform in any material respect on a timely
basis, his, her or its obligations under this Agreement.

 

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1.12 Regulatory Permits. The Company possess all certificates, authorizations
and permits issued by the appropriate federal, state, local or foreign
regulatory authorities necessary to conduct its businesses as presently
conducted as far as the Company is aware and the Company does not expect that
the failure to possess any such permit might reasonably be expected to result in
a Material Adverse Effect (“Material Permits”), and the Company has not received
any notice of proceedings relating to the revocation or modification of any
Material Permit.

 

1.13 Contracts.

 

(a)  Schedule 1.13(a) of the Company Disclosure Schedules contains a list of all
contracts, agreements, franchises, license agreements, debt instruments or other
commitments to which the Company is a party or by which it or any of its assets,
products, technology, or properties are bound other than those incurred in the
ordinary course of business (“Disclosure Documents”). In the case of oral
agreements, Schedule 1.13(a) includes a description thereof. The Schedule
1.13(a) Disclosure Documents will be provided to OHGI by the Company not less
than five (5) business days prior to the Closing Date as currently scheduled.
Specifically, with respect to Rodriguez’ publishing agreement through Rosemine
Publishing with Sony/ATV Discos Music Publishing LLC, Rodriguez has disclosed
and OHGI acknowledges that such publishing agreement is personal to Rodriguez
and any rights of Rodriguez thereunder shall continue to belong to Rodriguez and
not the Company or OHGI notwithstanding any other provision of this Agreement. 

 

(b)  All contracts, agreements, franchises, license agreements, and other
commitments to which the Company is a party or by which its properties are bound
and which are material to the operations of the Company taken as a whole are
valid and enforceable by the Company in all respects, except as limited by
bankruptcy and insolvency laws and by other laws affecting the rights of
creditors generally or by the terms and conditions set forth in such contracts
or agreements;

 

(c) The Company owns, licenses or has rights to use any and all intellectual
property and technology used in the Company’s business, and to its knowledge the
Company’s use of such intellectual property or technology does not infringe upon
the intellectual property rights of any third party; and

 

(d)  Except as included or described in Schedule 1.13(a) of the Company
Disclosure Schedules, the Company is not a party to any oral or written (i)
contract for the employment of any officer or employee; (ii) profit sharing,
bonus, deferred compensation, stock option, severance pay, pension benefit or
retirement plan; (iii) agreement, contract, or indenture relating to the
borrowing of money; (iv) guaranty of any obligation; (vi) collective bargaining
agreement; or (vii) agreement with any present or former officer or manager of
the Company, which, in each case cannot be terminated by the Company on notice
of no more than thirty (30) days at a cost of no more than $25,000.

 

1.14 Bank Accounts; Power of Attorney.   Schedule 1.15 of the Company Disclosure
Schedules will be provided to OHGI by the Company not less than five (5)
business days prior to the Closing Date as currently scheduled and will set
forth a true and complete list of all accounts with banks, money market mutual
funds or securities or other financial institutions maintained by the Company
within the past twelve (12) months, the account numbers thereof, and all persons
authorized to sign or act on behalf of the Company.

 

1.15 No Brokers. The Company has not retained any broker or finder in connection
with any of the transactions contemplated by this Agreement, and has not
incurred or agreed to pay, or taken any other action that would entitle any
person to receive, any brokerage fee, finder’s fee or other similar fee or
commission with respect to any of the transactions contemplated by this
Agreement except as the Company has otherwise disclosed.

 

1.16 Disclosure.  All disclosure provided to OHGI regarding the Company, its
business and the transactions contemplated hereby, including the Company
Disclosure Schedules to this Agreement, furnished by or on behalf of the Company
with respect to the representations and warranties made herein are true and
correct with respect to such representations and warranties and do not contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading. In the event that the
Company Disclosure Schedules are not delivered contemporaneously with the
execution of this Agreement, they shall be delivered prior to the Closing Date.

  

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The Company Parties acknowledge and agree that OHGI has not made, nor is OHGI
making, any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth herein.  

 

ARTICLE II

 

REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS

 

The Stockholders hereby represent and warrant, severally and solely, to OHGI as
follows.

 

2.01 Good Title.  The Stockholder are the record and beneficial owners of the
Company and have good title to the Company Shares and have the right and
authority to sell and deliver such Company Shares, free and clear of all liens,
claims, charges, encumbrances, pledges, mortgages, security interests, options,
rights to acquire, proxies, voting trusts or similar agreements, restrictions on
transfer or adverse claims of any nature whatsoever. Upon delivery of any
certificate or certificates duly assigned, representing the same as herein
contemplated and/or upon registering OHGI or its designee as the new owner of
such Company Shares in the records maintained by the Company listing the names
of its stockholders and their respective ownership of Company Shares, OHGI or
its designee will receive good title to such Company Shares, free and clear of
all liens.

 

2.02 Power and Authority. The Stockholders have the legal power, capacity and
authority to execute and deliver this Agreement, to consummate the transactions
contemplated by this Agreement, and to perform such Stockholders’ obligations
under this Agreement.  This Agreement constitutes a legal, valid and binding
obligation of the Stockholders, enforceable against the Stockholders in
accordance with the terms hereof.

 

2.03 No Conflicts.  The execution and delivery of this Agreement by the
Stockholders and the performance by the Stockholders of their obligations
hereunder in accordance with the terms hereof (i) will not require the consent
of any third party or governmental entity under any applicable laws; (ii) will
not violate any laws applicable to the Stockholders and (iii) will not violate
or breach any contractual obligation to which the Stockholders are a party.

 

2.04 Stockholders are Acquiring Exchange Shares for Investment and are
Accredited Investors.

 

(a) The Stockholders are acquiring the Exchange Shares for investment for such
Stockholders’ own account and not as a nominee or agent, and not with a view to
the resale or distribution.

 

(b) The Stockholders represent and warrant that such Stockholders (i) can bear
the economic risk of such Stockholders’ investments, and (ii) possess such
knowledge and experience in financial and business matters that such
Stockholders are capable of evaluating the merits and risks of the investment in
OHGI and OHGI Common Stock.

 

(c) The Stockholders represent that he and are “Accredited Person(s)” as that
term is defined in Rule 501 of Regulation D (“Regulation D”) promulgated by the
Securities and Exchange Commission (“SEC”) under Section 4(a)(2) of the
Securities Act of 1933, as amended (“Securities Act”), and understand and
acknowledge that OHGI is relying upon such representation to qualify for the
exemption from the registration requirements of the Securities Act pursuant to
Rule 506 of Regulation D, and that each certificate representing the Exchange
Shares shall be endorsed with the following legends, in addition to any other
legend required to be placed thereon by applicable federal or state securities
laws:

 

“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS.”

 

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(d) The Stockholders acknowledge that neither the SEC nor the securities
regulatory body of any other jurisdiction, has received, considered or passed
upon the accuracy or adequacy of the information and representations made in
this Agreement. 

 

(e) The Stockholders acknowledge that they carefully reviewed such information
as such Stockholders have deemed necessary to evaluate an investment in OHGI and
the OHGI Common Stock. The Stockholders acknowledge that such Stockholders have
been furnished all materials that he and she have requested relating to OHGI and
the issuance of the Exchange Shares hereunder, and that such Stockholders have
been afforded the opportunity to ask questions of OHGI’s representatives to
obtain any information necessary to verify the accuracy of any representations
or information made or given to the Stockholders. Notwithstanding the foregoing,
nothing herein shall derogate from or otherwise modify the representations and
warranties of OHGI set forth in this Agreement, on which each of the
Stockholders have relied in making an exchange of his, her or its Company Shares
for the Exchange Shares.

 

(f) Stockholders understand that the Exchange Shares may not be sold,
transferred, or otherwise disposed of without registration under the Securities
Act or an exemption therefrom, and that in the absence of an effective
registration statement covering the Exchange Shares or any available exemption
from registration under the Securities Act, the Exchange Shares may have to be
held indefinitely. The Stockholders further acknowledges that the Exchange
Shares may not be sold pursuant to Rule 144 promulgated under the Securities Act
unless all of the conditions of Rule 144 are satisfied (including, without
limitation, OHGI’s compliance with the reporting requirements under the Exchange
Act).

 

(g) Stockholders agree that, notwithstanding anything contained herein to the
contrary, the warranties, representations, agreements and covenants of such
Stockholders under this Section 3.04 shall survive the Closing for the period
set forth in Section 11.01 hereof.

 

ARTICLE III 

REPRESENTATIONS, COVENANTS, AND WARRANTIES OF OHGI

 

As an inducement to, and to obtain the reliance of the Company and its
Stockholders, except as set forth in the schedules of exceptions to the
representations of OHGI annexed hereto (“OHGI Disclosure Schedules”), OHGI
represents and warrants, as of the date hereof and as of the Closing Date, as
follows:

 

3.01 Organization. OHGI is a corporation duly incorporated, validly existing,
and in good standing under the laws of Delaware and has the corporate power and
is duly authorized under all applicable laws, regulations, ordinances, and
orders of public authorities to carry on its business in all material respects
as it is now being conducted.  OHGI has made available to the Company or there
has been available on EDGAR complete and correct copies of the certificate of
incorporation and bylaws of OHGI as in effect on the date hereof. The execution
and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby will not, violate any provision of OHGI’s
certificate of incorporation or by-laws. OHGI has taken all action required by
law, its certificate of incorporation and by-laws, or otherwise to authorize the
execution and delivery of this Agreement, and OHGI has full power, authority,
and legal right and has taken all action required by law, its certificate of
incorporation and by-laws, or otherwise to consummate the transactions herein
contemplated, except that the issuance of the OHGI Common Stock will require the
consent of NASDAQ; and, if the number of such shares exceeds Nineteen and
Nine-Tenths percent (19.9%) of the outstanding shares of OHGI outstanding on the
Closing Date or the date of issuance, the consent of the shareholders of OHGI.

 

3.02 Capitalization.

 

 (a) OHGI’s authorized capitalization consists of 200,000,000 shares of OHGI
Common Stock, of which not more than 35,000,000 shares are issued and
outstanding, and 50,000,000 shares of preferred stock, par value $0.0001 per
share, of which no shares are issued and outstanding. All issued and outstanding
shares are legally issued, fully paid, and non-assessable and not issued in
violation of the preemptive or other rights of any person. All outstanding
shares OHGI Common Stock have been issued and granted in compliance with all
applicable securities laws and (in all material respects) other applicable laws
and regulations.

 

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(b) Except as contemplated by this Agreement, and as have or will be disclosed
in the “SEC Reports” (as defined in Section 3.04) and except as set forth in
Schedule 3.02 (c) of the OHGI Disclosure Schedules, there is no voting trust,
proxy, rights plan, anti-takeover plan or other agreement or understanding to
which OHGI is a party or by which it is bound with respect to any equity
security of any class of OHGI, and there are no agreements to which OHGI is a
party, or which OHGI has knowledge of, that conflict with this Agreement or the
transactions contemplated herein or otherwise prohibit the consummation of the
transactions contemplated hereunder.

 

(c) Except as contemplated by this Agreement, and as have or will be disclosed
in the SEC Reports and except as set forth in Schedule 3.02 (c) of the OHGI
Disclosure Schedules, there are no registration rights agreements to which OHGI
is a party, or which OHGI has knowledge of, which conflict with this Agreement
or the transactions contemplated herein or otherwise prohibit the consummation
of the transactions contemplated hereunder.

 

3.03 Subsidiaries and Predecessor Corporations. Except as disclosed in the SEC
Reports, OHGI does not have any predecessor corporation, no subsidiaries, and
does not own, beneficially or of record, any shares of any other corporation.

 

3.04 SEC Filings; Financial Statements.

 

(a) OHGI has made available to the Company and the Members, or there has been
available on EDGAR, correct and complete copies of each report, registration
statement and definitive proxy statement filed by OHGI with the SEC since
January 1, 2015 (“SEC Reports”). As of their respective dates, the SEC Reports:
(i) were prepared in accordance and complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may be, and
the rules and regulations of the SEC thereunder applicable to such SEC Reports;
and (ii) did not at the time they were filed (and if amended or superseded by a
filing prior to the date of this Agreement then on the date of such filing and
as so amended or superseded) contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.

 

(b) Included in the SEC Reports are the audited consolidated balance sheets of
OHGI as of December 31, 2016, and 2015, and the related audited consolidated
statements of operations, stockholders’ equity and cash flows for December 31,
2016, and 2015, together with the notes to such statements and the opinion of
its independent certified public accountants, with respect thereto; and the
unaudited consolidated balance sheets of OHGI as of September 30, 2017, and
2016, and the related unaudited consolidated statements of operations and cash
flows for the three (3) months and nine (9) months ended September 30, 2017, and
2016, together with the notes to such statements.

 

(c) Each set of financial statements (including, in each case, any related notes
thereto) contained in the SEC Reports comply as to form in all material respects
with the published rules and regulations of the SEC with respect thereto, were
prepared in accordance with U.S generally accepted accounting principles
(“GAAP”) applied on a consistent basis throughout the periods involved (except
as may be indicated in the notes thereto) and each fairly presents in all
material respects the financial position of OHGI at the respective dates thereof
and the results of its operations and cash flows for the periods indicated,
except that the unaudited interim financial statements were or are subject to
normal adjustments, which were not or are not expected to have a Material
Adverse Effect upon the business, prospects, management, properties, operations,
condition (financial or otherwise) or results of operations of OHGI, taken as a
whole.

 

(d) The OHGI balance sheets are true and accurate and present fairly as of their
respective dates the financial condition of OHGI. As of the date of such balance
sheets, except as and to the extent reflected or reserved against therein, OHGI
had no liabilities or obligations (absolute or contingent) that should be
reflected in the balance sheets or the notes thereto prepared in accordance with
GAAP, and all assets reflected therein are properly reported and present fairly
the value of the assets of OHGI, in accordance with GAAP. The statements of
operations, stockholders’ equity and cash flows reflect fairly the information
required by GAAP to be set forth therein. All of OHGI’s assets are reflected on
its financial statements, and, except as set forth in the OHGI Disclosure
Schedules or the financial statements of OHGI or the notes thereto, OHGI has no
material liabilities, direct or indirect, matured or un-matured, contingent or
otherwise; and

 

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(e) The books and records, financial and otherwise, of OHGI are in all material
aspects complete and correct and have been maintained in accordance with GAAP,
consistently applied throughout the periods involved.

 

3.05 Options or Warrants.   Except as has or will be disclosed in the SEC
Reports, there are no existing options, warrants, calls, or commitments of any
character relating to the authorized and unissued stock of OHGI.

 

3.06 Absence of Certain Changes or Events. Since September 30, 2017 and except
as disclosed in the SEC Reports or as set forth in Section 3.06 of the OHGI
Disclosure Schedules hereto:

 

(a) there has not been (i) any material adverse change in the business,
operations, properties, assets or condition of OHGI or (ii) any damage,
destruction or loss to OHGI (whether or not covered by insurance) materially and
adversely affecting the business, operations, properties, assets or condition of
OHGI;

 

(b) OHGI has not (i) amended its certificate of incorporation or by-laws, except
as required by this Agreement; (ii) declared or made, or agreed to declare or
make any payment of dividends or distributions of any assets of any kind
whatsoever to stockholders or purchased or redeemed, or agreed to purchase or
redeem, any of its capital stock; (iii) waived any rights of value, which in the
aggregate are outside of the ordinary course of business or material considering
the business of OHGI; or (iv) made any material change in its method of
management, operation, or accounting;

 

(c) OHGI has not except as has or will be disclosed in SEC Reports: (i) granted
or agreed to grant any options, warrants, or other rights for its stock, bonds,
or other corporate securities calling for the issuance thereof; (ii) borrowed or
agreed to borrow any funds or incurred, or become subject to, any material
obligation or liability (absolute or contingent) except liabilities incurred in
the ordinary course of business; (iii) paid or agreed to pay any material
obligations or liabilities (absolute or contingent) other than current
liabilities reflected in or shown on the most recent OHGI balance sheet and
current liabilities incurred since that date in the ordinary course of business
and professional and other fees and expenses in connection with the preparation
of this Agreement and the consummation of the transaction contemplated hereby;
(iv) sold or transferred, or agreed to sell or transfer, any of its assets,
properties, or rights (except assets, properties, or rights not used or useful
in its business which, in the aggregate have a value of less than $1,000), or
canceled, or agreed to cancel, any debts or claims (except debts or claims which
in the aggregate are of a value less than $1,000); (v) made or permitted any
amendment or termination of any contract, agreement, or license to which it is a
party if such amendment or termination is material, considering the business of
OHGI; or (vi) issued, delivered or agreed to issue or deliver, any stock, bonds
or other corporate securities including debentures (whether authorized and
unissued or held as treasury stock), except in connection with this Agreement;
and

 

(d)  OHGI has not become subject to any law or regulation that materially and
adversely affects, or in the future, may adversely affect, the business,
operations, properties, assets or condition of OHGI.

 

3.07 Litigation and Proceedings.  There are no actions, suits, proceedings or
investigations pending or, to the knowledge of OHGI, threatened against OHGI, or
affecting OHGI or its properties, at law or in equity, before any court or other
governmental agency or instrumentality, domestic or foreign, or before any
arbitrator of any kind. OHGI is not in default with respect to any judgment,
order, writ, injunction, decree, award, rule or regulation of any court,
arbitrator, or governmental agency or instrumentality.  

 

3.08 No Conflict with Other Instruments.  The execution of this Agreement and
the consummation of the transactions contemplated by this Agreement will not
result in the breach of any term or provision of, constitute a default under, or
terminate, accelerate or modify the terms of, any indenture, mortgage, deed of
trust, or other material agreement or instrument to which OHGI is a party or to
which any of their respective assets, properties or operations are subject.

 

8 

 

 

3.09 Compliance with Laws and Regulations.  OHGI has complied with all
applicable statutes and regulations of any federal, state, or other applicable
governmental entity or agency thereof.  

 

3.10 Approval of Agreement.  The Board of OHGI and to the extent required, its
shareholders have authorized the execution and delivery of this Agreement by
OHGI and have approved this Agreement and the transactions contemplated hereby,
except that the shareholders of OHGI have not granted such requests as might be
required for the issuance of shares hereunder as required by NASDAQ. 

 

3.11 Material Transactions or Affiliations.  Except as set forth in the SEC
Reports, there exists no contract, agreement or arrangement between OHGI (or any
predecessor) and any person who was at the time of such contract, agreement or
arrangement an officer, director, or person owning of record or known by OHGI to
own beneficially, five percent (5%) or more of the issued and outstanding common
shares of OHGI; and, or, which is to be performed in whole or in part after the
date hereof or was entered into since January 1, 2015. No officer, director, nor
any five percent (5%) shareholder(s) of OHGI has, or has had since inception of
OHGI, any known interest, direct or indirect, in any such transaction with OHGI,
which was material to the business of OHGI. OHGI has no commitment, whether
written or oral, to lend any funds to, borrow any money from, or enter into any
other transaction with, any such affiliated person.

 

3.12 Valid Obligation.  This Agreement and all agreements and other documents
executed by OHGI in connection herewith constitute the valid and binding
obligation of OHGI, enforceable in accordance with its terms, except as may be
limited by bankruptcy, insolvency, moratorium or other similar laws affecting
the enforcement of creditors’ rights generally and subject to the qualification
that the availability of equitable remedies is subject to the discretion of the
court before which any proceeding therefore may be brought.

 

3.13 Exchange Act Compliance.  OHGI is in compliance with, and current in, all
of the reporting, filing and other requirements under the Exchange Act, except
where a failure to so comply is not reasonably likely to have a Material Adverse
Effect on OHGI.

 

3.14 No Brokers.  Except for the entity or entities that has or have been
identified to the Company who has or have or will be paid by OHGI, OHGI has not
retained any broker or finder in connection with any of the transactions
contemplated by this Agreement, and OHGI has not incurred or agreed to pay, or
taken any other action that would entitle any person to receive, any brokerage
fee, finder’s fee or other similar fee or commission with respect to any of the
transactions contemplated by this Agreement.  

 

3.15 Disclosure.  All disclosure provided to the Stockholders regarding OHGI,
its business and the transactions contemplated hereby, including the OHGI
Disclosure Schedules to this Agreement, furnished by or on behalf of OHGI with
respect to the representations and warranties made herein are true and correct
and do not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made therein, in light
of the circumstances under which they were made, not misleading. In the event
that the OHGI Disclosure Schedules are not delivered contemporaneously with the
execution of this Agreement, they shall be delivered as soon as practicable
prior to the Closing Date.

 

OHGI acknowledges and agrees that the Company and its Stockholders have not
made, nor is the Company and its Stockholders making, any representations or
warranties with respect to the transactions contemplated hereby other than those
specifically set forth herein.

 

ARTICLE IV 

PLAN OF EXCHANGE

 

4.01 The Exchange. On the terms and subject to the conditions set forth in this
Agreement, on the Closing Date, the Stockholders shall assign, transfer and
deliver to OHGI, free and clear of all security interests, liens, pledges,
encumbrances, charges, restrictions or known claims of any kind, nature, or
description, all of the Company Shares. In exchange for the transfer of the
Company Shares, OHGI shall issue and deliver the Cash Exchange Consideration and
the Initial Shares to the Stockholders. The Cash Exchange Consideration shall be
delivered to the account designated by the Shareholders within two (2) business
days of execution of this Agreement and the Initial Shares shall be delivered
within two (2) weeks of the Closing Date.

 

9 

 

 

4.02 Closing.  The “Closing” or the “Closing Date” of the transactions
contemplated by this Agreement shall occur on or before March 12, 2018, or such
or such other date as the parties shall agree. Such Closing shall take place at
a mutually agreeable time and place, and be conditioned upon all of the
conditions of the Exchange being met.

 

4.03 Closing Events.  At the Closing, OHGI, the Company and its Stockholders
shall execute, acknowledge, and deliver (or shall ensure to be executed,
acknowledged, and delivered), any and all certificates, financial statements,
Schedules, agreements, resolutions, rulings or other instruments required by
this Agreement to be so delivered at or prior to the Closing, together with such
other items as may be reasonably requested by the parties hereto and their
respective legal counsel in order to effectuate or evidence the transactions
contemplated hereby.

 

4.04 Termination.  This Agreement may be terminated by the Company or OHGI only
in the event that the Company or OHGI, as the case may be, does not meet the
conditions precedent set forth in Articles VI and VII. If this Agreement is
terminated pursuant to this Section, this Agreement shall be of no further force
or effect, and no obligation, right or liability shall arise hereunder.

 

ARTICLE V 

COVENANTS OF THE PARTIES

 

The parties hereby agree that:

 

5.01 Audited Financial Statements.  The Company shall deliver to OHGI no later
than seventy (70) days following the consummation of the transaction
contemplated hereby, audited financial statements of the Company for the year
ended December 31, 2017, including balance sheets at December 31, 2017, and
2016, and statements of operations and cash flows for the year ended December
31, 2017, prepared in accordance with Generally Accepted Accounting Principles
(“GAAP”), consistently applied, together with a report of the auditors of the
Company thereon, in such form that will to enable OHGI to file a Form 8-K with
the SEC reporting the acquisition of the Company in accordance with the
applicable requirements of the Exchange Act, all at OHGI’s sole cost and
expense. The Company parties agree to exert reasonable best efforts and
cooperate in the preparation of such financial statements, including executing
such certificates as may reasonably be requested by the auditors. For further
clarification, OHGI agrees to pay the reasonable fees and costs of the auditor
in completing the audit of the Company.

 

5.02 Additional Shares.

 

(a) Promptly, and in no event more than forty-five (45) days after the end of
the period commencing on the Closing Date and ending at the end of the calendar
month which first ends twelve (12) months after the Closing Date, tentatively,
on or about, March 31, 2019 (“First Adjustment Period”), OHGI shall deliver to
the Stockholders, in proportion to their respective Stockholder Percentages, a
number of Additional Shares equal to four (4) times the Company’s net after-tax
earnings (“Net Profit”) for the First Adjustment Period, divided by the Market
Value of the OHGI Common Stock, as determined below.

 

(b) Promptly and in no event more than forty-five (45) days after the end of the
period commencing on the day following the First Adjustment Period and ending
twelve (12) months thereafter (tentatively, on or about March 31, 2020) (“Second
Adjustment Period”), OHGI shall deliver to the Stockholders, in proportion to
their respective Stockholder Percentages, a number of Additional Shares equal to
four (4) times the Company’s Net Profit for Second Adjustment Period, divided by
the Market Value of the OHGI Common Stock, as determined below; provided that if
the Company’s Net Profit for the eighteen (18) months following the Closing is
in excess of $3,000,000, the number of Additional Shares to be delivered to the
Stockholders in proportion to their respective Stockholder Percentages for the
Second Adjustment Period shall be equal to five (5) times the Company’s Net
Profit for the Second Adjustment Period, divided by the Market value of the OHGI
Common stock, as determined below.

 

10 

 

 

For purposes of the above:

 

(i)         The Company’s Net Profit for each of the First Adjustment Period and
the Second Adjustment Period shall be determined in accordance with GAAP. For
the avoidance of doubt, Net Profits shall not include any revenues, or costs and
expenses, related to OHGI or any other subsidiary or affiliate thereof other
than the Company.

 

(ii)        The “Market Value” of the OHGI Common Stock used to determine the
number of shares of Common Stock deliverable in respect of the First Adjustment
Period or the Second Adjustment Period, as the case may be, shall be the average
closing price of a share of OHGI Common Stock for the ten (10) consecutive
trading days (“Determination Period”) ending on the last day of the First
Adjustment Period or the Second Adjustment Period, as the case may be (each, a
“Determination Date”).  

 

(iii)       Closing price of a share of OHGI Common Stock as of any date during
the Determination Period shall mean (A) if the OHGI Common Stock is then listed
on NASDAQ or another securities exchange (each, an “Exchange”), the closing
price of the OHGI Common Stock on the Exchange on which OHGI Common Stock is
then listed on such date as reported by Bloomberg L.P. (based on a trading day
from 9:30 a.m. (New York City-time) to 4:02 p.m. (New York City-time); (B) if
OHGI Common Stock is quoted on OTCQB, OTCQX or a similar recognized quotation
service (each, a “Quotation Service”), the closing price of a share OHGI Common
Stock on such date as quoted on such Quotation Service ; or (C) if the OHGI
Common Stock is not then listed on an Exchange or quoted for trading on a
Quotation Service and if prices for the OHGI Common Stock are then reported by
OTC Pink, the price published by OTC Markets Group, Inc. (or a similar
organization or agency succeeding to its functions of reporting prices), as the
last bid price per share of the OHGI Common Stock so reported for such date; or
(D) in all other cases, the fair market value of a share of OHGI Common Stock as
determined by an independent appraiser selected in good faith by the Board of
Directors of OHGI, the fees and expenses of which shall be paid by OHGI.

 

For example, (i) if the Company’s Net Profit for the First Adjustment Period was
$1,000,000 and the Market Value of the OHGI Common Stock was $1.00, the
aggregate number of shares of OHGI Common Stock to be issued to the Stockholders
would be 4,000,000 shares, (ii) if the Company’s Net Profit for the Second
Adjustment Period was $4,000,000 and the Market Value of the OHGI Common Stock
was $4.00, the aggregate number of shares of OHGI Common Stock to be issued to
the Stockholders would be 4,000,000 shares, and (iii) if the Company’s Net
Profit for the first eighteen (18) months after the Closing was $3,050,000 and
the Company’s Net Profit for the Second Adjustment Period was $4,000,000 and the
Market Value of the OHGI Common Stock was $4.00, the aggregate number of shares
of OHGI Common Stock to be issued to the Stockholders would be 5,000,000 shares.

 

OHGI shall cause its Transfer Agent to issue and deliver certificates evidencing
the number of additional shares of OHGI Common Stock, if any, registered in the
names of the Stockholders, to the Stockholders, in proportion to their
respective Stockholder Percentages within five (5) days after the Determination
Date (“Issuance Date”).

 

(c) Notwithstanding anything herein to the contrary, regardless of whether OHGI
has a class of securities listed on NASDAQ at the time Additional Shares are to
be issued in respect of the First Adjustment Period and the Second Adjustment
Period, the aggregate number of shares of OHGI Common Stock to be delivered
pursuant to this Agreement, including the Initial Shares and the Additional
Shares, cannot exceed 19.9% of the total number of shares of the OHGI Common
Stock outstanding as of the Closing Date and on the dates of issuance of
Additional Shares unless approved by NASDAQ, which will require a vote of the
shareholders of OHGI other than the Stockholders. If it is necessary under the
circumstances for OHGI to obtain approval from its stockholders to permit any
issuance of OHGI Common Stock pursuant to the terms hereof, OHGI agrees to
exercise reasonable best efforts to obtain the requisite stockholder approval
and NASDAQ’s approval.

 

If OHGI shall not obtain such approvals prior to the end of the First Adjustment
Period or the Second Adjustment Period and the number of shares of OHGI Common
Stock deliverable pursuant hereto exceeds 19.9% of the total number of shares of
OHGI Common Stock outstanding on the date hereof or on the Issuance Date, OHGI
shall pay cash in lieu of delivering any shares of OHGI Common Stock otherwise
deliverable.

 

11 

 

 

(d)   The Stockholders understand and acknowledge that the issuance of shares of
OHGI Common Stock pursuant hereto is contingent upon OHGI obtaining NASDAQ
approval. The Stockholders further acknowledge that NASDAQ approval is dependent
upon OHGI’s satisfaction of certain qualifications and requirements imposed by
the NASDAQ Capital Market, which may include the approval of the issuance of
OHGI common stock by OHGI’s stockholders.

 

5.03 Reservation of OHGI Common Stock. OHGI agrees to reserve with its Transfer
Agent from time-to-time a sufficient number of shares of OHGI Common Stock for
issuance to the Stockholders pursuant to Section 5.02.

 

5.04 Public Status.  OHGI shall make any and all required filings under the
Exchange Act so that it remains a reporting company under the Exchange Act and
so that the OHGI Common Stock continues to be a publicly-traded security for a
period of at least five (5) years from the Closing Date. OHGI shall exercise
commercially reasonable efforts to maintain the listing of the OHGI Common Stock
on NASDAQ during the five (5) years following the Closing Date.        

 

5.05 Public Announcements.  Except as required by applicable law, OHGI and the
Company shall consult with each other before issuing any press release or making
any public statement with respect to this Agreement or the transactions
contemplated hereby. The Stockholders shall be afforded the opportunity for
meaningful consultation prior to OHGI issuing any press release or making any
public statement should the contemplated press release or public statement be in
reference to such Stockholder in any way.

 

5.06 Notices of Certain Events.  In addition to any other notice required to be
given by the terms of this Agreement, each of the parties shall promptly notify
the other party hereto of:

 

(a) any notice or other communication from any person alleging that the consent
of such person is or may be required in connection with any of the transactions
contemplated by this Agreement;

 

(b) any notice or other communication from any governmental or regulatory agency
or authority in connection with the transactions contemplated by this Agreement;
and

 

(c) any actions, suits, claims, investigations or proceedings commenced or, to
its knowledge threatened against, relating to or involving or otherwise
affecting such party that, if pending on the date of this Agreement, would have
been required to have been disclosed pursuant hereto or that relates to the
consummation of the transactions contemplated by this Agreement.  

 

5.07 Access to Information.  Following the date hereof, until consummation of
all transactions contemplated hereby:

 

(a) The Company shall give to OHGI and its authorized representatives full and
complete access to its books and records, contracts, facilities and personnel as
OHGI and its authorized representatives may request so that OHGI may complete
its due diligence investigation of the Company. The officers of the Company
agree to provide OHGI and its authorized representatives with access to any
information in his or her or the Company’s possession or within his or her or
the Company’s control that contains information generated by him or her or the
Company regarding the Company relative to its financial, operational, and/or
regulatory condition (present, past, or prospective). 

 

(b) OHGI shall give to the officers and the authorized representatives of the
Company full and complete access to the books and records, contracts, facilities
and personnel of OHGI as the officers and the authorized representatives of the
Company may request so that the Company may complete its due diligence
investigation of OHGI. OHGI agrees to provide the officers and authorized
representatives of the Company with access to any information in its possession
or within its control which contains information generated by it or on its
behalf relative to the financial, operational, and/or regulatory condition
(present, past, or prospective) of OHGI.

 

12 

 

 

5.08 Limitation of Business Activities of the Company Prior to Closing.  Except
for transactions contemplated by this Agreement, the Company will not, without
the prior written consent of OHGI, (i) make any material change in the type or
nature of its business, or in the nature of its operations, (ii) create or
suffer to exist any debt, other than that currently in existence or undertaken
to complete projects ongoing or to meet short term working capital needs, (iii)
issue any securities or membership interests or (iv) enter into any new
agreements of any kind or undertake any new obligations or liabilities likely to
have a material impact on its business.

 

5.09 Consents of Third Parties.  Each of the parties will give any notices to
third parties, and will use its reasonable best efforts to obtain any
third-party consents, that the other parties reasonably may request in
connection with this Agreement. Each of the parties will give any notices to,
make any filings with, and use its reasonable best efforts to obtain any
authorizations, consents, and approvals of governments and governmental agencies
in connection with the matters in this Agreement.

 

5.10 No Solicitations.  From and after the date of this Agreement until the
later of the Closing, sixty (60) days after the date hereof or termination of
this Agreement pursuant to Section 9.01, the Company will not, and will not
permit any of its directors, officers, stockholders, or agents acting on its
behalf to: (i) take any action to solicit, initiate, encourage or assist the
submission of any proposal, negotiation or offer from any person or entity other
than OHGI, and other person(s) or entities for purposes of soliciting their
participation as investors or co-investors with the Company, relating to the
acquisition, sale or transfer of any of the Company Shares or any material part
of the assets of the Company; (ii) offer to issue, sell or transfer any Company
Shares or any material part of the assets of the Company to any person other
than OHGI; or (iii) disclose financial or other information relating to the
Company other than in the ordinary course of business to any person or entity
other than OHGI or its agents and representatives, except with the written
consent of OHGI. The Company acknowledges and agrees that the legal remedies
available to OHGI in the event it violates any of the foregoing covenants would
be inadequate and that OHGI shall be entitled to specific performance,
injunctive relief and other equitable remedies in the event of any such
violation. The Company agrees that it will immediately notify OHGI regarding any
contact between the Company, any of its directors, officers, stockholders,
employees, agents or representatives and any other person regarding any offer,
proposal or inquiry during this exclusivity period.  

 

5.11 No Investment without Consent. Prior to the second (2nd) anniversary of the
Closing Date, the Company shall not accept any investment from a third party
without the consent of OHGI.

 

5.12 Short Sale. Prior to the second (2nd) anniversary of the Closing Date, no
Stockholder shall, directly or indirectly, enter into a short sale of OHGI
Common Stock or enter into any hedging transaction including any borrowing which
establishes a net short position.

 

5.13 Additional Acquisitions. Prior to completing an acquisition of another
business, OHGI shall advise the Stockholders serving on the Board of the Company
of its intent to do so and, if consummation of such acquisition requires consent
of the stockholders of OHGI, such Stockholders shall have the right to vote any
shares of OHGI they may hold on the applicable record date.

 

5.14 Survival. The obligations of OHGI under this Article V shall survive any
termination of this Agreement.

  

ARTICLE VI 

CONDITIONS PRECEDENT TO OBLIGATIONS OF OHGI

 

The obligations of OHGI under this Agreement are subject to the satisfaction, at
or before the Closing Date, of the following conditions:

 

6.01 Accuracy of Representations and Performance of Covenants. Each of the
representations and warranties made by the Company Parties and the Stockholders
shall be true and correct in all material respects as of the Closing Date as if
made on such date.  The Company and the Stockholders shall have performed or
complied with all covenants and conditions required by this Agreement to be
performed or complied with by it prior to or at the Closing. OHGI shall be
furnished with a certificate, signed by the Stockholders of the Company and a
duly authorized executive officer of the Company dated as of the Closing Date,
confirming (i) the statements made in the two (2) preceding sentences; and (ii)
that there has been no material adverse change in the business, affairs,
prospects, operations, properties, assets or conditions of the Company since the
date of this Agreement.

 

13 

 

 

6.02 No Governmental Prohibition. No order, statute, rule, regulation, executive
order, injunction, stay, decree, judgment or restraining order shall have been
enacted, entered, promulgated or enforced by any court or governmental or
regulatory authority or instrumentality that prohibits the consummation of the
transactions contemplated hereby.

 

6.03 Consents.  All consents, approvals, waivers or amendments pursuant to all
contracts, licenses, permits, trademarks and other intangibles in connection
with the transactions contemplated herein, or for the continued operation of the
Company after the Closing Date on the basis as presently operated shall have
been obtained.

 

6.04 Absence of Litigation. There shall be no actions, suits, proceedings or
governmental investigations or inquiries pending or, to Company’s knowledge,
threatened against the Company and/or its Stockholders, which would prevent the
consummation of the transaction contemplated hereby.

 

6.05 Other Items. OHGI shall have received further documents, certificates, or
instruments relating to the transactions contemplated hereby as it may
reasonably request, including such financial statements for the Company and such
information regarding the Company and its operations as OHGI shall deem
reasonably necessary for inclusion in the reports to be filed by OHGI with the
SEC.

 

6.06 Schedules and Other Information.  The Company shall have delivered to OHGI
the books and records reasonably requested in connection with OHGI’s due
diligence investigation of the Company, and there shall have been no disclosure
provided in connection with such due diligence investigation, which in the
reasonable opinion of OHGI differs materially from the information it has
received as of the date hereof and which does or may have a materially adverse
effect on the value of the business of the Company or on its assets, properties
or goodwill.

 

ARTICLE VII 

CONDITIONS PRECEDENT TO OBLIGATIONS OF 

THE COMPANYAND ITS STOCKHOLDERS

 

The obligations of the Company and its Stockholders under this Agreement are
subject to the satisfaction, at or before the Closing Date, of the following
conditions:

 

7.01   Accuracy of Representations and Performance of Covenants. Each of the
representations and warranties made by OHGI shall be true and correct in all
material respects as of the Closing Date as if made on such date. OHGI shall
have performed or complied with all covenants and conditions required by this
Agreement to be performed or complied with by it prior to or at the Closing. The
Company shall be furnished with a certificate, signed by a duly authorized
executive officer of OHGI, dated the Closing Date, confirming (i) the statements
made in the two preceding sentences; and (ii) that there has been no material
adverse change in the business, affairs, prospects, operations, properties,
assets or conditions of the OHGI since the date of this Agreement.

 

7.02 No Governmental Prohibition.  No order, statute, rule, regulation,
executive order, injunction, stay, decree, judgment or restraining order shall
have been enacted, entered, promulgated or enforced by any court or governmental
or regulatory authority or instrumentality, which prohibits the consummation of
the transactions contemplated hereby.

 

7.03 Consents.  All consents, approvals, waivers or amendments pursuant to all
contracts, licenses, permits, trademarks and other intangibles in connection
with the transactions contemplated herein, or for the continued operation of
OHGI after the Closing Date shall have been obtained, except that the consent of
NASDAQ to the issuance of the Additional Shares, the consent of the shareholders
of OHGI to the issuance of the Additional Shares and the issuance of the
Additional Shares may be obtained or effectuated as otherwise set forth in
Section 5.02.

 

14 

 

 

7.04 Absence of Litigation. There shall be no actions, suits, proceedings or
governmental investigations or inquiries pending or, to OHGI’s knowledge,
threatened against OHGI which would prevent the consummation of the transactions
contemplated hereby.

 

7.05 Employment Agreement. OHGI shall within three (3) business days of the
Closing Date, enter into Employment Agreements with Rodriguez, Nieto and
Jacqueline Patricia Rosales (“Rosales”) in the forms to be annexed hereto as
Exhibits 7.05A, 7.05B and 7.05C, respectively, and which Employment Agreements
(i) shall be for a minimum period of two (2) years; (ii) shall specify that the
annual salaries for Rodriguez and Nieto respectively will be at a minimum rate
of $125,000 annually and that the annual salary for Rosales will be at a minimum
rate of $50,000 annually; (iii) Rodriguez’ Employment Agreement will include an
issuance from OHGI to Rodriguez and/or his designee(s) of 400,000 shares of OHGI
common stock within five (5) business days of the ‘Effective Date’ of such
Employment Agreement, which may be issued on an S-8 basis to the extent
available subject to any applicable affiliate rules; and (iv) which such
Employment Agreements shall not include any non-compete beyond the minimum two
(2) year period of such Employment Agreements.

 

7.06 Other Items.  The Company and its Stockholders shall have received further
documents, certificates, or instruments relating to the transactions
contemplated hereby as they may reasonably request.

 

7.07 Schedules and Other Information. OHGI shall have delivered to the Company
the OHGI Disclosure Schedules required hereunder, and there shall have been no
disclosure in any Schedule delivered after the date of execution and delivery of
this Agreement, or the documents described therein, which in the reasonable
opinion of the Company does or may have a materially adverse effect on the value
of the business of OHGI or on its assets, properties or goodwill.

 

ARTICLE VIII 

POST CLOSING COVENANTS

 

8.01       Cooperation with Financial Statements. The Company shall, at the
expense of OHGI, assist OHGI to complete such audit of the Company’s financial
statements as are required by the Exchange Act.

 

8.02       Information Statement. As promptly as practicable following the
Closing Date, OHGI shall prepare and caused to be mailed to its stockholders
such Information Statement as may be required by the Rules and Regulations of
the Exchange Act and the Rules of NASDAQ to permit the Exchange Shares to be
issued to the Stockholders. 

 

8.03       Board Representation. OHGI shall cause Rodriguez and Nieto to be
elected as directors of the Board of the Company; it being understood that under
all circumstances, OHGI will have the right to designate a majority of the
members of the Board of the Company. Rodriguez and Nieto and any other directors
or officers of the Company and the Company shall be covered under OHGI’s
Directors and Officers Liability Insurance Policy so long as the Company remains
a wholly owned subsidiary of OHGI at OHGI’s sole cost and expense including any
applicable retention amount(s).

 

  

 

8.04       Restriction on Investment in Company by Third Parties. For a period
of three (3) years after the Closing Date, the Company will not accept
investment funds from any third party, or issue any of its securities, or permit
the transfer or assignment of any of its securities without the express written
approval of a designated member of the Board of OHGI.

 

8.05       Trading Restrictions. No stockholder of the Company, whether in such
stockholder’s own capacity or through a representative, agent or affiliate,
shall enter into or effect any “short sales” (as that term is defined in Rule
10a-1 of the Exchange Act) of OHGI Common Stock or any hedging transaction,
including obtaining a borrowing, which establishes a net short position with
respect to OHGI Common Stock.

 

8.06       Non-interference. Subject to the fiduciary obligations of the Board
of OHGI, Christopher Robin Rodriguez and Patricia Nieto-Rodriguez shall serve as
the co-Chief Executive Officers of the Company, with sole responsibility and
authority for the Company’s obligations for the term of their Employment
Agreements. Further, subject to the fiduciary obligations of the Board of OHGI,
neither OHGI nor any of its affiliated entities shall interfere with the
operations of the Company.

 

15 

 

 

ARTICLE IX 

TERMINATION

 

9.01 Termination.  This Agreement may be terminated at any time prior to the
Closing:

 

(a) by mutual written consent of OHGI and the Company;

 

(b) by OHGI or the Company if the Closing shall not have occurred on or before
March 12, 2018 (unless the failure to consummate the transactions by such date
shall be due to the action or failure to act of the party seeking to terminate
this Agreement which, in the case of the Company would include the failure of
any Stockholder);

 

(c) by OHGI if: (i) the Company or any of its Stockholders shall have failed to
timely comply in any material respect with any of the other covenants,
conditions, terms or agreements contained in this Agreement to be complied with
or performed by it, which breach is not cured within ten (10) days if capable of
cure; or (ii) any representations and warranties of the Company Parties or its
Stockholders contained in this Agreement shall have been materially false when
made or on and as of the Closing Date; or

 

(d) by the Company if: (i) OHGI shall have failed to timely comply in any
material respect with any of the covenants, conditions, terms or agreements
contained in this Agreement to be complied with or performed by it, which breach
is not cured within ten (10) days if capable of cure; or (ii) any
representations and warranties of OHGI contained in this Agreement shall have
been materially false when made or on and as of the Closing Date.  

 

9.02 Effect of Termination.  In the event of the termination of this Agreement
pursuant to this Article IX, all further obligations of the parties under this
Agreement shall forthwith be terminated without any further liability of any
party to the other parties; provided, however, that nothing contained in this
Section 9.02 shall relieve any party from liability for any breach of this
Agreement. Upon termination of this Agreement for any reason, each of the
parties shall promptly cause to be returned to the other all documents and
information obtained in connection with this Agreement and the transactions
contemplated by this Agreement and all documents and information obtained in
connection with the investigation of the other party’s business, operations and
legal affairs, including any copies made of any such documents or information.

 

ARTICLE X 

SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION

 

10.01. Survival. The representations and warranties, set forth in this
Agreement, in any Exhibit or Schedule hereto and in any certificate or
instrument delivered in connection herewith shall survive for a period of
eighteen (18) months after the Closing Date (“Warranty Period”) and shall
thereupon terminate and expire and shall be of no force or effect thereafter,
except that (i) the representation and warranty of the Stockholders in Section
3.01 as to the ownership of the Company Shares shall survive for the period
equal to the applicable statute of limitations relating to said matter; (ii)
with respect to any claim, written notice of which shall have been delivered to
OHGI or the Stockholders, as the case may be, in accordance with the
indemnification provisions of this Article X and prior to the end of the
Warranty Period, such claim shall survive the termination of such Warranty
Period for as long as such claim is unsettled, and (ii) with respect to any
litigation which shall have been commenced to resolve such claim on or prior to
such date.

 

10.02. Indemnification by Members. Subject to the provisions of Section 10.05
below, each Stockholder hereby covenants and agrees with OHGI that such
Stockholder shall indemnify OHGI and its directors, officers, employees and
Affiliates (as that term is defined in Rule 405 of the Securities Act), and each
of their successors and assigns (individually, an “OHGI Indemnified Party”), and
hold them harmless from, against and in respect of any and all costs, losses,
claims, liabilities, fines, penalties, damages and expenses (including interest,
if any, imposed in connection therewith, court costs and reasonable fees and
disbursements of counsel) (collectively, “Damages”) incurred by any of them
resulting from any misrepresentation, breach of any representation or warranty
in this Agreement or the non-fulfillment in any material respect of any
agreement, covenant or obligation by the Stockholders or Members, as the case
may be, made in this Agreement (including without limitation any Exhibit or
Schedule hereto and any certificate or instrument delivered in connection
herewith).

 

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10.03. Indemnification by OHGI. Subject to the provisions of Section 10.05
below, OHGI hereby covenants and agrees with the Stockholders that OHGI shall
indemnify the Stockholders (each a “Stockholder Indemnified Party” and
collectively, the “Stockholder Indemnified Parties”) and hold them harmless
from, against and in respect of any and all Damages incurred by the Stockholder
Indemnified Party resulting from any misrepresentation, breach of any
representation or warranty in this Agreement or the non-fulfillment in any
material respect of any agreement, covenant or obligation by OHGI made in this
Agreement (including without limitation any Exhibit or Schedule hereto and any
certificate or instrument delivered in connection herewith).

 

10.04. Right to Defend. If the facts giving rise to any such indemnification
shall involve any actual claim or demand by any third party against an OHGI
Indemnified Party or Stockholder Indemnified Party (referred to herein as an
“Indemnified Party”), then the Indemnified Party will give prompt written notice
of any such claim to the indemnifying party, which notice shall set forth in
reasonable detail the nature, basis and amount of such claim (the “Notice of
Third Party Claim”). It is a condition precedent to the applicable indemnifying
party’s obligation to indemnify the applicable Indemnified Party for such claim
that such Indemnified Party timely provide to such indemnifying party the
applicable Notice of Third Party Claim, provided that the failure to provide
such Notice of Third Party Claim shall only relieve such indemnifying party of
its or his obligation to indemnify for such claim only to the extent that such
indemnifying party has been prejudiced by such Indemnified Party’s failure to
give the Notice of Third Party Claim as required. The indemnifying party
receiving such Notice of Third Party Claim may (without prejudice to the right
of any Indemnified Party to participate at its own expense through counsel of
its own choosing) undertake the defense of such claims or actions at its expense
with counsel chosen and paid by its giving written notice (the “Election to
Defend”) to the Indemnified Party within thirty (30) days after the date the
Notice of Third Party Claim is deemed received; provided, however, that the
indemnifying party receiving the Notice of Third Party Claim may not settle such
claims or actions without the consent of the Indemnified Party, which consent
will not be unreasonably withheld or delayed, except if the sole relief provided
is monetary damages to be borne solely by the indemnifying party; and, provided
further, if the defendants in any action include both the indemnifying party and
the Indemnified Party, and the Indemnified Party shall have reasonably concluded
that counsel selected by the indemnifying party has a conflict of interest
because of the availability of different or additional defenses to the parties,
the Indemnified Party shall cooperate in the defense of such claim and shall
make available to the indemnifying party pertinent information under its control
relating thereto, but the Indemnified Party shall have the right to retain its
own counsel and to control its defense and shall be entitled to be reimbursed
for all reasonable costs and expenses incurred in such separate defense. In no
event will the provisions of this Article reduce or lessen the obligations of
the parties under this Article, if prior to the expiration of the foregoing
thirty (30) day notice period, the Indemnified Party furnishing the Notice of
Third Party Claim responds to a third-party claim if such action is reasonably
required to minimize damages or avoid a forfeiture or penalty or because of any
requirements imposed by law. If the indemnifying party receiving the Notice of
Third Party Claim does not duly give the Election to Defend as provided above,
then it will be deemed to have irrevocably waived its right to defend or settle
such claims, but it will have the right, at its expense, to attend, but not
otherwise to participate in, proceedings with such third parties; and if the
indemnifying party does duly give the Election to Defend, then the Indemnified
Party giving the Notice of Third Party Claim will have the right at its expense,
to attend, but not otherwise to participate in, such proceedings. The parties to
this Agreement will not be entitled to dispute the amount of any Damages
(including reasonable attorney’s fees and expenses) related to such third-party
claim resolved as provided above.

 

10.05 Limitation on Rights of Indemnification.

 

(a) No OHGI Indemnified Party shall have the right to indemnification under this
Agreement unless and until the aggregate amount of any and all such
indemnification claims made by an OHGI Indemnified Party under this Agreement
exceeds $100,000 (the “Basket”). If claims asserted by the OHGI Indemnified
Parties exceed the Basket, OHGI Indemnified Parties shall be entitled to receive
$1.50 USD in respect of each one dollar ($1.00 USD) of indemnified claims in
excess of the Basket until the OHGI Indemnified Parties shall have received an
amount equal to the sum of the reimbursed indemnified claims plus the Basket in
respect of indemnified claims If OHGI Indemnified Parties are entitled to any
further payments in respect of indemnifications claims, they shall be made on a
dollar-for-dollar basis subject to any limitations contained herein. The Basket
shall not apply to claims relating to the representation and warranty of the
Stockholders in Section 2.01 as to the ownership of the Company Shares.

 

17 

 

 

Stockholders may satisfy any indemnification claims hereunder by delivery of
shares of OHGI Common Stock. Such shares shall be valued at the greater of (i)
$1.50 USD per share and (ii) the value used to determine the number of shares
issued in respect of the Additional Shares, and, in such latter case, shares
shall be valued first at the highest price, up to the number of shares issued at
such price, next at the second highest price, up to the number of shares issued
at such price, and then at the lowest price.

 

(b) The aggregate liability of the Stockholders pursuant to this Article X shall
not exceed the sum of the Cash Exchange Consideration and the value of the
Exchange Shares received by them; provided, however, that the provisions of this
Section 10.05(b) shall not apply to: (i) breaches of Stockholders’
representations and warranties relating to ownership of Company Shares, and (ii)
claims arising out of fraud.

 

(c) Except in the event of fraud, the remedies provided in Sections 10.02 and
10.03 hereof shall be the sole and exclusive remedies of OHGI Indemnified
Parties and Stockholder Indemnified Parties from and after the Closing in
connection with any breach of representation or warranty or non-performance,
partial or total, of any covenant or agreement contained in this Agreement;
provided, that, nothing contained herein shall prevent any party from seeking
equitable remedies (including specific performance or injunctive relief) in
connection therewith.

 

ARTICLE XI 

MISCELLANEOUS

 

11.01 Governing Law.  This Agreement shall be governed by, enforced, and
construed under and in accordance with the laws of New York, without giving
effect to principles of conflicts of law thereunder. Venue for all matters shall
be in New York, New York. Each of the parties irrevocably consents and agrees
that any legal or equitable action or proceedings arising under or in connection
with this Agreement shall be brought exclusively in the Southern District Court
of the United States located in New York County. By execution and delivery of
this Agreement, each party hereto irrevocably submits to and accepts, with
respect to any such action or proceeding, generally and unconditionally, the
jurisdiction of the aforesaid court, and irrevocably waives any and all rights
such party may now or hereafter have to object to such jurisdiction.

 

11.02 Notices.  Any notice or other communications required or permitted
hereunder shall be in writing and shall be sufficiently given if personally
delivered to it or sent by overnight courier or registered mail or certified
mail, postage prepaid, or electronic mail with a follow up copy by overnight
courier, addressed as follows:

 

If to the Company or the Stockholders:

 

C-Rod, Inc. 

649 NE 81st Street 

Miami, Florida 33138 

Attn: Christopher Robin Rodriguez, President 

E-mail: donchrisrodriguez@gmail.com

 

with a copy (which shall not constitute notice) by electronic mail to:

 

If to OHGI:

 

One Horizon Group, Inc. 

Room 1808, 18/F Hutchison House, 10 Harcourt Road, Central 

Hong Kong 

Attn: Mark B. White, Chief Executive Officer 

E-mail: mark@onehorizoninc.com

 

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with a copy (which shall not constitute notice) by electronic mail to:

 

One Horizon Group, Inc.
34 South Molton Street
London W1K 5RG, United Kingdom

Attn: Martin Ward, Chief Financial Officer 

E-mail: martin.ward@onehorizoninc.com

 

Mandelbaum Salsburg P.C. 

1270 Avenue of the Americas, Suite 1808 

New York, NY 10020 

Attention: Vincent J. McGill, Esq. 

E-mail: vmcgill@lawfirm.ms

 

or such other addresses as shall be furnished in writing by any party in the
manner for giving notices hereunder, and any such notice or communication shall
be deemed to have been given (i) upon receipt, if personally delivered or sent
by electronic mail, (ii) on the day after dispatch, if sent by overnight
courier, and (iii) three (3) days after mailing, if sent by registered or
certified mail.

 

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

 

11.04 Confidentiality. OHGI, on the one hand, the Company and its Stockholders,
on the other hand, each agree with the other that the documentation and other
information disclosed to them by the other party hereunder to evaluate various
the business and affairs of the Company or OHGI, as the case may be, and various
aspects of the Exchange and the other transactions contemplated hereby may
contain proprietary confidential information and trade secrets, and that the
disclosure and unauthorized use of such information could cause irreparable
injury. The parties agree that all such information and materials shall be used
and disclosed only to the limited extent necessary for the parties hereto (and
their professional advisors) to evaluate the Exchange and the other transactions
contemplated hereby. All extracts, digests and copies of such documentation and
information shall be maintained under strict control by the recipients. Upon
termination of the negotiations by the parties, no party (or advisor to such
party) shall make any further use of such documentation and information, and all
documentation previously obtained (together with all copies, abstracts, digests
and analyses thereof) shall be returned to the party providing such information.
The Company and its Stockholders recognize that OHGI is a publicly traded
company in the United States and agree not to buy OHGI Common Stock or recommend
to any other party that it or he or she do so, from the Closing Date until such
information has been disclosed to the public.

 

11.05 Public Announcements and Filings.  Unless required by applicable law or
regulatory authority, none of the parties will issue any report, statement or
press release to the general public, trade or trade press, or to any third party
(other than its advisors and representatives in connection with the transactions
contemplated hereby) or file any document, relating to this Agreement and the
transactions contemplated hereby, except as may be mutually agreed by the
parties. Copies of any such filings, public announcements or disclosures,
including any announcements or disclosures mandated by law or regulatory
authorities, shall be delivered to each party prior to the release thereof. 

 

11.06 Schedules; Knowledge.  Each party is presumed to have full knowledge of
all information set forth in the other party’s schedules delivered pursuant to
this Agreement.

 

11.07 Third Party Beneficiaries.  This contract is strictly between OHGI, the
Company and its Stockholders, and, except as specifically provided, no director,
officer, stockholder, employee, agent, independent contractor or any other
person or entity shall be deemed to be a third-party beneficiary of this
Agreement.

 

19 

 

 

11.08 Expenses.  Whether or not the Exchange is consummated, each of OHGI, on
the one hand, and the Company, on the other hand, will bear their own respective
expenses, including without limitation the fees and expenses of its legal,
accounting and financial advisors, incurred in connection with the Exchange or
any of the other transactions contemplated hereby.

 

11.09 Entire Agreement.  This Agreement represents the entire agreement between
the parties relating to the subject matter thereof and supersedes all prior
agreements, understandings and negotiations, written or oral, with respect to
such subject matter.

 

11.10 Amendment or Waiver.  Every right and remedy provided herein shall be
cumulative with every other right and remedy, whether conferred herein, at law,
or in equity, and may be enforced concurrently herewith, and no waiver by any
party of the performance of any obligation by the other shall be construed as a
waiver of the same or any other default then, theretofore, or thereafter
occurring or existing. This Agreement may by amended only by a writing signed by
all parties hereto.

 

11.11. Best Efforts.  Subject to the terms and conditions herein provided, each
party shall use its best efforts to perform or fulfill all conditions and
obligations to be performed or fulfilled by it under this Agreement so that the
transactions contemplated hereby shall be consummated as soon as practicable.
Each party also agrees that it shall use its best efforts to take, or cause to
be taken, all actions and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate and make
effective this Agreement and the transactions contemplated herein.

 

11.12 Counterparts.  This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original and all of which taken together shall
be but a single instrument.

 

Signature Page 21 Follows

 

20 

 

 

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

 

  One Horizon Group, Inc.         By:  /s/ Mark White     Name: Mark White    
Title: Chief Executive Officer

 

  C-Rod, Inc.         By:  /s/ Christopher Robin Rodriguez     Name: Christopher
Robin Rodriguez     Title: Co-Chief Executive Officer

 

  Stockholders:         /s/ Christopher Robin Rodriguez   Christopher Robin
Rodriguez         /s/ Patricia Nieto Rodriguez   Patricia Nieto Rodriguez

 

21 

 

 

Company Disclosure Schedules

 

22 

 

 

OHGI Disclosure Schedules

 

23