EXHIBIT 10.1

 

MEMBERSHIP INTEREST PURCHASE AGREEMENT

 

by and between

 

MICHAEL A. TURNER

(the “Seller”)

 

and

 

MULTIMEDIA PLATFORMS, INC.

(the “Buyer”)

 

dated as of

 

September 8, 2015

 

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TABLE OF CONTENTS

 

ARTICLE I

DEFINITIONS

 

 

ARTICLE II

PURCHASE AND SALE

 

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF SELLER

 

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF BUYER

 

 

ARTICLE V

COVENANTS

 

 

ARTICLE VI

TAX MATTERS

 

 

ARTICLE VII

CONDITIONS TO CLOSING

 

 

ARTICLE VIII

INDEMNIFICATION

 

 

ARTICLE IX

MISCELLANEOUS

 

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MEMBERSHIP INTEREST PURCHASE AGREEMENT

 

This Membership Interest Purchase Agreement (this “Agreement”) is dated as of
September 8, 2015, by and among Michael A. Turner (the “Seller”), and Multimedia
Platforms, Inc., a Nevada corporation (the “Buyer”).

 

Recitals

 

(A) WHEREAS, Seller own all of the issued and outstanding membership interests
(the “Membership Interests”), in New Frontiers Media Holdings, LLC, a Delaware
limited liability company (the “Company”), immediately prior to Closing; and

 

(B) WHEREAS, Seller wishes to sell to Buyer, and Buyer wishes to purchase from
Seller, the Membership Interests, subject to the terms and conditions set forth
herein;

 

(C) NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

 

ARTICLE I

 

Definitions

 

The following terms have the meanings specified or referred to in this Article
I:

 

“Action” means any claim, action, cause of action, demand, lawsuit, arbitration,
inquiry, audit, notice of violation, proceeding, litigation, citation, summons,
subpoena or investigation of any nature, civil, criminal, administrative,
regulatory or otherwise, whether at law or in equity.

 

“Affiliate” of a Person means any other Person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, such Person. The term “control” (including the terms
“controlled by” and “under common control with”) means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.

 

“Agreement” has the meaning set forth in the preamble.

 

“Assignment” has the meaning set forth in Section 2.03(b)(i).

 

“Unaudited Financial Statements” has the meaning set forth in Section 3.06.

 

“Balance Sheet” has the meaning set forth in Section 3.06.

 

“Balance Sheet Date” has the meaning set forth in Section 3.06.

 

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“Business Day” means any day except Saturday, Sunday or any other day on which
commercial banks located in New York are authorized or required by Law to be
closed for business.

 

“Business Enterprise” means --- --- --- --- --- ---- --- ------ --- --- ---
------ ---- --- --- --- --- ---- --- --- --- ----- ------- --- --- --- --- ----
--- --- --- --- --- --- --- --- ---- --- --- --- --- --- --- --- --- ----
--- --- --- ----- --- --- --- ---- --- --- --- ---- --- --- --- ---- --- ---
--- -- --- ---- --- --- --- ----- --- --- --- ---- --- --- --- -- --- -- ---
--- --- --- --- ---- --- ------ --- --- --- ------ ---- --- --- --- --- ----
--- --- --- ----- ------- --- --- --- --- ---- --- --- --- --- --- --- --- ---
---- --- --- --- --- --- --- --- --- ---- --- --- --- ----- --- --- --- ----
--- --- --- ---- --- --- --- --- --- ---- --- ------ --- --- --- ------ ---- -

 

“Buyer” has the meaning set forth in the preamble.

 

“Buyer Indemnitees” has the meaning set forth in Section 8.02.

 

“Change of Control Transaction” means the occurrence after the date hereof of
any of (a) an acquisition after the date hereof by an individual or legal entity
or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act)
of effective control (whether through legal or beneficial ownership of capital
stock of the Buyer, by contract or otherwise) of in excess of 50% of the voting
securities of the Buyer, (b) the Buyer merges into or consolidates with any
other Person, or any Person merges into or consolidates with the Buyer and,
after giving effect to such transaction, the stockholders of the Buyer
immediately prior to such transaction own less than 50% of the aggregate voting
power of the Buyer or the successor entity of such transaction, or (c) the Buyer
sells or transfers all or substantially all of its assets to another Person and
the stockholders of the Buyer immediately prior to such transaction own less
than 60% of the aggregate voting power of the acquiring entity immediately after
the transaction.

 

“Closing” has the meaning set forth in Section 2.04.

 

“Closing Date” has the meaning set forth in Section 2.04.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Company” has the meaning set forth in the recitals.

 

“Company Intellectual Property” means all Intellectual Property that is owned or
held for use by the Company.

 

“Company IP Agreements” means all licenses, sublicenses, consent to use
agreements, settlements, coexistence agreements, covenants not to sue,
permissions and other Contracts (including any right to receive or obligation to
pay royalties or any other consideration), whether written or oral, relating to
Intellectual Property to which the Company is a party, beneficiary or otherwise
bound.

 

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“Company IP Registrations” means all Company Intellectual Property that is
subject to any issuance registration, application or other filing by, to or with
any Governmental Authority or authorized private registrar in any jurisdiction,
including registered trademarks, domain names and copyrights, issued and
reissued patents and pending applications for any of the foregoing.

 

“Contracts” means all contracts, leases, deeds, mortgages, licenses,
instruments, notes, commitments, undertakings, indentures, joint ventures and
all other agreements, commitments and legally binding arrangements, whether
written or oral.

 

“Direct Claim” has the meaning set forth in Section 8.04(c).

 

“Disclosure Schedules” means the Disclosure Schedules delivered by Seller and
Buyer concurrently with the execution and delivery of this Agreement.

 

“Dollars or $” means the lawful currency of the United States.

 

“Encumbrance” means any charge, claim, community property interest, pledge,
condition, equitable interest, lien (statutory or other), option, security
interest, mortgage, easement, encroachment, right of way, right of first
refusal, or restriction of any kind, including any restriction on use, voting,
transfer, receipt of income or exercise of any other attribute of ownership.

 

“Environmental Claim” means any Action, Governmental Order, lien, fine, penalty,
or, as to each, any settlement or judgment arising therefrom, by or from any
Person alleging liability of whatever kind or nature (including liability or
responsibility for the costs of enforcement proceedings, investigations,
cleanup, governmental response, removal or remediation, natural resources
damages, property damages, personal injuries, medical monitoring, penalties,
contribution, indemnification and injunctive relief) arising out of, based on or
resulting from: (a) the presence, Release of, or exposure to, any Hazardous
Materials; or (b) any actual or alleged non-compliance with any Environmental
Law or term or condition of any Environmental Permit.

 

“Environmental Law” means any applicable Law, and any Governmental Order or
binding agreement with any Governmental Authority: (a) relating to pollution (or
the cleanup thereof) or the protection of natural resources, endangered or
threatened species, human health or safety, or the environment (including
ambient air, soil, surface water or groundwater, or subsurface strata); or (b)
concerning the presence of, exposure to, or the management, manufacture, use,
containment, storage, recycling, reclamation, reuse, treatment, generation,
discharge, transportation, processing, production, disposal or remediation of
any Hazardous Materials.

 

“Environmental Notice” means any written directive, notice of violation or
infraction, or notice respecting any Environmental Claim relating to actual or
alleged non-compliance with any Environmental Law or any term or condition of
any Environmental Permit.

 

“Environmental Permit” means any Permit, letter, clearance, consent, waiver,
closure, exemption, decision or other action required under or issued, granted,
given, authorized by or made pursuant to Environmental Law.

 

“Financial Statements” has the meaning set forth in Section 3.06.

 

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“GAAP” means United States generally accepted accounting principles in effect
from time to time.

 

“Governmental Authority” means any federal, state, local or foreign government
or political subdivision thereof, or any agency or instrumentality of such
government or political subdivision, or any self-regulated organization or other
non-governmental regulatory authority or quasi-governmental authority (to the
extent that the rules, regulations or orders of such organization or authority
have the force of Law), or any arbitrator, court or tribunal of competent
jurisdiction.

 

“Governmental Order” means any order, writ, judgment, injunction, decree,
stipulation, determination or award entered by or with any Governmental
Authority.

 

“Hazardous Materials” means: (a) any material, substance, chemical, waste,
product, derivative, compound, mixture, solid, liquid, mineral or gas, in each
case, whether naturally occurring or manmade, that is hazardous, acutely
hazardous, toxic, or words of similar import or regulatory effect under
Environmental Laws; and (b) any petroleum or petroleum-derived products, radon,
radioactive materials or wastes, asbestos in any form, lead or lead-containing
materials, urea formaldehyde foam insulation, and polychlorinated biphenyls.

 

“Indemnified Party” has the meaning set forth in Section 8.04.

 

“Indemnifying Party” has the meaning set forth in Section 8.04.

 

“Insurance Policies” has the meaning set forth in Section 3.16.

 

“Intellectual Property” means all intellectual property and industrial property
rights and assets, and all rights, interests and protections that are associated
with, similar to, or required for the exercise of, any of the foregoing, however
arising, pursuant to the Laws of any jurisdiction throughout the world, whether
registered or unregistered, including any and all: (a) trademarks, service
marks, trade names, brand names, logos, trade dress, design rights and other
similar designations of source, sponsorship, association or origin, together
with the goodwill connected with the use of and symbolized by, and all
registrations, applications and renewals for, any of the foregoing; (b) internet
domain names, whether or not trademarks, registered in any top-level domain by
any authorized private registrar or Governmental Authority, web addresses, web
pages, websites and related content, accounts with Twitter, Facebook and other
social media companies and the content found thereon and related thereto, and
URLs; (c) works of authorship, expressions, designs and design registrations,
whether or not copyrightable, including copyrights, author, performer, moral and
neighboring rights, and all registrations, applications for registration and
renewals of such copyrights; (d) inventions, discoveries, trade secrets,
business and technical information and know-how, databases, data collections and
other confidential and proprietary information and all rights therein; (e)
patents (including all reissues, divisionals, provisionals, continuations and
continuations-in-part, re-examinations, renewals, substitutions and extensions
thereof), patent applications, and other patent rights and any other
Governmental Authority-issued indicia of invention ownership (including
inventor’s certificates, petty patents and patent utility models); and (f)
software and firmware, including data files, source code, object code,
application programming interfaces, architecture, files, records, schematics,
computerized databases and other related specifications and documentation.

 

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“Intellectual Property Registrations” has the meaning set forth in Section
3.12(b).

 

“Interim Balance Sheet” has the meaning set forth in Section 3.06.

 

“Interim Balance Sheet Date” has the meaning set forth in Section 3.06.

 

“Interim Financial Statements” has the meaning set forth in Section 3.06.

 

“Knowledge of Seller or Seller’s Knowledge” or any other similar knowledge
qualification, means the actual or constructive knowledge of Seller, after due
inquiry.

 

“Law” means any statute, law, ordinance, regulation, rule, code, order,
constitution, treaty, common law, judgment, decree, other requirement or rule of
law of any Governmental Authority.

 

“Liabilities” has the meaning set forth in Section 3.07.

 

“Losses” means losses, damages, liabilities, deficiencies, Actions, judgments,
interest, awards, penalties, fines, costs or expenses of whatever kind,
including reasonable attorneys’ fees and the cost of enforcing any right to
indemnification hereunder and the cost of pursuing any insurance providers;
provided, however, that “Losses” shall not include punitive damages, except in
the case of fraud or to the extent actually awarded to a Governmental Authority
or other third party.

 

“Market Area” means  --- --- ------ ---- --- --- --- --- ---- --- --- --- -----
------- --- --- --- --- ---- --- --- --- --- --- --- --- --- ---- --- ---
--- --- --- --- --- --- ---- --- --- --- ----- --- --- --- ---- --- ---
--- ---- --- --- --- ---- --- --- --- -- --- ---- --- --- --- ----- --- --- ---
---- --- --- --- -- --- -- --- --- --- --- --- ---- --- -----

 

“Material Adverse Effect” means any event, occurrence, fact, condition or change
that is, or could reasonably be expected to become, individually or in the
aggregate, materially adverse to (a) the business, results of operations,
condition (financial or otherwise) or assets of the Company, or (b) the ability
of Seller to consummate the transactions contemplated hereby on a timely basis.

 

“Material Contracts” has the meaning set forth in Section 3.09(a).

 

“Material Customers” has the meaning set forth in Section 3.15(a).

 

“Material Suppliers” has the meaning set forth in Section 3.15(b).

 

“Membership Interests” has the meaning set forth in the recitals.

 

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“Organizational Documents” means (a) in the case of a Person that is a
corporation, its articles or certificate of incorporation and its by-laws,
regulations or similar governing instruments required by the laws of its
jurisdiction of formation or organization; (b) in the case of a Person that is a
partnership, its articles or certificate of partnership, formation or
association, and its partnership agreement (in each case, limited, limited
liability, general or otherwise); (c) in the case of a Person that is a limited
liability company, its articles or certificate of formation or organization, and
its limited liability company agreement or operating agreement; and (d) in the
case of a Person that is none of a corporation, partnership (limited, limited
liability, general or otherwise), limited liability company or natural person,
its governing instruments as required or contemplated by the laws of its
jurisdiction of organization.

 

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“Permits” means all permits, licenses, franchises, approvals, authorizations,
registrations, certificates, variances and similar rights obtained, or required
to be obtained, from Governmental Authorities.

 

“Person” means an individual, corporation, partnership, joint venture, limited
liability company, Governmental Authority, unincorporated organization, trust,
association or other entity.

 

“Post-Closing Tax Period” means any taxable period beginning after the Closing
Date and, with respect to any taxable period beginning before and ending after
the Closing Date, the portion of such taxable period beginning after the Closing
Date.

 

“Post-Closing Taxes” means Taxes of the Company for any Post-Closing Tax Period.

 

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“Pre-Closing Tax Period” means any taxable period ending on or before the
Closing Date and, with respect to any taxable period beginning before and ending
after the Closing Date, the portion of such taxable period ending on and
including the Closing Date.

 

“Pre-Closing Taxes” means Taxes of the Company for any Pre-Closing Tax Period.

 

“Purchase Price” has the meaning set forth in Section 2.02.

 

“Real Property” means the real property owned, leased or subleased by the
Company, together with all buildings, structures and facilities located thereon.

 

“Release” means any actual or threatened release, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
dumping, abandonment, disposing or allowing to escape or migrate into or through
the environment (including, without limitation, ambient air (indoor or outdoor),
surface water, groundwater, land surface or subsurface strata or within any
building, structure, facility or fixture).

 

“Representative” means, with respect to any Person, any and all
directors/managing members, managers, officers, employees, consultants,
financial advisors, counsel, accountants and other agents of such Person.

 

“Restricted Period” has the meaning set forth in Section 5.07(a).

 

“Seller” has the meaning set forth in the preamble.

 

“Seller Indemnitees” has the meaning set forth in Section 8.03.

 

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“Straddle Period” has the meaning set forth in Section 6.03.

 

“Taxes” means all federal, state, local, foreign and other income, gross
receipts, sales, use, production, ad valorem, transfer, franchise, 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, windfall profits,
customs, duties or other taxes, fees, assessments or charges of any kind
whatsoever, together with any interest, additions or penalties with respect
thereto and any interest in respect of such additions or penalties.

 

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“Tax Return” means any return, declaration, report, claim for refund,
information return or statement or other document relating to Taxes, including
any schedule or attachment thereto, and including any amendment thereof.

 

“Third Party Claim” has the meaning set forth in Section 8.04(a).

 

“Transaction Documents” means this Agreement, the Assignment, the Promissory
Note and the Employment Agreement with Michael A. Turner.

 

“Union” has the meaning set forth in Section 3.20(b).

 

ARTICLE II

 

Purchase and sale

 

2.01 Purchase and Sale. Subject to the terms and conditions set forth herein, at
the Closing, Seller shall sell to Buyer, and Buyer shall purchase from Seller,
all of Seller’s right, title and interest in and to the Membership Interests,
free and clear of all Encumbrances, for the consideration specified in Section
2.02.

 

2.02 Purchase Price. The aggregate purchase price for the Membership Interests
shall be $500,000 (the “Purchase Price”), consisting of $250,000 payable at the
Closing and the remaining $250,000 in the form of a Promissory Note as set forth
in Exhibit B (with interest at a rate of 4.5% per annum) payable at the earlier
of March 31, 2016 or the closing of an underwritten offering of not less than
$3,000,000 (the “Offering”). In addition, the Seller shall also receive an
aggregate of 14,400,000 shares (the “Shares”) of Buyer’s common stock, of which
3,000,000 shares of common stock (the “Escrow Shares”) shall be placed in escrow
to be released upon achieving certain Milestones. To the extent some of the
agreed upon milestones are not reached, the portion of the 3,000,000 escrow
shares associated with Milestones not reached shall be returned to Buyer
immediately. In the event of a Change of Control Transaction, any remaining
Escrow Shares (other than the shares that have been released to the Seller or
returned to the Buyer) shall be released the Seller at the closing of such
Change of Control Transaction.

 

2.03 Transactions to be Effected at the Closing.

 

(a)

At the Closing, Buyer shall deliver to Seller:

 

(i) $250,000, by wire transfer of immediately available funds to an account of
Seller designated in writing by Seller to Buyer prior to the Closing Date; and

 

(ii) the Transaction Documents and all other agreements, documents, instruments
or certificates required to be delivered by Buyer at or prior to the Closing
pursuant to Section 7.03 of this Agreement.

 

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(b)

At the Closing, Seller shall deliver to Buyer:

 

(i) an assignment of the Membership Interests to Buyer in the form of Exhibit A
hereto/in form and substance satisfactory to Buyer (the “Assignment”), duly
executed by Seller; and

 

(ii) the Transaction Documents and all other agreements, documents, instruments
or certificates required to be delivered by Seller at or prior to the Closing
pursuant to Section 7.02 of this Agreement.

 

2.04 Closing. Subject to the terms and conditions of this Agreement, the
purchase and sale of the Membership Interests contemplated hereby shall take
place at a closing (the “Closing”) to be held at 1 p.m., eastern standard time,
at the offices of SZAFERMAN LAKIND BLUMSTEIN & BLADER, PC, 101 Grovers Mill
Road, Lawrenceville, NJ 08648, or at such other time or on such other date or at
such other place as Seller and Buyer may mutually agree upon in writing (the day
on which the Closing takes place being the “Closing Date”).

 

2.05 Withholding Tax. Buyer and the Company shall be entitled to deduct and
withhold from the Purchase Price all Taxes that Buyer and the Company may be
required to deduct and withhold under any provision of Tax Law. All such
withheld amounts shall be treated as delivered to Seller hereunder.

 

ARTICLE III

 

Representations and Warranties of Seller

 

Except as set forth in the correspondingly numbered Section of the Disclosure
Schedules, Seller, severally but not jointly, represents and warrants to Buyer
that the statements contained in this Article III are true and correct as of the
date hereof.

 

3.01 Organization and Authority of Seller. Seller has full power and authority
to enter into this Agreement and the other Transaction Documents to which Seller
is a party, to carry out its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery by Seller of this Agreement and the other Transaction Document to which
Seller is a party, the performance by Seller of its obligations hereunder and
thereunder and the consummation by Seller of the transactions contemplated
hereby and thereby have been duly authorized by all requisite action on the part
of Seller. This Agreement has been duly executed and delivered by Seller, and
this Agreement constitutes a legal, valid and binding obligation of Seller
enforceable against Seller in accordance with its terms. When each other
Transaction Document to which Seller is or will be a party has been duly
executed and delivered by Seller, such Transaction Document will constitute a
legal and binding obligation of Seller enforceable against it in accordance with
its terms.

 

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3.02 Organization, Authority and Qualification of the Company. The Company is a
limited liability company duly organized, validly existing and in good standing
under the Laws of the state of Delaware and has full limited liability company
power and authority to own, operate or lease the properties and assets now
owned, operated or leased by it and to carry on its business as it has been and
is currently conducted. Section 3.02 of the Disclosure Schedules sets forth each
jurisdiction in which the Company is licensed or qualified to do business, and
the Company is duly licensed or qualified to do business and is in good standing
in each jurisdiction in which the properties owned or leased by it or the
operation of its business as currently conducted makes such licensing or
qualification necessary. All limited liability company actions taken by the
Company in connection with this Agreement and the other Transaction Documents
will be duly authorized on or prior to the Closing.

 

3.03 Capitalization.

 

(a) Seller is the record owner of and has good and valid title to the Membership
Interests, free and clear of all Encumbrances. The Membership Interests
constitute 100% of the total issued and outstanding membership interests in the
Company. The Membership Interests have been duly authorized and are validly
issued, fully-paid and non-assessable. Upon consummation of the transactions
contemplated by this Agreement, Buyer shall own all of the Membership Interests,
free and clear of all Encumbrances.

 

(b) The Membership Interests were issued in compliance with applicable Laws. The
Membership Interests were not issued in violation of the Organizational
Documents of the Company or any other agreement, arrangement or commitment to
which Seller or the Company is a party and are not subject to or in violation of
any preemptive or similar rights of any Person.

 

(c) There are no outstanding or authorized options, warrants, convertible
securities or other rights, agreements, arrangements or commitments of any
character relating to any membership interests in the Company or obligating
Seller or the Company to issue or sell any membership interests (including the
Membership Interests), or any other interest, in the Company. Other than the
Organizational Documents, there are no voting trusts, proxies or other
agreements or understandings in effect with respect to the voting or transfer of
any of the Membership Interests.

 

3.04 No Subsidiaries. The Company does not own, or have any interest in any
shares or have an ownership interest in any other Person.

 

3.05 No Conflicts; Consents. The execution, delivery and performance by Seller
of this Agreement and the other Transaction Documents to which it is a party,
and the consummation of the transactions contemplated hereby and thereby, do not
and will not: (a) conflict with or result in a violation or breach of, or
default under, any provision of the Organizational Documents of Seller or
Company; (b) conflict with or result in a violation or breach of any provision
of any Law or Governmental Order applicable to Seller or the Company; (c)
require the consent, notice or other action by any Person under, conflict with,
result in a violation or breach of, constitute a default or an event that, with
or without notice or lapse of time or both, would constitute a default under,
result in the acceleration of or create in any party the right to accelerate,
terminate, modify or cancel any Contract to which Seller or the Company is a
party or by which Seller or the Company is bound or to which any of their
respective properties and assets are subject (including any Material Contract)
or any Permit affecting the properties, assets or business of the Company; or
(d) result in the creation or imposition of any Encumbrance on any properties or
assets of the Company. No consent, approval, Permit, Governmental Order,
declaration or filing with, or notice to, any Governmental Authority is required
by or with respect to Seller or the Company in connection with the execution and
delivery of this Agreement and the other Transaction Documents and the
consummation of the transactions contemplated hereby and thereby.

 

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3.06 Financial Statements. Complete copies of the Company’s unaudited financial
statements consisting of the balance sheet of the Company as at December 31 in
the year 2014 and the related statements of income for the year then ended (the
“Unaudited Financial Statements”), and unaudited financial statements consisting
of the balance sheet of the Company as at July 31, 2015 and the related
statements of income for the seventh- month period then ended (the “Interim
Financial Statements” and together with the Unaudited Financial Statements, the
“Financial Statements”) are included in the Disclosure Schedules/have been
delivered to Buyer. The Financial Statements have been prepared to the best of
Company’s ability in accordance with GAAP applied on a consistent basis
throughout the period involved, subject, in the case of the Interim Financial
Statements, to normal and recurring year-end adjustments (the effect of which
will not be materially adverse) and the absence of notes (that, if presented,
would not differ materially from those presented in the Audited Financial
Statements). The Financial Statements are based on the books and records of the
Company, and fairly present in all material respects the financial condition of
the Company as of the respective dates they were prepared and the results of the
operations of the Company for the periods indicated. The balance sheet of the
Company as of December 31, 2014 is referred to herein as the “Balance Sheet” and
the date thereof as the “Balance Sheet Date” and the balance sheet of the
Company as of July 31, 2015 is referred to herein as the “Interim Balance Sheet”
and the date thereof as the “Interim Balance Sheet Date”. The Company maintains
a standard system of accounting established and administered in accordance with
GAAP to the best of its ability.

 

3.07 Undisclosed Liabilities. The Company has no liabilities, obligations or
commitments of any nature whatsoever, asserted or unasserted, known or unknown,
absolute or contingent, accrued or unaccrued, matured or unmatured or otherwise
(“Liabilities”), except (a) those which are adequately reflected or reserved
against in the Balance Sheet as of the Interim Balance Sheet Date, and (b) those
which have been incurred in the ordinary course of business consistent with past
practice since the Interim Balance Sheet Date and which are not, individually or
in the aggregate, material in amount.

 

3.08 Absence of Certain Changes, Events and Conditions. Since the Interim
Balance Sheet Date, and other than in the ordinary course of business consistent
with past practice, there has not been, with respect to the Company, any:

 

(a) event, occurrence or development that has had, or could reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect;

 

(b) amendment of the Organizational Documents of the Company;

 

(c) split, combination or reclassification of any membership interests in the
Company;

 

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(d) issuance, sale or other disposition of, or creation of any Encumbrance on,
any membership interests in the Company, or grant of any options, warrants or
other rights to purchase or obtain (including upon conversion, exchange or
exercise) any membership interests in the Company;

 

(e) declaration or payment of any distributions on or in respect of any
membership interests in the Company or redemption, purchase or acquisition of
any of the Company’s outstanding membership interests;

 

(f) material change in any method of accounting or accounting practice of the
Company, except as required by GAAP or as disclosed in the notes to the
Financial Statements;

 

(g) material change in the Company’s cash management practices and its policies,
practices and procedures with respect to collection of accounts receivable,
establishment of reserves for uncollectible accounts, accrual of accounts
receivable, inventory control, prepayment of expenses, payment of trade accounts
payable, accrual of other expenses, deferral of revenue and acceptance of
customer deposits;

 

(h) entry into any Contract that would constitute a Material Contract;

 

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(j) transfer, assignment, sale or other disposition of any of the assets shown
or reflected in the Interim Balance Sheet or cancellation of any debts or
entitlements;

 

(k) transfer, assignment or grant of any license or sublicense of any material
rights under or with respect to any Company Intellectual Property or Company IP
Agreements;

 

(l) material damage, destruction or loss (whether or not covered by insurance)
to its property;

 

(m) any capital investment in, or any loan to, any other Person;

 

(n) acceleration, termination, material modification to or cancellation of any
material Contract (including, but not limited to, any Material Contract) to
which the Company is a party or by which it is bound;

 

(o) any material capital expenditures;

 

(p) imposition of any Encumbrance upon any of the Company’s properties or
assets, tangible or intangible;

 

  14

 

 

(q) any loan to (or forgiveness of any loan to), or entry into any other
transaction with, any of its members or current or former managers, officers and
employees;

 

(r) entry into a new line of business or abandonment or discontinuance of
existing lines of business;

 

(s) adoption of any plan of merger, consolidation, reorganization, liquidation
or dissolution or filing of a petition in bankruptcy under any provisions of
federal or state bankruptcy Law or consent to the filing of any bankruptcy
petition against it under any similar Law;

 

(t) purchase, lease or other acquisition of the right to own, use or lease any
property or assets for an amount in excess of $5,000, individually (in the case
of a lease, per annum) or $25,000 in the aggregate (in the case of a lease, for
the entire term of the lease, not including any option term), except for
purchases of inventory or supplies in the ordinary course of business consistent
with past practice;

 

(u) acquisition by merger or consolidation with, or by purchase of a substantial
portion of the assets, stock or other equity of, or by any other manner, any
business or any Person or any division thereof;

 

(v) action by the Company to make, change or rescind any Tax election, amend any
Tax Return or take any position on any Tax Return, take any action, omit to take
any action or enter into any other transaction that would have the effect of
increasing the Tax liability or reducing any Tax asset of Buyer in respect of
any Post-Closing Tax Period; or

 

(w) any Contract to do any of the foregoing, or any action or omission that
would result in any of the foregoing.

 

3.09 Material Contracts.

 

(a) Section 3.09(a) of the Disclosure Schedules lists all material Contracts of
the Company (together with all Contracts concerning the occupancy, management or
operation of any Real Property (including without limitation, brokerage
contracts) listed or otherwise disclosed in Section 3.10(b) of the Disclosure
Schedules and all Company IP Agreements set forth in Section 3.12(b) of the
Disclosure Schedules, being “Material Contracts”).

 

(b) Each Material Contract is valid and binding on the Company in accordance
with its terms and is in full force and effect. None of the Company or, to
Seller’s Knowledge, any other party thereto is in breach of or default under (or
is alleged to be in breach of or default under) in any material respect, or has
provided or received any notice of any intention to terminate, any Material
Contract. No event or circumstance has occurred that, with notice or lapse of
time or both, would constitute an event of default under any Material Contract
or result in a termination thereof or would cause or permit the acceleration or
other changes of any right or obligation or the loss of any benefit thereunder.
Complete and correct copies of each Material Contract (including all
modifications, amendments and supplements thereto and waivers thereunder) have
been made available to Buyer.

 

  15

 

 

3.10 Title to Assets; Real Property.

 

(a) The Company has good and valid (and, in the case of owned Real Property,
good and marketable fee simple) title to, or a valid leasehold interest in, all
Real Property and personal property and other assets reflected in the Unaudited
Financial Statements or acquired after the Interim Balance Sheet Date, other
than properties and assets sold or otherwise disposed of in the ordinary course
of business consistent with past practice since the Interim Balance Sheet Date.
All such properties and assets (including leasehold interests) are free and
clear of Encumbrances.

 

(b) Section 3.10(b) of the Disclosure Schedules lists (i) the street address of
each parcel of Real Property; (ii) if such property is leased or subleased by
the Company, the landlord under the lease, the rental amount currently being
paid, and the expiration of the term of such lease or sublease for each leased
or subleased property; and (iii) the current use of such property. With respect
to owned Real Property, Seller has delivered or made available to Buyer true,
complete and correct copies of the deeds and other instruments (as recorded) by
which the Company acquired such Real Property, and copies of all title insurance
policies, opinions, abstracts and surveys in the possession of Seller or the
Company and relating to the Real Property. With respect to leased Real Property,
Seller has delivered or made available to Buyer true, complete and correct
copies of any leases affecting the Real Property. The Company is not a sublessor
or grantor under any sublease or other instrument granting to any other Person
any right to the possession, lease, occupancy or enjoyment of any leased Real
Property. The use and operation of the Real Property in the conduct of the
Company’s business do not violate in any material respect any Law, covenant,
condition, restriction, easement, license, permit or agreement. No material
improvements constituting a part of the Real Property encroach on real property
owned or leased by a Person other than the Company. There are no Actions pending
nor, to the Seller’s Knowledge, threatened against or affecting the Real
Property or any portion thereof or interest therein in the nature or in lieu of
condemnation or eminent domain proceedings.

 

3.11 Condition and Sufficiency of Assets. Except as set forth in Section 3.11 of
the Disclosure Schedules, the buildings, plants, structures, furniture,
fixtures, machinery, equipment, vehicles and other items of tangible personal
property of the Company are structurally sound, are in good operating condition
and repair, and are adequate for the uses to which they are being put, and none
of such buildings, plants, structures, furniture, fixtures, machinery,
equipment, vehicles and other items of tangible personal property is in need of
maintenance or repairs except for ordinary, routine maintenance and repairs that
are not material in nature or cost. The buildings, plants, structures,
furniture, fixtures, machinery, equipment, vehicles and other items of tangible
personal property currently owned or leased by the Company, together with all
other properties and assets of the Company, are sufficient for the continued
conduct of the Company’s business after the Closing in substantially the same
manner as conducted prior to the Closing and constitute all of the rights,
property and assets necessary to conduct the business of the Company as
currently conducted.

 

  16

 

 

3.12 Intellectual Property.

 

(a) Section 3.12(a) of the Disclosure Schedules lists all (i) Company IP
Registrations and (ii) Company Intellectual Property, including software, that
are not registered but that are material to the Company’s business or
operations. All required filings and fees related to the Company IP
Registrations have been timely filed with and paid to the relevant Governmental
Authorities and authorized registrars, and all Company IP Registrations are
otherwise in good standing. Seller has provided Buyer with true and complete
copies of file histories, documents, certificates, office actions,
correspondence and other materials related to all Company IP Registrations.

 

(b) Section 3.12(b) of the Disclosure Schedules lists all Company IP Agreements.
Seller has provided Buyer with true and complete copies of all such Company IP
Agreements, including all modifications, amendments and supplements thereto and
waivers thereunder. Each Company IP Agreement is valid and binding on the
Company in accordance with its terms and is in full force and effect. Neither
the Company nor any other party thereto is in breach of or default under (or is
alleged to be in breach of or default under), or has provided or received any
notice of breach or default of or any intention to terminate, any Company IP
Agreement.

 

(c) The Company is the sole and exclusive legal and beneficial, and with respect
to the Company IP Registrations, record, owner of all right, title and interest
in and to the Company Intellectual Property, and has the valid right to use all
other Intellectual Property used in or necessary for the conduct of the
Company’s current business or operations, in each case, free and clear of
Encumbrances. Without limiting the generality of the foregoing, Seller has
entered into binding, written agreements with every current and former employee
of the Company, and with every current and former independent contractor,
whereby such employees and independent contractors (i) assign to the Company any
ownership interest and right they may have in the Company Intellectual Property;
and (ii) acknowledge the Company’s exclusive ownership of all Company
Intellectual Property. Seller has provided Buyer with true and complete copies
of all such agreements.

 

(d) The consummation of the transactions contemplated hereunder will not result
in the loss or impairment of or payment of any additional amounts with respect
to, nor require the consent of any other Person in respect of, the Company’s
right to own, use or hold for use any Intellectual Property as owned, used or
held for use in the conduct of the Company’s business or operations as currently
conducted.

 

(e) The Company’s rights in the Company Intellectual Property are valid,
subsisting and enforceable. The Company has taken all reasonable steps to
maintain the Company Intellectual Property and to protect and preserve the
confidentiality of all trade secrets included in the Company Intellectual
Property, including requiring all Persons having access thereto to execute
written non-disclosure agreements.

 

(f) The conduct of the Company’s business as currently and formerly conducted,
and the products, processes and services of the Company, have not infringed,
misappropriated, diluted or otherwise violated, and do not and will not
infringe, dilute, misappropriate or otherwise violate the Intellectual Property
or other rights of any Person. No Person has infringed, misappropriated, diluted
or otherwise violated, or is currently infringing, misappropriating, diluting or
otherwise violating, any Company Intellectual Property.

 

  17

 

 

(g) There are no Actions (including any oppositions, interferences or
re-examinations) settled, pending or threatened (including in the form of offers
to obtain a license): (i) alleging any infringement, misappropriation, dilution
or violation of the Intellectual Property of any Person by the Company; (ii)
challenging the validity, enforceability, registrability or ownership of any
Company Intellectual Property or the Company’s rights with respect to any
Company Intellectual Property; or (iii) by the Company or any other Person
alleging any infringement, misappropriation, dilution or violation by any Person
of the Company Intellectual Property. The Company is not subject to any
outstanding or prospective Governmental Order (including any motion or petition
therefor) that does or would restrict or impair the use of any Company
Intellectual Property.

 

3.13 Inventory. All inventory of the Company, whether or not reflected in the
Interim Balance Sheet, consists of a quality and quantity usable and salable in
the ordinary course of business consistent with past practice, except for
obsolete, damaged, defective or slow-moving items that have been written off or
written down to fair market value or for which adequate reserves have been
established. All such inventory is owned by the Company free and clear of all
Encumbrances, and no inventory is held on a consignment basis. The quantities of
each item of inventory (whether raw materials, work-in-process or finished
goods) are not excessive, but are reasonable in the present circumstances of the
Company.

 

3.14 Accounts Receivable. The accounts receivable reflected on the Interim
Balance Sheet and the accounts receivable arising after the date thereof (a)
have arisen from bona fide transactions entered into by the Company involving
the sale of goods or the rendering of services in the ordinary course of
business consistent with past practice; and (b) constitute only valid,
undisputed claims of the Company not subject to claims of set-off or other
defenses or counterclaims other than normal cash discounts accrued in the
ordinary course of business consistent with past practice.

 

3.15 Customers and Suppliers.

 

(a) Section 3.15(a) of the Disclosure Schedules sets forth (i) each customer who
has paid aggregate consideration to the Company for goods or services rendered
in an amount greater than or equal to $5,000 for each of the two most recent
fiscal years (collectively, the “Material Customers”); and (ii) the amount of
consideration paid by each Material Customer during such periods. The Company
has not received any notice, and has no reason to believe, that any of its
Material Customers has ceased, or intends to cease after the Closing, to use its
goods or services or to otherwise terminate or materially reduce its
relationship with the Company.

 

(b) Section 3.15(b) of the Disclosure Schedules sets forth (i) each supplier to
whom the Company has paid consideration for goods or services rendered in an
amount greater than or equal to $5,000 for each of the two most recent fiscal
years (collectively, the “Material Suppliers”); and (ii) the amount of purchases
from each Material Supplier during such periods. The Company has not received
any notice, and has no reason to believe, that any of its Material Suppliers has
ceased, or intends to cease, to supply goods or services to the Company or to
otherwise terminate or materially reduce its relationship with the Company.

 

  18

 

 

3.16 Insurance. Section 3.16 of the Disclosure Schedules sets forth a true and
complete list of all current policies or binders of fire, liability, product
liability, umbrella liability, real and personal property, workers’
compensation, vehicular, directors and officers’ liability, fiduciary liability
and other casualty and property insurance maintained by Seller or its Affiliates
(including the Company) and relating to the assets, business, operations,
employees, officers and managers of the Company (collectively, the “Insurance
Policies”) and true and complete copies of such Insurance Policies have been
made available to Buyer. Such Insurance Policies are in full force and effect
and shall remain in full force and effect following the consummation of the
transactions contemplated by this Agreement. Neither the Seller nor any of its
Affiliates (including the Company) has received any written notice of
cancellation of, premium increase with respect to, or alteration of coverage
under, any of such Insurance Policies. All premiums due on such Insurance
Policies have either been paid or, if due and payable prior to Closing, will be
paid prior to Closing in accordance with the payment terms of each Insurance
Policy. The Insurance Policies do not provide for any retrospective premium
adjustment or other experience-based liability on the part of the Company. All
such Insurance Policies (a) are valid and binding in accordance with their
terms; (b) are provided by carriers who are financially solvent; and (c) have
not been subject to any lapse in coverage. There are no claims related to the
business of the Company pending under any such Insurance Policies as to which
coverage has been questioned, denied or disputed or in respect of which there is
an outstanding reservation of rights. None of Seller or any of its Affiliates
(including the Company) is in default under, or has otherwise failed to comply
with, in any material respect, any provision contained in any such Insurance
Policy. The Insurance Policies are of the type and in the amounts customarily
carried by Persons conducting a business similar to the Company and are
sufficient for compliance with all applicable Laws and Contracts to which the
Company is a party or by which it is bound.

 

3.17 Legal Proceedings; Governmental Orders.

 

(a) There are no Actions pending or, to Seller’s Knowledge, threatened (a)
against or by the Company affecting any of its properties or assets (or by or
against Seller or any Affiliate thereof and relating to the Company); or (b)
against or by the Company, Seller or any Affiliate of Seller that challenges or
seeks to prevent, enjoin or otherwise delay the transactions contemplated by
this Agreement. No event has occurred or circumstances exist that may give rise
to, or serve as a basis for, any such Action.

 

(b) There are no outstanding Governmental Orders and no unsatisfied judgments,
penalties or awards against or affecting the Company or any of its properties or
assets. No event has occurred or circumstances exist that may constitute or
result in (with or without notice or lapse of time) a violation of any such
Governmental Order.

 

3.18 Compliance With Laws; Permits.

 

(a) The Company has complied, and is now complying, with all Laws applicable to
it or its business, properties or assets.

 

(b) All Permits required for the Company to conduct its business have been
obtained by it and are valid and in full force and effect. All fees and charges
with respect to such Permits as of the date hereof have been paid in full.
Section 3.18(b) of the Disclosure Schedules lists all current Permits issued to
the Company, including the names of the Permits and their respective dates of
issuance and expiration. No event has occurred that, with or without notice or
lapse of time or both, would reasonably be expected to result in the revocation,
suspension, lapse or limitation of any Permit set forth in Section 3.18(b) of
the Disclosure Schedules.

 

  19

 

 

3.19 Environmental Matters.

 

(a) The Company is currently and has been in compliance with all Environmental
Laws and has not, and the Seller has not, received from any Person any: (i)
Environmental Notice or Environmental Claim; or (ii) written request for
information pursuant to Environmental Law, which, in each case, either remains
pending or unresolved, or is the source of ongoing obligations or requirements
as of the Closing Date.

 

(b) The Company has obtained and is in material compliance with all
Environmental Permits (each of which is disclosed in Section 3.19(b) of the
Disclosure Schedules) necessary for the ownership, lease, operation or use of
the business or assets of the Company and all such Environmental Permits are in
full force and effect and shall be maintained in full force and effect by Seller
through the Closing Date in accordance with Environmental Law, and neither
Seller nor the Company is aware of any condition, event or circumstance that
might prevent or impede, after the Closing Date, the ownership, lease, operation
or use of the business or assets of the Company as currently carried out. With
respect to any such Environmental Permits, Seller has undertaken, or will
undertake prior to the Closing Date, all measures necessary to facilitate
transferability of the same, and neither the Company nor the Seller is aware of
any condition, event or circumstance that might prevent or impede the
transferability of the same, nor have they received any Environmental Notice or
written communication regarding any material adverse change in the status or
terms and conditions of the same. 

 

3.20 Employment Matters. Section 3.20 of the Disclosure Schedules contains a
list of all persons who are employees, independent contractors or consultants of
the Company as of the date hereof, including any employee who is on a leave of
absence of any nature, paid or unpaid, authorized or unauthorized, and sets
forth for each such individual the following: (i) name; (ii) title or position
(including whether full or part time); (iii) hire date; (iv) current annual base
compensation rate; (v) commission, bonus or other incentive-based compensation;
and (vi) a description of the fringe benefits provided to each such individual
as of the date hereof. The Company is not a party to or bound by any collective
bargaining or any other type of labor or union agreement which covers any
employees. No strike, labor suit or proceeding or labor administrative
proceeding is pending or threatened respecting the Employees, and no such matter
has been threatened since February 3, 2014.

 

3.21 Taxes.

 

(a) All Tax Returns required to be filed on or before the Closing Date by the
Company have been, or will be, timely filed. Such Tax Returns are, or will be,
true, complete and correct in all respects. All Taxes due and owing by the
Company (whether or not shown on any Tax Return) have been, or will be, timely
paid.

 

  20

 

 

(b) The Company has withheld and paid each Tax required to have been withheld
and paid in connection with amounts paid or owing to any employee, independent
contractor, creditor, customer, member or other party, and complied with all
information reporting and backup withholding provisions of applicable Law.

 

(c) No claim has been made by any taxing authority in any jurisdiction where the
Company does not file Tax Returns that it is, or may be, subject to Tax by that
jurisdiction.

 

(d) No extensions or waivers of statutes of limitations have been given or
requested with respect to any Taxes of the Company.

 

(e) The amount of the Company’s Liability for unpaid Taxes for all periods
ending on or before July 31, 2015 does not, in the aggregate, exceed the amount
of accruals for Taxes (excluding reserves for deferred Taxes) reflected on the
Financial Statements. The amount of the Company’s Liability for unpaid Taxes for
all periods following the end of the recent period covered by the Financial
Statements shall not, in the aggregate, exceed the amount of accruals for Taxes
(excluding reserves for deferred Taxes) as adjusted for the passage of time in
accordance with the past custom and practice of the Company (and which accruals
shall not exceed comparable amounts incurred in similar periods in prior years).

 

(f) The Company is not a party to any Action by any taxing authority. There are
no pending or threatened Actions by any taxing authority.

  

(g) Seller will deliver to Buyer, by October 15, 2015, copies of all federal,
state, local and foreign income, franchise and similar Tax Returns, examination
reports, and statements of deficiencies assessed against, or agreed to by, the
Company for all Tax periods since February 3, 2014.

 

3.22 Books and Records. The minute books of the Company have been made available
to Buyer, are complete and correct and have been maintained in accordance with
sound business practices. The minute books of the Company contain accurate and
complete records of all meetings, and actions taken by written consent of, the
members and the managers, and no meeting, or action taken by written consent, of
any such members or managers has been held for which minutes have not been
prepared and are not contained in such minute books. At the Closing, all of
those books and records will be in the possession of the Company.

 

3.23 Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder’s or other fee or commission in connection with the
transactions contemplated by this Agreement or any other Transaction Document
based upon arrangements made by or on behalf of Seller.

 

3.24 Full Disclosure. No representation or warranty by Seller in this Agreement
and no statement contained in the Disclosure Schedules to this Agreement or any
certificate or other document furnished or to be furnished to Buyer pursuant to
this Agreement contains any untrue statement of a material fact, or omits to
state a material fact necessary to make the statements contained therein, in
light of the circumstances in which they are made, not misleading.

 

  21

 

 

ARTICLE IV

 

Representations and Warranties of Buyer

 

Except as set forth in the correspondingly numbered Section of the Disclosure
Schedules, Buyer represents and warrants to Seller that the statements contained
in this Article IV are true and correct as of the date hereof.

 

4.01 Organization and Authority of Buyer. Buyer is a corporation duly organized,
validly existing and in good standing under the Laws of the state of Nevada.
Buyer has full corporate power and authority to enter into this Agreement and
the other Transaction Documents to which Buyer is a party, to carry out its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution and delivery by Buyer of this
Agreement and any other Transaction Document to which Buyer is a party, the
performance by Buyer of its obligations hereunder and thereunder and the
consummation by Buyer of the transactions contemplated hereby and thereby have
been duly authorized by all requisite corporate action on the part of Buyer.
This Agreement has been duly executed and delivered by Buyer, and this Agreement
constitutes a legal, valid and binding obligation of Buyer enforceable against
Buyer in accordance with its terms. When each other Transaction Document to
which Buyer is or will be a party has been duly executed and delivered by Buyer,
such Transaction Document will constitute a legal and binding obligation of
Buyer enforceable against it in accordance with its terms.

 

4.02 No Conflicts; Consents. The execution, delivery and performance by Buyer of
this Agreement and the other Transaction Documents to which it is a party, and
the consummation of the transactions contemplated hereby and thereby, do not and
will not: (a) conflict with or result in a violation or breach of, or default
under, any provision of the Organizational Documents of Buyer; (b) conflict with
or result in a violation or breach of any provision of any Law or Governmental
Order applicable to Buyer; or (c) require the consent, notice or other action by
any Person under any Contract to which Buyer is a party. No consent, approval,
Permit, Governmental Order, declaration or filing with, or notice to, any
Governmental Authority is required by or with respect to Buyer in connection
with the execution and delivery of this Agreement and the other Transaction
Documents and the consummation of the transactions contemplated hereby and
thereby.

 

4.03 Investment Purpose. Buyer is acquiring the Membership Interests solely for
its own account for investment purposes and not with a view to, or for offer or
sale in connection with, any distribution thereof. Buyer acknowledges that the
Membership Interests are not registered under the Securities Act of 1933, as
amended, or any state securities laws, and that the Membership Interests may not
be transferred or sold except pursuant to the registration provisions of the
Securities Act of 1933, as amended or pursuant to an applicable exemption
therefrom and subject to state securities laws and regulations, as applicable.

 

  22

 

 

4.04 Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder’s or other fee or commission in connection with the
transactions contemplated by this Agreement or any other Transaction Document
based upon arrangements made by or on behalf of Buyer.

 

4.05 Sufficiency of Funds. Buyer has sufficient cash on hand or other sources of
immediately available funds to enable it to make payment of the Purchase Price
and consummate the transactions contemplated by this Agreement.

 

4.06 Legal Proceedings. There are no Actions pending or, to Buyer’s knowledge,
threatened against or by Buyer or any Affiliate of Buyer that challenge or seek
to prevent, enjoin or otherwise delay the transactions contemplated by this
Agreement. No event has occurred or circumstances exist that may give rise or
serve as a basis for any such Action.

 

4.07 Shares. The Shares are duly authorized and validly issued, fully paid and
nonassessable, free and clear of all liens imposed by the Buyer other than
restrictions on transfer provided for in this Agreement.

 

4.08 Capitalization. The capitalization of the Buyer as of the date of the
Agreement is as described on Schedule 4.08 and will remain as of the Closing
Date. The Buyer has not issued any capital stock since such date. Except as set
forth on Schedule 4.08, there are no outstanding options, warrants, script
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities, rights or obligations convertible into or
exchangeable for, or giving any Person any right to subscribe for or acquire,
any shares of common stock, or contracts, commitments, understandings or
arrangements by which the Buyer is or may become bound to issue additional
shares of common stock, or securities or rights convertible or exchangeable into
shares of common stock. The issuance and sale of the Shares will not obligate
the Buyer to issue shares of common stock or other securities to any Person
(other than the Purchaser) and will not result in a right of any holder of the
Buyer securities to adjust the exercise, conversion, exchange or reset price
under such securities.

 

4.09 Labor Relations. No material labor dispute exists or, to Buyer’s knowledge,
is imminent with respect to any of the employees of the Buyer which has had or
could reasonably be expected to result in a Material Adverse Effect. None of the
Buyer’s employees is a member of a union that relates to such employee’s
relationship with the Buyer, and the Buyer is not a party to a collective
bargaining agreement, and the Buyer believes that its relationships with their
employees are good. No officer, to the Knowledge of the Buyer, is, or is now
expected to be, in violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement or
non-competition agreement, or any other Contract or agreement or any restrictive
covenant in favor of any third party, and the continued employment of each such
executive officer does not subject the Buyer to any liability with respect to
any of the foregoing matters. The Buyer is in compliance with all U.S. federal,
state, local and foreign laws and regulations relating to employment and
employment practices, terms and conditions of employment and wages and hours.

 

  23

 

 

4.10 Compliance. The Buyer is not: (i) is in default under or in violation of
(and no event has occurred that has not been waived that, with notice or lapse
of time or both, would result in a default by the Buyer), nor has the Buyer
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) that has had or
could reasonably be expected to result in a Material Adverse Effect, (ii) is in
violation of any order of any court, arbitrator or governmental body that has
had or could reasonably be expected to result in a Material Adverse Effect, or
(iii) is or has been in violation of any statute, rule or regulation of any
governmental authority that has had or could reasonably be expected to result in
a Material Adverse Effect.

 

4.11 Regulatory Permits. The Buyer possesses all certificates, authorizations
and permits issued by the appropriate federal, state, local or foreign
regulatory authorities necessary to conduct their business, except where the
failure to possess such permits could not reasonably be expected to result in a
Material Adverse Effect (“Material Permits”), and the Buyer has not received any
notice of proceedings relating to the revocation or modification of any Material
Permit.

 

4.12 Title to Assets. The Buyer has good and marketable title in fee simple to
all real property owned by it that is material to the business of the Buyer and
good and marketable title in all personal property owned by it that is material
to the business of the Buyer, in each case free and clear of all Liens, except
for Liens as do not materially affect the value of such property and do not
materially interfere with the use made and proposed to be made of such property
by the Buyer and Liens for the payment of federal, state or other taxes, the
payment of which is neither delinquent nor subject to penalties. Any real
property and facilities held under lease by the Buyer is held by it under valid,
subsisting and enforceable leases of which the Buyer is in compliance, except
where the failure to be in compliance would not reasonably be expected to result
in a Material Adverse Effect.

 

4.13 Financial Statements. The financial statements of the Buyer (“Financial
Statements”) comply in all material respects with applicable accounting
requirements with respect thereto as in effect at the time of filing. The
Financial Statements have been prepared in accordance with GAAP, except as may
be otherwise specified in such financial statements or the notes thereto and
except that unaudited financial statements may not contain all footnotes
required by GAAP, and fairly present in all material respects the financial
position of the Buyer as of and for the dates thereof and the results of
operations and cash flows for the periods then ended, subject, in the case of
unaudited statements, to normal, immaterial, year-end audit adjustments.

 

4.14 Material Changes. Since the date of the latest Financial Statement: (i)
there has been no event, occurrence or development that has had or that could
reasonably be expected to result in a Material Adverse Effect, (ii) the Buyer
has not incurred any liabilities (contingent or otherwise), (iii) the Buyer has
not altered its method of accounting, (iv) the Buyer has not declared or made
any dividend or distribution of cash or other property to its stockholders or
purchased, redeemed or made any agreements to purchase or redeem any shares of
its capital stock, and (v) the Buyer has not issued any equity securities.
Except for the issuance of the Shares contemplated by this Agreement, no event,
liability or development has occurred or exists with respect to the Buyer or its
business, properties, operations or financial condition, that would be required
to be disclosed by the Buyer.

 

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4.15 Foreign Corrupt Practices. Neither the Buyer, nor to the Buyer’s knowledge,
any agent or other person acting on behalf of the Buyer, has: (i) directly or
indirectly, used any funds for unlawful contributions, gifts, entertainment or
other unlawful expenses related to foreign or domestic political activity, (ii)
made any unlawful payment to foreign or domestic government officials or
employees or to any foreign or domestic political parties or campaigns from
corporate funds, (iii) failed to disclose fully any contribution made by the
Buyer (or made by any person acting on its behalf of which the Buyer is aware)
which is in violation of law or (iv) violated in any material respect any
provision of the Foreign Corrupt Practices Act of 1977, as amended.

 

ARTICLE V

 

Covenants

 

5.01 Conduct of Business Prior to the Closing. From the date hereof until the
Closing, except as otherwise provided in this Agreement or consented to in
writing by Buyer (which consent shall not be unreasonably withheld or delayed),
Seller shall, and shall cause the Company to, (x) conduct the business of the
Company in the ordinary course of business consistent with past practice; and
(y) use reasonable best efforts to maintain and preserve intact the current
organization, business and franchise of the Company and to preserve the rights,
franchises, goodwill and relationships of its employees, customers, lenders,
suppliers, regulators and others having business relationships with the Company.
Without limiting the foregoing, from the date hereof until the Closing Date,
Seller shall:

 

(a) cause the Company to preserve and maintain all of its Permits;

 

(b) cause the Company to pay its debts, Taxes and other obligations when due;

 

(c) cause the Company to maintain the properties and assets owned, operated or
used by the Company in the same condition as they were on the date of this
Agreement, subject to reasonable wear and tear;

 

(d) cause the Company to continue in full force and effect without modification
all Insurance Policies, except as required by applicable Law;

 

(e) cause the Company to defend and protect its properties and assets from
infringement or usurpation;

 

(f) cause the Company to perform all of its obligations under all Contracts
relating to or affecting its properties, assets or business;

 

(g) cause the Company to maintain its books and records in accordance with past
practice;

 

  25

 

 

(h) cause the Company to comply in all material respects with all applicable
Laws; and

 

(i) cause the Company not to take or permit any action that would cause any of
the changes, events or conditions described in Section 3.08 to occur.

 

5.02 Access to Information. From the date hereof until the Closing, Seller
shall, and shall cause the Company to, (a) afford Buyer and its Representatives
full and free access to and the right to inspect all of the Real Property,
properties, assets, premises, books and records, Contracts and other documents
and data related to the Company; (b) furnish Buyer and its Representatives with
such financial, operating and other data and information related to the Company
as Buyer or any of its Representatives may reasonably request; and (c) instruct
the Representatives of Seller and the Company to cooperate with Buyer in its
investigation of the Company. No investigation by Buyer or other information
received by Buyer shall operate as a waiver or otherwise affect any
representation, warranty or agreement given or made by Seller in this Agreement.

 

5.03 Notice of Certain Events.

 

(a) From the date hereof until the Closing, Seller shall promptly notify Buyer
in writing of:

 

(i) any fact, circumstance, event or action the existence, occurrence or taking
of which (A) has had, or could reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect, (B) has resulted in, or could
reasonably be expected to result in, any representation or warranty made by
Seller hereunder not being true and correct or (C) has resulted in, or could
reasonably be expected to result in, the failure of any of the conditions set
forth in Section 7.02 to be satisfied;

 

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

 

(iii) any notice or other communication from any Governmental Authority in
connection with the transactions contemplated by this Agreement; and

 

(iv) any Actions commenced or, to Seller’s Knowledge, threatened against,
relating to or involving or otherwise affecting Seller or the Company that, if
pending on the date of this Agreement, would have been required to have been
disclosed pursuant to Section 3.17 or that relates to the consummation of the
transactions contemplated by this Agreement.

 

(b) Buyer’s receipt of information pursuant to this Section 5.03 shall not
operate as a waiver or otherwise affect any representation, warranty or
agreement given or made by Seller in this Agreement (including Section 8.02) and
shall not be deemed to amend or supplement the Disclosure Schedules.

 

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5.06 Confidentiality. From and after the Closing, Seller shall, and shall cause
its Affiliates to, hold, and shall use its reasonable best efforts to cause its
or their respective Representatives to hold, in confidence any and all
information, whether written or oral, concerning the Company, except to the
extent that Seller can show that such information (a) is generally available to
and known by the public through no fault of Seller, any of its Affiliates or
their respective Representatives; or (b) is lawfully acquired by Seller, any of
its Affiliates or their respective Representatives from and after the Closing
from sources which are not prohibited from disclosing such information by a
legal, contractual or fiduciary obligation. If Seller or any of its Affiliates
or their respective Representatives are compelled to disclose any information by
judicial or administrative process or by other requirements of Law, Seller shall
promptly notify Buyer in writing and shall disclose only that portion of such
information which Seller is advised by its counsel in writing is legally
required to be disclosed, provided that Seller shall use reasonable best efforts
to obtain an appropriate protective order or other reasonable assurance that
confidential treatment will be accorded such information.

 

5.07 Non-competition; Non-solicitation.

 

(a) The Seller acknowledges that to protect adequately the interest of Buyer in
its business, it is essential that any noncompete and nonsolicitation covenant
with respect thereto cover all of the Business Enterprise in the Market Area.
Neither the Seller nor their Affiliates shall, during the three (3) year period
from and after the Closing Date (the “Non-Compete Period”), directly or
indirectly, have an equity or profit interest in, nor shall the Seller offer or
render services substantially the same as provided by the Seller to the Company
during the last twelve (12) month prior to the Closing Date to any Person that
engages in the Business Enterprise in the Market Area. PROVIDED, HOWEVER, that
the foregoing shall not restrict Seller from holding up to 5% of the voting
power or equity of one or more public companies in the Business Enterprise.
Buyer acknowledges that Seller is a founder and board member of the National
Equality Publishers Association (“NEPA”) and that Seller shall have the right to
continue to be a member and board member of NEPA after the Closing Date.

 

(b) Neither the Seller nor their Affiliates shall, within the Market Area,
during the Non-Compete Period, in any manner, directly or indirectly, recruit or
hire away or attempt to recruit or hire away, on any of their behalves or on
behalf of any other Person, any employee of the Company or any employee of
Buyer.

 

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(c) Neither the Seller nor their Affiliates shall during the Non-Compete Period,
directly or indirectly, either individually, in partnership, jointly, or in
conjunction with, or on behalf of, any Person, other than for the direct benefit
of Buyer or its Affiliates: (i) solicit any customers of Buyer located within
the Market Area (including actively sought prospective customers), and with whom
Seller had material contact during the twelve (12) months prior to the Closing
Date, for the purpose of providing services or products within the Business
Enterprise in the Market Area.

 

(d) In the event a judicial or arbitral determination is made that any of the
provisions of this Section 5.07 constitutes an unreasonable or otherwise
unenforceable restriction against the Seller, the provisions of this Section
5.07 shall be rendered void only to the extent that such judicial or arbitral
determination finds such provisions to be unreasonable or otherwise
unenforceable with respect to the Seller. In this regard, the parties hereby
agree that any judicial authority construing this Agreement shall be empowered
to sever or modify any portion of the Market Area, any prohibited business
activity or any time period from the coverage of this Section 5.07 and to apply
the modified provisions of this Section 5.07 to the remaining portion of the
Market Area, the remaining business activities and the remaining time period to
the extent the judicial or arbitral authority deems it reasonable to do so.
Moreover, notwithstanding the fact that any provision of this Section 5.07 is
determined not to be specifically enforceable, Buyer shall nevertheless be
entitled to seek monetary damages as a result of the breach of such provision by
Seller or their Affiliates and injunctive relief based upon the provision as
modified.

 

(e) Any remedy at law for any breach of the provisions contained in this Section
5.07 shall be inadequate and Buyer shall be entitled to injunctive relief in
addition to any other remedy Buyer might have under this Agreement.

 

5.08 Governmental Approvals and Consents.

 

(a) Each party hereto shall, as promptly as possible, (i) make, or cause or be
made, all filings and submissions required under any Law applicable to such
party or any of its Affiliates; and (ii) use reasonable best efforts to obtain,
or cause to be obtained, all consents, authorizations, orders and approvals from
all Governmental Authorities that may be or become necessary for its execution
and delivery of this Agreement and the performance of its obligations pursuant
to this Agreement and the other Transaction Documents. Each party shall
cooperate fully with the other party and its Affiliates in promptly seeking to
obtain all such consents, authorizations, orders and approvals. The parties
hereto shall not willfully take any action that will have the effect of
delaying, impairing or impeding the receipt of any required consents,
authorizations, orders and approvals.

 

(b) Seller and Buyer shall use reasonable best efforts to give all notices to,
and obtain all consents from, all third parties that are described in Section
3.05 and Section 4.02 of the Disclosure Schedules.

 

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5.09 Books and Records.

 

(a) In order to facilitate the resolution of any claims made against or incurred
prior to the Closing, or for any other reasonable purpose, for a period of two
years after the Closing, each party shall:

 

(i) retain the books and records (including personnel files) of the Company
relating to periods prior to the Closing in a manner reasonably consistent with
the prior practices of the Company; and

 

(ii) upon reasonable notice, afford the Representatives of Seller reasonable
access (including the right to make, at Seller’s expense, photocopies), during
normal business hours, to such books and records;

 

provided, however, that any books and records related to Tax matters shall be
retained pursuant to the periods set forth in Article VI.

 

(b) Neither Buyer nor Seller shall be obligated to provide the other party with
access to any books or records (including personnel files) pursuant to this
Section 5.09 where such access would violate any Law.

 

5.10 Closing Conditions. From the date hereof until the Closing, each party
hereto shall, and Seller shall cause the Company to, use reasonable best efforts
to take such actions as are necessary to expeditiously satisfy the closing
conditions set forth in Article VII hereof.

 

5.11 D&O Insurance. Following the Closing, Buyer shall use its best efforts to
obtain and/or maintain directors and officers insurance for all directors and
officers of Buyer.

 

5.12 Indemnification of Directors. Following the Closing, Buyer shall enter into
indemnification agreements (or similar provisions in the employment agreements)
indemnifying directors to the fullest extent permitted by applicable law, and
would include in its charter and bylaws provisions limiting the board members’
liability and exposure to damages, and indemnifying board members, to the
fullest extent permitted by law.

 

5.13 Share Lock-Up. Seller agrees that they will not sell any of their shares
until (a) if Buyer’s stock is listed on Nasdaq or a national securities exchange
within one year following the Closing Date hereof, then a period of up to six
(6) months provided all other directors, officers and 5% or greater shareholders
of Buyer (the “Significant Shareholders”) also agree to an identical lock-up
provision, or (b) if not, then one year following the Closing Date hereof. In
addition, Seller agree to comply with any additional lock-up provisions required
by Buyer’s investment bankers for all Significant Shareholders.

 

5.14 Employment Agreement. Concurrently with the Closing, Buyer and Mr. Michael
A. Turner shall enter into a three-year employment agreement pursuant to which
Mr. Turner shall be appointed as President of Media Ventures Division and a
member of the board of director of Buyer, and remain as the president and
chairman of the Company.

 

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5.15 Public Announcements. Unless otherwise required by applicable Law or stock
exchange requirements (based upon the reasonable advice of counsel), no party to
this Agreement shall make any public announcements in respect of this Agreement
or the transactions contemplated hereby or otherwise communicate with any news
media without the prior written consent of the other party (which consent shall
not be unreasonably withheld or delayed), and the parties shall cooperate as to
the timing and contents of any such announcement.

 

5.16 Further Assurances. Following the Closing, each of the parties hereto
shall, and shall cause their respective Affiliates to, execute and deliver such
additional documents, instruments, conveyances and assurances and take such
further actions as may be reasonably required to carry out the provisions hereof
and give effect to the transactions contemplated by this Agreement.

 

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ARTICLE VI

 

Tax Matters

 

6.01 Tax Covenants.

 

(a) Without the prior written consent of Buyer, Seller (and, prior to the
Closing, the Company, its Affiliates and their respective Representatives) shall
not, to the extent it may affect, or relate to, the Company, make, change or
rescind any Tax election, amend any Tax Return or take any position on any Tax
Return, take any action, omit to take any action or enter into any other
transaction that would have the effect of increasing the Tax liability or
reducing any Tax asset of Buyer or the Company in respect of any Post-Closing
Tax Period. Seller agrees that Buyer is to have no liability for any Tax
resulting from any action of Seller, the Company, its Affiliates or any of their
respective Representatives, and agrees to indemnify and hold harmless Buyer
(and, after the Closing Date, the Company) against any such Tax or reduction of
any Tax asset.

 

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(b) All transfer, documentary, sales, use, stamp, registration, value added and
other such Taxes and fees (including any penalties and interest) incurred in
connection with this Agreement and the Assignment/the other Transaction
Documents (including any real property transfer Tax and any other similar Tax)
shall be borne and paid by Seller when due. Seller shall, at its own expense,
timely file any Tax Return or other document with respect to such Taxes or fees
(and Buyer shall cooperate with respect thereto as necessary).

 

(c) Buyer shall prepare, or cause to be prepared, all Tax Returns required to be
filed by the Company after the Closing Date with respect to a Pre-Closing Tax
Period. Any such Tax Return shall be prepared in a manner consistent with past
practice (unless otherwise required by Law) and without a change of any election
or any accounting method.

 

6.02 Tax Indemnification. Seller shall indemnify the Company, Buyer, and each
Buyer Indemnitee and hold them harmless from and against (a) any Loss
attributable to any breach of or inaccuracy in any representation or warranty
made in Section 3.21; (b) any Loss attributable to any breach or violation of,
or failure to fully perform, any covenant, agreement, undertaking or obligation
in Article VI; (c) all Taxes of the Company or relating to the business of the
Company for all Pre-Closing Tax Periods; and (d) any and all Taxes of any person
imposed on the Company arising under the principles of transferee or successor
liability or by contract, relating to an event or transaction occurring before
the Closing Date. In each of the above cases, together with any out-of-pocket
fees and expenses (including attorneys’ and accountants’ fees) incurred in
connection therewith. Seller shall reimburse Buyer for any Taxes of the Company
that are the responsibility of Seller pursuant to this Section 6.02 within ten
Business Days after payment of such Taxes by Buyer or the Company.

 

6.03 Straddle Period. In the case of Taxes that are payable with respect to a
taxable period that begins before and ends after the Closing Date (each such
period, a “Straddle Period”), the portion of any such Taxes that are treated as
Pre-Closing Taxes for purposes of this Agreement shall be:

 

(a) in the case of Taxes (i) based upon, or related to, income, receipts,
profits, wages, capital or net worth, (ii) imposed in connection with the sale,
transfer or assignment of property, or (iii) required to be withheld, deemed
equal to the amount which would be payable if the taxable year ended with the
Closing Date; and

 

(b) in the case of other Taxes, deemed to be the amount of such Taxes for the
entire period multiplied by a fraction the numerator of which is the number of
days in the period ending on the Closing Date and the denominator of which is
the number of days in the entire period.

 

6.04 Survival. Notwithstanding anything in this Agreement to the contrary, the
provisions of Section 3.21 and this Article VI shall survive for the full period
of all applicable statutes of limitations (giving effect to any waiver,
mitigation or extension thereof) plus 60 days.

 

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ARTICLE VII

 

Conditions to Closing

 

7.01 Conditions to Obligations of All Parties. The obligations of each party to
consummate the transactions contemplated by this Agreement shall be subject to
the fulfillment, at or prior to the Closing, of each of the following
conditions:

 

(a) No Action shall have been commenced against Buyer, Seller or the Company,
which would prevent the Closing. No injunction or restraining order shall have
been issued by any Governmental Authority, and be in effect, which restrains or
prohibits any transaction contemplated hereby.

 

(b) No Governmental Authority shall have enacted, issued, promulgated, enforced
or entered any Governmental Order which is in effect and has the effect of
making the transactions contemplated by this Agreement illegal, otherwise
restraining or prohibiting consummation of such transactions or causing any of
the transactions contemplated hereunder to be rescinded following completion
thereof.

 

7.02 Conditions to Obligations of Buyer. The obligations of Buyer to consummate
the transactions contemplated by this Agreement shall be subject to the
fulfillment or Buyer’s waiver, at or prior to the Closing, of each of the
following conditions:

 

(a) The representations and warranties of Seller contained in this Agreement,
the other Transaction Documents and any certificate or other writing delivered
pursuant hereto shall be true and correct in all respects (in the case of any
representation or warranty qualified by materiality or Material Adverse Effect)
or in all material respects (in the case of any representation or warranty not
qualified by materiality or Material Adverse Effect) on and as of the date
hereof and on and as of the Closing Date with the same effect as though made at
and as of such date (except those representations and warranties that address
matters only as of a specified date, the accuracy of which shall be determined
as of that specified date in all respects).

 

(b) Seller shall have duly performed and complied in all material respects with
all agreements, covenants and conditions required by this Agreement and each of
the other Transaction Documents to be performed or complied with by it prior to
or on the Closing Date; provided, that, with respect to agreements, covenants
and conditions that are qualified by materiality, Seller shall have performed
such agreements, covenants and conditions, as so qualified, in all respects.

 

(c) All approvals, consents and waivers that are listed on Section 3.05 of the
Disclosure Schedules shall have been received, and executed counterparts thereof
shall have been delivered to Buyer at or prior to the Closing.

 

  32

 

 

(d) From the date of this Agreement, there shall not have occurred any Material
Adverse Effect, nor shall any event or events have occurred that, individually
or in the aggregate, with or without the lapse of time, could reasonably be
expected to result in a Material Adverse Effect.

 

(e) Seller shall have duly executed and delivered the Assignment to Buyer.

 

(f) The other Transaction Documents including the Employment Agreement as set
forth in Section 5.14, shall have been executed and delivered by the parties
thereto and true and complete copies thereof shall have been delivered to Buyer.

 

(g) Buyer shall have received a certificate, dated the Closing Date and signed
by Seller, that each of the conditions set forth in Section 7.02(a) and Section
7.02(b) have been satisfied.

 

(h) Seller shall have delivered to Buyer a good standing certificate (or its
equivalent) for the Company from the secretary of state or similar Governmental
Authority of the jurisdiction under the Laws in which the Company is organized.

 

(i) Seller shall have delivered to Buyer such other documents or instruments as
Buyer reasonably requests and are reasonably necessary to consummate the
transactions contemplated by this Agreement.

 

7.03 Conditions to Obligations of Seller. The obligations of Seller to
consummate the transactions contemplated by this Agreement shall be subject to
the fulfillment or Seller’s waiver, at or prior to the Closing, of each of the
following conditions:

 

(a) The representations and warranties of Buyer contained in this Agreement, the
other Transaction Documents and any certificate or other writing delivered
pursuant hereto shall be true and correct in all respects (in the case of any
representation or warranty qualified by materiality or Material Adverse Effect)
or in all material respects (in the case of any representation or warranty not
qualified by materiality or Material Adverse Effect) on and as of the date
hereof and on and as of the Closing Date with the same effect as though made at
and as of such date (except those representations and warranties that address
matters only as of a specified date, the accuracy of which shall be determined
as of that specified date in all respects).

 

(b) Buyer shall have duly performed and complied in all material respects with
all agreements, covenants and conditions required by this Agreement and each of
the other Transaction Documents to be performed or complied with by it prior to
or on the Closing Date; provided, that, with respect to agreements, covenants
and conditions that are qualified by materiality, Buyer shall have performed
such agreements, covenants and conditions, as so qualified, in all respects.

 

(c) The other Transaction Documents, including the Employment Agreement as set
forth in Section 5.14, shall have been executed and delivered by the parties
thereto and true and complete copies thereof shall have been delivered to
Seller.

 

  33

 

 

(d) Seller shall have received a certificate, dated the Closing Date and signed
by a duly authorized officer of Buyer, that each of the conditions set forth in
Section 7.03(a) and Section 7.03(b) have been satisfied.

 

(e) Seller shall have received a resolution adopted by the board of directors of
Buyer authorizing the execution, delivery and performance of this Agreement and
the other Transaction Documents and the consummation of the transactions
contemplated hereby and thereby.

 

(f) Buyer shall have delivered to Seller cash in an amount equal to $250,000 by
wire transfer in immediately available funds, to an account or accounts
designated by Seller in a written notice to Buyer.

 

(g) Buyer shall have delivered an executed promissory note to Seller for the
$250,000 due at the earlier of March 30, 2016 or the closing of the Offering.

 

(h) Buyer shall hold 3,000,000 shares of common stock in escrow to be released
to Seller upon achieving certain Milestones.

 

(g) Buyer shall have delivered to Seller such other documents or instruments as
Seller reasonably requests and are reasonably necessary to consummate the
transactions contemplated by this Agreement.

 

(h) Buyer shall have sufficient capital available for the combined business of
Buyer and the Company, to fund the operations of the combined companies as
determined by the management and the board of directors of the companies.
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ARTICLE VIII

 

Indemnification

 

8.01 Survival. Subject to the limitations and other provisions of this
Agreement, the representations and warranties contained herein (other than any
representations or warranties contained in Section 3.21 which are subject to
Article VI) shall survive the Closing and shall remain in full force and effect
until the date that is two years from the Closing Date; provided, that the
representations and warranties in (i) Section 3.01, Section 3.03, Section 3.23,
Section 4.01 and Section 4.04 shall survive indefinitely, and (ii) Section 3.19
shall survive for a period of three years after the Closing. All covenants and
agreements of the parties contained herein (other than any covenants or
agreements contained in Article VI which are subject to Article VI) shall
survive the Closing indefinitely or for the period explicitly specified therein.
Notwithstanding the foregoing, any claims asserted in good faith with reasonable
specificity (to the extent known at such time) and in writing by notice from the
non-breaching party to the breaching party prior to the expiration date of the
applicable survival period shall not thereafter be barred by the expiration of
the relevant representation or warranty and such claims shall survive until
finally resolved.

 

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8.02 Indemnification By Seller. Subject to the other terms and conditions of
this Article VIII, Seller shall indemnify and defend each of Buyer and its
Affiliates (including the Company) and their respective Representatives
(collectively, the “Buyer Indemnitees”) against, and shall hold each of them
harmless from and against, and shall pay and reimburse each of them for, any and
all Losses incurred or sustained by, or imposed upon, the Buyer Indemnitees
based upon, arising out of, with respect to or by reason of:

 

(a) any inaccuracy in or breach of any of the representations or warranties of
Seller contained in this Agreement or in any certificate or instrument delivered
by or on behalf of Seller pursuant to this Agreement (other than in respect of
Section 3.21, it being understood that the sole remedy for any such inaccuracy
in or breach thereof shall be pursuant to Article VI), as of the date such
representation or warranty was made or as if such representation or warranty was
made on and as of the Closing Date (except for representations and warranties
that expressly relate to a specified date, the inaccuracy in or breach of which
will be determined with reference to such specified date); or

 

(b) any breach or non-fulfillment of any covenant, agreement or obligation to be
performed by Seller pursuant to this Agreement (other than any breach or
violation of, or failure to fully perform, any covenant, agreement, undertaking
or obligation in Article VI, it being understood that the sole remedy for any
such breach, violation or failure shall be pursuant to Article VI).

 

8.03 Indemnification By Buyer. Subject to the other terms and conditions of this
Article VIII, Buyer shall indemnify and defend each of Seller and their
Affiliates and their respective Representatives (collectively, the “Seller
Indemnitees”) against, and shall hold each of them harmless from and against,
and shall pay and reimburse each of them for, any and all Losses incurred or
sustained by, or imposed upon, the Seller Indemnitees based upon, arising out
of, with respect to or by reason of:

 

(a) any inaccuracy in or breach of any of the representations or warranties of
Buyer contained in this Agreement or in any certificate or instrument delivered
by or on behalf of Buyer pursuant to this Agreement, as of the date such
representation or warranty was made or as if such representation or warranty was
made on and as of the Closing Date (except for representations and warranties
that expressly relate to a specified date, the inaccuracy in or breach of which
will be determined with reference to such specified date); or

 

(b) any breach or non-fulfillment of any covenant, agreement or obligation to be
performed by Buyer pursuant to this Agreement (other than Article VI, it being
understood that the sole remedy for any such breach thereof shall be pursuant to
Article VI).

 

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8.04 Indemnification Procedures. The party making a claim under this Article
VIII is referred to as the “Indemnified Party”, and the party against whom such
claims are asserted under this Article VIII is referred to as the “Indemnifying
Party”.

 

(a) Third Party Claims. If any Indemnified Party receives notice of the
assertion or commencement of any Action made or brought by any Person who is not
a party to this Agreement or an Affiliate of a party to this Agreement or a
Representative of the foregoing (a “Third Party Claim”) against such Indemnified
Party with respect to which the Indemnifying Party is obligated to provide
indemnification under this Agreement, the Indemnified Party shall give the
Indemnifying Party reasonably prompt written notice thereof, but in any event
not later than 30 calendar days after receipt of such notice of such Third Party
Claim. The failure to give such prompt written notice shall not, however,
relieve the Indemnifying Party of its indemnification obligations, except and
only to the extent that the Indemnifying Party forfeits rights or defenses by
reason of such failure. Such notice by the Indemnified Party shall describe the
Third Party Claim in reasonable detail, shall include copies of all material
written evidence thereof and shall indicate the estimated amount, if reasonably
practicable, of the Loss that has been or may be sustained by the Indemnified
Party. The Indemnifying Party shall have the right to participate in, or by
giving written notice to the Indemnified Party, to assume the defense of any
Third Party Claim at the Indemnifying Party’s expense and by the Indemnifying
Party’s own counsel, and the Indemnified Party shall cooperate in good faith in
such defense; provided, that if the Indemnifying Party is Seller, such
Indemnifying Party shall not have the right to defend or direct the defense of
any such Third Party Claim that (x) is asserted directly by or on behalf of a
Person that is a supplier or customer of the Company, or (y) seeks an injunction
or other equitable relief against the Indemnified Party. In the event that the
Indemnifying Party assumes the defense of any Third Party Claim, subject to
Section 8.04(b), it shall have the right to take such action as it deems
necessary to avoid, dispute, defend, appeal or make counterclaims pertaining to
any such Third Party Claim in the name and on behalf of the Indemnified Party.
The Indemnified Party shall have the right to participate in the defense of any
Third Party Claim with counsel selected by it subject to the Indemnifying
Party’s right to control the defense thereof. The fees and disbursements of such
counsel shall be at the expense of the Indemnified Party, provided, that if in
the reasonable opinion of counsel to the Indemnified Party, (A) there are legal
defenses available to an Indemnified Party that are different from or additional
to those available to the Indemnifying Party; or (B) there exists a conflict of
interest between the Indemnifying Party and the Indemnified Party that cannot be
waived, the Indemnifying Party shall be liable for the reasonable fees and
expenses of counsel to the Indemnified Party in each jurisdiction for which the
Indemnified Party determines counsel is required. If the Indemnifying Party
elects not to compromise or defend such Third Party Claim, fails to promptly
notify the Indemnified Party in writing of its election to defend as provided in
this Agreement, or fails to diligently prosecute the defense of such Third Party
Claim, the Indemnified Party may, subject to Section 8.04(b), pay, compromise,
defend such Third Party Claim and seek indemnification for any and all Losses
based upon, arising from or relating to such Third Party Claim. Seller and Buyer
shall cooperate with each other in all reasonable respects in connection with
the defense of any Third Party Claim, including making available (subject to the
provisions of Section 5.06) records relating to such Third Party Claim and
furnishing, without expense (other than reimbursement of actual out-of-pocket
expenses) to the defending party, management employees of the non-defending
party as may be reasonably necessary for the preparation of the defense of such
Third Party Claim.

 

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(b) Settlement of Third Party Claims. Notwithstanding any other provision of
this Agreement, the Indemnifying Party shall not enter into settlement of any
Third Party Claim without the prior written consent of the Indemnified Party,
except as provided in this Section 8.04(b). If a firm offer is made to settle a
Third Party Claim without leading to liability or the creation of a financial or
other obligation on the part of the Indemnified Party and provides, in customary
form, for the unconditional release of each Indemnified Party from all
liabilities and obligations in connection with such Third Party Claim and the
Indemnifying Party desires to accept and agree to such offer, the Indemnifying
Party shall give written notice to that effect to the Indemnified Party. If the
Indemnified Party fails to consent to such firm offer within ten days after its
receipt of such notice, the Indemnified Party may continue to contest or defend
such Third Party Claim and in such event, the maximum liability of the
Indemnifying Party as to such Third Party Claim shall not exceed the amount of
such settlement offer. If the Indemnified Party fails to consent to such firm
offer and also fails to assume defense of such Third Party Claim, the
Indemnifying Party may settle the Third Party Claim upon the terms set forth in
such firm offer to settle such Third Party Claim. If the Indemnified Party has
assumed the defense pursuant to Section 8.04(a), it shall not agree to any
settlement without the written consent of the Indemnifying Party (which consent
shall not be unreasonably withheld or delayed).

 

(c) Direct Claims. Any Action by an Indemnified Party on account of a Loss which
does not result from a Third Party Claim (a “Direct Claim”) shall be asserted by
the Indemnified Party giving the Indemnifying Party reasonably prompt written
notice thereof, but in any event not later than 30 days after the Indemnified
Party becomes aware of such Direct Claim. The failure to give such prompt
written notice shall not, however, relieve the Indemnifying Party of its
indemnification obligations, except and only to the extent that the Indemnifying
Party forfeits rights or defenses by reason of such failure. Such notice by the
Indemnified Party shall describe the Direct Claim in reasonable detail, shall
include copies of all material written evidence thereof and shall indicate the
estimated amount, if reasonably practicable, of the Loss that has been or may be
sustained by the Indemnified Party. The Indemnifying Party shall have 30 days
after its receipt of such notice to respond in writing to such Direct Claim. The
Indemnified Party shall allow the Indemnifying Party and its professional
advisors to investigate the matter or circumstance alleged to give rise to the
Direct Claim, and whether and to what extent any amount is payable in respect of
the Direct Claim and the Indemnified Party shall assist the Indemnifying Party’s
investigation by giving such information and assistance (including access to the
Company’s premises and personnel and the right to examine and copy any accounts,
documents or records) as the Indemnifying Party or any of its professional
advisors may reasonably request. If the Indemnifying Party does not so respond
within such 30 day period, the Indemnifying Party shall be deemed to have
rejected such claim, in which case the Indemnified Party shall be free to pursue
such remedies as may be available to the Indemnified Party on the terms and
subject to the provisions of this Agreement.

 

8.05 Payments. Once a Loss is agreed to by the Indemnifying Party or finally
adjudicated to be payable pursuant to this Article VIII, the Indemnifying Party
shall satisfy its obligations within 15 Business Days of such final,
non-appealable adjudication by wire transfer of immediately available funds. The
parties hereto agree that should an Indemnifying Party not make full payment of
any such obligations within such 15 Business Day period, any amount payable
shall accrue interest from and including the date of agreement of the
Indemnifying Party or final, non-appealable adjudication to the date such
payment has been made at a rate per annum equal to 12%. Such interest shall be
calculated daily on the basis of a 365 day year and the actual number of days
elapsed, without compounding.

 

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8.06 Effect of Investigation. The representations, warranties and covenants of
the Indemnifying Party, and the Indemnified Party’s right to indemnification
with respect thereto, shall not be affected or deemed waived by reason of any
investigation made by or on behalf of the Indemnified Party (including by any of
its Representatives) or by reason of the fact that the Indemnified Party or any
of its Representatives knew or should have known that any such representation or
warranty is, was or might be inaccurate or by reason of the Indemnified Party’s
waiver of any condition set forth in Section 7.02 or Section 7.03, as the case
may be.

 

8.07 Exclusive Remedies. Subject to Section 5.07 and Section 9.12, the parties
acknowledge and agree that their sole and exclusive remedy with respect to any
and all claims (other than claims arising from fraud, criminal activity or
willful misconduct on the part of a party hereto in connection with the
transactions contemplated by this Agreement) for any breach of any
representation, warranty, covenant, agreement or obligation set forth herein or
otherwise relating to the subject matter of this Agreement, shall be pursuant to
the indemnification provisions set forth in Article VI and this Article VIII. In
furtherance of the foregoing, each party hereby waives, to the fullest extent
permitted under Law, any and all rights, claims and causes of action for any
breach of any representation, warranty, covenant, agreement or obligation set
forth herein or otherwise relating to the subject matter of this Agreement it
may have against the other parties hereto and their Affiliates and each of their
respective Representatives arising under or based upon any Law, except pursuant
to the indemnification provisions set forth in Article VI and this Article VIII.
Nothing in this Section 8.07 shall limit any Person’s right to seek and obtain
any equitable relief to which any Person shall be entitled or to seek any remedy
on account of any party’s fraudulent, criminal or intentional misconduct.

 

ARTICLE IX

 

Miscellaneous

 

9.01 Expenses. Except as otherwise expressly provided herein, all costs and
expenses, including, without limitation, fees and disbursements of counsel,
financial advisors and accountants, incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such costs and expenses, whether or not the Closing shall have occurred.

 

9.02 Notices. All notices, requests, consents, claims, demands, waivers and
other communications hereunder shall be in writing and shall be deemed to have
been given (a) when delivered by hand (with written confirmation of receipt);
(b) when received by the addressee if sent by a nationally recognized overnight
courier (receipt requested); (c) on the date sent by facsimile or e-mail of a
PDF document (with confirmation of transmission) if sent during normal business
hours of the recipient, and on the next Business Day if sent after normal
business hours of the recipient or (d) on the third day after the date mailed,
by certified or registered mail, return receipt requested, postage prepaid. Such
communications must be sent to the respective parties at the following addresses
(or at such other address for a party as shall be specified in a notice given in
accordance with this Section 9.02):

 

 

If to Seller:

Michael A. Turner

New Frontiers Media Holdings, LLC

5657 Wilshire Blvd, Suite 470

Los Angeles, CA 90036

Email: m.turner@frontiersmedia.com

 

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with a copy to:

[SELLER LAW FIRM]

 

 

 

 

If to Buyer:

Multimedia Platforms, Inc.

2929 East Commercial Blvd., Suite Ph-D

Fort Lauderdale, Florida 333308

Attention: Robert Blair

Email: bobby@bobbyblair.com

 

 

 

 

with a copy to:

Szaferman Lakind Blumstein & Blader, PC

101 Grovers Mill Road

Second Floor

Lawrenceville, NJ 08648

Attention: Gregg E. Jaclin

Email: gjaclin@szaferman.com

 

9.03 Interpretation. For purposes of this Agreement, (a) the words “include,”
“includes” and “including” shall be deemed to be followed by the words “without
limitation”; (b) the word “or” is not exclusive; and (c) the words “herein,”
“hereof,” “hereby,” “hereto” and “hereunder” refer to this Agreement as a whole.
Unless the context otherwise requires, references herein: (x) to Articles,
Sections, Disclosure Schedules and Exhibits mean the Articles and Sections of,
and Disclosure Schedules and Exhibits attached to, this Agreement; (y) to an
agreement, instrument or other document means such agreement, instrument or
other document as amended, supplemented and modified from time to time to the
extent permitted by the provisions thereof and (z) to a statute means such
statute as amended from time to time and includes any successor legislation
thereto and any regulations promulgated thereunder. This Agreement shall be
construed without regard to any presumption or rule requiring construction or
interpretation against the party drafting an instrument or causing any
instrument to be drafted. The Disclosure Schedules and Exhibits referred to
herein shall be construed with, and as an integral part of, this Agreement to
the same extent as if they were set forth verbatim herein.

 

9.04 Headings. The headings in this Agreement are for reference only and shall
not affect the interpretation of this Agreement.

 

9.05 Severability. If any term or provision of this Agreement is invalid,
illegal or unenforceable in any jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other term or provision of this Agreement
or invalidate or render unenforceable such term or provision in any other
jurisdiction. Except as provided in Section 5.07(e), upon such determination
that any term or other provision is invalid, illegal or unenforceable, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in a mutually
acceptable manner in order that the transactions contemplated hereby be
consummated as originally contemplated to the greatest extent possible.

 

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9.06 Entire Agreement. This Agreement, the Assignment and the other Transaction
Documents constitute the sole and entire agreement of the parties to this
Agreement with respect to the subject matter contained herein and therein, and
supersede all prior and contemporaneous understandings and agreements, both
written and oral, with respect to such subject matter. In the event of any
inconsistency between the statements in the body of this Agreement and those in
the Assignment and the other Transaction Documents, the Exhibits and Disclosure
Schedules (other than an exception expressly set forth as such in the Disclosure
Schedules), the statements in the body of this Agreement will control.

 

9.07 Legal Representation. Each party to this Agreement has read and fully
understands the terms and provisions hereof, has reviewed this Agreement with
its legal counsel and/or advisor, has executed this Agreement based upon such
party’s own judgment and advice of counsel, and knowingly, voluntarily, and
without duress, agrees to all of the terms set forth in this Agreement. The
parties have participated jointly in the negotiation and drafting of this
Agreement. If an ambiguity or question of intent or interpretation arises, this
Agreement will be construed as if drafted jointly by the parties and no
presumption or burden of proof will arise favoring or disfavoring any party
because of authorship of any provision of this Agreement. Except as expressly
set forth in this Agreement, neither the parties nor their affiliates, advisors
and/or their attorneys have made any representation or warranty, express or
implied, at law or in equity with respect of the subject matter contained
herein. Without limiting the generality of the previous sentence, the Buyer, its
affiliates, advisors and/or attorneys have made no representation or warranty to
Seller concerning the state or federal tax consequences to Seller regarding the
transactions contemplated by this Agreement.

 

9.08 Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
permitted assigns. Neither party may assign its rights or obligations hereunder
without the prior written consent of the other party, which consent shall not be
unreasonably withheld or delayed; provided, however, Buyer may, without the
prior written consent of Seller, assign all or any portion of its rights under
this Agreement to one or more of its direct or indirect wholly-owned
subsidiaries. No assignment shall relieve the assigning party of any of its
obligations hereunder.

 

9.09 No Third-party Beneficiaries. Except as provided in Section 6.02 and
Article VIII, this Agreement is for the sole benefit of the parties hereto and
their respective successors and permitted assigns and nothing herein, express or
implied, is intended to or shall confer upon any other Person or entity any
legal or equitable right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement.

 

9.10 Amendment and Modification; Waiver. This Agreement may only be amended,
modified or supplemented by an agreement in writing signed by each party hereto.
No waiver by any party of any of the provisions hereof shall be effective unless
explicitly set forth in writing and signed by the party so waiving. No waiver by
any party shall operate or be construed as a waiver in respect of any failure,
breach or default not expressly identified by such written waiver, whether of a
similar or different character, and whether occurring before or after that
waiver. No failure to exercise, or delay in exercising, any right, remedy, power
or privilege arising from this Agreement shall operate or be construed as a
waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege.

 

  40

 

 

9.11 Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.

 

(a) This Agreement shall be governed by and construed in accordance with the
internal laws of the State of Delaware without giving effect to any choice or
conflict of law provision or rule (whether of the State of Delaware or any other
jurisdiction).

 

(b) ANY LEGAL SUIT, ACTION OR PROCEEDING ARISING OUT OF OR BASED UPON THIS
AGREEMENT, THE ASSIGNMENT/THE OTHER TRANSACTION DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY MAY BE INSTITUTED IN THE FEDERAL COURTS OF THE
UNITED STATES OF AMERICA OR THE COURTS OF THE STATE OF DELAWARE, AND EACH PARTY
IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS IN ANY SUCH
SUIT, ACTION OR PROCEEDING. SERVICE OF PROCESS, SUMMONS, NOTICE OR OTHER
DOCUMENT BY MAIL TO SUCH PARTY’S ADDRESS SET FORTH HEREIN SHALL BE EFFECTIVE
SERVICE OF PROCESS FOR ANY SUIT, ACTION OR OTHER PROCEEDING BROUGHT IN ANY SUCH
COURT. THE PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY OBJECTION TO THE
LAYING OF VENUE OF ANY SUIT, ACTION OR ANY PROCEEDING IN SUCH COURTS AND
IRREVOCABLY WAIVE AND AGREE NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY
SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.

 

(c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE
UNDER THIS AGREEMENT OR THE ASSIGNMENT/THE OTHER TRANSACTION DOCUMENTS IS LIKELY
TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE
ASSIGNMENT/THE OTHER TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT
(A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER
IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS
OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) SUCH PARTY
HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.11(c).

 

9.12 Specific Performance. The parties agree that irreparable damage would occur
if any provision of this Agreement were not performed in accordance with the
terms hereof and that the parties shall be entitled to specific performance of
the terms hereof, in addition to any other remedy to which they are entitled at
law or in equity.

 

9.13 Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed an original, but all of which together shall be deemed to be one
and the same agreement. A signed copy of this Agreement delivered by facsimile,
e-mail or other means of electronic transmission shall be deemed to have the
same legal effect as delivery of an original signed copy of this Agreement.

 

[Signature Page Follows]

 

  41

 

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first written above by their respective officers thereunto duly
authorized.

 

 

 

SELLER:

 

        By: /s/ Michael A. Turner

 

 

Name:

Michael A. Turner

 

 

 

 

 

BUYER:

 

 

 

 

 

 

Multimedia Platforms, Inc.

 

 

 

 

 

 

By:

/s/ Robert Blair

 

 

Name:

Robert Blair

 

 

Title:

Chief Executive Officer

 

 

  42

 

 

Exhibit A

 

Assignment

 

As attached.

 

  43

 

 

Exhibit B

 

Promissory Note

 

As attached.

 

  44

 

 

Exhibit C

 

Employment Agreement

 

As attached.

 

 

45

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