Exhibit 10.1

 

 

 

 

 

 

 

STOCK PURCHASE AGREEMENT

 

by and between

 

GARMIN INTERNATIONAL, INC.

 

and

 

NXT-ID, INC.

 

For the capital stock of

 

FIT PAY, INC.

 

Dated as of September 9, 2019

 

 

 

 

 

 

 

 

 

 

 

 

STOCK PURCHASE AGREEMENT

 

THIS STOCK PURCHASE AGREEMENT (the “Agreement”) is dated as of September 9, 2019
(the “Closing Date”) and entered into by and between Garmin International, Inc.,
a Kansas corporation (“Buyer”), and Nxt-ID, Inc., a Delaware corporation
(“Seller”) and Fit Pay, Inc., a Delaware corporation (the “Company”).

 

PRELIMINARY STATEMENTS:

 

A. As of the Closing Date, Seller owns all of the issued and outstanding shares
of capital stock (the “Shares”) of the Company; and

 

B. Upon the terms and subject to the conditions set forth in this Agreement,
Seller desires to sell and transfer to Buyer, and Buyer desires to purchase and
receive from Seller, the Shares.

 

STATEMENT OF AGREEMENT:

 

NOW, THEREFORE, in consideration of the foregoing premises, the representations,
warranties, covenants and agreements contained herein, and certain other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

 

ARTICLE I.

DEFINITIONS

 

1.1 Definitions. For the purposes of this Agreement, the following terms have
the meanings set forth below:

 

“Affiliate” means, (i) a parent company (if any) that owns, directly or
indirectly, a majority of a party to this Agreement and (ii) any other company
that is a Subsidiary of a party or its parent company.

 

“Business” means the operation of the token requestor management platform that
delivers end-to-end solutions to device manufacturers for contactless payment
capabilities, credentials management, authentication and other secure services.

 

“Business Day” means any day excluding Saturday, Sunday and any day which is a
legal holiday in the State of New York, or is a day on which the New York
Federal Reserve Bank is not open for business.

 

“Cash” means the cash and cash equivalents of the Company as of Closing, less
(a) the amount of any “cut” but uncashed checks issued by the Company that are
outstanding as of Closing, and any cash, book or bank account overdrafts.

 

“Contract” means agreements, leases, licenses, contracts or other commitments of
any nature, whether written or oral.

 

 

 

 

“Environmental Laws” means all Laws relating to the regulation and protection of
human health, safety, the environment, or natural resources.

 

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

 

“Governmental Authority” means any United States or foreign federal, state,
provincial, regional, local or municipal legislative, executive or judicial
department, commission, board, bureau, agency, office, tribunal, court or other
instrumentality, governmental or quasi-governmental.

 

“Income Tax” means any federal, state, local or foreign Tax measured or imposed
on net income, including any interest, penalty or addition thereto, whether
disputed or not.

 

“Income Tax Return” means any Tax Return relating to Income Taxes, including any
schedule or attachment thereto.

 

“Indebtedness” of any Person at any date means, without duplication, (i) all
indebtedness of such Person for borrowed money whether short-term or long-term,
(ii) any Liability evidenced by bonds, debentures, notes or similar instruments,
(iii) any Liability to pay the deferred purchase price or deferred rent of
property or services (other than trade payables and accrued expenses incurred
and payable in the ordinary course of business that are not more than 90 days
past due), including, but not limited to, any earn-out that may or may not be
payable or similar obligations, (iv) all Liability in respect of letters of
credit, acceptance credit or similar facilities, (v) all obligations or
commitments to repay deposits or other similar amounts advanced by and owing to
third parties, (vi) any capitalized lease indebtedness or other indebtedness
arising under conditional sales contracts and other similar title retention
instruments, (vii) all interest, fees and other expenses owed with respect to
indebtedness in the foregoing clauses (i) through (vi), (viii) all indebtedness
referred to in the foregoing clauses (i) through (vii) that is directly or
indirectly guaranteed by such Person, and (ix) all indebtedness referred to in
the foregoing clauses (i) through (vii) that is secured by (or for which the
holder of such indebtedness has an existing right, contingent or otherwise, to
be secured by) any Lien on assets or property owned by such Person, even though
such Person has not assumed or become liable for the payment of such
Indebtedness.

 

“Intellectual Property” means all (a) patents, patent applications,
continuations, continuations-in-part, divisions and reissues thereto, (b)
registered trademarks and applications therefor, (c) registered copyrights, (d)
Internet domain name registrations, and (e) confidential ideas, trade secrets,
computer software (including source code, object code, computer instructions,
algorithms, lines of code, specifications, operating instructions, integrated
databases, libraries, software development kits, and application program
interfaces, together with any corresponding documentation), know-how,
works-in-progress, concepts, methods, processes, inventions, invention
disclosures, formulae, reports, data, customer lists, mailing lists, business
plans or other proprietary information.

 

“Knowledge” means, with respect to the Company, the knowledge of Michael
Orlando, Tom DaPolito, Gino Pereira or Vincent S. Miceli and with respect to
Seller, the knowledge of Gino Pereira, Michael Orlando or Vincent S. Miceli. For
purposes of this Agreement, an individual shall be deemed to have knowledge of a
particular fact or other matter if such individual is actually aware of such
fact or other matter after reasonable inquiry.

 

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“Laws” means with respect to the United States and all other countries, all
federal, state and local laws, statutes, final rules and regulations, laws,
ordinances and codes, now or hereafter in effect, including any judicial and
administrative interpretations thereof, and all Orders.

 

“Liability” means any liability or obligation of whatever kind or nature
(whether known or unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or unliquidated,
and whether due or to become due), including any liability for Taxes.

 

“License Agreement” means the license agreement, substantially in the form
attached to this Agreement as Exhibit A, to be entered into at the Closing
between Seller and the Company pursuant to which the Company will license the
right to manufacture and distribute “Project Hendrix” devices.

 

“Lien” means any security interest, pledge, bailment, mortgage, hypothecation,
deed of trust, conditional sales and title retention agreement (including any
lease in the nature thereof), charge, restriction, right of first refusal,
encumbrance or other similar arrangement or interest in real or personal
property, whether now or hereafter owned, operated or leased.

 

“Non-Income Tax Return” means any Tax Return relating solely to Taxes other than
Income Taxes and, for the avoidance of doubt, shall not mean or include any
Income Tax Return.

 

“Order” means any order, injunction, judgment, decree, ruling, writ, arbitration
decision or award, Permit or assessment of a Governmental Authority.

 

“Organizational Documents” means, for a corporation, the certificate or articles
of incorporation, the bylaws, any certificate of determination or instrument
relating to the rights of any preferred shareholders of such corporation, and
any shareholder rights agreement.

 

“Permit” means any approval, consent, license, certificate, registration,
permit, waiver or other authorization issued, granted, given or otherwise made
available by or under a Governmental Authority or pursuant to any Law, and all
pending applications therefor or renewals thereof.

 

“Permitted Liens” means (i) Liens for Taxes or assessments and similar charges,
which either are not delinquent or are being contested in good faith and by
appropriate proceedings which have been disclosed by Seller prior to the Closing
Date and have been established on the Company’s books with respect thereto, (ii)
mechanics’, materialmen’s or contractors’ Liens or any similar statutory Lien or
restriction for amounts not yet due or payable that have been established on the
Company’s books with respect thereto, (iii) covenants, conditions, restrictions,
easements and other matters affecting the Company’s assets or properties which
do not impair the occupancy or use, value or marketability of the property which
they encumber, (v) any and all matters and encumbrances (including, without
limitation, fee mortgages or ground leases) affecting the Leased Real Property
not created or granted by the Company, and (vi) transfer restrictions under
applicable securities Laws. Any Permitted Liens are described on Schedule 1.1.

 

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“Person” means an individual, a partnership, a corporation, a limited liability
company, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization or a Governmental Authority, of any nationality or
jurisdiction.

 

“Pre-Closing Straddle Period” means the portion of a Straddle Period that ends
on the Closing Date.

 

“Pre-Closing Tax Period” means any taxable period ending on or before the
Closing Date.

 

“Seller Expenses” means the costs and expenses incurred on or prior to the
Closing Date by Seller or the Company (including any costs or expenses incurred,
paid or agreed to be paid by the Company on behalf of Seller) in connection with
this Agreement and the transactions contemplated hereby to the extent not paid
by Seller or the Company prior to Closing, including (i) any bonuses or other
compensation or remuneration Seller promises to pay to any employee, contractor,
consultant or other Person upon consummation of the transactions contemplated in
this Agreement, (ii) all fees, commissions, costs and expenses of the Company’s
investment bankers, financial advisors, accountants and legal counsel incurred
in connection with the transactions contemplated hereby, and (iii) all other
fees, commissions, costs and expenses of other third parties engaged by the
Company or Seller to conduct any specific tasks or perform any specific analysis
for the Company or Seller in connection with the transactions contemplated
hereby. All Seller Expenses are set forth on Schedule 2.3(c) accompanying this
Agreement.

 

“Solvent” means, with respect to any Person on any date of determination, that
on such date (i) the fair value of such Person’s assets is greater than the
total amount of such Person’s Liabilities, (ii) the present fair saleable value
of such Person’s assets is not less than the amount that will be required to pay
the probable Liabilities of such Person as they become absolute and matured,
(iii) such Person does not intend to, and does not believe that it will, incur
Liabilities beyond such Person’s ability to pay such Liabilities as they mature,
and (iv) such Person is not engaged in a business or a transaction, and is not
about to engage in a business or a transaction, for which such Person’s property
would constitute an unreasonably small capital. The amount of contingent
liabilities at any time shall be computed as the amount that, in light of all
the facts and circumstances existing at the time, represents the amount that can
reasonably be expected to become an actual matured liability.

 

“Straddle Period” means a taxable period which begins on or before the Closing
Date and ends after the Closing Date.

 

“Subsidiary” means, with respect to any Person, any corporation, limited
liability company, partnership, association or other business entity, in any
jurisdiction, of which a majority of the total voting power of shares of stock
or similar equity or ownership interest thereof entitled to vote in the election
of directors, managers or trustees (or members of any similar governing body)
thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more of the other Subsidiaries of that Person or a combination
thereof.

 

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“Tax” or “Taxes” means any net income, alternative or add-on minimum tax, gross
income, gross receipts, sales, use, ad valorem, value added, goods and services,
transfer, franchise, profits, license, withholding, payroll, employment,
unemployment, excise, severance, stamp, occupation, premium, property,
environmental or windfall profit tax, custom, duty or other tax, customs fees,
governmental fee or other like assessment or charge of any kind whatsoever,
including obligations under applicable escheat or unclaimed property Laws,
together with any interest, penalty, addition to tax or additional or liquidated
amount imposed by any Governmental Authority, whether disputed or not.

 

“Tax Authority” means any Governmental Authority responsible for the imposition,
or collection, administration or enforcement of any Tax, in any jurisdiction.

 

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

 

ARTICLE II.

PURCHASE AND SALE

 

2.1 Purchase and Sale. Upon and subject to the terms and conditions of this
Agreement, at the Closing, Seller will sell, assign, transfer and deliver to
Buyer, and Buyer will purchase and acquire from Seller, all of Seller’s right,
title and interest in, to or under the Shares.

 

2.2 Purchase Price. In consideration of the sale of the Shares by Seller to
Buyer, Buyer shall pay to Seller an aggregate cash purchase price (the “Purchase
Price”) equal to $3,358,593, minus (a) the aggregate amount of all Indebtedness
of the Company as of the Closing Date, all of which is set forth on Schedule
2.3(b) minus (b) all Seller Expenses as forth on Schedule 2.3(c), minus the
amount of the excluded accounts payable set forth on Schedule 2.3(d), plus Cash
(if any) on hand at Closing. Buyer paid $500,000 of the Purchase Price as an
advance payment on August 7, 2019 (the “Advanced Amount”).

 

2.3 Payment of Purchase Price. At the Closing, Buyer shall pay the Purchase
Price as follows:

 

(a) to Seller, the Purchase Price, less the Advanced Amount;

 

(b) to the holders of any Indebtedness, the amount of the Indebtedness to be
repaid at the Closing as set forth on Schedule 2.3(b) in accordance with the
instructions provided to Buyer prior to the Closing; and

 

(c) to the Persons set forth in Schedule 2.3(e), Seller Expenses set forth in
Schedule 2.3(c) in accordance with the instructions received from such Persons
prior to the Closing.

 

2.4 Closing. The closing of the transactions contemplated hereby (the “Closing”)
shall take place simultaneously with the execution by all parties of this
Agreement on the Closing Date, or at such other place, on such other date and at
such other time as may be agreed upon in writing between Seller and Buyer. The
Closing contemplated hereby may occur electronically via email and/or physical
delivery of documents to be held in escrow pending closing.

 

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ARTICLE III.

REPRESENTATIONS AND WARRANTIES OF SELLER AND THE COMPANY

 

Each of Seller and the Company, jointly and severally, represents and warrants
as of the Closing Date (except for those representations and warranties made as
of another date) to Buyer, subject to the exceptions as are specifically
disclosed with respect to specific numbered and lettered subsections of this
Article III in the Schedules hereto, delivered herewith and dated as of the date
hereof, as follows (Seller, and not the Company, shall be responsible for all
indemnification obligations under Section 7.3(a)(i) arising out of any breach of
any of the representations and warranties made below by Seller or the Company):

 

3.1 Organization and Qualification. The Company is a corporation duly organized,
validly existing, and in good standing under the Laws of the state of Delaware
and has full corporate 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. 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. The Company
has no Subsidiaries and does not have the right to acquire an ownership interest
in any other Person.

 

3.2 No Conflicts. The performance and consummation of the transactions
contemplated in this Agreement do not and will not, (i) conflict with or result
in a material violation or breach of any of the terms, conditions or provisions
of the Company’s Organizational Documents; (ii) conflict with or result in a
material violation or breach of, or default under, give rise to any right of
acceleration or termination of, or otherwise require the consent of any Person
pursuant to, any of the terms, conditions or provisions of any Company Contract
disclosed or required to be disclosed on Schedule 3.181a); (iii) result in the
creation of any Lien on any of the assets or properties of the Company; or (iv)
conflict with or result in a material violation or breach of any Laws or Orders
applicable to the Company or any of its assets or properties.

 

3.3 Authorization. Seller has the power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement by Seller and the consummation of the transactions contemplated
hereby have been duly and validly authorized on behalf of Seller and no
shareholder approval or other proceedings on the part of Seller are necessary to
authorize the execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated hereby. This Agreement has been
duly executed and delivered by Seller and constitute or will constitute upon
execution and delivery valid and binding agreements of Seller, enforceable
against Seller in accordance with its terms.

 

3.4 Solvency. On the Closing Date Seller is Solvent.

 

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3.5 Compliance With Laws; Permits. The Company is not, and at all times since
May 19, 2017, has not been, in material violation of any applicable Laws or
Order, and the Company has not been given written notice of or has been
threatened in writing to be charged with any such violation. The Company owns,
holds, possesses or lawfully uses in the operation of the Business all Permits
which are in any manner necessary for it to conduct the Business as now
conducted, or for the ownership, operation and use of its assets, free and clear
of all Liens (other than Permitted Liens). The Company is not in material
default, nor has it received any notice of any claim of default, with respect to
any such Permits. All such Permits are renewable by their terms or in the
ordinary course of business without the need to comply with any special
qualification procedures or to pay any amounts other than routine filing fees.
Without limiting any of the foregoing, any Permits that are necessary to operate
the Business that were previously held by Seller or any other Person have been
transferred to the Company, and the Company holds such Permits as of the Closing
Date. Seller agrees to sign any documents or take any other action necessary, in
Buyer’s reasonable opinion, after Closing to ensure that the Company holds any
such Permits.

 

3.6 Governmental Approvals. No approval, consent, waiver or authorization of, or
registration, declaration or filing with, exemption by, or any notice to, any
Governmental Authority or other regulatory body is required to be made, obtained
or given by the Company: (a) for or in connection with the consummation of the
transactions contemplated in this Agreement, or (b) as a condition to the
legality, validity or enforceability of the transactions contemplated in this
Agreement.

 

3.7 Capitalization.

 

(a) The authorized shares of the Company consist of 1,000 shares of common
stock, par value $0.0001 per share, of which 1,000 shares are issued and
outstanding and constitute the Shares. All of the Shares have been duly
authorized, are validly issued, fully paid and nonassessable.

 

(b) All of the Shares were issued in compliance with applicable Laws. None of
the Shares were issued in violation of any agreement or commitment to which
Seller or the Company is a party or is subject to or in violation of any
preemptive or similar rights of any Person, including without limitation any
Governmental Authority.

 

(c) There are no outstanding or authorized options, warrants, convertible
securities, stock appreciation, phantom stock, profit participation, or other
rights, agreements, or commitments relating to the shares of stock of the
Company or obligating Seller or the Company to issue or sell any shares of stock
of, or any other interest in, the Company. There are no voting trusts,
shareholder agreements, proxies, or other agreements in effect with respect to
the voting or transfer of any of the Shares.

 

(d) Seller is the sole record and beneficial owner of the Shares. No other
Person owns any interest in or has any right to any capital stock or equity
interests in the Company. Seller has good and valid title to the Shares, free
and clear of all Liens. Seller is not a party to any option or warrant or other
right, agreement, arrangement or commitment obligating Seller to transfer any of
the Shares, restricting the transfer of any of the Shares or affecting the
voting of any of the Shares.

 

3.8 Litigation. There are no claims, actions, causes of action, demands,
lawsuits, arbitrations, inquiries, audits, notices of violation, proceedings,
litigation, citations, summons, subpoenas, or known investigations of any
nature, whether at law or in equity (collectively, “Actions”) pending or, to
Company’s Knowledge, overtly threatened against or by the Company, to Company’s
or Seller’s Knowledge’s, any of their Affiliates: (i) relating to or affecting
the Company or any of the Company’s properties or assets; or (ii) that challenge
or seek to prevent, enjoin, or otherwise delay the transactions contemplated by
this Agreement.

 

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3.9 Intellectual Property Rights.

 

(a) Schedule 3.9(a) sets forth a complete and correct listing of the following
Company IP (i) patents, patent applications, continuations,
continuations-in-part, divisions and reissues thereto, (ii) registered
trademarks and applications therefor, (iii) registered copyrights, and (iv)
Internet domain name registrations.

 

(b) Any patents, patent applications or other Intellectual Property that is
necessary to operate the Business that was previously owned by Seller or any
other Person, including the Intellectual Property listed on Schedule 3.9(b), has
been transferred to the Company prior to Closing, and the Company fully owns
such Intellectual Property as of the Closing Date free any clear of any Liens
other than Permitted Liens. Seller does not own any Intellectual Property used
by the Company in the conduct of its business.

 

(c) To Company’s Knowledge, the Business as it has been conducted and is
currently conducted does not infringe, misappropriate or otherwise violate the
Intellectual Property of any third party, and no Person has asserted any claim
of the foregoing or challenging the ownership, validity or enforceability of any
Intellectual Property owned, licensed or used by the Company. Neither the
Company nor Seller received or sent any written notices or written
communications (including emails) alleging any of the foregoing (including any
demand letters). To Company’s Knowledge, no event has occurred that would give
any third party a right to obtain Company IP from any escrow agent.

 

(d) The Company: (i) owns and possesses the entire and exclusive right, title
and interest in and to the Company IP, free and clear of any Liens (other than
Permitted Liens or written licenses of Intellectual Property to third parties
made available to Buyer prior to Closing); or (ii) has been granted sufficient
rights pursuant to a written Contract made available to Buyer in and to any
Intellectual Property not owned by the Company which is material to conduct the
Business of the Company as it has been conducted or is currently conducted. All
of the Intellectual Property owned by the Company, including without limitation
all Intellectual Property referred to in Section 3.9(b) (collectively, the
“Company IP”) is subsisting, valid and enforceable.

 

(e) The Company has taken reasonable necessary actions to maintain and protect
the Company IP and confidential and proprietary information owned or used by the
Company, no loss or expiration of any Intellectual Property owned by the Company
is pending or, to Company’s Knowledge, threatened or reasonably foreseeable
(except for patents expiring at the end of their statutory terms and not due to
any failure by the Company to pay any maintenance fees, and subject to the
requirement of payment of patent and trademark maintenance fees as they become
due in the future), and the Company has not taken any action which would
reasonably be expected to have a material and adverse effect on its rights in
any of the Intellectual Property.

 

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(f) No Public Software (i) forms part of the Company IP; or (ii) was or is
distributed by the Company to third parties, in whole or in part, in conjunction
with the Company IP, in each case (i) and (ii) that would require (A) any
software included in the Company IP to be licensed free of charge or for a
nominal fee, (B) the source code of any software included in the Company IP to
be disclosed, licensed or distributed, or (C) granting rights to any third party
to modify or create derivative works of any software included in the Company IP.
For purposes of this Section 3.9(f), “Public Software” means any software
licensed to or otherwise used by the Company that, to Company’s Knowledge,
contains, or is derived in any manner (in whole or in part) from, any software
that is distributed as “free software”, open source software or similar
licensing or distribution models.

 

3.10 Financial Statements.

 

(a) Attached to Schedule 3.10 hereto are copies of the (i) unaudited financial
statements (balance sheet, statement of operations, statement of cash flows and
statement of shareholders’ equity) of the Company as at, and for the fiscal
years ended December 31, 2017 and December 31, 2018, and a balance sheet as of
June 30, 2019 (collectively, the “Financial Statements”). The Financial
Statements were prepared from the books and records of the Company in accordance
with the Company’s historical practices, applied on a consistent basis
throughout the periods indicated. The Financial Statements fairly present in all
material respects the financial condition and operating results of the Company
as of the dates, and for the periods, indicated therein, subject, in the case of
unaudited financial statements, to normal year-end audit adjustments.

 

(b) The accounts receivable shown on the balance sheet as of June 30, 2019 (the
“Balance Sheet Date”) included in the Financial Statements (the “Balance Sheet”)
and accounts receivable since the date thereof, arose from bona fide
transactions in the ordinary course of business and consistent with past
practice. Since the Balance Sheet Date, the Company has continued all pricing,
sales, receivables and payables production practices in accordance with the
ordinary course of business and consistent with prior period practice and has
not engaged in (i) any practice intended to have the effect of accelerating to
pre-Closing periods collections of receivables that would otherwise be expected
(based on past practice) to be made in post-Closing periods or (ii) any practice
intended to have the effect of postponing to post-Closing periods payments by
the Company that would otherwise be expected (based on past practice) to be made
in pre-Closing periods.

 

(c) Provided that the Indebtedness set forth on Schedule 2.3(b) is paid in full
at Closing, the Company has no Indebtedness as of the Closing.

 

(d) Since the Balance Sheet Date, the Company has continued to pay all accounts
and notes payable in accordance with the ordinary course of business and
consistent with prior period practice and the payment terms of its suppliers or
vendors, and none of such payables is delinquent.

 

3.11 Books and Records. The minute books and stock record books and other
similar records of the Company have been provided or made available to Buyer
prior to the execution of this Agreement.

 

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3.12 Absence of Changes. Since the Balance Sheet Date, the Business has been
conducted in the ordinary course consistent with past practice. In addition,
without limiting the generality of the foregoing, since the Balance Sheet Date,
other than in connection with the transactions contemplated hereby, with the
exceptions set forth on Schedule 3.12, the Company has not:

 

(a) entered into any Contract in connection with any transaction involving a
proposal for a merger or other business combination involving the Company or any
transaction involving a proposal or offer to acquire membership interests or
substantially all of the assets of the Company;

 

(b) acquired any business or Person, whether by merger, consolidation or
reorganization or by purchase of its assets or equity interests;

 

(c) entered into any strategic alliance, joint development or joint marketing
Contract;

 

(d) received a written notice of default or termination of or under any Company
Contract;

 

(e) declared or paid any dividends or other distribution of any kind;

 

(f) amended its Organizational Documents;

 

(g) made or agreed to make any transfer, disposition or sale of, waiver or
cancellation of any claims or rights to, license or lease of, or incurrence of
any Liens on, any assets or properties of the Company;

 

(h) made or agreed to make payment, discharge or satisfaction, in an amount in
excess of $50,000, of any disputed claim or disputed Liability;

 

(i) incurred, assumed or guaranteed any Indebtedness, issued or sold any debt
securities or guaranteed any debt securities of others;

 

(j) incurred or committed to incur capital expenditures in excess of $50,000,
individually, or incurred or committed to incur capital expenditures in excess
of $100,000 in the aggregate;

 

(k) granted or promised any increase in the compensation or benefits payable or
to become payable to any officer, director, consultant or employee, except for
normal merit and cost of living increases in the ordinary course of business;

 

(l) made, revoked or changed any Tax election or method of Tax accounting or
settled or compromised any liability with respect to Taxes of the Company; or

 

(m) made any change in any method of accounting or accounting practice by the
Company, except for any such change required by reason of a concurrent change in
applicable requirements of GAAP;

 

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(n) sold, leased, licensed, abandoned or otherwise disposed of any assets of the
Company other than for fair consideration in the ordinary course of business,
consistent with past practices; or

 

(o) agreed, authorized or otherwise committed to do any of the foregoing.

 

3.13 No Undisclosed Liabilities. There are no material Liabilities of, relating
to or affecting the Company or any of its assets or properties, other than (i)
current Liabilities incurred in the ordinary course of business consistent with
past practice since the Balance Sheet Date and in accordance with the provisions
of this Agreement and (ii) Liabilities that are reflected, reserved for or
disclosed in the Balance Sheet (including any notes thereto), and (iii) Seller
Expenses. For purposes of this Agreement, “ordinary course” Liabilities include
only Liabilities incurred in the normal course of the business of the Company,
consistent with past practice and amounts, and do not include Liabilities
arising from the breach of or default under the Company Contract or the
violation of any Laws, Order or Permit. For the purpose of clarity, any and all
obligations and Liabilities related to earn-out or other contingent payments
that are or may be payable to the former shareholders of the Company (including
any obligations to provide reports regarding sales and revenues) under the
Agreement and Plan of Merger dated as of May 19, 2017 by and among Seller, the
Company, Fit Merger Sub, and the former shareholders of the Company are
obligations and Liabilities of Seller, and the Company does as of the Closing
and will not following the Closing have any obligations or Liabilities related
to any such earn-out or other contingent payments.

 

3.14 Taxes.

 

(a) All Tax Returns required to be filed by or with respect to the Company have
been duly and timely filed (taking into account any extensions of time to file)
with the appropriate Tax Authority. All such Tax Returns are true, correct and
complete in all material respects and prepared in compliance with all applicable
Laws. All Taxes due and payable or owed by or with respect to the Company
(whether or not shown to be due and payable on any Tax Return) have been timely
paid or withheld and remitted to the appropriate Tax Authority.

 

(b) The Company has (i) withheld and paid to the appropriate Tax Authority all
Taxes required to have been withheld and paid in connection with amounts paid or
owing to any employee, creditor, independent contractor, stockholder, vendor or
other third party, and (ii) complied with all information reporting and backup
withholding requirements, including the filing of all required Forms W 2 and
Forms 1099 and the maintenance of all required records with respect thereto.

 

(c) No claim has ever been made in writing by a Tax Authority in a jurisdiction
where the Company does not file Tax Returns that the Company is or may be
subject to taxation by that jurisdiction. There is no audit, dispute, claim or
proceeding related to Taxes pending or, to Company’s Knowledge, threatened
against the Company by a Governmental Authority. All Tax deficiencies or
assessments asserted or made by a Governmental Authority against the Company
have been fully paid or settled. There are no Liens for Taxes upon the assets or
properties of the Company other than Liens for Taxes not yet due and payable.
There are no requests for rulings in respect of any Taxes pending between the
Company and any Tax Authority, and there is no power of attorney given by or
binding upon the Company that is currently in effect.

 

11

 

 

(d) The Company is not currently the beneficiary of any extension of time within
which to file any Tax Return. There are no outstanding agreements or waivers (i)
extending the statutory period of limitation applicable to any Tax Returns
required to be filed by, or that include or are treated as including, the
Company, or (ii) with respect to any Tax assessment or deficiency affecting the
Company.

 

(e) The Company (i) was not included and is not includable in the Tax Return of
any affiliated, consolidated, combined, unitary or similar group of corporations
(other than the group that consists of Seller, the Company and Seller’s other
wholly owned Subsidiary), and the Company is not the successor (whether by
merger, conversion, liquidation or otherwise) to any Person that was so included
or includible, (ii) is not a party to or bound by any obligations under any Tax
sharing, Tax allocation, Tax indemnity or similar agreement, or (iii) has no
Liability for the Taxes of any other Person under Section 1.1502-6 of the
Treasury Regulations (or any similar provision of Law in any material amount),
or as a transferee or successor, by Contract (other than a Contract, the
principal of which does not related to Taxes) or otherwise.

 

(f) The Company has not participated, within the meaning of Treasury Regulations
Section 1.6011, in any “reportable transaction” within the meaning of
Section 6707A of the Internal Revenue Code of 1986, as amended (the “Code”) and
Treasury Regulations Section 1.6011-4(b) or any analogous provision of state,
local or foreign Law. The Company has disclosed on its Tax Returns all positions
taken therein that could give rise to a substantial understatement of Tax within
the meaning of Code Section 6662 (or any similar Law).

 

(g) None of the assets of the Company constitute “tax-exempt bond financed
property” within the meaning of Code Section 168, and none of such assets is
subject to a lease, safe harbor lease or other arrangement as a result of which
such assets are required for federal Income Tax purposes to be treated as owned
by a Person other than the Company.

 

(h) The Company will not be required to include any item of income in, or
exclude any item of deduction from, taxable income for the taxable period (or
portion thereof) ending after the Closing Date as a result of any (i) change in
method of accounting (including adjustments pursuant to Section 481) for a
taxable period ending on or prior to the Closing Date, (ii) “closing agreement”
as described in Code Section 7121 (or any corresponding or similar provision of
state, local or foreign income Tax Law) executed on or prior to the Closing
Date; (iii) intercompany transaction or excess loss account described in
Treasury Regulations under Code Section 1502 (or any corresponding or similar
provision of state, local or foreign income Tax Law); (iv) installment sale or
open transaction disposition made on or prior to the Closing Date; or (v)
deferred revenue or prepaid amount received on or prior to the Closing Date.

 

(i) Schedule 3.14(i) lists all federal, state, and local Income Tax Returns
filed by or with respect to the Company for taxable periods to which the
applicable statutes of limitations on the assessment and collection of Taxes
have not expired, and indicates those Income Tax Returns that have been audited
and indicates those Tax Returns that currently are the subject of audit. Such
Schedule also indicates all jurisdictions where the Company currently files a
Tax Return, including sales and use, value-added (VAT) or goods and services
(GST) Tax Returns. Seller or the Company has made available to the Buyer correct
and complete copies of all federal Income Tax Returns, examination reports and
statements of deficiencies assessed against or agreed to by the Company filed or
received since January 1, 2016.

 

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(j) The aggregate unpaid Taxes of the Company (i) did not exceed the reserve for
Tax Liability (rather than any reserve for deferred Taxes established to reflect
timing differences between book and Tax income) set forth on the face of the
Balance Sheet (rather than in any notes thereto) and (ii) do not exceed that
reserve as adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of the Company in filing their Tax
Returns. Since the date of the Balance Sheet, the Company has not incurred any
liability for Taxes arising from extraordinary gains or losses, as that term is
used in GAAP, outside the ordinary course of business consistent with past
custom and practice.

 

3.15 Benefit Plans; ERISA.

 

(a) Schedule 3.15 lists all Benefit Plans. For purposes of this Agreement,
“Benefit Plan” means any employee benefit plan, arrangement, policy or
commitment (whether written or oral and whether or not an employee benefit plan
within the meaning of Section 3(3) of ERISA), including, without limitation, any
employment, consulting or deferred compensation agreement, executive
compensation, bonus, incentive, pension, profit-sharing, savings, retirement,
stock option, stock purchase or severance pay plan, any life, health, disability
or accident insurance plan or other welfare benefit plan or any holiday or
vacation practice, currently maintained, sponsored or administered by the
Company or the Subsidiary for which the Company or the Subsidiary has or may
have Liability.

 

(b) With respect to each Benefit Plan, no event has occurred, and there exists
no condition or set of circumstances in connection with which the Company could,
directly, or indirectly, be subject to any Liability under ERISA, the Code or
any other applicable Law, except Liability for benefits claims and funding
obligations payable in the Ordinary Course of Business.

 

(c) No Benefit Plan is subject to Section 302 or Title IV of ERISA or Code
Section 412.

 

(d) No Benefit Plan that is a welfare plan within the meaning of ERISA
Section 3(1) (regardless of whether the plan is covered by ERISA) provides
benefits to current or former employees beyond retirement or other termination
of service (except as otherwise required by Law).

 

(e) No Benefit Plan is a “nonqualified deferred compensation plan” as that term
is defined under Code Section 409A.

 

(f) The Company does not have any deferred compensation plans and does not owe
any deferred bonuses or other deferred compensation to any of its employees as
of the Closing.

 

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3.16 Assets.

 

(a) The Company has good and valid title to, or in the case of leased property
and assets, has a valid leasehold interest in, all of its tangible property and
assets, except for properties and assets sold since the Balance Sheet Date in
the ordinary course of business (collectively, the “Assets”). None of the Assets
is subject to any Lien other than Permitted Liens. All of the assets used by the
Company in the conduct of its business (other than goods in transit) are located
on the premises of the Company. Without limiting any of the foregoing, any
assets that are necessary to operate the Business that were previously held by
Seller or any other Person have been transferred to the Company, and the Company
fully owns such assets as of the Closing Date, free and clear of any Liens other
than Permitted Liens.

 

(b) No Person other than the Company owns any material equipment or other
tangible assets or properties situated on the premises of the Company or used in
the operation of the Business, except for items leased by the Company.

 

(c) The Company does not own any real property.

 

(d) Schedule 3.16(d) sets forth (i) a true, correct and complete list of all
real property leased, subleased or licensed to the Company (collectively, the
“Leased Real Property”), and (ii) the address of each parcel of Leased Real
Property. A true and correct copy of each such lease and any material amendments
thereto have been made available to Buyer. The Company has not granted any
Person the right to use or occupy any portion of any parcel of Leased Real
Property or received notice of any claim of any Person to the contrary.

 

3.17 Company Systems. To Company’s Knowledge, there has been no unauthorized
access, use, intrusion, or breach of security, or failure, breakdown,
performance reduction, or other adverse event affecting any computer hardware,
servers, networks, platforms, peripherals, data communication lines, and other
information technology equipment and related systems, including any outsourced
systems and processes, that are owned or managed by Company (“Company Systems”)
that has caused or could reasonably be expected to cause any: (i) substantial
disruption of or substantial interruption in or to the use of such Company
Systems or the conduct of the Company’s Business; (ii) material loss, material
destruction, material damage, or material harm of or to the Company or its
operations, personnel, property, or other assets; (iii) unavailability of any
services or data Company licenses or sells to its customers, or (iv) any Action
against the Company (including, without limitation, any breach of contract
claims or claims for service credits). The Company has taken all reasonable
actions, consistent with reasonable and applicable industry practices, to
protect the integrity and security of the Company Systems and the data and other
information stored or processed thereon. The Company (x) maintains commercially
reasonable backup and data recovery, disaster recovery, and business continuity
plans, procedures, and facilities; and (y) acts in material compliance
therewith.

 

3.18 Contracts.

 

(a) Schedule 3.18(a) sets forth a list (including applicable date, Contract
title, and party names) of each of the following Contracts (other than customary
engagement letters with attorneys or accountants) to which the Company is a
party or by which it is bound (the “Company Contracts”):

 

(i) each Contract that involves the annual payment of an amount greater than
$50,000;

 

(ii) each Contract that was not entered into in the ordinary course of business;

 

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(iii) Contracts with each of the top ten customers of the Company determined by
the revenue received from such customers for the twelve (12) month period ended
December 31, 2018;

 

(iv) each Contract that limits the freedom of the Company to engage in any line
of business, to compete with any Person, to solicit for employment, hire or
obtain the services of any Person or to sell any products or services of or to
any Person;

 

(v) each Contract that involves payments to or by any Person based on sales,
purchases or profits, other than (i) direct payments for goods, or (ii) any plan
for the payment of bonuses to employees of the Company;

 

(vi) each Contract that includes a proxy, power of attorney or similar
delegation of authority of the Company or the Subsidiary, or a guarantee of the
obligations of any other Person; and

 

(vii) each Contract for the lease of personal property to or from any Person.

 

(b) Each of the Company Contracts is a legal, valid, binding and enforceable
obligation of the Company and is in full force and effect, and there exists no
material default or event of default or event, occurrence, condition or act,
with respect to the Company or, to Company’s Knowledge, with respect to the
other contracting party or otherwise, that, with or without the giving of
notice, the lapse of the time or the happening of any other event or condition,
constitutes a material default or breach by such Person thereunder or would
reasonably be expected to (i) become a material default or event of default
under or breach or violation of any of the Company Contracts or (ii) result in
the loss or expiration of any right or option by the Company (or the gain
thereof by any third party) under any of the Company Contracts. True, correct
and complete copies of all of the Company Contracts (including any amendments
thereto) have been made available to Buyer.

 

(c) Schedule 3.18(c) sets forth a list of all Company Contracts that require
consent of their counterparties to assign or transfer such Company Contracts
upon a change of control of Company.

 

3.19 Insurance. The Company has delivered or made available to Buyer copies of
all policies of insurance to which the Company is a party or a named beneficiary
or under which the Company or any director of the Company, is or has been
covered at any time within one year preceding the date of this Agreement. All
policies to which the Company is kparty or that provide coverage to the Company,
or any director or officer of the Company are valid and outstanding, and the
Company has given proper and timely notice to the applicable insurer of all
claims that may be insured thereby. The Company has paid all premiums due, and
has otherwise performed all of its obligations, under or in connection with each
policy to which the Company is a party or that provides coverage to the Company
or any director thereof.

 

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3.20 Labor Matters.

 

(a) Schedule 3.20(a) contains a complete list of the names of all Persons who
are employees or independent contractors of the Company, specifying whether each
Person is an employee or an independent contractor. Schedule 3.20(a) also
includes a complete list of all employment agreements between the Company and
any of its employees.

 

(b) The Company is in compliance in all material respects with all Laws
respecting employment and employment practices, terms and conditions of
employment and wages and hours, and are not engaged in any unfair labor
practice. The Company is not a party to any labor dispute, arbitration, lawsuit
or administrative proceeding relating to labor matters involving the employees
of the Company.

 

(c) In accordance with applicable Law, each individual who the Company deems to
be an employee of the Company and each individual with whom the Company directly
contracts to provide services is, and has been, (A) properly classified as an
employee or independent contractor, and (B) paid all wages (including any
required overtime pay), deferred compensation, benefits and other compensation
for all services performed by such individual. All accrued vacation will be paid
to the Company’s employees prior to the Closing.

 

3.21 Environmental Matters. Except for the Leased Real Property, the Company
does not own, operate, lease or control any real property. The Company complies
in all material respects with all Environmental Laws. Since May 19, 2017, the
Company has not received written notice from any Governmental Authority that the
Company, its Business or Assets, or any real property currently or formerly
owned, leased, or used by the Company is or may be in violation of any
Environmental Law or any applicable Law regarding hazardous substances.

 

3.22 Banks and Brokerage Accounts. Schedule 3.22 sets forth (a) a true and
complete list of the names and locations of all banks, trust companies,
securities brokers and other financial institutions at which the Company has an
account or safe deposit box or maintains a banking, custodial, trading or other
similar relationship, and (b) a true and complete list and description of each
such account, box and relationship, indicating in each case the account number
and the names of the respective officers, employees, agents or other similar
representatives of the Company having signatory power with respect thereto.

 

3.23 Directors and Officers. Schedule 3.23 lists all officers and directors (or
equivalent) of the Company.

 

3.24 Interests of Related Parties.

 

(a) Except as set forth on Schedule 3.24(a), no officer, director or Affiliate
of the Company or Seller: (i) owns or has owned, directly or indirectly, any
equity or other financial or voting interest in any competitor, supplier,
vendor, licensor, lessor, distributor, independent contractor or customer of the
Company other than an amount not exceeding five percent (5%) of the issued and
outstanding securities of any class of any company whose securities are traded
on a national securities exchange or in the over-the-counter market; (ii) owns
or has owned, directly or indirectly, or has or has had any interest in any
property (real or personal, tangible or intangible) used in the Business of the
Company; or (iii) is a party to any Contract or transaction with the Company
(other than Benefit Plans).

 

16

 

 

(b) There are no outstanding notes payable to, accounts receivable from or
advances by the Company to or from any officer, director or Affiliate of the
Company or Seller in connection with the Business or Assets, and the Company is
not otherwise a debtor or creditor of, or has any liability or other obligation
of any nature to, any such Person other than compensation and benefits to
employees and directors, Company credit cards and travel and expense advances in
the ordinary course of business.

 

(c) All Indebtedness that was owed by the Company to Seller has been paid to or
forgiven by Seller prior to the Closing.

 

3.25 Powers of Attorney. There are no outstanding powers of attorney executed by
or on behalf of the Company in favor of any Person, other than powers of
attorney granted in connection with Intellectual Property or Indebtedness.

 

3.26 No Brokers or Finders. Neither the Company nor Seller has incurred and will
not incur, directly or indirectly, as a result of any action taken or permitted
to be taken by or on behalf of the Company or Seller, any liability for
brokerage or finders’ fees or agents’ commissions or similar charges in
connection with the execution and performance of the transactions contemplated
by this Agreement, except that Seller engaged Peak Technology Partners in
connection with the transactions contemplated by this Agreement and all fees or
other amounts payable to Peak Technology Partners will be paid by Seller at
Closing or will be deducted from the Purchase Price if not paid by Seller at
Closing.

 

3.27 Payment-Related Representations.

 

(a) The operations of the Company are and have been conducted at all times in
material compliance with all applicable state and federal money transmitter
Laws, including, without limitation, Laws issued by the Financial Crimes
Enforcement Network and state regulatory agencies. Since May 19, 2017, the
Company has not received any written notice of any action or proceeding against
it alleging any failure to comply with any applicable state or federal money
transmitter law.

 

(b) The operations of the Company are and have been conducted at all times in
material compliance with applicable Law in respect of escheat or unclaimed or
abandoned property (“Unclaimed Properly Laws”). Since May 19, 2017, the Company
has not received any written communication from any Governmental Authority (or
any third party serving as an agent, representative or contractor for a
Governmental Authority) inquiring about the Company’s unclaimed property and/or
escheat compliance, seeking an abandoned property audit, or alleging that the
Company is in violation of applicable Unclaimed Property Laws.

 

17

 

 

(c) The operations of the Company are and have been conducted at all times in
material compliance with applicable U.S. anti-money laundering Laws, including,
without limitation, the requirements of the USA PATRIOT Act of 2011, the United
States Bank Secrecy Act of 1970, the United States Money Laundering Control Act
of 1986, and the International Money Laundering Abatement and Anti-Terrorist
Financing Act of 2001, the Laws and executive orders administered and enforced
by the Office of Foreign Assets Control, U.S. Department of the Treasury
(“OFAC’), and any regulations promulgated thereunder (collectively, the
“Anti-Money Laundering Laws”), and no proceeding by or before any court or
Governmental Authority or any arbitrator involving the Company or any of its
Affiliates with respect to Anti-Money Laundering Laws is pending or, to the
Company’s Knowledge, threatened. To the Company’s Knowledge, the Company (i) is
not under investigation by any Governmental Authority or self-regulatory
authority for, nor has it been charged with, or convicted of, money laundering,
drug trafficking, terrorist-related activities, any crimes which in the United
States would be predicate crimes to money laundering, or any violation of any
Anti-Money Laundering Laws; (ii) has not been assessed civil or criminal
penalties under any Anti-Money Laundering Laws; and (iii) has not had any of its
funds seized or forfeited in any action under any Anti-Money Laundering Laws.

 

(d) In connection with its collection, storage, transfer (including, without
limitation, any transfer across national borders) and/or use of any personally
identifiable information from any individuals, including, without limitation,
any customers, prospective customers, employees and/or other third parties
(collectively “Personal information”), the Company is and has been since May 19,
2017 in compliance with all applicable Laws in all relevant jurisdictions, the
Company’s privacy policies and the requirements of any contract or codes of
conduct to which the Company is a party. The Company has commercially reasonable
physical, technical, organizational and administrative security measures and
policies in place to protect all Personal Information collected by it or on its
behalf from and against unauthorized access, use and/or disclosure. The Company
is and has been in compliance with all Laws relating to data loss, theft and
breach of security notification obligations, including, without limitation, the
General Data Protection Regulation, EU 2016/679, as amended. Since May 19, 2017,
no breach or violation by the Company, or any employee, director, or officer,
or, to the Company’s Knowledge, any consultant or advisor of any security policy
of the Company with respect to Personal Information has occurred, and, since May
19, 2017, there has been no unauthorized or illegal use of or access to any
Personal Information by any Person.

 

3.28 Exclusivity of Representations. The representations and warranties made by
Company and Seller in this Article III are the exclusive representations and
warranties made by Company and Seller with respect to the purchase and sale of
the Shares. Except for the representations and warranties contained in this
Article III neither the Company, Seller nor any other Person has made or makes
any other representation or warranty, either written or oral, on behalf of
Company or Seller with respect to the purchase and sale of the Shares, as the
case may be, and each of Company and Seller hereby disclaims any other express
or implied representations or warranties with respect to any matter whatsoever.

 

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ARTICLE IV.

REPRESENTATIONS AND WARRANTIES OF BUYER

 

Buyer hereby represents and warrants as follows:

 

4.1 Organization; Standing and Power. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Kansas and
has all requisite power and authority to own, operate and lease its properties
and to carry on its business as now being conducted.

 

4.2 Authority; Enforceability. Buyer has all requisite power and authority to
execute and deliver this Agreement and to perform its obligations hereunder and
to consummate the transactions contemplated hereby, and all action required on
the part of Buyer for such execution, delivery and performance has been duly and
validly taken. Assuming due execution by Seller, this Agreement constitutes the
legal, valid and binding obligation of Buyer enforceable against Buyer in
accordance with its terms, except as enforceability thereof may be limited by
bankruptcy, insolvency, moratorium and other similar Laws relating to the
enforcement of creditors’ rights generally and by general equitable principles.

 

4.3 No Conflicts. The execution and delivery by Buyer of this Agreement does
not, the performance and consummation by Buyer of the transactions contemplated
hereby do not and will not, conflict with or result in a violation or breach of,
or default under, or give rise to any right of acceleration or termination of,
any of the terms, conditions or provisions of any note, bond, lease, license,
agreement or other instrument or obligation to which Buyer is a party or by
which Buyer’s assets or properties are bound, or violate any Laws applicable to
Buyer or any of Buyer’s assets or properties, in each case, which would
adversely affect its ability to consummate the transactions contemplated hereby.

 

4.4 Legal Proceedings. There is no action, suit, claim, proceeding or
investigation pending or threatened against or involving Buyer or its assets or
properties in a matter that would adversely affect its ability to perform its
obligations under this Agreement, and Buyer knows of no reasonable basis for any
of the foregoing.

 

4.5 No Brokers or Finders. Buyer has not incurred and will not incur, directly
or indirectly, as a result of any action taken or permitted to be taken by or on
behalf of Buyer, any liability for brokerage or finders’ fees or agents’
commissions or similar charges in connection with the execution and performance
of the transactions contemplated by this Agreement.

 

4.6 Investment. Buyer is acquiring the Shares 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 in violation of the Securities Act of 1933, as
amended. Buyer acknowledges that the Shares are not registered under the
Securities Act of 1933, as amended, or any state securities laws, and that the
Shares 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. Without limitation of any of representation or
warranty by Seller and/or the Company herein, Buyer is able to bear the economic
risk of holding the Shares for an indefinite period (including total loss of its
investment), and has sufficient knowledge and experience in financial and
business matters so as to be capable of evaluating the merits and risk of its
investment.

 

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ARTICLE V.

DELIVERIES OF SELLER AND COMPANY AND BUYER

 

5.1 Deliveries of Seller. At or before the Closing, Seller and/or Company, as
applicable, shall deliver, or cause to be delivered, to Buyer the following in
form and substance satisfactory to Buyer, acting reasonably:

 

(a) original Share certificate(s) evidencing the Shares, duly endorsed in blank
or accompanied by stock powers or other instruments of transfer duly executed in
blank.

 

(b) a secretary’s certificate of the Company attaching: (i) a copy of the
Company’s Organizational Documents (each, as amended through the Closing); and
(ii) a certificate, dated within ten (10) Business Days of Closing, from the
Delaware Secretary of State establishing the Company is in existence and in good
standing in the State of Delaware;

 

(c) the consents of all counterparties to the Company Contracts listed on
Schedule 3.18(c) that require consent prior to a change of control of the
Company;

 

(d) evidence that all assets, including all patents, patent applications or
other Intellectual Property, that are necessary to operate the Business
previously owned by Seller or any other Person has been transferred to the
Company prior to Closing;

 

(e) a written release from                             of any guarantees from
the Company of any obligations under the Senior Secured Credit Agreement dated
as of May 3, 2019 and its attachments and any amendments, and evidence that any
security agreement (or similar agreement) between the Company and 
                             and/or Sagard Holdings Manager LP has been
terminated as of Closing;

 

(f) the release of all Liens that                             or any of its
affiliates or any other third party, including without limitation, Sagard
Holdings Manager LP, has on any of the Company’s assets, intellectual property
rights, property or capital stock (including any assets of the Seller
transferred to the Company and any assets of the Seller subject to
Section 6.11), and a UCC termination statement evidencing such release;

 

(g) evidence that the necessary filings have been made with the U.S. Patent and
Trademarks Office to release all Liens that                             ,
LogicMark, LLC, Seller, 3D-ID, LLC and/or Sagard Holdings Manager LP have on the
patents, patent applications and trademarks that Seller transferred to the
Company prior to Closing as contemplated in (d) above;

 

(h) duly executed resignations, effective as of the Closing Date, of the
directors and officers of the Company, as Buyer shall designate;

 

(i) any and all Permits, Orders of, or declarations or filings with, or
expiration of waiting periods imposed by, any Governmental Authority necessary
for the consummation of the transactions contemplated by this Agreement shall
have been filed, occurred or been obtained;

 

(j) evidence that the Company has prepared all required documentation to change
the authorized signatures on its bank accounts listed on Schedule 3.22 to the
Persons designated by Buyer, such that the changes can be implemented
immediately following the Closing; and

 

(k) a copy of the License and Services Agreement signed by Seller.

 

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5.2 Buyer Delivery. Buyer shall deliver to Seller at Closing a copy of the
License and Services Agreement signed by the Company.

 

5.3 Simultaneous Deliveries. The delivery of the documents required to be
delivered at the Closing pursuant to this Agreement shall be deemed to occur
simultaneously. No delivery shall be effective until each party has received or
waived receipt of all the documents that this Agreement entitles such party to
receive.

 

ARTICLE VI.

POST-CLOSING COVENANTS

 

6.1 [Reserved].

 

6.2 Post-Closing Notifications. Buyer and Seller will, and each will cause their
respective Affiliates to, comply with any post-Closing notification or other
requirements, to the extent then applicable to such party, of any Governmental
Authority having jurisdiction over such Person.

 

6.3 Tax Returns. The following provisions shall govern the allocation of
responsibility as between the parties for certain Tax matters following the
Closing:

 

(a) Seller, at its expense, shall prepare or cause to be prepared and timely
file or cause to be timely filed all Income Tax Returns required to be filed by
the Company for all Pre-Closing Tax Periods regardless of when they are to be
filed. Such Tax Returns shall be prepared in a manner consistent with the past
practices of the Company except as required by applicable Law. Seller shall
deliver a copy of such Income Tax Returns to Buyer at least fifteen days prior
to the date on which such Income Tax Return is required to be filed (taking into
consideration applicable extensions) for Buyer’s review and comment, in each
case, solely with respect to matters that could adversely affect Buyer or the
Company for any period (or portion thereof) beginning after the Closing Date.
Buyer shall review such Income Tax Returns within ten (10) days after the
delivery of such Income Tax Returns. In connection with Buyer’s review, Seller
shall provide or cause to be provided promptly to Buyer information reasonably
requested by Buyer or its Affiliates. If Buyer does not submit comments within
such review period, Buyer will be deemed to have approved such Income Tax
Returns as prepared by Seller. If Buyer submits comments to Seller with respect
to matters that could adversely affect Buyer or the Company for any period (or
portion thereof) beginning after the Closing Date within such review period,
then Buyer and Seller shall negotiate in good faith to resolve any such items
disputed in such comments.

 

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(b) Seller, at its expense, shall prepare or cause to be prepared and timely
file or cause to be timely filed (i) all Non-Income Tax Returns required to be
filed for the Company for all Pre-Closing Tax Periods that are to be filed on or
after the Closing Date, and (ii) any and all Tax Returns required to be filed
for the Company for a Straddle Period. Seller shall deliver a copy of such Tax
Returns to Buyer at least fifteen (15) days prior to the date on which such Tax
Return is required to be filed (taking into consideration applicable extensions)
for Buyer’s review and comment. In connection with Buyer’ review, Seller shall
provide or cause to be provided promptly to Buyer information reasonably
requested by Buyer. If Seller does not submit comments within such review
period, Seller will be deemed to have approved such Tax Returns as prepared by
the Buyer. If Seller submits comments to the Buyer within such review period,
the Buyer and Seller shall negotiate in good faith to resolve any such items
disputed in such comments. If Buyer and Seller are unable to resolve any such
dispute within ten (10) days after Seller provides its comments, the parties
shall resolve the dispute in accordance with Section 6.3(c).

 

(c) In the event Buyer and Seller are unable to agree on any timely-raised issue
raised by the other party pursuant to Section 6.3 (a) or (b), Buyer and Seller
shall engage a mutually agreed upon impartial nationally recognized firm of
independent certified public accountants (the “Designated Accounting Firm”) to
resolve the matter, and the Designated Accounting Firm’s determination shall be
final and binding on the parties. The Designated Accounting Firm shall resolve
the dispute within twenty (20) days after the item has been referred to it.
Notwithstanding anything to the contrary in this Section 6.3, the party
responsible pursuant to Section 6.3 (a) or (b) for preparing the disputed Tax
Return shall be entitled to file on behalf of the Company, or cause to be filed,
the applicable Tax Return without having incorporated the disagreed upon changes
to avoid a late filing of such Tax Return. If the Designated Accounting Firm’s
resolution of the dispute necessitates that a Tax Return filed in accordance
with the previous sentence be amended, then the party responsible pursuant to
Section 6.3 (a) or (b) for preparing the disputed Tax Return shall cause an
amended Tax Return to be filed that reflects such resolution. The fees and
expenses of the Designated Accounting Firm shall be borne by each party in the
percentage inversely proportionate to the percentage of the total items
submitted for dispute that are resolved in such party’s favor.

 

(d) To the extent permitted or required by Law or administrative practice, the
taxable year of the Company shall be treated as closing on (and including) the
Closing Date. In the case of any Straddle Period, (i) the amount of any sales or
use Tax, employment Tax, withholding Tax, and any Tax based on or measured by
income, profits or receipts, in each instance imposed upon or payable by or with
respect to the Company for the Pre-Closing Straddle Period shall be determined
based on an interim closing of the books of Company as of the end of the Closing
Date, and (ii) the amount of any Taxes other than a sales or use Tax, employment
Tax, withholding Tax, or Tax based on or measured by income, profits or receipts
Taxes of the Company for the Pre-Closing Straddle Period shall be deemed to be
the amount of such Tax for the entire taxable period multiplied by a fraction
the numerator of which is the number of days in the taxable period ending on and
including the Closing Date and the denominator of which is the total number of
days in such Straddle Period; provided, however, that exemptions, allowances or
deductions that are calculated on an annual basis, such as the deduction for
depreciation, shall be apportioned on a pro rata per diem basis.

 

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6.4 Liability for Taxes.

 

(a) Seller shall be liable for and pay, and pursuant to Article VII (and subject
to the limitations thereof), shall indemnify and hold harmless Buyer and the
Company from and against any and all of the following Taxes (collectively,
“Seller Taxes”): (A) Taxes imposed on any or all of the, or for which Seller or
any of its Affiliates may otherwise be liable, regardless of the Tax period to
which such Taxes relate; (B) Taxes imposed on the Company, or for which the
Company may otherwise be liable under Law, for any Pre-Closing Tax Period, or
for any Pre-Closing Straddle Period as determined in accordance with
Section 6.3(d); (C) [reserved]; (D) Taxes of any member of any “affiliated
group” (within the meaning of the Code Section 1504(a) or any similar group
defined under a similar provision of federal, state, local or foreign Law) of
which the Company (or any predecessor of the Company, whether by merger,
conversion or otherwise) was a member on or prior to the Closing Date by reason
of Treasury Regulations Section 1.1502-6(a) or any analogous or similar
provision of foreign, state or local Law; (E) Taxes of any other Person for
which the Company (or any predecessor of the Company, whether by merger,
conversion or otherwise) is or has been liable (or for which such Person has an
obligation to pay, fund or reimburse) for any Pre-Closing Tax Period or for any
Pre-Closing Straddle Period as determined in accordance with Section 6.3(d),
whether as a transferee or successor, by Contract, Law or otherwise; and (F)
Transfer Taxes allocated to and payable by Seller pursuant to Section 6.4(b).

 

(b) All transfer, documentary, sales, use, stamp, registration and other such
Taxes, and all conveyance fees, recording charges and other fees and charges
(including any penalties and interest) incurred in connection with consummation
of the transactions contemplated by this Agreement (“Transfer Taxes”) shall be
paid by Seller when due, and Seller, will, at its own expense, file all
necessary Tax Returns and other documentation with respect to all such Taxes,
fees and charges, and, if required by applicable Law, the Buyer will, and will
cause its Affiliates to, join in the execution of any such Tax Returns and other
documentation. Notwithstanding the foregoing, the Sellers, on the one hand, and
the Buyer, on the other hand, shall each pay half of any Transfer Taxes. Buyer
and Seller further agree, upon request, to use commercially reasonable efforts
to obtain any certificate or other document from any Governmental Authority or
any other Person as may be necessary to mitigate, reduce or eliminate any Tax
that could be imposed (including, but not limited to, with respect to the
transactions contemplated hereby).

 

(c) Notwithstanding any provision to the contrary in this Agreement, this
Section 6.4(c) shall govern the parties’ rights and responsibilities with
respect to a voluntary disclosure or any similar contracts with a Governmental
Authority with respect to Taxes of the Company for a Pre-Closing Tax Period.
Prior to filing any voluntary disclosure or initiating any similar contacts with
a Governmental Authority related to Taxes of the Company for a Pre-Closing Tax
Period with any Governmental Authority, Buyer shall notify Seller in writing of
its intent to file any such voluntary disclosure or initiate any similar
contacts with a Governmental Authority. For a period of thirty (30) days after
the receipt of such notice by Seller, the Buyer and Seller shall meet and
discuss in good faith the subject matter of such proposed voluntary disclosure
and will work to come to agreement regarding what, if anything, should be
disclosed. If, at the end of such thirty (30) day period, Buyer and Seller
cannot come to agreement regarding such matters, then Buyer shall not at that
time be entitled to make such voluntary disclosure or make any Tax filings with
respect thereto. If Buyer breaches this Section 6.4(c), then Buyer shall not be
entitled to any indemnification with respect to such matter. For the purposes of
clarity, nothing in this subSection (c) is intended to restrict Buyer’s right to
take any action or make any Tax filings with respect to any Tax period that is
not a Pre-Closing Tax Period. In the event Buyer takes action or makes a Tax
filing with respect to a Tax period that is not a Pre-Closing Tax Period, and a
Governmental Authority inquires or initiates an audit thereafter with respect to
a Pre-Closing Tax Period, Buyer will be entitled to indemnification for any
resulting Indemnifiable Losses under Section 7.3(a)(iv).

 

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6.5 Buyer or the Company shall be liable for and pay and shall indemnify and
hold harmless Seller from and against any and all Taxes that relate to
post-Closing Tax periods. Amended Tax Returns. Except as required by Law and
subject to Section 6.4(c), none of the Buyer or any of its Affiliates shall (or
shall cause or permit the Company to) amend or refile any Tax Return previously
filed by the Company without the prior written consent of Seller, such consent
not to be unreasonably withheld, conditioned or delayed. Any dispute between
Buyer and Seller with respect to the filing of any such Tax Return shall be
resolved in accordance with the procedures set forth in Section 6.3(c).

 

6.6 Contest Provisions. Each of Buyer and Seller shall promptly notify the other
in writing upon receipt (including receipt by Affiliates of Buyer or Seller) of
any written notice of any pending or threatened federal, state, local or foreign
Tax audits, examinations or assessments or administrative or court proceeding
which might reasonably be expected to affect the Tax liabilities of the Company,
Seller, or Buyer (a “Tax Proceeding”) with respect to any Pre-Closing Tax Period
or any Straddle Period. With respect to a Tax Proceeding that pertains to a
Pre-Closing Tax Period, Seller shall have the right to control any such Tax
Proceeding, and to employ counsel of its choice at its expense; provided,
however, that Buyer and its representatives shall be permitted, at Buyer’s
expense, to be present at, and participate in, any such Tax Proceeding. If
Seller does not timely elect to control a Tax Proceeding that pertains to a
Pre-Closing Tax Period, Buyer shall have the right to assume control of such Tax
Proceeding. With respect to a Tax Proceeding that pertains to a Straddle Period,
Seller shall have the sole right to control any such Tax Proceeding, and to
employ counsel of its choice at its expense; provided, however, that Seller and
its representatives shall be permitted, at Seller’s expense, to be present at,
and participate in, any such audit, examination, assessment or proceeding.

 

6.7 Cooperation. The Buyer, the Company and Seller shall cooperate fully, as and
to the extent reasonably requested by any other party, in connection with the
filing of Tax Returns pursuant to Section 6.3(a) and Section 6.3(b), and any
audit, litigation or other proceeding with respect to Taxes. Such cooperation
shall include the retention and (upon the other party’s request) the provision
of records and information that are reasonably relevant to any such audit,
litigation or other proceedings and making employees available on a mutually
convenient basis to provide additional information and explanation of any
material provided hereunder. The Company and Seller agree to retain all material
books and records with respect to Tax matters pertinent to the Company relating
to each taxable period beginning before the Closing Date until the expiration of
the statute of limitations (and, to the extent notified by the Buyer or Seller,
any extensions thereof) of the respective taxable periods, and to abide by all
record retention agreements entered into with any Tax Authority. Further, Seller
agrees to give the Buyer reasonable written notice prior to transferring,
destroying or discarding any such books and records and, upon the reasonable
request of the Buyer, the Company, as applicable, shall allow the Buyer (at the
sole cost and expense of the Buyer) to make copies of such books and records.

 

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6.8 Other Tax Matters.

 

(a) All Tax-sharing agreements or similar agreements with respect to or
involving the Company shall be terminated as of the Closing Date, and, after the
Closing Date, the Company shall not be bound thereby or have any Liability
thereunder.

 

(b) Buyer and Seller further agree, upon request, to provide the other with all
information that either may be required to report pursuant to Code Section 6043,
or Code Section 6043A, or Treasury Regulations promulgated thereunder.

 

6.9 RELEASES. EFFECTIVE AS OF THE CLOSING, SELLER TO THE FULLEST EXTENT LEGALLY
POSSIBLE, HEREBY COMPLETELY AND FOREVER RELEASES, WAIVES AND DISCHARGES, AND
SHALL BE FOREVER PRECLUDED FROM ASSERTING, ANY AND ALL CLAIMS, OBLIGATIONS,
SUITS, JUDGMENTS, DAMAGES, DEMANDS, DEBTS, RIGHTS, CAUSES OF ACTION AND
LIABILITIES, OF ANY KIND OR NATURE, WHETHER LIQUIDATED OR UNLIQUIDATED, FIXED OR
CONTINGENT, MATURED OR UNMATURED, KNOWN OR UNKNOWN, FORESEEN OR UNFORESEEN,
WHETHER OR NOT HIDDEN OR CONCEALED, THEN EXISTING IN LAW, EQUITY OR OTHERWISE,
THAT SUCH PERSON AND ITS AFFILIATES, INCLUDING WITHOUT LIMITATION DERIVATIVELY,
TO THE FULLEST EXTENT LEGALLY POSSIBLE, HAS, HAD OR MAY HAVE AGAINST THE COMPANY
THAT ARE BASED IN WHOLE OR IN PART ON ANY ACT, OMISSION, TRANSACTION OR OTHER
OCCURRENCE TAKING PLACE ON OR PRIOR TO THE CLOSING DATE, OTHER THAN) ANY RIGHTS
UNDER THIS AGREEMENT. FOR PURPOSES OF CLARITY, THE PROVISIONS OF THIS
SECTION 6.9 DO NOT RELEASE OR OTHERWISE WAIVE ANY RIGHTS SELLER MAY HAVE UNDER
THIS AGREEMENT.

 

EFFECTIVE AS OF THE CLOSING, BUYER AND COMPANY TO THE FULLEST EXTENT LEGALLY
POSSIBLE, HEREBY COMPLETELY AND FOREVER RELEASE, WAIVE AND DISCHARGE, AND SHALL
BE FOREVER PRECLUDED FROM ASSERTING, ANY AND ALL CLAIMS, OBLIGATIONS, SUITS,
JUDGMENTS, DAMAGES, DEMANDS, DEBTS, RIGHTS, CAUSES OF ACTION AND LIABILITIES, OF
ANY KIND OR NATURE, WHETHER LIQUIDATED OR UNLIQUIDATED, FIXED OR CONTINGENT,
MATURED OR UNMATURED, KNOWN OR UNKNOWN, FORESEEN OR UNFORESEEN, WHETHER OR NOT
HIDDEN OR CONCEALED, THEN EXISTING IN LAW, EQUITY OR OTHERWISE, THAT BUYER AND
COMPANY AND THEIR AFFILIATES, INCLUDING WITHOUT LIMITATION DERIVATIVELY, TO THE
FULLEST EXTENT LEGALLY POSSIBLE, HAVE, HAD OR MAY HAVE AGAINST SELLER THAT ARE
BASED IN WHOLE OR IN PART ON ANY ACT, OMISSION, TRANSACTION OR OTHER OCCURRENCE
TAKING PLACE ON OR PRIOR TO THE CLOSING DATE, OTHER THAN) ANY RIGHTS UNDER THIS
AGREEMENT. FOR PURPOSES OF CLARITY, THE PROVISIONS OF THIS SECTION 6.9 DO NOT
RELEASE OR OTHERWISE WAIVE ANY RIGHTS BUYER MAY HAVE UNDER THIS AGREEMENT.

 

6.10 Public Announcements. No party hereto shall disclose the terms of or the
existence of this Agreement (except to advisors, attorneys, investors,
representatives and financing sources who have a need to know or who are
otherwise subject to a confidentiality restriction) without the prior written
consent of the other parties hereto, except as required by applicable Law.
Notwithstanding the foregoing, on or after the Closing Date, Buyer may, at its
own expense, issue a news release and other general marketing announcements, in
each case, relating to the consummation of the transactions contemplated by this
Agreement; provided, however, that Buyer may not disclose the Purchase Price
without the consent of Seller.

 

25

 

 

6.11 Further Assurances. Each party hereto will execute and deliver, both before
and after the Closing, such further certificates, agreements and other documents
and take such other actions as another party may reasonably request or as may be
necessary or appropriate to consummate or implement the transactions
contemplated by this Agreement or to evidence such events or matters; provided,
however, that no party shall be required to execute an amendment hereof or to
waive any of its rights or any breach hereunder. Without limiting the foregoing,
Seller agrees to sign any documents or take any other action necessary, in
Buyer’s reasonable opinion, after Closing to ensure that the Company owns all
assets, patents, patent applications or other Intellectual Property that were
previously owned by Seller and were transferred by Seller to the Company prior
to Closing.

 

6.12 Post-Closing Cooperation. After the Closing, upon reasonable notice and
during normal business hours, the parties hereto shall furnish or cause to be
furnished to each other and their respective representatives access to such
information and assistance relating to the Business within the control of such
party as is reasonably necessary for financial reporting, accounting, Tax or
other matters.

 

ARTICLE VII.

INDEMNIFICATION

 

7.1 Survival of Representations and Warranties and Covenants.

 

(a) Except as to the representations and warranties contained Sections 3.1, 3.2,
3.3, 3.4, 3.6, 3.8, 3.9, 3.13, 3.20 and 3.27 (collectively, the “Fundamental
Representations”), each of which shall remain in effect until sixty (60) days
after the expiration of the applicable statute of limitations, Seller’s
representations and warranties in Article III of this Agreement will remain in
effect for eighteen (18) months after the Closing Date. Claims for
indemnification under Section 7.3(a)(i) must be brought within such survival
periods. Claims for indemnification under Sections 7.3(a)(ii)-(vi) must be
brought within sixty (60) days after the expiration of the applicable statute of
limitations

 

(b) Unless a specified period is set forth in this Agreement (in which event
such specified period will control), the covenants in this Agreement will
survive the Closing and remain in effect for the applicable statute of
limitations.

 

7.2 Limitation on Liability.

 

(a) Anything to the contrary herein notwithstanding, no Indemnifying Party shall
have any liability under or in connection with this Agreement for Indemnifiable
Losses in excess of the Purchase Price, except in the case of Fraud or
indemnification under (i) Sections 7.3(a)(iii), (iv), or (v) or (ii)
Sections 7.3(b)(iv) or (iv). Seller shall not be liable to Buyer Indemnitees for
indemnification under Section 7.3(a)(i) or (ii) until the aggregate amount of
all Indemnifiable Losses in respect of indemnification under such Sections
exceeds $35,000 (the “Deductible”), in which event the Buyer Indemnitees will be
entitled to make a claim against Seller only in the amount by which all
Indemnifiable Losses under such Sections exceed the Deductible. The Deductible
shall not apply to claims in respect of Indemnifiable Losses arising out of
breaches of Fundamental Representations, fraud or indemnification under
Sections 7.3(a)(iii), (iv), or (v).

 

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(b) For purposes of this Agreement, (i) “Indemnity Payment” means any amount of
Indemnifiable Losses required to be paid pursuant to this Agreement,
(ii)”Indemnitee” means any Person entitled to indemnification under this
Agreement, (iii) “Indemnifying Party” means any Person required to provide
indemnification under this Agreement, (iv) “Indernnifiable Losses” means, except
as provided below, any and all damages, losses, Liabilities, obligations, costs
and expenses, and any and all claims, demands or suits (by any Person, including
without limitation any Governmental Authority), including without limitation the
costs and expenses of any and all actions, suits, proceedings, demands,
assessments, judgments, settlements and compromises relating thereto and
including reasonable attorneys’ fees and expenses in connection therewith (but
specifically excluding exemplary or punitive damages, except any such damages
awarded in connection with a Third Party Claim), net of any tax benefit or
insurance payment received by the Indemnified Party in connection therewith, and
(v) “Third Party Claim” means any claim, demand, action or proceeding made or
brought by any Person who or which is not a party to this Agreement or an
Affiliate of a party to this Agreement.

 

7.3 Indemnification.

 

(a) Subject to Sections 7.1 and 7.2, Seller agrees to indemnify, defend and hold
harmless Buyer, the Company (after the Closing), and their respective directors,
managers, officers, partners, Affiliates, employees, agents, equity holders and
representatives from and against any and all Indemnifiable Losses to the extent
relating to, resulting from or arising out of:

 

(i) any inaccuracy in or breach of representation or warranty of Seller or the
Company contained in Article III of this Agreement;

 

(ii) any breach or nonfulfillment of any agreement or covenant of Seller under
the terms of this Agreement;

 

(iii) Seller Taxes, including the failure to pay or withhold and remit any
Seller Taxes or the failure to timely file a Tax Return for any Seller Taxes;

 

(iv) any Indebtedness of the Company to any Person arising or existing or
relating to the period prior to the Closing, any Liabilities of the Company
arising or existing or relating to the period prior to the Closing, any Liens on
any assets of the Company at the Closing other than Permitted Liens, and any
Seller Expenses, each to the extent not paid or satisfied prior to or at
Closing; and

 

(v) any Liabilities related to earn-out or other contingent payments payable to
the former shareholders of the Company under the Agreement and Plan of Merger
dated as of May 19, 2017 by and among Seller, the Company, Fit Merger Sub, and
the former shareholders of the Company.

 

27

 

 

(b) Buyer agrees to indemnify, defend and hold harmless Seller and its
directors, officers, Affiliates, partners, employees, agents or representatives,
from and against any and all Indemnifiable Losses to the extent relating to,
resulting from or arising out of:

 

(i) any inaccuracy in or breach of representation or warranty of Buyer under the
terms of this Agreement or any certificate or other document delivered pursuant
hereto;

 

(ii) any breach or nonfulfillment of any agreement or covenant of Company or
Buyer to be performed following Closing under the terms of this Agreement;

 

(iii) any Third Party Claim arising out of act, error, omission, condition or
circumstance of the Company first arising as a result of the operation of the
Business after the Closing and not related to a breach of representation or
warranty set forth in Article III or Seller’s indemnification obligations
hereunder; and

 

(iv) the failure to pay or withhold and remit any Taxes of the Company or Buyer
relating to post-Closing Tax period or the failure to timely file a Tax Return
for any Taxes or Buyer relating to post-Closing Tax periods, in each case not
relating to a breach of representation or warranty made by Seller or the Company
in Article III.

 

7.4 Defense of Claims.

 

(a) In order for any Indemnitee to be entitled to any indemnification provided
for under this Agreement in respect of, arising out of or involving a Third
Party Claim, such Indemnitee must notify the Indemnifying Party in writing (and
in reasonable detail) of the Third Party Claim promptly (and in no event later
than thirty (30) calendar days) following receipt by such Indemnitee of written
notice of the Third Party Claim; provided, however, that failure to give such
notification shall not affect the indemnification provided hereunder except to
the extent the Indemnifying Party shall have been actually prejudiced as a
result of such failure. Thereafter, the Indemnitee shall deliver to the
Indemnifying Party, within ten (10) Business Days’ time after the Indemnitee’s
receipt thereof, copies of all written notices and documents (including court
papers) received by the Indemnitee relating to the Third Party Claim.

 

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(b) If a Third Party Claim is made against an Indemnitee and the Indemnitee
notifies the Indemnifying Party of such Third Party Claim, the Indemnifying
Party shall be entitled to participate in the defense thereof and, if it so
chooses, to assume the defense thereof with counsel selected by the Indemnifying
Party if (i) the Indemnifying Party acknowledges its obligation to indemnify the
Indemnitee for any Indemnifiable Losses resulting from such Third Party Claim
subject to the limitations of this Article VII, and (ii) such third Party Claim
does not involve any Governmental Authority or request for equitable remedies
(collectively, the “Defense Conditions”). The party defending such Third Party
Claim shall from time to time apprise the other of the status of the Third Party
Claim and shall furnish the other with such documents and information filed or
delivered in connection with such claim, Liability or expense as the Indemnitee
may reasonably request. Should the Indemnifying Party so elect to assume the
defense of a Third Party Claim, the Indemnifying Party shall not be liable to
the Indemnitee for any legal expenses subsequently incurred by the Indemnitee in
connection with the defense thereof; provided, however, that if the Indemnifying
Party fails to notify the Indemnitee of its election to assume the defense of
the Third Party Claim within ten (10) Business Days after its receipt of written
notice of such claim under paragraph (a) of this Section 7.4, or fails to take
reasonable steps necessary to defend diligently such Third Party Claim within
ten (10) Business Days after receiving written notice from the Indemnitee that
the Indemnitee believes the Indemnifying Party has failed to take such steps, or
if any of the Defense Conditions cease to be satisfied for any reason, the
Indemnitee may assume its own defense, and the Indemnifying Party will be liable
for all costs or expenses paid or incurred in connection therewith (subject to
the limitations of this Article VII), and the Indemnitee shall have the right to
compromise or settle such Third Party Claim with the consent of the Indemnifying
Party (which consent shall not be unreasonably withheld or delayed). If the
Indemnifying Party assumes such defense in accordance with this Section 7.4(b),
the Indemnitee shall have the right to participate in the defense thereof and to
employ counsel (not reasonably objected to by the Indemnifying Party), at its
own expense, separate from the counsel employed by the Indemnifying Party, it
being understood that the Indemnifying Party shall control such defense. Subject
to the limitations of this Article VII, the Indemnifying Party shall be liable
for the fees and expenses of counsel employed by the Indemnitee for any period
during which the Indemnifying Party has not assumed the defense thereof in
accordance with this Section 7.4(b) (other than during any period in which the
Indemnitee shall have failed to give notice of the Third Party Claim as provided
above and the ten (10) Business Day period following the date of such notice).
Each party shall cooperate in the defense or prosecution of such Third Party
Claim. Such cooperation shall include the retention and (upon request) the
provision to the Indemnifying Party of records and information that are
reasonably relevant to such Third Party Claim, and making employees available on
a mutually convenient basis to provide additional information and explanation of
any material provided hereunder. Whether or not the Indemnifying Party assumes
the defense of a Third Party Claim, the Indemnitee shall not admit any liability
with respect to, or settle, compromise or discharge, such Third Party Claim
without the Indemnifying Party’s prior written consent (which consent shall not
be unreasonably withheld or delayed). If the Indemnifying Party assumes the
defense of a Third Party Claim, the Indemnitee shall agree to any settlement,
compromise or discharge of a Third Party Claim that the Indemnifying Party may
recommend and that by its terms obligates the Indemnifying Party to pay the full
amount of the liability in connection with such Third Party Claim and which
releases the Indemnitee in connection, with such Third Party Claim.

 

ARTICLE VIII.

GENERAL PROVISIONS

 

8.1 Expenses. All costs and expenses of the parties incurred in connection with
this Agreement and the transactions contemplated hereby and thereby shall be
paid by party incurring such expense; provided, that all expenses of the Company
incurred prior to the Closing Date (including on behalf of Seller) relating to
the preparation and negotiation of this Agreement paid or agreed to be paid by
the Company or for which the Company is otherwise liable shall be deducted from
the determination of the Initial Purchase Price as “Seller Expenses” as provided
in Section 2.3(c) and on Schedule 2.3(c).

 

8.2 Amendment. This Agreement may be amended or modified in whole or in part at
any time by an agreement in writing between the Buyer and Seller.

 

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8.3 Waiver. Any term or provision of this Agreement may be waived in writing at
any time by Seller or Buyer as such waiver relates to a benefit under this
Agreement. Any waiver effected pursuant to this Section 8.3 shall be binding. No
failure to exercise and no delay in exercising any right, power or privilege
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power or privilege preclude the exercise of any other right, power or
privilege. No waiver of any breach of any covenant or agreement hereunder shall
be deemed a waiver of a preceding or subsequent breach of the same or any other
covenant or agreement.

 

8.4 Cumulative Remedies. Except as otherwise expressly stated in this Agreement,
the rights and remedies under this Agreement are cumulative and not exclusive of
any other rights, remedies, powers and privileges that may be available under
this Agreement or otherwise.

 

8.5 Notices. Unless otherwise provided, any notice required or permitted under
this Agreement shall be given in writing and shall be deemed effectively given
upon personal delivery to the party to be notified or one Business Day following
timely deposit with a reputable international overnight courier with express
delivery instructions at the address indicated below or at such other address as
such party may designate by ten (10) days’ advance written notice to the other
parties pursuant to these provisions.

 

If to Buyer or the Company:

 

Garmin International, Inc.

1200 E. 151st St.

Olathe, KS 66062

Attention: Associate General Counsel - Corporate

 

If to Seller:

 

Nxt-ID, Inc.

1627 U.S. Highway 1

Unit 206

Sebastian, FL 32958

Attention: Chief Executive Officer

 

8.6 Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed an original, but all of which taken together shall constitute
one and the same instrument. Scanned and .pdf signatures to this Agreement shall
be acceptable and binding.

 

8.7 Governing Law. This Agreement shall be governed by, interpreted under, and
construed and enforced in accordance with the Laws of the State of Delaware,
without regard to conflicts of law principles.

 

8.8 Entire Agreement. The terms of this Agreement (including the Exhibits and
Schedules hereto and representations or warranties herein) and other documents
and instruments referenced herein are intended by the parties as a final
expression of their agreement with respect to the subject matter hereof and
thereof and may not be contradicted by evidence of any prior or contemporaneous
agreement. The parties further intend that this Agreement constitutes the
complete and exclusive statement of its terms and that no extrinsic evidence
whatsoever may be introduced in any judicial proceeding, if any, involving this
Agreement.

 

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8.9 No Third Party Rights. Other than Persons entitled to receive
indemnification under Article VII, the Persons entitled to the benefits of the
release in Section 6.9, the parties hereto do not intend to confer any benefit
hereunder on any Person, firm or corporation other than the parties hereto.

 

8.10 Titles and Headings. Titles and headings of Sections of this Agreement are
for convenience of reference only and shall not affect the construction of any
provision of this Agreement.

 

8.11 Assignment. This Agreement and the rights, duties and obligations hereunder
may not be assigned by any of the parties without the prior written consent of
the other parties, and any attempted assignment without consent shall be void.
In the case of Seller, such an assignment shall be deemed to include an
assignment by operation of law. Notwithstanding the foregoing, Buyer may
designate one or more of its Affiliates to perform its obligations hereunder (in
any or all of which cases Buyer nonetheless shall remain responsible for the
performance of all of its obligations hereunder). In addition, notwithstanding
the foregoing, Buyer (A) may assign any or all of its rights and obligations
under this Agreement to any buyer of all or substantially all of the assets of
Buyer and (B) may assign any or all of its rights under this Agreement to any
lender to Buyer or any of its Subsidiaries as security for indebtedness to any
such lender.

 

8.12 Successors and Assigns. This Agreement and the provisions hereof shall be
binding upon each of the parties hereto and their permitted successors and
assigns.

 

8.13 Severability. If one or more provisions of this Agreement are held to be
unenforceable under applicable Law, such provision shall be excluded from this
Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.

 

8.14 Dispute Resolution. Each party agrees that any suit, action or proceeding
brought by such party against the other in connection with or arising from this
Agreement (“Judicial Action”) shall be brought against any of the parties only
in any United States federal or state court located in the City of Wilmington in
the State of Delaware, and each of the parties hereto hereby consents to the
exclusive jurisdiction of such courts (and of the appropriate appellate courts)
in any such Judicial Action and waives any objection to venue laid therein.
Without limiting the generality of the foregoing, each party hereto agrees that
service of process upon such party at the address referred to in Section 8.5,
together with written notice of such service to such party, shall be deemed
effective service of process upon such party.

 

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8.15 Waiver of Jury Trial. NO PARTY TO THIS AGREEMENT OR ANY ASSIGNEE,
SUCCESSOR, HEIR OR PERSONAL REPRESENTATIVE OF A PARTY SHALL SEEK A JURY TRIAL IN
ANY LAWSUIT, PROCEEDING, COUNTERCLAIM OR ANY OTHER LITIGATION PROCEDURE BASED
UPON OR ARISING OUT OF THIS AGREEMENT OR THE DEALINGS OR THE RELATIONSHIP
BETWEEN THE PARTIES. NO PARTY WILL SEEK TO CONSOLIDATE ANY SUCH ACTION IN WHICH
A JURY TRIAL HAS BEEN WAIVED, WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT
OR HAS NOT BEEN WAIVED. THE PROVISIONS OF THIS SECTION 8.15 HAVE BEEN FULLY
DISCUSSED BY THE PARTIES HERETO, AND THESE PROVISIONS SHALL BE SUBJECT TO NO
EXCEPTIONS. NO PARTY HERETO HAS IN ANY WAY AGREED WITH OR REPRESENTED TO ANY
OTHER PARTY HERETO THAT THE PROVISIONS OF THIS SECTION 8.15 WILL NOT BE FULLY
ENFORCED IN ALL INSTANCES.

 

8.16 Specific Performance. Subject to Article VII, which shall control the
parties’ remedies following the Closing, the parties agree that the parties
shall be entitled to seek an injunction, specific performance and other
equitable relief to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof, in addition to any other remedy to
which they are entitled at Law or in equity.

 

8.17 Certain Interpretive Matters and Definition. No provision of this Agreement
will be interpreted in favor of, or against, any of the parties hereto by reason
of the extent to which any such party or its counsel participated in the
drafting thereof or by reason of the extent to which any such provision is
inconsistent with any prior draft hereof or thereof

 

 

[SIGNATURE PAGE FOLLOWS]

 

32

 

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
and delivered as of the date first set forth above.

 

  SELLER:       Nxt-ID, Inc.       By: /s/ Gino Pereira   Name:  

Gino Pereira

  Title:

Chief Executive Officer

      COMPANY       Fit-Pay, Inc.       By: /s/ Vincent S. Miceli   Name: 

Vincent S. Miceli

  Title: Chief Financial Officer       BUYER:       Garmin International, Inc.  
    By: /s/ Cliff Pemble   Name: Cliff Pemble   Title: President & CEO

 

  

 

 

 

Exhibit A — Form of Project Hendrix License Agreement

 

[See Attached]