STOCK PURCHASE AGREEMENT

 

This STOCK PURCHASE AGREEMENT is entered into as of June 30, 2016 (this
“Agreement”) by EVENT CARDIO GROUP INC., a Nevada corporation (the “Buyer”), and
RICHARD F. OWSIK (“Owsik”) and JOSEPH K. HASHIM (“Hashim”), the shareholders
(each a “Shareholder,” collectively, the “Shareholders”) of AMBUMED, INC., a
Maryland corporation t/a NATIONAL CARDIAC MONITORING CENTER (the “Company”) and
CAPITAL CARDIAC, LLC ( “Capital Cardiac”).

 

RECITALS

 

The Shareholders are the record and beneficial owners of 100 shares of common
stock of the Company (the “Shares”), which constitute one hundred percent (100%)
of the issued and outstanding shares of capital stock of the Company, and 100%
of the membership interests in Capital Cardiac (the “Interests”), which
constitute one hundred percent (100%) of the issued and outstanding membership
interests in Capital Cardiac; and

 

The Buyer desires to purchase the Shares and the Interests from the
Shareholders, and the Shareholders desire to sell the Shares and Interests to
the Buyer, on the terms and conditions set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:

 

ARTICLE 1

DEFINITIONS

 

As used herein the following terms shall have the following meanings and shall
include in the singular number the plural and in the plural number the singular
unless the context otherwise requires (capitalized terms not defined in this
Article 1 shall have the meanings ascribed to such terms elsewhere in this
Agreement):

 

“Affiliate” means, as to a Person, any other Person that, directly or
indirectly, through one or more intermediaries controls, is controlled by or is
under common control with the first-mentioned Person.

 

“Assets” means all of the assets of the Company including, without limitation,
any and all assets reflected on Schedule 1 hereto or the Cutoff Date Balance
Sheet.

 

“Business” means the cardiac monitoring and related diagnostic services business
currently being conducted by the Company.

 

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

 

“Contract” means any agreement, contract, obligation, promise, undertaking,
indenture, mortgage, policy, arrangement, or instrument, including any amendment
thereto, fixed or contingent, written or oral, expressed or implied, which
cannot be terminated by the Company without cause on no more than 30 days’
notice and without liability to the Company in excess of $10,000.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

 

“Governmental Body” means any federal, state, local, municipal, foreign, or
other government, or governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official, or entity and
any court or other tribunal).

 

“IRS” means the Internal Revenue Service.

 

 

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“Knowledge”. A Person will be deemed to have “Knowledge” of a particular fact or
other matter if such Person is actually aware of such fact or other matter.
“Knowledge” with respect to the Company shall mean the Knowledge of one or more
of the Shareholders. “Knowledge” with respect to the Buyer shall mean the
Knowledge of the Buyer’s President and Chief Executive Officer.

 

“Legal Requirement” means any applicable federal, state, local, municipal,
foreign, international, multinational, or other administrative order,
constitution, law, ordinance, principle of common law, regulation, statute, or
treaty.

 

“Liability” means any liability (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
(without limitation) any liability for Taxes.

 

“Ordinary Course of Business” means the ordinary course of business of the
Company consistent with past practice.

 

“Permits” shall mean any and all licenses, permits, orders or approvals of any
federal, state, local or foreign governmental or regulatory body necessary for
the operation of the Business by the Company as presently conducted.

 

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

 

“Regulatory Approvals” shall mean all regulatory approvals, exemptions, lapses
of waiting periods, written opinions or other actions by the federal, state and
local governmental authorities necessary for the consummation of the
transactions contemplated by this Agreement.

 

“Security Interest” means any mortgage, pledge, lien, encumbrance, charge, or
other security interest, other than (a) mechanic’s, materialman’s and similar
liens, (b) liens for Taxes not yet due and payable or for Taxes that the
taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under capital lease
arrangements, (d) in the case of real property, rights of way, building use
restrictions, variances and easements, provided the same do not in any material
respect interfere with the Company’s operation of the Business and (e) other
liens arising in the Ordinary Course of Business and not incurred in connection
with the borrowing of money.

 

“Tax Return” includes any material report, statement, form, return or other
document or information required to be supplied to a federal, state, local or
foreign taxing authority in connection with Taxes.

 

“Tax” or “Taxes” means any federal, state, local and foreign income or gross
receipts tax, alternative or add-on minimum tax, sales and use tax, customs duty
and any other tax, charge, fee, levy or other assessment including property,
transfer, occupation, service, license, payroll, franchise, excise, withholding,
ad valorem, severance, stamp, premium, windfall profit, employment, rent or
other tax, governmental fee or like assessment or charge of any kind, together
with any interest, fine or penalty thereon, addition to tax, additional amount,
deficiency, assessment or governmental charge imposed by any federal, state,
local or foreign taxing authority.

 

“Transaction Documents” means this Agreement, the Escrow Agreement, the Lease,
the Employment Agreement and the Consulting Agreement.

 

 

 

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ARTICLE 2

SALE AND PURCHASE OF SHARES

 

Section 2.1. Purchase and Sale of Shares.

 

In exchange for the consideration specified herein, the Buyer hereby agrees to
purchase from the Shareholders, and the Shareholders hereby agree to sell,
assign, and deliver to the Buyer, at the Closing (defined in Section 3.1) all
right, title and interest in and to the Shares and the Interests.

 

Section 2.2 Consideration.

 

The consideration payable by the Buyer for the Shares and Interests (the
“Purchase Price”) shall be (i) one million two hundred thousand dollars
($1,200,000), of which six hundred thousand ($600,000) is payable in cash at
Closing and six hundred thousand dollars ($600,000) is payable on the first
anniversary of the Closing and (ii) two million (2,000,000) shares of the common
stock of Buyer (the “Purchase Price Shares”). The Shareholders have requested
that the Purchase Price be allocated between them as follows: At Closing, Buyer
shall (x) pay Owsik, five hundred thousand dollars ($500,000) by wire transfer
to such account as directed by Owsik, and issue to Owsik Buyer’s promissory note
payable to Owsik in the principal amount of four hundred thousand dollars
($400,000) in the form of Exhibit A and one million (1,000,000) shares of
Buyer’s common stock registered in such name or names as Owsik desires less two
hundred fifty thousand (250,000) shares to be placed in escrow; and (y) Hashim,
one hundred thousand dollars ($100,000) by wire transfer to such account as
directed by Hashim, and issue to Hashim Buyer’s promissory note payable to
Hashim in the principal amount of two hundred thousand dollars ($200,000) in the
form annexed hereto as Exhibit A and one million (1,000,000) shares of Buyer’s
common stock registered in such name or names as Hashim shall direct, less two
hundred fifty thousand shares (250,000) shares to be placed in escrow. The
parties acknowledge that, at Owsik’s sole and absolute discretion, the payment
of the five hundred thousand dollars ($500,000) shall be to pay back any loans
by Owsik to the Company.

 

If the average of the closing market price of the Buyer’s common stock on the
OTC Markets or other principal trading market or quotation service upon which
the common stock is then listed or quoted for the ten trading days immediately
preceding August 1, 2017 (the “Market Price”) is less than $0.25 per share, the
Company will pay to Owsik an amount equal to the product of (i) 1,000,000 and
(ii) the excess of $0.25 over the Market Price. At the option of the Company, it
may pay any deficiency by the delivery to Owsik of the number of its shares
times the Market Price equal to the amount due.

 

As additional consideration, any and all automobiles of the Company shall be
transferred to Owsik at Closing. Owsik shall be solely responsible for any and
all transfer and title expenses relating to the transfer.

 

Section 2.3 Escrow.

 

At Closing, Buyer shall deposit in escrow with Eaton & Van Winkle LLP, as escrow
agent, pursuant to the escrow agreement in the form annexed hereto as Exhibit B
(the “Escrow Agreement”), one or more certificates evidencing 500,000 shares of
the Buyer’s common stock (“Escrow Shares”) to secure the Shareholders’ indemnity
obligation to Buyer pursuant to Section 9.2 of this Agreement, accompanied by
stock powers executed in blank.

 

Section 2.4. Distributions Prior to the Closing.

 

Immediately prior to the Closing, the Company shall distribute to the
Shareholders, in such proportion as the Shareholders shall determine, all cash
and cash equivalents held by the Company. Buyer acknowledges that the Assets
shall not include any cash or cash equivalents.

 

 

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ARTICLE 3

CLOSING

 

Section 3.1 Time and Place of Closing.

 

The closing for the sale and purchase of the Shares and Interests (the
“Closing”) shall take place at 10:00 a.m., Eastern Time, at the offices of Eaton
& Van Winkle LLP, 3 Park Avenue, 16th floor, New York, NY 10016, on July 15,
2016, or such other place or time or on such other date as the Buyer and the
Shareholders may agree in writing (the “Closing Date”). At the Closing, the
Shareholders shall deliver to Buyer certificates representing the Shares and
Interests, duly endorsed in blank or accompanied by duly executed stock powers,
and such other instruments of transfer reasonably requested by Buyer to vest in
Buyer, title to the Shares and Interests, free and clear of any Lien or
Liability, other than restrictions imposed by federal or applicable state
securities laws.

 

The Shareholders also shall deliver or cause to be delivered to Buyer duly
executed copies of the documents set forth in Section 7.1.

 

(b) Buyer shall deliver to:

 

(i) Owsik

(A) five hundred thousand dollars ($500,000) by wire transfer of funds to an
account designated by Owsik;

 

(B) Buyer’s promissory note payable to Owsik in the principal amount of four
hundred thousand dollars ($400,000) in the form annexed hereto Exhibit A; and

(C) seven hundred fifty thousand (750,000) shares of Buyer’s common stock
registered in such name or names as Owsik shall direct.

(ii) Hashim

(A) one hundred thousand dollars ($100,000) by wire transfer of funds to an
account designated by Hashim;

(B) Buyer’s promissory note payable to Hashim in the principal amount of two
hundred thousand dollars ($200,000) in the form annexed hereto as Exhibit A; and

(C) seven hundred fifty thousand (750,000) shares of Buyer’s common stock
registered in such name or names as Hashim shall direct.

 

(iii) the Escrow Agent, the Escrow Shares.

 

The Buyer also shall deliver or cause to be delivered to the Shareholders duly
executed copies of the documents set forth in Section 7.2.

 

 

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ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS

 

As an inducement to Buyer to enter into this Agreement and perform its
obligations hereunder, the Shareholders hereby represent and warrant to the
Buyer as of the date hereof or if an earlier date as specified in such
representation and warranty, as of such earlier date (the representations and
warranties of the Shareholders shall be joint and several except as to the
representations and warranties contained in sections 4.3, 4.6 and 4.7, which
shall be individual):

 

 

 

Section 4.1. Organization, Good Standing, Power

 

The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Maryland. The Company has the corporate
power and authority to own, lease and operate its assets and to carry on the
Business as now being conducted. The Company is authorized or licensed to do
business as a foreign corporation and is in good standing in each of the
jurisdictions set forth on Schedule 4.1. The minute books, stock ledgers and
stock transfer records of the Company will be furnished to the Buyer for review.

 

Capital Cardiac is a limited liability company duly organized, validly existing
and in good standing under the laws of the State of Maryland. Capital Cardiac
has not conducted, and is not currently conducting, any business operations, and
has no liabilities, other than those incurred in connection with its
organization.

 

Section 4.2. Certificate of Incorporation and By-Laws.

 

Correct and complete copies of the Certificate of Incorporation (the
“Certificate of Incorporation”) and By-laws (the “By-laws”) of the Company, in
each case as amended to date, and the Articles of Organization and Limited
Liability Company Agreement (the “Operating Agreement”) of Capital Cardiac, in
each case as amended to date, have been delivered to the Buyer.

 

Section 4.3. Shares.

 

Each of the Shareholders has good, valid and marketable title to the number of
Shares and Interests set forth opposite his name on Schedule 4.3 hereto. As of
Closing, such Shares and Interests shall be held free and clear of any covenant,
condition, restriction, voting arrangement, charge, Security Interest, option or
adverse claim, other than restrictions on transfer under federal and applicable
state securities laws, and in the case of the Interests, restrictions on
transfer set forth in the Operating Agreement . Upon delivery of certificates
representing the Shares and Interests and payment of the Purchase Price, the
Buyer will acquire good and marketable title to the Shares and Interests, free
and clear of any Security Interest, restrictions or claims. Owsik and Hashim
have previously entered into a shareholder’s agreement that shall terminate, by
virtue of this provision, at Closing. Additionally, Hashim’s shares of stock are
subject to a lien in favor of Owsik, which lien shall be released at Closing.

 

Section 4.4. Capital Stock.

 

(a) The Company has outstanding 100 shares of common stock all of which are duly
authorized, validly issued, fully paid, non-assessable, and were issued in
compliance with all federal and applicable state securities laws. Capital
Cardiac has not issued any membership interests to any Person other than the
Shareholders.

 

(b) There are no outstanding offers, options, warrants, rights, calls,
commitments, obligations (verbal or written), conversion rights, plans or other
agreements (conditional or unconditional) of any character providing for or
requiring the sale, purchase or issuance of the Shares, Interests or of any
other shares of capital stock or securities of the Company or Capital Cardiac.

 

Section 4.5. Subsidiaries, Divisions and Affiliates.

 

Neither the Company nor Capital Cardiac owns or has any rights to any equity
interest, directly or indirectly, in any corporation, partnership, joint
venture, firm or other entity.

 

 

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Section 4.6. Authorization.

 

Each Shareholder possesses the legal right and capacity to execute, deliver and
perform this Agreement, without obtaining any approval, authorization, consent
or waiver or giving any notice. The Shareholders have taken all shareholder
action required by applicable law, the Company’s Certificate of Incorporation,
By-laws or otherwise to be taken to authorize the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby. This
Agreement and all other Transaction Documents to which a Shareholder is a party
have been, or will be, duly executed and delivered by the Shareholders and
constitute the legal, valid and binding obligations of each Shareholder which is
a party thereto, enforceable against such Shareholder in accordance with their
respective terms, except to the extent such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium, receivership, fraudulent
conveyance or similar laws affecting or relating to the enforcement of
creditors’ rights generally, and by equitable principles (regardless of whether
enforcement is sought in a proceeding in equity or at law).

 

Section 4.7. Effect of Agreement.

 

Except as set forth in Schedule 4.7, the execution, delivery and performance of
this Agreement by the Shareholders and the sale of the Shares and Interests
contemplated hereby will not, with or without the giving of notice and the lapse
of time, or both, (a) violate any provision of law, statute, rule, regulation or
executive order to which the Company, Capital Cardiac, a Shareholder or the
Business is subject; (b) violate any judgment, order, writ or decree of any
court applicable to the Company, Capital Cardiac, a Shareholder or the Business;
(c) result in the breach of or conflict with any term, covenant, condition or
provision of, or constitute a default under, or result in the creation or
imposition of any Security Interest upon any of the Assets or Shares pursuant to
the Certificate of Incorporation or the By-laws of the Company, or upon any of
the Interests pursuant to the Articles of Organization or Operating Agreement of
Capital Cardiac , or any commitment, contract or other agreement or instrument,
including any of the Contracts, to which the Company is a party or by which any
of the Assets or Shares are bound or (iv) result or give rise to grounds for the
termination of any Permit necessary to the continued operation of the Business
in the ordinary course.

 

Section 4.8. Governmental and Other Consents.

 

Except as set forth on Schedule 4.8, (i) no notice to, consent, authorization or
approval of, or exemption by, any governmental or public body or authority is
required in connection with the execution, delivery and performance by the
Shareholders of this Agreement or any other Transaction Documents to which a
Shareholder is a party, or the taking of any action herein contemplated; and
(ii) no notice to, consent, authorization or approval of, any Person under any
agreement, arrangement or commitment of any nature to which a Shareholder is
party to, or by which the Shares, Interests or Assets are bound by or subject
to, or from which the Company receives or is entitled to receive a benefit, is
required in connection with the execution, delivery and performance by the
Shareholders of this Agreement or any other Transaction Documents to which a
Shareholder is a party, or the taking of any action herein contemplated. The
sale of the Shares as contemplated hereby will not result in the lapse,
termination or forfeiture of any Permit, license, customer certification or
approval required to be maintained by the Company in order for it to continue
its business in the ordinary course. Upon consummation of the transactions
contemplated hereby, the Company will be able to continue to operate the
Business as presently conducted.

 

Section 4.9. Financial Statements.

 

Copies of a balance sheet of the Company as of the year ended December 31, 2015
(“FY 15;” the “2015 Balance Sheet”) and of income statements on a cash basis for
the years ended December 31, 2012 through 2015 (the “Annual Income Statements”),
and a balance sheet and income statement as of, and for the five months ended
May 31, 2016 (the “Interim Financials,” collectively with the Balance Sheet and
the Annual Financial Statements, the “Financial Statements”), have been
delivered to the Buyer and have been prepared from the books and records of the
Company on a consistent basis. Upon the Company’s accountant’s review, the
Financial Statements were revised and a copy of such revised Financial
Statements were provided. May 31, 2016 is referred to herein as the “Cutoff
Date.” The Financial Statements have been prepared in accordance with principles
applied on a consistent basis during the periods involved, except as may be
otherwise specified in such Financial Statements or the notes thereto and except
that Financial Statements do not contain any of the footnotes required by
generally accepted accounting principles. The Financial Statements fairly
present in all material respects the financial position of the Company as of the
dates thereof and the results of operations and cash flows for the periods then
ended, subject, in the case of the Interim Statements, to normal, immaterial,
year-end adjustments.

 

 

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Section 4.10. No Undisclosed Liabilities.

 

Except as set forth in Schedule 4.10, the Company has no Liabilities of the
nature required to be disclosed in the liabilities column of a balance sheet
prepared in accordance with generally accepted accounting principles (whether
known and whether absolute, accrued, contingent or otherwise), other than those
Liabilities that are reflected or reserved against in the Cutoff Date Balance
Sheet contained in the Financial Statements, Liabilities disclosed in this
Agreement or in the accompanying Schedules, and Liabilities incurred in the
Ordinary Course of Business since the Cutoff Date.

 

Section 4.11. Absence of Certain Changes or Events.

 

Since the Cutoff Date, the Company has used commercially reasonable efforts to
preserve the business organization of the Company intact, to keep available to
the Company the services of all current officers and employees of the Company
necessary to the continued operation of the Business and to preserve the
goodwill of the suppliers, customers, employees and others having business
relations with the Company as of such date and has operated the business
substantially in the ordinary course. In particular, except for such dividends
and other distributions since the Cutoff Date as have been disclosed to the
Buyer, the Company has managed its cash, ordered supplies and materials,
collected its receivables and paid its payables on a basis consistent with its
historical practices. Buyer acknowledges that the Company made a distribution to
each of Hashim and Owsik in the amount of $20,000 each (with Hashim’s being made
prior to the Cutoff Date and Owsik’s being made after the Cutoff Date).

 

Section 4.12. Title to Assets; Absence of Liens and Encumbrances.

 

The Company has good and marketable title to, and owns outright, the Assets,
free and clear of all Security Interests, other than those disclosed in the
Financial Statements and those set forth in Schedule 4.12 (the “Permitted
Encumbrances”). The leases and other agreements or instruments under which the
Company holds, leases or is entitled to the use of any real or personal property
are in full force and effect and are set forth in Schedule 4.12. The Company
enjoys peaceable and undisturbed possession under all such leases. All Assets
are in material conformance with applicable zoning and other laws, ordinances,
rules and regulations; and no notice of violation of any law, ordinance, rule or
regulation thereunder has been received by the Company or the Shareholders. The
Assets owned or leased by the Company are adequate for the conduct of the
Business in the ordinary course.

 

The Company owns no real property. Schedule 4.12 sets forth the address of the
premises occupied by the Company (the “Premises”). The Company has no obligation
or liability to the landlord under any prior lease or occupancy agreement and
upon consummation of the transaction contemplated hereby will have no liability
to the landlord arising prior to the Closing. Except as set forth in Schedule
4.12, the Premises and material items of machinery, equipment and other material
tangible assets used by the Company in the conduct of the Business are in
reasonably good operating condition and repair, ordinary wear and tear excepted,
are usable in the Ordinary Course of Business and are adequate and suitable for
the uses to which they are being put.

 

Section 4.13. Equipment.

 

Set forth on Schedule 4.13 is a correct and complete list and description of all
items of equipment used in the Business having a fair market value of $2,000 or
more (collectively, the “Equipment”).

 

Section 4.14. Insurance.

 

To the Company’s Knowledge, there are no outstanding or unsatisfied written
requirements imposed or made by any of the Company’s current insurance companies
with respect to current policies covering any of the Assets, or by any
governmental authority requiring or recommending, with respect to any of the
Assets, that any repairs or other work be done on or with respect to, or
requiring or recommending any equipment or facilities be installed on or in
connection with, any of the Assets. On Schedule 4.14 is set forth a correct and
complete list of (a) all currently effective insurance policies and bonds
covering the Assets or the Business. There are no pending or, to the Company’s
Knowledge, threatened terminations or premium increases with respect to any of
the policies or bonds on Schedule 4.14 other than premium increases in the
Ordinary Course of Business, and, to the Company’s Knowledge, there is no
condition or circumstance applicable to the Business, which could reasonably be
expected to result in such termination or increase other than premium increases
in the Ordinary Course of Business. The Company is in compliance with all
material conditions contained in such policies or bonds, except for
noncompliance which, individually or in the aggregate, would not be reasonably
expected to have a material adverse effect on the Business.

 

 

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Section 4.15. Agreements, Arrangements

 

(a) Except for open orders on the part of the Company to buy equipment or to
supply equipment or services to customers in the Ordinary Course of Business and
as set forth on Schedule 4.15, the Company is not a party to any:

 

(i) lease agreement (whether as lessor or lessee) where the annual obligation of
the Company exceeds $10,000;

 

(ii) license agreement, assignment or contract (whether as licensor or licensee,
assignor or assignee) relating to trademarks, trade names, patents, or
copyrights (or applications therefore), unpatented designs or processes,
formulae, know-how or technical assistance, or other proprietary rights, other
than agreements relating to off-the-shelf software used in the conduct of the
Business;

 

(iii) agreement granting any person a Security Interest on any of the Assets,
including, without limitation, any factoring or agreement for the assignment of
receivables or inventory;

 

(iv) agreement which may not be terminated by the Company on no more than thirty
(30) days’ notice without liability to the Company in excess of $10,000:

 

(v) non-competition, secrecy or confidentiality agreements, or another agreement
restricting the Company from doing business anywhere in the world;

 

(vi) agreement with any distributor, dealer, leasing company, sales agent or
representative;

 

(vii) agreement guaranteeing, indemnifying or otherwise becoming liable for the
obligations or liabilities of another Person;

 

(vii) advertising, publication or printing agreement; and

 

(ix) agreement giving any party the right to renegotiate or require a reduction
in prices to be paid or the repayment of any amount previously paid, to the
Company.

 

Correct and complete copies of all items required to be shown on Schedule 4.15
and of all Contracts have been delivered or made available to Buyer prior to the
date hereof.

 

(c) Each of the Contracts is valid, in full force and effect and enforceable in
accordance with its terms, except to the extent such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium, receivership,
fraudulent conveyance or similar laws affecting or relating to the enforcement
of creditors’ rights generally, and by equitable principles (regardless of
whether enforcement is sought in a proceeding in equity or at law).

 

(d) Except as set forth on Schedule 4.15, the Company has materially fulfilled,
or has taken all action reasonably necessary to enable it to fulfill when due,
all of its respective material obligations under the Contracts. Furthermore, to
the Company’s Knowledge, there has not occurred any default or any event which
with the lapse of time or the election of any person other than the Company or
the Shareholders, will become a default under any of the Contracts, except for
such defaults, if any, which have been indicated on Schedule 4.15.

 

Section 4.16. Patents, Trademarks, Copyrights.

 

Schedule 4.16 sets forth (i) the registered and beneficial owner and the
expiration date, to the extent applicable, for each patent or trademark
(“Right”) owned or used by the Company and (ii) the product, service, or
products or services of the Company which make use of, or are sold, licensed or
made under, each such Right. All of the Rights are included in the Assets.
Except as set forth on Schedule 4.16, neither any of the Shareholders nor the
Company has sold, assigned, transferred, licensed, sub-licensed or conveyed the
Rights, or any of them, or any interest in the Rights, or any of them, to any
Person, and the Company has the entire right or right, title and interest (free
and clear of all Security Interests) in and to the Rights owned or used by the
Company to conduct the Business. To the Company’s Knowledge, neither the
validity of the Rights, nor the use thereof by the Company, is the subject of
any pending or threatened opposition, interference, cancellation, nullification,
conflict, concurrent use, litigation or other proceeding. To the Company’s
Knowledge, the conduct of the Business as currently operated, and the use of the
Assets does not conflict with, or infringe upon, any legally enforceable rights
of third parties.

 

 

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Section 4.17. Permits.

 

Set forth on Schedule 4.17 is a complete list of all Permits issued to the
Company (the “Company Permits”). The Permits set forth in Schedule 4.17 are all
Permits required to permit the Company to carry on the Business as currently
conducted.

 

Section 4.18. Compliance with Applicable Laws.

 

The conduct by the Company of the Business does not violate or infringe any law,
statute, ordinance, regulation or executive order currently in effect and
applicable to the Company, except in each case for violations or infringements
which could not be reasonably expected to have, individually or in the
aggregate, a material adverse effect on the Business. The Company is not in
default under, and to the Company’s Knowledge there is no reasonable basis for
any claim of violation of or default under any Company Permit, any governmental
or administrative order or demand directed to it, or with respect to any order,
writ, injunction or decree of any court applicable to it.

 

Section 4.19. Litigation.

 

Except as set forth on Schedule 4.19, there is no claim, action, suit,
proceeding, arbitration, reparation, investigation or hearing pending against
the Company or which could prevent the consummation of the transaction
contemplated hereby, before any court or governmental, administrative or other
competent authority or private arbitration tribunal, nor (i) to the Knowledge of
the Shareholders, is any such claim threatened and (ii) are there any facts
known to the Shareholders which could reasonably be expected to give rise to
claim, action, suit, proceeding, arbitration, investigation or hearing, which
could result in a material adverse effect on the Business, or prevent the
consummation of the transactions contemplated by this Agreement. There is no
continuing order, injunction or decree of any court, arbitrator or governmental,
administrative or other competent authority to which the Company is a party, or
to which the Assets or Business is subject. Neither the Company nor any current
officer, director, or employee of the Company has been permanently or
temporarily enjoined or barred by order, judgment or decree of any court or
other tribunal or any agency or other body from engaging in or continuing any
conduct or practice in connection with the Business.

 

Section 4.20. Customers, Suppliers, Distributors and Agents.

 

Schedule 4.20 sets forth (a) the five largest (in dollar value) purchasers of
goods and/or services from the Company and (b) the five largest (in dollar
value) providers of goods and/or services to the Company during the fiscal year
ended December 31, 2015.

 

The Company does not have any long-term Contracts with its customers. All work
performed by the Company for its customers is pursuant to short-term purchase
orders.

 

The Company has not received any notice (formal or informal, oral or written)
from any customer identified on Schedule 4.20 of an intention to substantially
reduce or terminate its relationship with the Company.

 

Section 4.21. Employee Benefit Plans.

 

(a) No other corporation or other entity would now or in the past constitute a
single employer with the Company within the meaning of Section 414 of the Code.

 

(b) Schedule 4.21(b) contains a true and complete list of all of the following
agreements or plans, if any, which are presently in effect or which were in
effect since January 1, 2014 and which cover or covered current or former
employees, directors and/or other service providers of any member of the Company
Group (collectively “Participants”):

 

(i) Any employee benefit plan as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”), and any trust or
other funding agency created thereunder, or under which any member of the
Company Group, with respect to employees, has any outstanding, present, or
future obligation or liability, or under which any employee or former employee
has any present or future right to benefits which are covered by ERISA; or

 

(ii) Any other pension, profit sharing, retirement, deferred compensation, stock
purchase, stock option, incentive, bonus, vacation, severance, disability,
hospitalization, medical, life insurance, split dollar or other employee benefit
plan, program, policy, or arrangement, whether written or unwritten, formal or
informal, which the Company maintains or to which the Company has any
outstanding, present or future obligations to contribute or make payments under,
whether voluntary, contingent or otherwise.

 

 

9

 

 

The plans, programs, policies, or arrangements described in subparagraph (a) or
(b) above are hereinafter collectively referred to as the “Company Plans.” There
will be delivered to the Buyer true and complete copies, if any, of all written
plan documents and contracts evidencing the Company Plans, as they may have been
amended to the date hereof, together with (A) all documents, including without
limitation, Forms 5500, relating to any Company Plans required to have been
filed prior to the date hereof with governmental authorities for each of the
three most recently completed plan years; (B) attorney’s response to an
auditor’s request for information for each of the three most recently completed
plan years; and (C) financial statements and actuarial reports, if any, for each
Company Plan for the three most recently completed plan years.

 

(c) Except as to those plans identified on Schedule 4.21(c) as tax-qualified
Company Plans (the “Company Qualified Plans”), the Company does not maintain or
since January 1, 2013, has maintained a Company Plan which meets or was intended
to meet the requirements of Section 401(a) of the Code. The IRS has issued
favorable determination letters to the effect that each Company Qualified Plan
qualifies under Section 401(a) of the Code and that any related trust is exempt
from taxation under Section 501(a) of the Code, and such determination letters
remain in effect and have not been revoked. Copies of the most recent
determination letters and any outstanding requests for a determination letter
with respect to each Company Qualified Plan, if any, will be delivered to the
Buyer. No Company Qualified Plan has been amended since the issuance of the most
recent determination letter for such Company Qualified Plan. The Company
Qualified Plans currently materially comply in form with the requirements under
Section 401(a) of the Code, other than changes required by statutes, regulations
and rulings for which amendments are not yet required. To the Company’s
Knowledge, no issue concerning qualification of the Company Qualified Plans is
pending before or is threatened by the IRS. The Company Qualified Plans have
been materially administered according to their terms (except for those terms
which are inconsistent with the changes required by statutes, regulations, and
rulings for which changes are not yet required to be made, in which case the
Company Qualified Plans have been materially administered in accordance with the
provisions of those statutes, regulations and rulings) and materially in
accordance with the requirements of IRC Section 401(a).Neither the Company nor
any fiduciary of any Company Qualified Plan has done anything that would
adversely affect the qualified status of the Company Qualified Plans or the
related trusts. Any Company Qualified Plan which is required to satisfy Section
401(k)(3) and 401(m)(2) of the Code has been tested for compliance with, and has
satisfied the requirements of, Sections 401(k)(3) and 401(m)(2) of the Code for
each plan year ending prior to the Closing Date.

 

(d) The Company is in material compliance with the requirements prescribed by
any and all statutes, orders, governmental rules and regulations applicable to
the Company Plans and all reports and disclosures relating to the Company Plans
required to be filed with or furnished to any Governmental Body, participants or
beneficiaries prior to the Closing Date have been or will be filed or furnished
in a timely manner and in accordance with applicable Legal Requirements.

 

(e) No termination or partial termination of any Company Qualified Plan has
occurred nor has a notice of intent to terminate any Company Qualified Plan been
issued by the Company.

 

(f) The Company does not maintains and has not maintained an “employee benefit
pension plan” within the meaning of ERISA Section 3(2) that is or was subject to
Title IV of ERISA.

 

(g) Any Company Plan can be terminated on or prior to the Closing Date without
liability to the Company or the Buyer, including without limitation, any
additional contributions, penalties, premiums, fees or any other charges as a
result of the termination, except to the extent of funds set aside for such
purpose or reflected as reserved for such purpose on the Cut Off date balance
sheet.

 

(h) The Company has made full and timely payment of, or has accrued, pending
full and timely payment, all amounts which are required under the terms of each
of the Company Plans and in accordance with applicable Legal Requirements and
Contracts to be paid as a contribution to each Company Plan. The Cut Off Date
balance sheet accurately reflects all obligations for accrued benefits under any
non-qualified deferred compensation or supplemental retirement plans.

 

 

10

 

 

(i) The Company does not have any past, present or future obligation or
liability to contribute to and has not contributed to any multiemployer plan as
defined in ERISA Section 3(37).

 

(j) Neither the Company nor any other “disqualified person” or “party in
interest” (as defined in Section 4975 of the Code and ERISA Section 3(14),
respectively) with respect to the Company Plans, has engaged in any “prohibited
transaction” (as defined in Section 4975 of the Code or ERISA Section 406). The
Company and all “fiduciaries” (as defined in ERISA Section 3(21)) with respect
to the Company Plans, have materially complied with the requirements of ERISA
Section 404.

 

(k) The Company has materially complied with the continuation coverage
requirements of Section 4980B of the Code, Section K, Chapter 100 of the Code
and ERISA Sections 601 through 608 (“COBRA”), and with the portability, access
and renewability provisions of ERISA Sections 701 through 712.

 

(l) The Company has not made and is not obligated to make any nondeductible
contributions to any Company Plan.

 

(m) Other than routine claims for benefits, to the Company’s Knowledge, there
are no actions, audits, investigations, suits or claims pending, or threatened
against any Company Plan, any trust or other funding agency created thereunder,
or against any fiduciary of any Company Plan or against the assets of any
Company Plan.

 

(n) The consummation of the transaction contemplated hereby will not accelerate
or increase by more than 5% any liability under any Company Plan because of an
acceleration or increase of any of the rights or benefits to which Participants
may be entitled thereunder.

 

(o) Other than health continuation coverage required by COBRA, the Company has
no obligation to any retired or former employee, director or other service
provider or any current employee, director or other service provider of the
Company upon retirement or termination of employment.

 

(p) Except as otherwise disclosed, since January 1, 2016,the Company has not (i)
increased the rate of compensation payable or to become payable to any of the
employees of the Company, other than in the Ordinary Course of Business and
consistent with past practice; (ii) made any commitment and has not incurred any
liability to any labor union; (iii) paid or agreed to pay any bonuses or
severance pay; (iv) increased any benefits or rights under any Company Plan; or
(v) adopted any new plan, program, policy or arrangement, which if it existed as
of the Closing Date, would constitute a Company Plan.

 

Section 4.22. Powers of Attorney.

 

No person has any power of attorney to act on behalf of the Company.

 

Section 4.23. Labor Matters.

 

(a) The Company is not a party to any contract or collective bargaining
agreement with any labor organization. To the Company’s Knowledge, no organizing
effort is pending regarding the employees of the Company, and no such effort has
been undertaken within the preceding three years.

 

(b) All reasonably anticipated material obligations of the Company, whether
arising by operation of law, contract, past custom or otherwise, for
unemployment compensation benefits, pension benefits, salaries, wages, bonuses
and other forms of compensation payable to the officers, directors and other
employees and independent contractors of the Company have been paid or
adequately reserved for.

 

(c) There is no basis for any claim, grievance, arbitration, negotiation, suit,
action or charge of or by the employees of the Company which could be reasonably
anticipated to result in a liability on the part of the Company and no such
charge or complaint is pending against the Company before the National Labor
Relations Board, the Equal Employment Opportunity Commission or any other
federal, state or local agency with jurisdiction over employment matters.

 

 

11

 

 

(d) The Company has withheld and paid to the appropriate governmental
authorities or is withholding for payment not yet due to such authorities all
amounts required to be withheld from the employees of the Company. The Company
is not liable for any arrears of such amounts or penalties thereon for failure
to comply with any of the foregoing. The Company is in compliance in all
material respects with all applicable laws, rules and regulations relating to
the employment of labor, including those relating to wages, hours, collective
bargaining and the payment and withholding of taxes and other amounts as
required by appropriate governmental authorities.

 

Section 4.24. Personnel.

 

(a) The Company has made available to Buyer a list, as of the date hereof, of
the following information for each full-time, part-time or temporary employee,
officer, director or consultant of the Company, including each employee on leave
of absence or layoff status: name; job title; current employment status; current
compensation; severance or other compensation to be paid as a result of
termination of employment or upon a change of control; and the basis for
determining any bonuses, commissions or similar payments. The total aggregate
obligation for severance and any other compensation that would be due as the
result of a change of control or termination of all employment or consulting
agreements (whether written or oral) relating to the Company employees,
officers, directors, consultants and independent contractors does not exceed
$10,000.

 

(b) To the Company’s Knowledge, no employee or director of the Company is a
party to, or is otherwise bound by, any Contract or arrangement, including any
confidentiality, noncompetition, or proprietary rights agreement, between such
employee or director and any other Person that in any way adversely affects or
will affect (i) the performance of his duties as an employee or director, or
(ii) the ability to conduct the Business. To the Company’s Knowledge, no
director, officer, or other key employee of the Company intends to terminate his
employment.

 

(c) Schedule 4.24(c) contains a complete and accurate list of all retired
employees or directors of the Company receiving benefits or scheduled to receive
benefits in the future from the Company.

 

Section 4.25. Environmental Matters.

 

Except as set forth on Schedule 4.25, (i) the Company is in compliance with all
applicable environmental laws; (ii) the Company has not transported, stored and
disposed of any hazardous materials upon real property owned or leased by it in
contravention of applicable environmental laws; (iii) there has not occurred,
nor is there presently occurring, a release of any hazardous materials by the
Company on, into or beneath the surface of any parcel of real property in which
the Company has an ownership interest or any leasehold interest except in
compliance with applicable laws; (iv) the Company has not transported or
disposed of, or allowed or arranged for any third parties to transport or
dispose of, any hazardous material to or at a site which, pursuant to CERCLA,
has been placed on the National Priorities List; (v) the Company has not
received written notice that the Company is a potentially responsible party for
a federal or state environmental cleanup site or for corrective action under
RCRA; and (vi) the Company has not undertaken (or been requested to undertake)
any response or remedial actions at the request of any federal, state or local
governmental entity in each of the foregoing cases of causes (i) through (vi).

 

Section 4.26. Tax Matters.

 

(a) The Company has filed all Tax Returns that it was required to file or has
obtained valid extensions of time to file such Tax Returns. All such Tax Returns
were correct and complete in all material respects. All Taxes owed by the
Company have been paid or adequately reserved for. The Company is not currently
the beneficiary of any extension of time within which to file any Tax Return
that has not already been timely filed (with due regard to such extension). No
written claim has ever been made by an authority in a jurisdiction where the
Company does not file Tax Returns that it is or may be subject to taxation by
that jurisdiction. There are no Security Interests on any of the Assets of the
Company that arose in connection with any failure (or alleged failure) to pay
any Tax (except for Taxes not yet due and owing).

 

 

12

 

 

(b) The Company has withheld and paid all Taxes required to have been withheld
and paid in connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder, or other third party.

 

(c) There is no pending or threatened claim by any authority for additional
Taxes for any period for which Tax Returns have been filed. There have been
delivered to the Buyer correct and complete copies of all federal income Tax
Returns, examination reports, and statements of deficiencies filed, assessed
against or agreed to by the Company since December 31, 2013.

 

(d) The Company has not waived any statute of limitations in respect of Taxes or
agreed to any extension of time with respect to a Tax assessment or deficiency.

 

(e) The Company has not filed a consent under Section 341(f) of the Code
concerning collapsible corporations. The Company has not made any payments, is
not obligated to make any payments, nor is it a party to any agreement that
under certain circumstances could obligate it to make any payments that will not
be deductible under Section 280G of the Code. The Company is not a party to any
Tax allocation or sharing agreement. The Company (i) has not been a member of an
Affiliated Group filing a consolidated federal income Tax Return or (ii) does
not have any Liability for the Taxes of any Person (other than the Company)
under Treas. Reg. Section 1-1502-6 (or any similar provision of state, local, or
foreign law), as a transferee or successor, or by contract.

 

(f) The Company has maintained its status as a “small business corporation”
within the meaning of ss. 1361(b) of the Code and any comparable provisions of
state or local law at all times since January 1, 2008. The validity of the
election of “S Corporation” status has not been challenged by the Internal
Revenue Service nor, to the Company’s Knowledge, is there any basis for such a
challenge. The Company has not been taxed other than as a “small business
corporation” since January 1, 2010.

 

(g) The Company has not agreed to, and is not required to include in its income,
any adjustment pursuant to ss. 481(c) of the Code (or comparable provisions of
any state or local law) by reason of a change in accounting method or otherwise.

 

(h) The unpaid Taxes of the Company (i) did not, as of the Cutoff Date, exceed
the reserve for Tax Liability (including any reserve for deferred Taxes
established to reflect timing differences between book and Tax income) set forth
on the face of the Balance Sheet dated April 30, 2014 (including any notes
thereto), contained in the Financial Statements 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 its Tax
Returns.

 

Section 4.27. Recent Dividends and Other Distributions.

 

Except as disclosed to the Buyer, and except for salaries paid in the Ordinary
Course of Business, there has been no dividend or other distribution of assets
or securities or payment, whether consisting of money, property or any other
thing of value, declared, issued or paid to or for the benefit of the
Shareholders by the Company since April 30, 2016.

 

Section 4.28. Inventory.

 

The inventory of the Company as of the date hereof is consistent with the
inventories maintained by the Company in the Ordinary Course of Business.
Current inventory levels are not in excess of the normal operating requirements
of the Company in the Ordinary Course of Business. Except as set forth in
Schedule 4.28, all of the inventory reflected on the balance sheets contained in
the Financial Statements is of a quantity and quality maintained in the Ordinary
Course of Business at regular prices or usable in the Ordinary Course of
Business.

 

 

13

 

 

Section 4.29. Purchase and Sale Obligations.

 

All purchases, sales and orders and all other commitments for purchases, sales
and orders made by or on behalf of the Company since the Cutoff Date have been
made in the Ordinary Course of its Business.

Section 4.30. Accounts Receivable and Accounts Payable.

 

A true and correct aged (30-60-90 days) list of all accounts receivable and
accounts payable of the Company as of the end of the calendar month preceding
the date hereof has been furnished to the Buyer. All of the accounts receivable
of the Company are actual and bona fide accounts receivable representing
obligations for the total dollar amount thereof showing on the books of the
Company and the accounts receivable are not and the accounts receivable as of
the Closing Date will not be subject to any recoupments, set-offs or
counter-claims, other than set-offs from the purchase of inventory by the
Company and returns, in each case in the Ordinary Course of Business. Except as
otherwise reflected or reserved for in the Financial Statements such accounts
receivable are collectible in the Ordinary Course of Business.

 

Section 4.31. Brokers and Finders.

 

Neither the Shareholders nor the Company, nor any of its officers, directors or
employees has employed any broker or finder or incurred any liability for any
brokerage fees, commissions or finders’ fees in connection with the transactions
contemplated by this Agreement. The Shareholders agree to indemnify, defend and
hold Buyer harmless from any liability, loss, cost, claim and/or demand that any
other broker or finder may have in connection with this transaction as a result
of actions taken by the Company or the Shareholders.

 

Section 4.32. Insider Interests.

 

Except as set forth in Schedule 4.32, no Shareholder, officer or director of the
Company is a party to any transaction with the Company including, without
limitation, by being a party to any contract, agreement or arrangement (i)
providing for the furnishing of services, (ii) providing for rental of real or
personal property, or (iii) otherwise requiring payments to any such
Shareholder, officer or director or to any trust, corporation or entity to which
such person has any interest.

 

Section 4.33 Accredited Investor Status.

 

Each of the Shareholders is an “accredited investor” as that term is defined in
Rule 501(a) of Regulation D promulgated under the Securities Act by virtue of
the annual income or net worth tests for individuals set forth therein.

 

Section 4.34 Reliance on Exemptions.

 

Each of the Shareholders understands that the Purchased Price Shares are being
offered and sold to him as part of the consideration for the acquisition of the
Shares of the Company in reliance on specific exemptions from the registration
requirements of United States federal and state securities laws and that the
Buyer is relying in part upon the truth and accuracy of, and the Shareholder’s
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of the Shareholder set forth herein in order to determine the
availability of such exemptions and the eligibility of the Shareholder to
acquire the Purchase Price Shares. Further, each Shareholder understands that
there shall be affixed to the certificate representing the shares of the Company
to be acquired by him a legend in substantially the following form:

 

THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS. THIS SECURITY MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN
WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE
501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

 

14

 

 

Section 4.35. Disclosure on Schedules.

 

Items that are disclosed on any Schedule in such a way as to make their
relevance to the information called for by another Schedule readily apparent
shall be deemed disclosed on such other Schedule.

 

ARTICLE 5

REPRESENTATIONS AND WARRANTIES OF THE BUYER

 

As an inducement to Shareholders to enter into this Agreement and to perform
their obligations hereunder, the Buyer hereby represents and warrants to the
Shareholders as of the date hereof and as of the Closing Date:

 

Section 5.1. Organization and Good Standing; Power and Authority.

 

The Buyer is a corporation duly organized, validly existing and in good standing
under the laws of the State of Nevada. The Buyer has the corporate power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder and to consummate the transactions contemplated hereby.

 

Section 5.2. Corporate Authorization.

 

The Buyer has full corporate power and authority and has taken all actions
necessary to enter into this Agreement and to carry out the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
and all other Transaction Documents to which the Buyer is a party, and the
consummation of the transactions contemplated hereby and thereby, have been duly
and validly authorized by all necessary corporate action on the part of the
Buyer. This Agreement and the other Transaction Documents to which the Buyer is
a party have been, or will be, duly executed and delivered by the Buyer and
constitute (or when executed will constitute) the valid, legal and binding
obligations of the Buyer, enforceable against the Buyer in accordance with their
respective terms, except to the extent such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium, receivership, fraudulent
conveyance or similar laws affecting or relating to the enforcement of
creditors’ rights generally, and by equitable principles (regardless of whether
enforcement is sought in a proceeding in equity or at law).

 

Section 5.3. Conflicts; Defaults.

 

The execution and delivery of this Agreement and the other agreements and
instruments executed or to be executed in connection herewith by the Buyer do
not, and the performance by the Buyer of its obligations hereunder and
thereunder and the consummation by the Buyer of the transactions contemplated
hereby or thereby, will not: (i) violate, conflict with, or constitute a breach
or default under any of the terms of its articles of incorporation or bylaws;
(ii) require any authorization, approval, consent, registration, declaration or
filing with, from or to any governmental authority or other Person; (iii)
violate any law, statute, judgment, decree, injunction, order, writ, rule or
regulation applicable to the Buyer; or (iv) conflict with or result in a breach
of, create an event of default (or event that, with the giving of notice or
lapse of time or both, would constitute an event of default) under, or give any
third party the right to terminate, cancel or accelerate any obligation under,
any contract, agreement, note, bond, guarantee, deed of trust, loan agreement,
mortgage, license, lease, indenture, instrument, order, arbitration award,
judgment or decree to which the Buyer is a party or by which such party is bound
and which would affect the consummation of the transactions contemplated hereby.
There is no pending or, to the Knowledge of the Buyer threatened action, suit,
claim, proceeding, inquiry or investigation before or by any governmental
authorities, involving or that could reasonably be expected to restrain or
prevent the consummation of the transactions contemplated by this Agreement.

 

Section 5.4. Brokers, Finders and Agents.

 

Neither the Buyer, nor any of its officers, directors or employees has employed
any broker or finder or incurred any liability for any brokerage fees,
commissions or finders’ fees in connection with the transactions contemplated by
this Agreement and the Buyer agrees to indemnify, defend and hold the
Shareholders harmless from any liability, loss, cost, claim and/or demand that
any broker or finder may have in connection with this transaction as a result of
actions taken by the Buyer, or any of its officers, directors or employees.

 

 

15

 

 

Section 5.5. SEC Reports; Financial Statements.

 

The Buyer has filed all required forms, reports and documents with the
Securities and Exchange Commission (the “SEC”) for the periods on or after
August 31, 2014 (such filings, and any other filings made by the Company
pursuant to the Securities Act (as defined below) are hereinafter referred to as
the “SEC Reports”, each of which has complied in all material respects with all
applicable requirements of the Securities Act of 1933, as amended (the
“Securities Act”) and the Securities Exchange Act of 1934, as amended (the
“Exchange Act), as the case may be, each as in effect on the dates such forms,
reports and documents were filed. None of such SEC Reports contained when filed
any untrue statement of a material fact or omitted to state a material fact
required to be stated or incorporated by reference therein or necessary in order
to make the statements therein in light of the circumstances under which they
were made not misleading. The consolidated financial statements of Buyer
included in the SEC Reports have been prepared in accordance with GAAP applied
on a consistent basis (except as may be indicated in the notes thereto), and
fairly and accurately present, in all material respects, the consolidated
financial position of Buyer and its consolidated subsidiaries as of the dates
thereof and their consolidated results of operations and changes in financial
position for the periods then ended, except, in the case of unaudited interim
financial statements, for normal year-end audit adjustments and the fact that
certain information and notes have been condensed or omitted in accordance with
the applicable rules of the SEC. Buyer has no material liabilities whether
accrued or contingent, except as disclosed in the SEC Reports or which have
arisen in the ordinary course of the Buyer’s business since the date of the
latest of such reports, neither of which will cause a Material Adverse Change.

 

Section 5.6. Absence of Changes.

 

Except as set forth on Schedule 5.6 or reflected in the SEC Reports, since
February 29, 2016 there has not been: (i) any events, changes or effects with
respect to Buyer or its subsidiaries that are outside the ordinary course of
business other than sales of its capital stock and its tentative agreement to
acquire Contex Engineering; (ii) any material change by Buyer in its accounting
policies, practices, or methods; (iii) any amendment to the articles of
incorporation or bylaws or other organizational documents of Buyer or its
subsidiaries; (iv) any sale or transfer of any material portion of its assets or
of any material asset, except in the ordinary course of business; (v) pledge of
any of its assets or otherwise permitted any of its assets to become subject to
any Security Interest, except for pledges of immaterial assets made in the
ordinary course of business and consistent with past practices; (vi) any
commencement or settlement of material legal proceedings; or (vii) any action
taken by any public body or entity which affects, in any material respect, the
business of Buyer.

 

Section 5.7 No Consents Required.

 

Except as set forth on Schedule 5.7, no notice to, consent, authorization or
approval of, or exemption by, any governmental or public body or authority is
required in connection with the execution, delivery and performance by the Buyer
of this Agreement or any other Transaction Documents to which the Buyer is a
party, or the taking of any action herein contemplated. Except as set forth on
Schedule 5.7, no notice to, consent, authorization or approval of any Person
under any agreement, arrangement or commitment of any nature which the Buyer is
party to or which the assets of Buyer are bound by or subject to, or from which
the Buyer receives or is entitled to receive a benefit, is required in
connection with the execution, delivery and performance by the Buyer of this
Agreement or any other Transaction Documents to which the Buyer is a party, or
the taking of any action by Buyer herein contemplated.

 

Section 5.8 The Purchase Price Shares.

 

The Purchase Price Shares shall be validly issued as of the Closing Date, free
and clear of any covenant, condition, restriction, voting arrangement, charge,
Security Interest, option or adverse claim, other than restrictions on transfer
under federal and applicable state securities laws. Upon delivery of
certificates representing the Purchase Price Shares, the Shareholders will
acquire good and marketable title to the Purchase Price Shares, free and clear
of any Security Interest, restrictions or claims, other than restrictions on
transfer under federal and applicable state securities laws.

 

 

16

 

 

ARTICLE 6

CERTAIN COVENANTS OF THE

SHAREHOLDERS AND THE BUYER

 

Section 6.1. Non-Competition

 

For a period of five (5) years following the Closing Date (a) neither of the
Shareholders, whether individually, as a director, manager, member, stockholder,
partner, owner, employee, consultant or agent of any business, or in any other
capacity, shall engage, directly or indirectly through any other person, in any
business, enterprise or employment which competes with the business of the
Company as conducted as of the date hereof, (b) neither of the Shareholders
shall, directly or indirectly, for himself, or on behalf of or in conjunction
with any other person, solicit or attempt to solicit the business or patronage
of, or interfere with the business relationship of the Company, the Buyer or any
of its subsidiaries with any customer of the Company, and (c) neither of the
Shareholders shall directly or indirectly cause any other person to employ,
solicit, disturb, entice away, or in any other manner persuade any employee of
the Company, the Buyer or any of its subsidiaries to discontinue or alter his or
her relationship with the Company, the Buyer and its subsidiaries.

 

Each of the Shareholders acknowledges and agrees that the business of the
Company is of a national nature and that any geographic limitation on the
foregoing covenant would be ineffective to adequately protect the interests of
the Company. Each of the Shareholders further acknowledges and agrees that the
foregoing covenant is an integral part of this Agreement, and is fair and
reasonable in light of all of the facts and circumstances of the relationship
between the Shareholders, the Company and the Buyer. In the event any court of
competent jurisdiction determines that, notwithstanding the foregoing
acknowledgments, the scope of the restricted activities of the foregoing
covenant is excessive or not enforceable, or that the foregoing covenant is not
enforceable unless it is subject to a geographic limitation, this Agreement
shall be deemed amended to reflect the maximum restrictions on activities and
geographic scope allowable pursuant to such court’s determination.

 

Section 6.2 Further Assurances.

 

Shareholders and Buyer covenant and agree to deliver and acknowledge (or cause
to be executed, delivered and acknowledged), from time to time, at the request
of any other party and without further consideration, all such further
instruments and take all such further actions as may be reasonably necessary or
appropriate to carry out the provisions and intent of this Agreement. Further,
each Shareholder agrees to cooperate with the company and the Buyer in
connection with the Company’s efforts to audit its financial statements so as to
enable the Buyer to comply with the applicable filing requirements under the
Securities Act.

 

ARTICLE 7

CONDITIONS TO CLOSING

 

Section 7.1 Conditions to Obligation of Buyer. The obligation of Buyer to
purchase the Shares and Interests from the Shareholders is subject to the
satisfaction of the following conditions, any or all of which may be waived in
whole or in part by Parent:

 

(a) Representations and Warranties. The representations and warranties of the
Shareholders in Article 4 of this Agreement shall be true and correct in all
material respects on and as of the Closing Date as if made on the Closing Date
(except to the extent such representations and warranties speak as of an earlier
date).

(b) Agreements. The Shareholders and the Company shall have performed and
complied in all material respects with all of their respective undertakings,
covenants, conditions and agreements required by this Agreement to be performed
or complied with by them prior to or at the Closing.

 

(c) No Material Adverse Change. There shall not have occurred any fact, change,
condition or occurrence which had, or which is reasonably likely to cause, a
material adverse effect on the business, results of operations, properties,
assets, condition (financial or otherwise) or prospects of the Company.

 

 

17

 

 

(d) Officer’s Certificate. At the Closing Buyer shall have received a
certificate from the Shareholders dated the Closing Date signed by each of the
Shareholders certifying to the fulfillment of the conditions set forth in the
preceding clauses (a), insofar as it relates to the representations and
warranties of the Company, (b) and (c).

 

(e) No Adverse Proceedings. There shall not be in effect any action, suit, or
Legal Proceedings before any court or Governmental Authority or before any
arbitrator wherein an unfavorable injunction, judgment, order, decree, ruling,
or charge that would (A) prevent consummation of any of the transactions
contemplated by this Agreement, (B) cause any of the transactions contemplated
by this Agreement to be rescinded following consummation, or (C) affect
adversely the right of Buyer to own the Shares or to operate the Business as
presently conducted and as proposed to be conducted following the Closing (and
no such injunction, judgment, order, decree, ruling, or charge is in effect).

 

(f) Consents. With respect to any approvals and consents of third parties
required by the Shareholders to consummate the transactions contemplated hereby,
the Shareholders shall have furnished to the Buyer, in form and substance
reasonably satisfactory to the Buyer, (i) executed consents to the sale of the
Shares to the Buyer from the applicable governmental authority, customer or
other person under any Contract or Permit that purported to restrict, directly
or indirectly, any sale or transfer of the Shares and (ii) executed waivers from
the applicable governmental authority, customer or other person of any right to
terminate or to restrict the rights or powers of the Company under any Permit
upon any such sale or transfer.

 

(g) Escrow Agreement. The Escrow Agreementshall have been duly executed and
delivered by each of the parties thereto.

 

(h) Employment Agreement. Hashim shall have executed and delivered to Buyer an
employment agreement with the Buyer in form and substance satisfactory to Buyer.

 

(i) Consulting Agreement. Owsik shall have executed and delivered to Buyer a
consulting agreement with the Buyer in form and substance satisfactory to Buyer.

 

(j) Certified Charter and Good Standing Certificates. A long-form certificate of
good standing issued by the Secretary of State of Maryland, dated as of a date
not more than five business days prior to the Closing Date, attesting to the
organization and good standing of the Company and Capital Cardiac, a certified
copy of the Certificate of Incorporation of the Company, and all amendments
thereto, and a certified copy of the Articles of Organization of Capital
Cardiac, and all amendments thereto.

 

(k) Buyer shall have determined that it is reasonable to anticipate that it will
be able to complete within 70 days of the Closing date an audit of the Company’s
financial statements for the year ending December 31, 2015,

 

(l) Lease. A lease with the owner of the premises occupied by the Company at
3789 Ivory Road, Glenelg, Maryland 21737 for a term commencing on the Closing
Date and ending 90 days after the Closing Date in the form annexed hereto as
Exhibit C (the “Lease”).

 

(m) Resignations of Directors, Managers and Officers. The resignations of the
officers and directors of the Company from their positions with the Company and
the resignations of the managers and officers of Capital Cardiac.

 

(n) Releases. Duly executed and delivered releases from the Shareholders, each
officer and director of the Company, and each manager and officer of Capital
Cardiac, in form and substance reasonably satisfactory to the Buyer, releasing
the Company and Capital Cardiac from any liability or obligation owed by the
Company, or Capital Cardiac, as the case may be, to such person as of the
Closing Date, other than obligations arising under this Agreement and the
Transaction Documents.

 

(o) No Injunctions or Restraints. No statute, rule, regulation, injunction,
restraining order or decree of any court or Governmental Authority of competent
jurisdiction shall be in effect which restrains or prevents the transactions
contemplated hereby.

 

 

18

 

 

(p) Corporate Proceedings and Documents. All corporate proceedings taken by the
Company in connection with the transactions contemplated hereby and all
documents incident thereto shall be reasonably satisfactory in all material
respects to Buyer shall have received all such counterpart originals or
certified or other copies of such documents as it may reasonably request.

 

(q) The Company shall have entered into an agreement reasonably satisfactory to
Buyer to enable the Company to maintain all Permits after the Closing.

 

Section 7.2 Conditions to Obligations of the Shareholders. The obligation of the
Shareholders to sell the Shares and Interests to Buyer is subject to the
satisfaction of the following conditions, any or all of which may be waived in
whole or in part by the Shareholders

 

(a) Representations and Warranties. The representations and warranties of Buyer
set forth in Article 5 of this Agreement shall be true and correct in all
material respects on and as of the Closing Date as if made on the Closing Date
(except to the extent such representations and warranties speak as of an earlier
date).

 

(b) Agreements. Buyer shall have performed and complied in all material respects
with all of its undertakings, covenants, conditions and agreements required by
this Agreement to be performed or complied with by Buyer prior to or at the
Closing.

 

(c) Officer’s Certificate. At the Closing the Shareholders shall have received a
certificate from Buyer dated the Closing Date signed by an authorized officer of
Buyer certifying to the fulfillment of the conditions set forth in the preceding
clauses (a) and (b).

 

(d) Employment Agreement. Buyer shall have executed and delivered to Hashim an
employment agreement with the Hashim in form and substance satisfactory to
Hashim.

 

(e) Consulting Agreement. Buyer shall have executed and delivered to Owsik a
consulting agreement with the Owsik in form and substance satisfactory to Owsik.

 

(f) Escrow Agreement. The Escrow Agreement shall have been executed and
delivered by Buyer

 

(g) Corporate Proceedings and Documents. All corporate proceedings taken by
Buyer in connection with the transactions contemplated hereby and all documents
incident thereto shall be reasonably satisfactory in all material respects to
the Shareholders and the Shareholders shall have received all such counterpart
originals or certified or other copies of such documents as they may reasonably
request.

 

ARTICLE 8

AGREEMENTS REGARDING TAXES

 

Section 8.1. Tax Returns.

 

The Buyer will prepare or cause to be prepared any Tax Returns of the Company
that are due or may be filed by the Company from and after the Closing Date,
other than any income Tax Returns required to be filed for periods ending on or
prior to the Closing Date, which will be prepared by the Shareholders (at their
expense) and delivered in a timely manner to the Buyer. If the Shareholders fail
to deliver to the Buyer any Tax Return contemplated by the first sentence of
this Section, the Buyer will prepare such Tax Returns or cause them to be
prepared at the expense of the Shareholders. In the case of Tax Returns prepared
by the Buyer, the Buyer will provide the Shareholders with drafts of any such
Tax Returns that include any period ending on or prior to the Closing Date no
later than 30 days before their due date (with regard to extensions actually
granted) and will permit the Shareholders to review, comment on and approve such
draft Tax Returns. The Shareholders will not unreasonably withhold or delay
their approval to any such draft Tax Returns. In the case of Tax Returns of the
Company prepared by the Shareholders, the Shareholders will prepare such Tax
Returns consistent with past practice and in accordance with applicable law,
will provide to the Buyer drafts of any such Tax Returns that include any period
ending on the Closing Date at least 30 days before the due date thereof, with
regard to extensions actually granted, and will permit the Buyer to review,
comment on and approve such draft Tax Returns. The Buyer will not unreasonably
withhold or delay its approval to any such draft Tax Returns and, after such
approval, will execute and file such Tax Returns. The Buyer will cooperate with
the Shareholders with respect to any information or documentation reasonably
required by the Shareholders in preparing such Tax Returns. For the avoidance of
doubt, the Shareholders shall be responsible for payment of all taxes attributed
to the activities of the Company up to the Closing Date.

 

 

19

 

 

Section 8.2. Cooperation on Tax Matters.

 

The Buyer and the Shareholders shall cooperate fully, as and to the extent
reasonably requested, in connection with the filing of Tax Returns pursuant to
this Article and any audit, litigation or other proceeding with respect to
Taxes. Such cooperation shall include the retention and (upon another party’s
request) the provision of records and information which are reasonably relevant
to any such audit, litigation or other proceeding and making employees available
on a mutually convenient basis to provide additional information and explanation
of any material provided hereunder. The Buyer and the Shareholders shall, and
shall cause the Company to, retain all books and records with respect to Tax
matters pertinent to the Company relating to any taxable period beginning before
the Closing Date until the expiration of the statute of limitations of the
respective taxable periods, and to abide by all record retention agreements
entered into with any taxing authority.

 

ARTICLE 9

SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION

 

Section 9.1. Survival.

 

The representations and warranties set forth in this Agreement, in any Exhibit
or Schedule hereto and in any certificate or instrument delivered in connection
herewith shall survive for a period of eighteen (18) months after the Closing
Date (the “Warranty Period”) and shall thereupon terminate and expire and shall
be of no force or effect thereafter, except (i) with respect to any claim,
written notice of which shall have been delivered to Buyer or the Shareholders,
as the case may be, in accordance with Section 9.6 and prior to the end of the
Warranty Period, such claim shall survive the termination of such Warranty
Period for as long as such claim is unsettled, and (ii) with respect to any
litigation which shall have been commenced to resolve such claim on or prior to
such date. Notwithstanding the foregoing, solely with respect to the
representations and warranties regarding Ownership of the Shares (Section 4.3),
Taxes (Section 4.28), Environmental Matters (Section 4.25) and ERISA Matters
(Section 4.24), the applicable Warranty Period shall be the applicable statute
of limitations.

 

Section 9.2. Indemnification by the Shareholders.

 

Subject to the provisions of Section 9.5 below, each Shareholder hereby
covenants and agrees with Buyer that such Shareholder shall indemnify Buyer and
its shareholders, respective directors, officers, employees and Affiliates of
Buyer, and each of their successors and assigns (individually, a “Buyer
Indemnified Party”), and hold them harmless from, against and in respect of any
and all costs, losses, claims, liabilities (including for Taxes), fines,
penalties, damages and expenses (including interest, if any, imposed in
connection therewith, court costs and reasonable fees and disbursements of
counsel) (collectively, “Damages”) incurred by any of them resulting from any
breach of any representation or warranty in this Agreement or the
non-fulfillment in any material respect of any agreement, covenant or obligation
by a Shareholder made in this Agreement (including without limitation any
Exhibit or Schedule hereto and any certificate or instrument delivered in
connection herewith).

 

Section 9.3. Indemnification by Buyer.

 

Buyer hereby covenants and agrees with the Shareholders that Buyer shall
indemnify the Shareholders and their heirs and assigns (individually, a
“Shareholder Indemnified Party”) and hold them harmless from, against and in
respect of any and all Damages incurred by any of them resulting from any breach
of any representation or warranty in this Agreement or the non-fulfillment in
any material respect of any agreement, covenant or obligation by Buyer or Parent
made in this Agreement (including without limitation any Exhibit or Schedule
hereto and any certificate or instrument delivered in connection herewith).

 

 

20

 

 

Section 9.4. Right to Defend.

 

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

 

Section 9.5 Limitation on Rights of Indemnification.

 

(a) No Buyer Indemnified Party shall have the right to indemnification under
this Agreement unless and until the aggregate amount of any and all such
indemnification claims made by the Buyer Indemnified Party under this Agreement
exceeds $25,000 (the “Basket”). After the aggregate of all Damages suffered or
incurred by the Buyer exceeds the Basket, Buyer shall be entitled to receive one
and one-half ($1.50) dollars in respect of each one dollar of indemnified claims
in excess of the Buyer until Buyer shall have received an amount equal to the
sum of the reimbursed indemnified claims plus the Basket in respect of
indemnified claims. If Buyer is entitled to any further payments in respect of
indemnifications claims, such payments shall be made on a dollar for dollar
basis subject to any limitations contained herein; subject, however, to the
further limitations on indemnification set forth in Section 9.5(b) below. The
Basket shall not apply to claims regarding Taxes (4.28), ERISA (4.24) and
Ownership of the Shares (4.3), and claims arising out of fraud.

 

 

21

 

 

(b) Except in the event of fraud, the remedies provided in Sections 9.2 and 9.3
hereof shall be the sole and exclusive remedies of the Buyer Indemnified Party
and Shareholder Indemnified Party from and after the Closing in connection with
any breach of representation or warranty or non-performance, partial or total,
of any covenant or agreement contained in this Agreement.

 

Section 9.6. Subrogation.

 

If the Indemnified Party receives payment or other indemnification from the
indemnifying party hereunder, the indemnifying party shall be subrogated to the
extent of such payment or indemnification to all rights in respect of the
subject matter of such claim to which the Indemnified Party may be entitled, to
institute appropriate action against third parties for the recovery thereof,
including under any insurance policies, and the Indemnified Party agrees to
assist and cooperate in good faith with the indemnifying party and to take any
action reasonably required by such indemnifying party, at the expense of such
indemnifying party, in enforcing such rights.

 

If a Shareholder shall have paid a Buyer Indemnified Party for an indemnified
claim arising out of Section 4.21 hereof or otherwise, and the Buyer Indemnified
Party or the Company subsequently receives payment under insurance policies
(existing prior to the Closing) covering such claim, the Buyer Indemnified Party
shall repay to the Shareholder the amount of such prior payment made by the
Shareholder; provided, however, such repayment shall not exceed the actual
amount received by the Buyer Indemnified Party under such policy, less all
reasonable fees (including attorneys’ fees) incurred by the Buyer Indemnified
Party in pursuing and collecting under such policy.

 

ARTICLE 10

TERMINATION AND AMENDMENT

 

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

 

(a) by mutual written consent of the Buyer, on the one hand, and the
Shareholders on the other hand;

 

(b) by Buyer if any of the conditions set forth in Section 7.1 shall have become
incapable of fulfillment, and shall not have been waived by Buyer, or if either
of the Shareholders shall breach in any material respect any of its
representations, warranties or obligations hereunder;

 

(c) by the Shareholders, if any of the conditions set forth in Section 7.2 shall
have become incapable of fulfillment, and shall not have been waived by the
Shareholders, or if Buyer shall breach in any material respect any of their
representations, warranties or obligations hereunder;

 

(d) by either the Buyer or the Shareholders if the Closing shall not have been
consummated on or before August 31, 2016, as to which date time shall be of the
essence.

 

Notwithstanding the foregoing, a party shall not be permitted to terminate this
Agreement pursuant to clause (b), (c) or (d) hereof if such party is in breach
of any of its representations, warranties, covenants or agreements contained in
this Agreement.

 

10.2 Effect of Termination. In the event of termination by the Buyer or the
Shareholders pursuant to Section 10.1, written notice thereof shall promptly be
given to the other parties and, except as otherwise provided herein, the
transactions contemplated by this Agreement shall be terminated, without further
action by any party. Notwithstanding the foregoing, nothing in Section 10.1 or
10.2 shall be deemed to release any party from any liability for any breach by
such party of the terms and provisions of this Agreement or to impair the right
of the Shareholders, on the one hand, and Buyer, on the other hand, to compel
specific performance of the other party of its or their obligations under this
Agreement.

 

10.3 Amendment. This Agreement may be amended, modified or supplemented only by
written agreement of Buyer and the Shareholders at any time prior to the Closing
with respect to any of the terms contained herein.

 

 

22

 

 

ARTICLE 11

MISCELLANEOUS

 

Section 11.1. Waivers.

 

No action taken pursuant to this Agreement, including any investigation by or on
behalf of any party, shall be deemed to constitute a waiver by the party taking
such action of compliance with any representation, warranty, covenant or
agreement contained herein. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach. Any party hereto may, at or before the Closing, waive any
conditions to its obligations hereunder which are not fulfilled.

 

Section 11.2. Binding Effect; Benefits.

 

This Agreement shall inure to the benefit of the parties hereto and shall be
binding upon the parties hereto and their respective successors and assigns.
Except as otherwise set forth herein, nothing in this Agreement, expressed or
implied, is intended to confer on any person other than the parties hereto, the
Buyer Indemnified Party, the Shareholder Indemnified Party or their respective
successors and assigns, any rights, remedies, obligations, or liabilities under
or by reason of this Agreement.

 

Section 11.3. Assignment; Delegation.

 

No party to this Agreement may assign its rights or delegate its obligations
hereunder without the prior written consent of all of the other parties.

 

Section 11.4. Notices.

 

All notices, requests, demands and other communications which are required to be
or may be given under this Agreement shall be in writing and shall be deemed to
have been duly given when delivered in person or after dispatch by recognized
overnight courier to the party to whom the same is so given or made:

 

If to the Buyer, to:

 

Event Cardio Group Inc.

7694 Colony Palm Drive

Boynton Beach, Florida 33436

Attn: John Bentivoglio, President and CEO

 

With a copy to:

Eaton & Van Winkle LLP

3 Park Avenue, 16th floor

New York, NY 10016

Attn: Vincent J. McGill, Esq.

 

or at such other address as the Buyer may have advised the other parties hereto
in writing; and

 

 

23

 

 

If to the Shareholders, to:

 

Richard F. Owsik

c/o Levin & Gann, P.A.

502 Washington Avenue, Suite 800

Towson, Maryland 21204

Attn: Randolph C. Knepper, Esq.

 

Joseph K. Hashim

21 Fairview Ave. apt 224

Tuckahoe, NY 10707

 

With a copy to:

Levin & Gann, P.A.

502 Washington Avenue, Suite 800

Towson, Maryland 21204

Attn: Randolph C. Knepper, Esq.

 

or at such other address as the Shareholders may have advised the Buyer in
writing; and

 

All such notices, requests and other communication shall be deemed to have been
received on the date of delivery thereof or the refusal to accept delivery
thereof.

 

Section 11.5. Entire Agreement.

 

This Agreement (including the Schedules and Exhibits hereto) and the other
Transaction Documents constitute the entire agreement and supersede all prior
agreements, statements, representations or promises, oral and written, among the
parties hereto with respect to the subject matter hereof. No party hereto shall
be bound by or charged with any written or oral arguments, representations,
warranties, statements, promises or understandings not specifically set forth in
this Agreement or in any Schedule or Exhibits hereto or any other Transaction
Documents, or in certificates and instruments to be delivered pursuant hereto on
or before the Closing.

 

Section 11.6. Governing Law.

 

This Agreement, and the rights and obligations of the parties hereto under this
Agreement, shall be governed by, construed and enforced in accordance with the
laws of the Maryland, without giving effect to the choice of law principles
thereof. Any action arising out of the breach or threatened breach of this
Agreement shall be commenced in the United States District Court for the
Southern District of Maryland or the state courts of Maryland located in
Baltimore County, and each of the parties hereby submits to the jurisdiction of
such courts for the purpose of enforcing this Agreement.

 

Section 11.7. Severability.

 

If any term or provision of this Agreement shall to any extent be finally
determined by a court of competent jurisdiction to be invalid or unenforceable,
the remainder of this Agreement shall not be affected thereby, and each term and
provision of this Agreement shall be valid and enforced to the fullest extent
permitted by law, provided that, as so enforced, each of the parties receives
substantially all of the benefits contemplated hereby.

 

 

24

 

 

Section 11.8. Amendments.

 

This Agreement may not be modified or changed except by an instrument or
instruments in writing signed by the party or parties against whom enforcement
of any such modification or amendment is sought.

 

Section 11.9. Transaction Taxes.

 

The Shareholders shall pay any and all taxes arising out of the transfer of the
Shares to the Buyer and imposed upon the Shareholders regarding the sale of the
Shares and transfer of ownership thereof to Buyer.

 

Section 11.10. Exhibits and Schedules.

 

The Exhibits and Schedules attached hereto or referred to herein are
incorporated herein and made a part hereof. As used herein, the expression “this
Agreement” includes such Exhibits and Schedules.

 

IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
representatives to execute and deliver this Agreement as of the first date
written above.

 

 

EVENT CARDIO GROUP INC. (“BUYER”)

 

By: /s/ John Bentivoglio

John Bentivoglio, President and CEO

 

THE SHAREHOLDERS:

/s/ Richard F. Owsik

Richard F. Owsik

 

/s/ Joseph K. Hashim

Joseph K. Hashim

 

 

25

 

 

EXHIBIT A

 

PROMISSORY NOTE

 

$ [ ], 2016

New York, New York

 

For good and valuable consideration, the receipt of which is hereby
acknowledged, Event Cardio Group Inc., a Nevada corporation (the “Company”),
promises to pay to the order of __________ or his assigns (collectively, the
“Holder”), the principal sum of _________ Hundred Thousand Dollars ($______.00)
on July __, 2017 or, if earlier, (ii) when, upon or after the occurrence of an
Event of Default (as defined below), such amount is declared due and payable by
the Holder or made automatically due and payable in accordance with the terms
hereof (the “Maturity Date”).

 

This Note may be prepaid in whole or in part at any time.

 

This Note is issued pursuant to that certain Stock Purchase Agreement, dated as
of June__ 2016 (the “Stock Purchase Agreement”), entered into between the
Company and the Holder.

 

The following is a statement of rights of the Holder and the conditions to which
this Note is subject, and to which the Holder, by acceptance of this Note,
agrees:

 

1. Events of Default. If any of the events specified in this Section shall occur
(herein individually referred to as an “Event of Default”), the Holder may, so
long as such condition exists, in addition to any other right, power or remedy
granted to the Holder under this Note, the Stock Purchase Agreement, or
applicable law, either by suit in equity or by action at law, or both, declare
the entire principal amount and all other amounts immediately due and payable,
without presentment, demand or notice of any kind, all of which are expressly
waived, provided, however, that upon the occurrence of any Event of Default
described in Section 1(c) or 1(d) hereof, the entire principal amount and all
other amounts shall automatically become due and payable:

 

(a) Payment of the principal of this Note shall be delinquent for a period of
five days or more after the due date thereof;

 

(b) If the Company shall fail to observe any covenant or other provision
contained in this Note (other than with respect to payment), the Stock Purchase
Agreement and such failure of observance shall be continuing for 10 days after
the Holder has given written notice thereof;

 

(c) The institution by the Company of proceedings to be adjudicated as bankrupt
or insolvent, or the consent by it to institution of bankruptcy or insolvency
proceedings against it or the filing by it of a petition or answer or consent
seeking reorganization or release under the federal Bankruptcy Act, or any other
applicable federal or state law, or the consent by it to the filing of any such
petition or the appointment of a receiver, liquidator, assignee, trustee or
other similar official of the Company, or of any substantial part of its
property, or the making by it of an assignment for the benefit of creditors, or
the taking of corporate action by the Company in furtherance of any such action;
or

 

(d) If, within 45 days after the commencement of an action against the Company
(and service of process in connection therewith on the Company) seeking any
bankruptcy, insolvency, reorganization, liquidation, dissolution or similar
relief under any present or future statute, law or regulation, such action shall
not have been resolved in favor of the Company or all orders or proceedings
thereunder affecting the operations or the business of the Company stayed, or if
the stay of any such order or proceeding shall thereafter be set aside, or if
there is appointed without the consent or acquiescence of the Company of any
trustee, receiver or liquidator of the Company or of all or any substantial part
of the properties of the Company, such appointment shall not have been vacated.

 

 

26

 

 

2. Miscellaneous.

 

(a) Waiver and Amendment. The rights and remedies herein reserved to any party
shall be cumulative and in addition to any other or further rights and remedies
available at law or in equity. The waiver by any party hereto of any breach of
any provision of this Note shall not be deemed to be a waiver of the breach of
any other provision or any subsequent breach of the same provision. This Note
and its terms may be changed, waived or amended only by the written consent of
the Company and the Holder.

 

(b) Governing Law. This Note shall be governed by and construed in accordance
with the law of the State of New York without regard to conflict of law
provisions. Any legal suit, action or proceeding arising out of or based upon
this Note shall be instituted in the United States District Court for the
Southern District of New York or the state courts of New York located in New
York County. The aforementioned choice of venue is intended to be mandatory and
not permissive in nature, thereby precluding the possibility of litigation
arising out of this Note in any jurisdiction other than that specified in this
Section. The Holder and the Company each waive, to the fullest extent permitted
by applicable law, any right it may have to assert the doctrine of forum non
conveniens or similar doctrine or to object to venue with respect to any
proceeding brought in accordance with this Section, and stipulates that the
United States District Court for the Southern District of New York and the state
courts of New York located in New York County, shall have in personam
jurisdiction and venue over them for the purpose of litigation any dispute,
controversy or proceeding arising out of or related to this Note.

 

(c) Waiver of Presentment, Demand, Etc. To the fullest extent permitted by
applicable law, the Company expressly waives presentment, demand, protest,
notice of dishonor, notice of non-payment, notice of maturity, notice of
protest, presentment for the purpose of accelerating maturity of the obligations
under this Note, diligence in collection, and the benefit of any exemption or
insolvency laws.

 

(d) Notices. All notices, requests, demands or other communications which are
required to be or may be given or permitted hereunder shall be in writing and
shall be deemed to have been duly given when delivered in person or after
dispatch by a recognized overnight courier to the appropriate party to whom the
same is so given or made:

 

To Holder at:

c/o Levin & Gann, P.A.

502 Washington Avenue, Suite 800

Towson, Maryland 21204

Attn: Randolph C. Knepper, Esq.

 

 

To the Company at: Event Cardio Group Inc.

7694 Colony Palm Drive

Boynton Beach, Florida 33436

Attn: John Bentivoglio, President and CEO

 

with a copy to:

 

Eaton & Van Winkle LLP

3 Park Avenue, 16th floor

New York, NY 10016

Attn: Vincent J. McGill, Esq.

 

27

 

 

or to such other address as a party has designated by notice in writing to the
other party in the manner provided by this Section. All such notices, requests,
demands or other communications shall be deemed to have been received on the
date of delivery thereof (if delivered by hand) and on the next day after
sending thereof (if by overnight courier).

 

(e) Costs of Collection. The Company shall reimburse Holder for reasonable
attorneys’ fees and expenses incurred in connection with enforcing any
provisions of this Note and/or collecting any amounts due under this Note.

 

(f) Right of Set-Off. Company shall have the no to set-off for claims against
Holder arising out the Stock Purchase Agreement.

 

(g) Successors and Assigns. All of the terms and provisions of this Note shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors, heirs and permitted assigns.

 

(h) Severability. In case any provision contained herein (or part thereof) shall
for any reason be held to be invalid, illegal, or unenforceable in any respect,
such invalidity, illegality, or other unenforceability shall not affect any
other provision (or the remaining part of the affected provision) hereof; but
this Note shall be construed as if such invalid, illegal, or unenforceable
provision (or part thereof) had never been contained herein, but only to the
extent that such provision is invalid, illegal, or unenforceable.

 

(i) Headings. The section headings contained in this Note are intended solely
for convenience of reference and do not themselves constitute a part of this
Note.

 

IN WITNESS WHEREOF, the Company has caused this Note to be duly executed and
issued as of the date first written above.

 

EVENT CARDIO GROUP INC.

 

By:_____________________
John Bentivoglio

President and CEO

 

28

 

 

  

SCHEDULE 4.1

 

ORGANIZATION, GOOD STANDING, POWER

 

[The Company is not authorized or licensed to conduct business as a foreign
corporation in any jurisdictions.]

 

29

 

 

SCHEDULE 4.3

 

SHARES

 

 The Shareholders hold the following Shares:

 

Richard F. Owsik

 

 

Joseph K. Hashim

 

 

30

 

 

SCHEDULE 4.7

 

EFFECT OF AGREEMENT

 

 

 

31

 

 

SCHEDULE 4.8

 

GOVERNMENTAL AND OTHER CONSENTS

 

[Independent Diagnostic Testing Facility]

 

 

 

32

 

 

SCHEDULE 4.10

 

UNDISCLOSED LIABILITIES

 

 

 

33

 

 

SCHEDULE 4.11

 

ABSENCE OF CERTAIN CHANGES OR EVENTS

 

 

 

34

 

 

SCHEDULE 4.12

 

TITLE TO ASSETS; ABSENCE OF LIENS AND ENCUMBRANCES

 

 

 

 

35

 

 

SCHEDULE 4.13

 

EQUIPMENT

 

SCHEDULE 4.14

 

INSURANCE

 

 

36

 

 

SCHEDULE 4.15

 

AGREEMENTS; ARRANGEMENTS

 

 

 

37

 

 

SCHEDULE 4.16

 

PATENTS, TRADEMARKS, COPYRIGHTS

 

 

38

 

 

SCHEDULE 4.17

 

PERMITS

 

 

39

 

 

SCHEDULE 4.19

 

LITIGATION

 

 

 

40

 

 

SCHEDULE 4.20

 

CUSTOMERS, SUPPLIERS, DISTRIBUTORS AND AGENTS

 

41

 

 

SCHEDULE 4.21(b)

 

EMPLOYEE BENEFIT PLANS

 

 

SCHEDULE 4.21(c)

 

COMPANY QUALIFIED PLANS

 

 

42

 

 

SCHEDULE 4.24(c)

 

RETIRED EMPLOYEES AND DIRECTORS

 

 

 

43

 

 

SCHEDULE 4.25

 

ENVIRONMENTAL MATTERS

 

 

 

 

44

 

 

SCHEDULE 4.28

 

INVENTORY

 

 

 

45

 

 

SCHEDULE 4.32

 

INSIDER INTERESTS

 

 

 

46

 

 

SCHEDULE 5.6

 

ABSENCE OF CHANGES

 

47

 

 

SCHEDULE 5.7

 

CONSENTS

 

 

48