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SECURITIES PURCHASE AGREEMENT
by and among
NEIL SINGER,
AC KINETICS, INC.
and
CAPSTONE COMPANIES, INC.
Dated effective as of June 27, 2016
 
 

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TABLE OF CONTENTS

   
Page
ARTICLE 1 PURCHASE
4
1.1
Purchase of Securities
4
1.2
Purchase Price and Payment
4
1.3
Termination of Rights as Stockholder
4
ARTICLE 2 CLOSING, DELIVERIES AND OTHER ACTIONS
4
2.1
Time and Place of the Closing
4
2.2
Deliveries by the Stockholder
5
2.3
Deliveries by the Company and the Purchaser
5
ARTICLE 3 REPRESENTATIONS AND WARRANTIES RELATED TO THE STOCKHOLDER
5
3.1
Title to the Securities
5
3.2
Authority, Validity, Effect and No Conflict
6
3.3
Consents
6
3.4
Receipt of Information
7
3.5
No Future Participation
7
3.6
No Other Company Securities
7
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND THE COMPANY
7
4.1
Authority, Validity and Enforceability
7
4.2
No Conflict
8
4.3
Consents
8
4.4
Status; Investment Purpose
8
ARTICLE 5 ADDITIONAL AGREEMENTS
8
5.1
Further Assurances
8
5.2
Press Release, Announcements and Disclosure
8
5.3
Waiver, Release and Assignment.
9
5.4
Withholding
10
ARTICLE 6 DEFINITIONS
10
6.1
Definitions
10
ARTICLE 7 MISCELLANEOUS
14
7.1
Assignment
14
7.2
Headings
14
7.3
Integration, Modification and Waiver
14
7.4
Construction
14
7.5
Severability
15
7.6
Notices
15
7.7
Governing Law
16
7.8
Jurisdiction and Venue
16
7.9
Waiver of Jury Trial
16
7.10
No Third Party Beneficiaries
17
7.11
Counterparts
17

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LIST OF EXHIBITS

Exhibit A Form of Option Agreement

Exhibit B Form of Subordination Agreement

Exhibit C Form of Note

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LIST OF SCHEDULES

Schedule 3.4 Koch Transaction Documents and Asset Transfers Documents

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SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this "Agreement"), effective this 27 day of
June, 2016 (the "Closing Date"), is by and among AC Kinetics, Inc., a Delaware
corporation (the "Company"), Neil Singer, an individual (the "Purchaser"), and
Capstone Companies, Inc., a Florida corporation (the "Stockholder").  The
Stockholder, the Company and the Purchaser are sometimes individually referred
to as a "Party," and collectively as the "Parties."
RECITALS
A. The Stockholder owns all of the issued and outstanding shares of Series A
Preferred Stock, par value $0.001 per share, of the Company (the "Securities");
B. The Purchaser, together with his wife, Lydia Singer, owns 1,000 shares of the
Class A Common Stock, par value $0.001 per share, of the Company;
C. At the Closing (as defined below), the Stockholder wishes to sell to the
Purchaser, and the Purchaser wishes to purchase from the Stockholder, all of the
Securities in exchange for the making by the Purchaser to the order of the
Stockholder that certain Note (as defined below), subject to the terms and
conditions set forth herein;
D. Purchaser is simultaneously entering into other similar transactions with
other stockholders of the Company such that, following the Closing and the
closing of such other transactions, Purchaser, together with his wife, will own
all of the equity securities of the Company;
E. Following the Closing, but prior to the occurrence of the Koch Transactions
(as defined below), (1) the Purchaser shall assign the Note to NLO Holdco, LLC,
a Delaware limited liability company ("NLO"), together with certain of his other
assets and certain of his other liabilities, in exchange for certain membership
interests of NLO, and (2) immediately following such assignment, each of the
Company and NLO shall assign all or substantially all of its respective assets
and certain of its respective liabilities (including, with respect to NLO, the
Note) to ACK NLO, LLC, a Delaware limited liability company ("Newco"), in
exchange for all of the membership interests of Newco (collectively, the "Asset
Transfers");
F. Stockholder desires to make that certain waiver, release and assignment set
forth herein to Purchaser and the Company, and Purchaser, as owner of all equity
securities of the Company (together with his wife), would not enter into this
Agreement but for such waiver, release and assignment to Purchaser and the
Company;
G. As additional consideration for such waiver, release and assignment from
Stockholder, the Company hereby agrees to pay to Stockholder an amount equal to
$10 (the "Additional Consideration");
H. Newco is contemplating entering into certain agreements with Koch Minerals,
LLC and its Affiliates ("Koch") following the Asset Transfers, including a
credit agreement relating to the proposed extension of credit to Newco by Koch,
and the related proposed option agreement pursuant to which Koch would be
granted the option to purchase the assets of Newco (the "Koch Transactions");
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I. The Stockholder and Koch would enter into that certain Subordination
Agreement in the form attached hereto as Exhibit A (the "Subordination
Agreement"), to be agreed and acknowledged by ACK, NLO and Newco, whereby the
Stockholder shall, effective with the Koch Transactions, subordinate its rights
as an ultimate creditor of Newco with respect to the Note and otherwise to those
of Koch;
J. Also in connection with the transactions contemplated hereby, the Stockholder
and Involve LLC, an Affiliate of the Purchaser ("Involve") will enter into that
certain Option Agreement, in the form attached hereto as Exhibit A (the "Option
Agreement"), whereby Involve will grant the Stockholder an Option to repurchase
shares of the Stockholder owned by Involve; and
K. The Parties acknowledge and agree that Koch would not pursue or enter into
the Koch Transactions without the Parties and their respective Affiliates
entering into and performing their respective obligations under this Agreement
and the Ancillary Agreements.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereby agree as
follows:
ARTICLE 1
PURCHASE
1.1 Purchase of Securities.  Subject to the terms and conditions of this
Agreement, concurrent with the execution hereof, the Purchaser will purchase
from the Stockholder, and the Stockholder will sell, transfer, assign, convey
and deliver to the Purchaser, or cause to be sold, transferred, conveyed,
assigned and delivered to the Purchaser, free and clear of all Liens (other than
any Liens existing under securities Laws), all right, title and interest in, to
and under the Securities.  Following the Closing, the Purchaser shall assign the
Securities to the Company and the Company shall cancel the Securities.
1.2 Purchase Price and Payment.  The total consideration payable by the
Purchaser to or for the account of the Stockholder in consideration for the
transactions contemplated hereby shall be a note in the form attached hereto as
Exhibit C in the original principal amount of $1,500,000 (the "Note"). 
Following the Closing, the Purchaser shall (a) assign all of his right, title
and interest under the Note to NLO and (b) cause NLO to assign all of its right,
title and interest under the Note to Newco (the "Note Assignments").  Following
the Note Assignments, the Stockholder acknowledges and agrees that Neil Singer,
in his individual capacity, shall have no liability to the Stockholder for any
outstanding obligations of the Borrower (as such term is defined therein) under
the Note.
1.3 Termination of Rights as Stockholder.  Upon receipt of the Note and
following the transactions contemplated by Section 1.1, the Securities shall
cease to be outstanding for any and all purposes, and the Stockholder shall no
longer have any rights as an equityholder of the Company, including any rights
that the Stockholder may have had under the Company's Certificate of
Incorporation or otherwise.
ARTICLE 2
CLOSING, DELIVERIES AND OTHER ACTIONS
2.1 Time and Place of the Closing.  On the Closing Date, the closing of the
transactions contemplated hereby (the "Closing") will take place at the offices
of the Company located at 20 Bedford Road, Armonk, New York 10504.
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2.2 Deliveries by the Stockholder.  At the Closing, the Stockholder shall
deliver, or cause to be delivered, to the Purchaser the following items:
(a)
stock certificates evidencing the Securities duly endorsed in blank or
accompanied by an instrument of transfer duly executed by the Stockholder,
transferring the Securities to the Purchaser free and clear of all Liens (other
than Liens existing under securities Laws), dated as of the Closing Date;

(b)
the Option Agreement, duly executed by the Stockholder;

(c)
the Subordination Agreement duly executed by the Stockholder and dated as of the
Closing Date; and

(d)
a termination agreement (the "Termination Agreement") terminating all contracts
between Stockholder and the Company other than those specifically identified
therein, duly executed by the Stockholder and any other parties to the Contracts
listed on the schedules thereto necessary to make such Termination Agreement
valid with respect to such Contract and dated as of the Closing Date.

2.3 Deliveries by the Company and the Purchaser.  At the Closing, the Company
and the Purchaser shall deliver, or cause to be delivered, to the Stockholder
the following items:
(a)
the Option Agreement, duly executed by Involve and dated as of the Closing Date;

(b)
an acknowledgment of the Subordination Agreement, duly executed by ACK, NLO and
Newco and dated as of the Closing Date;

(c)
the Termination Agreement, duly executed by the Company and any other parties to
the Contracts listed on the schedules thereto necessary to make such Termination
Agreement valid with respect to such Contract and dated as of the Closing Date;

(d)
the Additional Consideration; and

(e)
the Note, duly executed by the Purchaser and dated as of the Closing Date.

ARTICLE 3
REPRESENTATIONS AND WARRANTIES RELATED TO THE STOCKHOLDER
The Stockholder represents and warrants to the Purchaser and the Company as
follows:
3.1 Title to the Securities; Exemption from Registration.
(a)
As of the Closing, the Stockholder shall own, and shall deliver to the
Purchaser, the Securities, free and clear of any and all Liens (other than Liens
existing under securities Laws).

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(b)
The Stockholder acquired the Securities solely for its own account for
investment purposes and not with a view to, or for offer or sale in connection
with, any distribution thereof, and the Stockholder has held the Securities for
a period of at least six (6) months.  The Securities have not been and will not
be registered under the Securities Act of 1933, as amended, which term, as used
herein, includes the rules and regulations of the Securities and Exchange
Commission thereunder (the "Securities Act") and may not be offered or sold
except pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act and any state securities laws,
as applicable. Subject to the accuracy of the representations and warranties of
the Purchaser set forth in this Agreement, it is not necessary in connection
with the sale of the Securities to the Purchaser to register the Securities
under the Securities Act or any state securities laws, as the Securities are
eligible for resale pursuant to an applicable exemption from registration under
the Securities Act and state securities laws and regulations, as applicable.

3.2 Authority, Validity, Effect and No Conflict.
(a)
The Stockholder is a Florida corporation duly incorporated, validly existing and
in good standing under the laws of the jurisdiction of its formation.

(b)
Each of the Stockholder and its Affiliates, as applicable, has all requisite
power and authority to enter into and perform its respective obligations under
this Agreement and any Ancillary Agreement to which such entity is a party and
to consummate the transactions contemplated hereby and thereby.  This Agreement
and any such Ancillary Agreements have been duly approved by all requisite
action and have been duly executed and delivered by the Stockholder and/or such
Affiliates, as applicable, pursuant to all necessary authorization and are the
legal, valid and binding obligations of the Stockholder and/or such Affiliates,
as applicable, enforceable against the Stockholder and/or such Affiliates, as
applicable, in accordance with their terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation, fraudulent conveyance and
other similar Laws and principles of equity affecting creditors' rights and
remedies generally (the "General Enforceability Exceptions").

(c)
Neither the execution of this Agreement or the Ancillary Agreements by the
Stockholder and/or its Affiliates, as applicable, nor the performance by the
Stockholder and/or such Affiliates, as applicable, of its obligations hereunder
or thereunder will (i) violate or conflict with the organizational or governing
documents of the Stockholder and/or such Affiliates, as applicable, or any Law,
Permit or Order, (ii) violate, conflict with or result in a breach or
termination of, or otherwise give any Person additional rights or compensation
under, or the right to terminate or accelerate, or constitute (with notice or
lapse of time, or both) a default under the terms of any note, deed, mortgage,
or other Contract to which the Stockholder and/or such Affiliates, as
applicable, is a party or by which any of its assets or properties are bound or
(iii) result in the creation or imposition of any Lien with respect to, or
otherwise have an adverse effect upon, the Securities.

3.3 Consents.  No Consent is required in connection with the execution and
delivery by Stockholder and/or its Affiliates, as applicable, of this Agreement
or the Ancillary Agreements or the consummation of the transactions contemplated
hereby or thereby.
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3.4 Receipt of Information.  The Stockholder has received all the information it
considers necessary or appropriate for deciding whether to dispose of the
Securities, including information pertaining to NLO, Newco, the Asset Transfers
and the Koch Transactions. The Stockholder has had an opportunity to ask
questions and receive answers from the Purchaser and the Company regarding the
terms and conditions of the Purchaser's purchase of the Securities and the
business and financial condition of the Purchaser and the Company, as well as
NLO, Newco, the Asset Transfers and the Koch Transactions, including drafts of
those transaction documents set forth on Schedule 3.4, and to obtain additional
information (to the extent the Purchaser or the Company possessed such
information or could acquire it without unreasonable effort or expense)
necessary to verify the accuracy of any information furnished to it or to which
it had access. The Stockholder has not received, and is not relying on, any
representations or warranties from the Purchaser or the Company, express or
implied, other than as provided herein.
3.5 No Future Participation.  The Stockholder acknowledges that the Stockholder
will have no future participation in any Company gains, losses, profits or
distributions with respect to the Securities.  The Stockholder acknowledges that
the Stockholder is voluntarily forfeiting any opportunity to share in any
increase in value from the equity of the Company.
3.6 No Other Company Securities  Other than the Securities, the Stockholder does
not own, beneficially or of record, any equity or debt securities of the
Company.  Following the Closing, the Stockholder will not own, beneficially or
of record, any securities of the Company.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND THE COMPANY
The Purchaser and the Company hereby represent and warrant to the Stockholder as
follows:
4.1 Authority, Validity and Enforceability.
(a)
The Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware.

(b)
The Purchaser is an individual with due capacity, and the Company and its and
the Purchaser's respective Affiliates have the requisite power and authority to
enter into and perform their respective obligations under this Agreement and any
Ancillary Agreement to which such Person is a party and to consummate the
transactions contemplated hereby and thereby.  This Agreement and any such
Ancillary Agreements have been duly approved by all requisite action and have
been duly executed and delivered by the Purchaser, the Company and/or such
Affiliates, as applicable, pursuant to all necessary authorization, as
applicable, and are the legal, valid and binding obligations of the Purchaser,
the Company and/or such Affiliates, as applicable, enforceable against them in
accordance with their terms, subject to the General Enforceability Exceptions.

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4.2 No Conflict.  Neither the execution of this Agreement or the Ancillary
Agreements by the Purchaser, the Company and/or their respective Affiliates, as
applicable, nor the performance by the Purchaser, the Company and/or such
Affiliates, as applicable, of their respective obligations hereunder or
thereunder will (a) violate or conflict with the organizational or governing
documents of the Company and/or such Affiliates, as applicable, or any Law,
Permit or Order, (b) violate, conflict with or result in a breach or termination
of, or otherwise give any Person additional rights or compensation under, or the
right to terminate or accelerate, or constitute (with notice or lapse of time,
or both) a default under the terms of any note, deed, mortgage, or other
Contract to which the Purchaser, the Company and/or such Affiliates, as
applicable, is a party or by which any of its assets or properties are bound or
(c) result in the creation or imposition of any Lien with respect to, or
otherwise have an adverse effect upon, the assets of the Purchaser.
4.3 Consents.  No Consent is required in connection with the execution and
delivery by the Purchaser, the Company, or their respective Affiliates, as
applicable, of this Agreement or the Ancillary Agreements to which such Person
is a party or the consummation of the transactions contemplated hereby or
thereby.
4.4 Status; Investment Purpose.  The Purchaser has such knowledge, skill and
experience in business, financial and investment matters that he is capable of
evaluating the merits and risks of purchasing the Securities, has considered the
suitability of purchasing the Securities and is able to bear the risks
associated with such purchase.  The Purchaser is acquiring the Securities solely
for his own account for investment purposes and not with a view to, or for offer
or sale in connection with, any distribution thereof.  The Purchaser
acknowledges that the Securities are "restricted securities" and, as such, are
not registered under the Securities Act or any state securities laws or
regulations, and that the Securities may not be transferred or sold except
pursuant to the registration provisions of the Securities Act or pursuant to an
applicable exemption therefrom and subject to state securities laws and
regulations, as applicable.
ARTICLE 5
ADDITIONAL AGREEMENTS
5.1 Further Assurances.  From and after the Closing Date, at the request of the
Purchaser, the Stockholder shall execute and deliver to the Purchaser, or cause
to be executed and delivered on behalf of the Stockholder to the Purchaser, such
instruments and other documents as the Purchaser may reasonably request in order
to implement the transactions contemplated by this Agreement and the Ancillary
Agreements, including all further materials, documents and instruments of
conveyance, transfer or assignment to effect, record or verify the transfer to,
and vesting in the Purchaser of, the Stockholder's right, title and interest in
and to the Securities, free and clear of all Liens (other than Liens existing
under securities Laws), in accordance with the terms of this Agreement.
5.2 Press Release, Announcements and Disclosure.  The Stockholder shall not, and
shall cause its managers, directors, officers, employees, equity holders, former
equity holders, agents or representatives not to, disclose any information or
issue any press release or other announcement, including any announcement to
employees, customers, suppliers or others having dealings with the Stockholder
or any of its Affiliates, relating to the Purchaser, the Company, Koch, their
respective Affiliates, the Purchaser or the Company's respective businesses
(including the Intellectual Property owned, held or used by the Purchaser, the
Company or their respective Affiliates), the subject matter of this Agreement or
any Ancillary Agreement or the transactions contemplated hereby or thereby,
including the Koch Transactions and the Asset Transfers, without the prior
written consent of the Purchaser;
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provided, however, nothing in this Section 5.2 will preclude the Stockholder or
agent or representative thereof from making any disclosures required under
applicable Law or required in conjunction with the filing of any Tax Return or
other document required to be filed in connection with obtaining, delivering or
filing Consents required under this Agreement from, to or with any Governmental
Authority.
5.3 Waiver, Release and Assignment.
(a)
The Stockholder on behalf of itself and each of its Affiliates and each of their
respective heirs, administrators, executors, officers, directors, employees,
stockholders, partners, managers, members, agents and representatives, and the
successors and assigns of each (individually, a "Releasor", collectively, the
"Releasors"), FULLY AND FINALLY RELEASES, ACQUITS AND FOREVER DISCHARGES, AND
COVENANTS NOT TO SUE, the Purchaser, the Company and their respective Affiliates
(including Convolve, Inc., Newco and NLO), as well as Koch, (and, to the extent
they would be liable in respect of their position with the foregoing, each of
the present and former officers, directors, stockholders, members, partners,
managers, representatives, employees, agents, Affiliates, subsidiaries,
predecessors, successors, assigns, beneficiaries, heirs, executors, insurers,
personal representatives and attorneys of the foregoing) (the "Released
Parties") from or for any and all Actions, Liens, Contracts, offers, Liabilities
and compensation of any kind or nature whatsoever, KNOWN OR UNKNOWN, SUSPECTED
OR UNSUSPECTED, FORESEEN OR UNFORESEEN, KNOWN OR UNKNOWN, DISCLOSED OR
UNDISCLOSED, MATURED OR UNMATURED, FIXED OR CONTINGENT, PAST, PRESENT OR FUTURE,
IN LAW OR IN EQUITY ("Released Matters"), which Releasors presently have, have
ever had or may hereafter have against the Released Parties arising
contemporaneously with or prior to the Closing Date or on account of or arising
out of any matter, cause or event occurring contemporaneously with or prior to
the Closing Date, as well as the Note Assignments, Asset Transfers or Koch
Transactions, including (i) any claims related to ownership in or of, or in any
portion or aspect of Intellectual Property that is owned, held or used by the
Purchaser or the Company and (ii) any claims related to that certain Royalty
Agreement, dated as of January 15, 2013, by and between the Company and the
Stockholder, that certain letter agreement, dated as of January 15, 2013, by and
between the Company and the Stockholder, or any other agreements to which the
Stockholder and/or any Affiliate thereof, on the one hand, and the Company, the
Purchaser and/or any Affiliate thereof, on the other hand, is a party; provided,
however, that nothing contained herein operates to release any obligations of
the Company, the Purchaser or their respective Affiliates, as applicable,
arising under this Agreement or the Ancillary Agreements. In compliance with any
Law which requires a specific release of unknown claims or benefits, the
Stockholder acknowledges that this release includes a release of unknown claims
(except claims of fraud), and hereby expressly waives and relinquishes any and
all such claims, rights or benefits that such may have which are unknown at the
effective time of this release. Each Party understands and agrees that if,
hereafter, it discovers facts different from or in addition to those that it now
knows or believe to be true, that the waivers and releases granted hereby will
be and remain effective in all respects notwithstanding such different or
additional facts or the discovery of such facts except in the case of claims of
fraud.  The Releasor hereby waives any claims or rights in and to the
Intellectual Property that is owned, held or used by the Purchaser or the
Company.

(b)
The Stockholder further agrees not to institute any Action, and will not
cooperate or assist in any such Action, against the Released Parties, or any of
them, pursuing any Released Matter released pursuant to Section 5.3(a).

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(c)
The Stockholder shall indemnify, defend and hold harmless the Released Parties
from any Liabilities incurred or suffered by any of such Persons based upon,
arising out of, or otherwise related to a breach of Section 5.2 or this Section
5.3 by any Releasor.

(d)
The Stockholder represents that it has not assigned any Released Matter or
potential Released Matter against the Released Parties to any other Person.

(e)
It is understood and agreed that the Purchaser and the Company (on behalf of
themselves and the other Released Parties) do not admit any Liability regarding
the matters released hereby.

(f)
To the extent that the Stockholder in fact possesses any right, title or
interest in any degree or any portion or aspect of NLO IP respecting technology
for AC induction motor control, the Stockholder hereby assigns and transfers all
such right, title and interest to the Company.  To the extent that the
Stockholder in fact possesses any right, title or interest in any degree or in
any portion or aspect of NLO IP other than that respecting technology for AC
induction motor control, the Stockholder hereby assigns and transfers all such
right, title and interest to the Purchaser.

5.4 Withholding.  The Stockholder shall indemnify, defend and hold harmless the
Purchaser against any and all Taxes (and any and all related Liabilities)
incurred by or asserted against the Purchaser by the IRS or any other
Governmental Authority as a result of the Purchaser's failure to deduct and
withhold the proper amount of Tax from the Note for any reason.
ARTICLE 6
DEFINITIONS
6.1 Definitions.  For purposes of this Agreement, the following terms have the
meanings specified or referenced in this Section 6.1:
"Action" means any claim, cause of action, complaint, demand, action,
litigation, suit, legal proceeding or hearing, audit, assessment, investigation,
interference, opposition, reexamination, inter partes review, post grant review,
opposition, nullification, supplemental examination, concurrent use,
controversy, cancellation, administrative enforcement proceeding or arbitration
or mediation proceeding before or under the direction of any Governmental
Authority.
"Additional Consideration" has the meaning set forth in the Recitals.
"Affiliate" means with respect to any Person, a Person that directly or
indirectly controls, is controlled by, or is under common control with, such
Person.  The term "control" as used in this definition (including the terms
"controlled by" or "under common control with") means, the possession, directly
or indirectly, of the power to direct or cause the direction of the management
or policies of such Person, whether through ownership of voting securities,
membership interests, by contract or otherwise.  When applied to any Person that
is an individual, the term "Affiliate" also includes any child, stepchild,
grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law,
including adoptive relationships, of such Person.
"Agreement" has the meaning set forth in the Preamble.
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"Ancillary Agreements" means the Note, the Subordination Agreement, the Option
Agreement, the Termination Agreement and each agreement, document, instrument or
certificate contemplated by this Agreement or any other Ancillary Agreement or
to be executed or delivered by the Company, the Purchaser, the Stockholder or
their respective Affiliates in connection with the consummation of the
transactions contemplated by this Agreement, as indicated by the context in
which such term is used.
"Asset Transfers" has the meaning set forth in the Recitals.
"Business Day" means any day except Saturday, Sunday or a day on which banking
institutions in the State of New York are required by Law to be closed.
"Closing Date" has the meaning set forth in the Preamble.
"Closing" has the meaning set forth in Section 2.1.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning set forth in the Preamble.
"Consent" means any consent, approval, authorization, qualification, waiver,
registration or notification required to be obtained from, filed with or
delivered to a Person.
"Contracts" means all contracts, agreements (including employment agreements and
non-competition agreements), leases (whether real or personal property),
Licenses, commitments, understandings, courses of dealings or performance,
instruments, guarantees, bids, orders and proposals, whether oral or written.
"Exhibit" means any exhibit to this Agreement.
"GAAP" means accounting principles generally accepted in the U.S. as in effect
from time to time, consistently applied.
"General Enforceability Exceptions" has the meaning set forth in Section 3.2(a).
"Governmental Authority" means any government or political subdivision or
regulatory authority, whether federal, state, local or foreign, or any agency or
instrumentality of any such government or political subdivision or regulatory
authority, or any federal, state, local or foreign court or arbitrator or
mediator.
"Intellectual Property means any and all of the following, and all rights in,
arising out of, or associated therewith, in any jurisdiction throughout the
world, whether protected, created or arising under any applicable Law, License
or other Contract, or otherwise: (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), products, processes,
prototypes, articles of manufacture, compositions of matter, know-how and other
things and information, all improvements thereto, and all patent disclosures and
patents (including patent applications), including all utility models,
provisional applications, continuations, divisionals, and continuations-in-part
thereof and patents issuing thereon, along with all reissues, reexaminations,
inter partes review proceedings, post grant review proceedings, opposition,
nullification, supplemental examination proceedings and extensions thereof; (b)
all copyrights, copyrightable subject matter and works of authorship (whether or
not embodied in any tangible form, including instruction manuals, schematics,
diagrams, drawings, product specifications,
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laboratory notebooks, samples, studies and summaries), and all mask work,
database and design rights, whether or not registered or published, all
registrations and recordations thereof and all applications and registrations in
connection therewith, along with all reversions, extensions and renewals
thereof; (c) trade or service marks, logos, trade names, corporate names,
including the name of the Company, rights in telephone numbers and trade dress
rights, together with all translations, adaptations, derivations and
combinations thereof and including the goodwill associated with any of the
foregoing, along with all applications, registrations, renewals and extensions
thereof; (d) confidential and proprietary information, including trade secrets
and know-how (including ideas, research and development, formulae, algorithms,
routines, compositions, engineering processes and techniques, manufacturing and
production processes and techniques, technical data, designs, drawings,
specifications, customer and supplier lists, pricing and cost information, and
business and marketing plans and proposals); (e) all internet domain names and
registrations and renewals thereof; (f) all Software and web sites; (g)
registrations and applications for registration of each of the foregoing and all
equivalent, similar or corresponding rights throughout the world; (h) all
advertising and promotional materials and product labels; (i) all other
intellectual property and other proprietary rights, and (j) all copies and
tangible embodiments thereof (in whatever form or medium).
"Involve" has the meaning set forth in the Recitals.
"IRS" means the Internal Revenue Service.
"Koch Transactions" has the meaning set forth in the Recitals.
"Law" means any foreign, federal, state or local law, statute, code, ordinance,
regulation, judicial decision, rule, Order, executive order or other
requirement.
"Liability" or "Liabilities" means any liabilities, Taxes, adverse claims,
indebtedness, fines and penalties or other obligations, whether accrued, fixed,
due or to become due, absolute or contingent, matured or unmatured, determined
or determinable, known or unknown, unliquidated or otherwise, regardless of when
asserted.
"License" means any license, sublicense, Contract, covenant not to sue or
permission.
"Liens" means any hypothecation, mortgage, assignment, lease, license or other
right of possession, deed of trust, encumbrance, real property title defect,
infringement, interference, charge, claim, community property interest,
easement, right of way, covenant, servitude, condition, equitable interest,
lien, option, pledge, security interest, purchase rights, right of first
refusal, tag along right or restriction of any kind, including any restriction
on use, voting, transfer, receipt of income or exercise of any other attribute
of ownership.
"Newco" has the meaning set forth in the Recitals.
"NLO" has the meaning set forth in the Recitals.
"NLO IP" means Intellectual Property that provides the foundation for, and may
be developed specifically to further, commercial applications utilizing
non-linear optimization algorithms, techniques, theories or methodologies.
"Note Assignments" has the meaning set forth in Section 1.2.
"Option Agreement" has the meaning set forth in the Recitals.
12

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"Order" means any order, judgment, injunction, award, decree, ruling, charge,
writ, assessment, arbitration award or other requirement of any Governmental
Authority.
"Party" and "Parties" have the respective meanings set forth in the Preamble.
"Permits" means any License, permit, product registration, approval,
certificate, authorization, certificate of occupancy, authority, qualification
or similar document or authority that has been issued or granted by any Person.
"Person" means any individual, sole proprietorship, partnership, corporation,
limited liability company, unincorporated society or association, trust,
Governmental Authority or other entity.
"Proceeding" has the meaning set forth in Section 7.8.
"Purchaser" has the meaning set forth in the Preamble.
"Released Matters" has the meaning set forth in Section 5.3(a).
"Released Parties" has the meaning set forth in Section 5.3(a).
"Releasor" and "Releasors" have the meanings set forth in Section 5.3(a).
"Software" means all computer software, programs and code, including assemblers,
applets, compilers, source code, object code, executable code, net lists,
development tools, design tools, user interfaces and data, databases in any form
or format, however fixed, and all related documentation.
"Securities" has the meaning set forth in the Recitals.
"Securities Act" has the meaning set forth in Section 3.1(b).
"Stockholder" has the meaning set forth in the Preamble.
"Subordination Agreement" has the meaning set forth in the Recitals.
"Tax" means (a) any net income, alternative or add-on minimum tax, gross income,
gross receipts, sales, use, ad valorem, value added, transfer, franchise,
profits, License, withholding, payroll, employment, withholding, excise,
severance, stamp, occupation, premium, personal property, real property,
environmental or windfall profit tax, custom, duty or other tax, governmental
fee or other like assessment or charge of any kind whatsoever, as well as any
Liabilities under any state abandonment or unclaimed property, escheat or
similar Laws, together with any interest, penalty, addition to tax or additional
amount imposed by any Law or Taxing Authority, whether disputed or not, (b) any
Liability for the payment of any amounts of any of the foregoing types as a
result of being a member of an affiliated, consolidated, combined or unitary
group, or being a party to any agreement or arrangement whereby Liability for
payment of such amounts was determined or taken into account with reference to
the Liability of any other Person and (c) any Liability for the payment of any
amounts of the foregoing types as a result of being a transferee or successor
under applicable Law, or a party to any agreements or arrangements (whether or
not written) or with respect to the payment of any amounts of any of the
foregoing types as a result of any express or implied obligation to indemnify
any other Person.
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"Tax Return" means any return, declaration, report, information return or other
document (including schedules or any related or supporting information) filed or
required to be filed with any Governmental Authority, including any return,
attachment or schedule of an affiliated, consolidated, combined or unitary
group, in connection with the determination, assessment or collection of any Tax
or the administration of any Laws relating to any Tax.
"Taxing Authority" means any Governmental Authority responsible for the
administration, collection or imposition of any Tax.
"Termination Agreement" has the meaning set forth in Section 2.2(d).
"U.S." means the United States of America.
ARTICLE 7
MISCELLANEOUS
7.1 Assignment.  Neither this Agreement nor any of the rights, interests or
obligations under this Agreement may be assigned by any Party without the prior
written consent of the other Parties; provided, however, that (a) the Purchaser
and the Company may each assign this Agreement and any or all rights or
obligations hereunder (including their respective rights to seek indemnification
hereunder) without consent to (i) any Affiliate or Affiliates of such Party
(including, in each case, NLO and Newco) or any Person or Persons to which such
Party or any of its Affiliates sells, transfers, assigns or delegates all or any
portion of its equity securities or its assets or business or (b) in the event
that the Purchaser assigns this Agreement to NLO, NLO may assign this Agreement
to Newco.  Upon any such permitted assignment, the references in this Agreement
to the Purchaser or the Company shall also apply to any such assignees unless
the context otherwise requires.
7.2 Headings.  The headings contained in this Agreement are included for
purposes of convenience only and do not affect the meaning or interpretation of
this Agreement.
7.3 Integration, Modification and Waiver.  This Agreement, together with the
Exhibits delivered hereunder and (when executed) the Ancillary Agreements,
constitutes the entire agreement between the Parties with respect to the subject
matter hereof and supersedes all prior understandings of the Parties.  No
supplement, modification or amendment of this Agreement shall be binding unless
executed in writing by the Purchaser, the Company and the Stockholder.  No
waiver of any of the provisions of this Agreement shall be deemed to be or shall
constitute a continuing waiver.  No waiver shall be binding unless executed in
writing by the Party making the waiver.
7.4 Construction.  The Parties have participated jointly in the negotiation and
drafting of this Agreement.  In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the Parties and no presumption or burden of proof shall arise favoring or
disfavoring any Party by virtue of the authorship of any of the provisions of
this Agreement.  Any reference to any Law shall be deemed also to refer to all
rules and regulations promulgated thereunder, unless the context requires
otherwise.  Unless the context clearly indicates otherwise: (a) each definition
herein includes the singular and the plural, (b) each reference herein to any
gender includes the masculine, feminine and neuter where appropriate, (c) the
words "include" and "including" and variations thereof shall not be deemed terms
of limitation, but rather shall be deemed to be followed by the words "without
limitation," (d) the words "hereof," "herein," "hereto," "hereby," "hereunder"
and derivative or similar words refer to this Agreement as an entirety and not
solely to any particular provision of this Agreement, (e) each reference in this
Agreement to a particular Article, Section or Exhibit means an Article or
Section
14

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of, or an Exhibit to, this Agreement, unless another agreement is specified, (f)
unless otherwise specified, any definition of or reference to any Contract,
instrument, document or Law herein shall be construed as referring to such
Contract, instrument, document or Law as it may from time to time be amended,
supplemented or otherwise modified, (g) any accounting term not defined herein
shall have the meaning ascribed to it under GAAP and (h) all references to "$"
or "Dollars" shall mean U.S. Dollars.
7.5 Severability.  If any provision of this Agreement or the application of any
provision of this Agreement to any Party or circumstance is, to any extent,
adjudged invalid or unenforceable, the application of the remainder of such
provision to such Party or circumstance, the application of such provision to
other Parties or circumstances, and the application of the remainder of this
Agreement shall not be affected thereby.
7.6 Notices.  All notices and other communications required or permitted under
this Agreement must be in writing and shall be deemed to have been duly given
and delivered (a) when delivered in person, (b) when sent by electronic mail
transmission (with read receipt confirmed), (c) one Business Day after having
been dispatched by a nationally recognized overnight courier service or (d) upon
tender by the U.S. Post Office after being sent by registered or certified mail,
return receipt requested, postage prepaid, to the appropriate Party at the
following address:
If to the Stockholder:
Capstone Companies, Inc.
350 Jim Moran Boulevard
Deerfield Beach, Florida  33442
Attention: Stewart Wallach, Aimee Gaudet and Gerry McClinton
Email:swallach@capstoneindustries.com; aimee@capstonecompaniesinc.com;
gmcclinton@capstoneindustries.com

If to the Company:
AC Kinetics, Inc.
20 Bedford Road
Armonk, New York 10504
Attention: Neil Singer, PhD
Email: nsing@ackinetics.com

If to the Purchaser:
Neil Singer
1 Quarter Mile Road
Armonk, New York 10504
Email: nsing@ackinetics.com

with a copy to (which will not constitute notice):
Sherman Wells Sylvester & Stamelman LLP
210 Park Avenue, Suite 200
Florham Park, New Jersey 07932
Attention: Andrew J. Stamelman, Esq.
Email: astamelman@shermanwells.com
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Any Party may change its address, electronic mail address or facsimile number
for the purposes of this Section 7.6 by giving notice to the other Parties as
provided in this Agreement.
7.7 Governing Law.  This Agreement shall be governed by and construed and
enforced in accordance with the Laws of the State of Delaware without regard to
principles of conflicts of Law.
7.8 Jurisdiction and Venue.  Each of the Parties acknowledges and agrees that
this Agreement involves at least $100,000, and that it has been entered into in
express reliance on Section 2708 of the Delaware Code.  Each of the Parties
hereby irrevocably and unconditionally, for itself and its property, submits to
the exclusive jurisdiction of the Delaware Court of Chancery (and if
jurisdiction in the Delaware Court of Chancery shall be unavailable, the federal
courts of the U.S. sitting in the State of Delaware), and any appellate court
from any thereof, in any judicial proceeding brought against any of the Parties
in connection with any controversy or claim arising out of or relating to this
Agreement or the Ancillary Agreements, or the breach hereof or thereof (each, a
"Proceeding") and agrees that all claims in respect of any such Proceeding may
be heard and determined in any such court, and each of the Parties hereby
irrevocably and unconditionally (a) agrees not to commence any such Proceeding
or other Action except in the Delaware Court of Chancery (and if jurisdiction in
the Delaware Court of Chancery is unavailable, the U.S. federal courts sitting
in the State of Delaware, and if jurisdiction in any of the foregoing courts is
unavailable, any U.S. federal or state court in which jurisdiction and venue are
proper), (b) agrees that any claim in respect of any such Proceeding may be
heard and determined in the Delaware Court of Chancery (and if jurisdiction in
the Delaware Court of Chancery is unavailable, the U.S. federal courts sitting
in the State of Delaware, and if jurisdiction in any of the foregoing courts is
unavailable, any U.S. federal or state court in which jurisdiction and venue are
proper), and any appellate court from any thereof, (c) waives, to the fullest
extent it may legally and effectively do so, any objection which it may now or
hereafter have to the laying of venue of any such Proceeding in the Delaware
Court of Chancery (and if jurisdiction in the Delaware Court of Chancery is
unavailable, the U.S. federal courts sitting in the State of Delaware, and if
jurisdiction in any of the foregoing courts is unavailable, any U.S. federal or
state court in which jurisdiction and venue are proper), and (d) waives, to the
fullest extent it may legally and effectively do so, the defense of an
inconvenient forum to the maintenance of such Proceeding in the Delaware Court
of Chancery (and if jurisdiction in the Delaware Court of Chancery is
unavailable, the U.S. federal courts sitting in the State of Delaware, and if
jurisdiction in any of the foregoing courts is unavailable, any U.S. federal or
state court in which jurisdiction and venue are proper).
7.9 Waiver of Jury Trial.  EACH OF THE PARTIES WAIVES TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN RESPECT OF
ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION BASED ON, OR ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, VERBAL OR WRITTEN STATEMENT OR ACTION OF ANY PARTY, IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY
OR OTHERWISE.  EACH OF THE PARTIES HEREBY AGREES THAT ANY SUCH CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND
THAT THE PARTIES MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT
WITH ANY COURT AS EVIDENCE OF THE CONSENT OF THE PARTIES TO THE WAIVER OF THEIR
RIGHT TO TRIAL BY JURY.
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7.10 No Third Party Beneficiaries.  Except as otherwise set forth in this
Section 7.10, this Agreement is for the sole benefit of the Parties and the
Released Parties and their respective successors and permitted assigns and
nothing herein express or implied shall give or be construed to give to any
Person, other than the Parties and the Released Parties and such respective
successors and permitted assigns, any legal or equitable right or remedy of any
nature whatsoever hereunder.  Notwithstanding the foregoing, (a) this Agreement
is an integral part of the Koch Transactions, (b) Koch would not enter into the
Koch Transactions but for the entry into, and performance of their respective
obligations under, this Agreement and the Ancillary Agreements by the Parties
and their Affiliates and (c) the Parties hereby designate Koch as third-party
beneficiaries of this Agreement and the Ancillary Agreements having the right to
enforce all provisions of this Agreement and the Ancillary Agreements against
each Party, its Affiliates, and their successors and assigns.
7.11 Counterparts.  This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.  Signatures transmitted by facsimile or
electronic mail shall be deemed originals for purposes of this Agreement.
[Remainder of Page Intentionally Left Blank]

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IN WITNESS WHEREOF, the Company has caused its duly authorized representative to
execute this Agreement effective as of the day and year first above written.
AC KINETICS, INC.
a Delaware corporation

By: /s/ Neil Singer

Name: Neil Singer

Title: President

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IN WITNESS WHEREOF, the Stockholder has executed this Agreement effective as of
the day and year first above written.
CAPSTONE COMPANIES, INC.
a Florida corporation

By: /s/ James G. McClinton

Name: James G. McClinton

Title: C.F.O.

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IN WITNESS WHEREOF, the Purchaser has executed this Agreement effective as of
the day and year first above written.

/s/ Neil Singer
Neil Singer, individually

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EXHIBIT A
FORM OF OPTION AGREEMENT

See attached.

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EXHIBIT B
FORM OF SUBORDINATION AGREEMENT

See attached.

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EXHIBIT C
FORM OF NOTE

See attached.

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Schedule 3.4
KOCH TRANSACTION DOCUMENTS
1.
Credit Agreement, by and between ACK NLO, LLC and Koch Minerals, LLC.

2.
Promissory Note from ACK NLO, LLC in favor of Koch Minerals, LLC.

3.
Guarantees of NLO Holdco, LLC and AC Kinetics, Inc. of ACK NLO, LLC's
obligations under the Credit Agreement in favor of Koch Minerals, LLC.

4.
Pledge Agreements of NLO Holdco, LLC and AC Kinetics, Inc. in favor of Koch
Minerals, LLC.

5.
Security Agreement, by and between ACK NLO, LLC and Koch Minerals, LLC.

6.
Option Agreement, by and among Koch Minerals, LLC, ACK NLO, LLC, AC Kinetics,
Inc., NLO Holdco, LLC, Neil Singer, individually and in his capacity as Seller
Parties' Representative, Lydia Singer, Stuart Landow and Gold Eagle Consulting,
Inc., and related Disclosure Schedules.

7.
Technology Escrow Agreement, by and among EscrowTech International, Koch
Minerals, LLC, and ACK NLO, LLC.

8.
Form of Asset Purchase Agreement, by and among Koch Minerals, LLC, an affiliate
of Koch Minerals, LLC and Neil Singer, individually and as Seller Parties'
Representative, and related Disclosure Schedules.

9.
Deferred Purchase Price Letter Agreement, by and among Koch Minerals, LLC and
Neil Singer.

10.
Services Agreement, by and among AC Kinetics, Inc., NLO Holdco, LLC, Stuart
Landow and Gold Eagle Consulting, Inc.

11.
Contribution Agreement, by and among Neil Singer, Lydia Singer, Stuart Landow
and Gold Eagle Consulting, Inc.

ASSET TRANSFERS DOCUMENTS
1.
Limited Liability Company Agreement of ACK NLO, LLC

2.
Assignment Agreements by each of Neil Singer and Stuart Landow individually and
Gold Eagle Consulting, Inc. in favor of NLO Holdco, LLC.

3.
Disclaimer and Assignment Agreement by each of Stuart Landow individually and
Gold Eagle Consulting, Inc. in favor of AC Kinetics, Inc.

4.
Disclaimer and Assignment Agreement by Kenneth Pasch individually in favor of
Neil Singer.

5.
Contribution Agreements by each of AC Kinetics, Inc. and NLO Holdco, LLC in
favor of ACK NLO, LLC.

6.
Restrictive Covenant Agreements between ACK NLO, LLC and each of Neil Singer,
Stuart Landow and Kenneth Pasch.

7.
Valuation of the Fair Market Value of VSD and NLO Proprietary Algorithms by
IncreMental Advantage, LLC, dated March 16, 2016.

 

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