EXHIBIT 10.91

 

STOCK PURCHASE AGREEMENT

 

This STOCK PURCHASE AGREEMENT, dated as of October 21, 2015, (this "Agreement"),
is made and entered into by and among The Brace Shop, LLC, a [Florida] limited
liability company (the "Company"), Mrs. Lynne Shapiro (the "Seller") and
Sanomedics, Inc., a Delaware corporation ("Buyer").

 

P R E M I S E S:

 

WHEREAS, the Buyer is engaged in the business of being a medical technology
holding company (such business as conducted by the Buyer being hereinafter
referred to as the "Business");

 

WHEREAS, the Seller is the record and beneficial owner of all of the issued and
outstanding membership interests of the Company (the "Stock"); and

 

WHEREAS, Buyer wishes to purchase all of the Stock from Seller and Seller wishes
to sell all of the Stock to Buyer, all pursuant to the terms, conditions,
limitations and exclusions contained herein.

 

A G R E E M E N T S:

 

NOW, THEREFORE, in consideration of the mutual agreements contained herein,
intending to be legally bound hereby, the parties hereto agree as follows:

 

ARTICLE I

DEFINED TERMS

 

1.1 Defined Terms. The following terms shall have the following meanings in this
Agreement:

 

"Affiliate" means, with respect to any specified Person, (a) any other Person
which, directly or indirectly, owns or controls, is under common ownership or
control with, or is owned or controlled by, such specified Person, (b) any other
person which is a director, officer or general partner or is, directly or
indirectly, the beneficial owner of ten percent (10%) or more of any class of
equity securities, of the specified Person, (c) another Person of which the
specified Person is a director, officer or general partner or is, directly or
indirectly, the beneficial owner of ten percent (10%) or more of any class of
equity securities, (d) another Person as to which the specified Person serves as
trustee or in a similar capacity, or (e) any relative or spouse of the specified
Person within the first degree of consanguinity, and to the extent they share a
common household with the specified Person, any relative of such spouse or any
spouse of any such relative.

 

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"Assets" means the interest of the Buyer in all the tangible and intangible
assets owned by or leased or licensed to the Buyer on the Closing Date.

 

"Audit" means any audit, assessment of Taxes, any other examination or claim by
any Tax Authority, judicial, administrative or other proceeding or litigation
(including any appeal of any such judicial, administrative or other proceeding
or litigation) relating to Taxes and/or Tax Returns.

 

"Business Day" means any day other than any Saturday or Sunday or any other day
on which banks located in New York, New York generally are closed for business.

 

"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act, as amended.

 

"Closing" means the consummation of the transactions contemplated by this
Agreement in accordance with the provisions of Article VIII hereof.

 

"Code" means the Internal Revenue Code of 1986, as amended to the date hereof.

 

"Confidential Information" shall mean (a) all of the Seller's technical,
commercial, marketing, strategic, business or other information, data, plans and
material of the kind either identified as confidential or proprietary or which a
reasonable person would recognize to be confidential or proprietary, either from
its nature or the manner of its disclosure, or which has not entered the public
domain and (b) the terms and provisions of this Agreement and any other material
information relating to this Agreement or the transactions contemplated
hereunder.

 

"Consents" means the consents of third parties necessary or advisable to
consummate the transactions contemplated hereby, as more particularly set forth
in Section 3.9.

 

"Contract" means any agreement, written or oral (including any amendments and
other modifications thereto), to which the Buyer is a party or is bound.

 

"Encumbrance" means any lien, mortgage, pledge, claim, security interest,
imperfection in title or other third party right or interest of any kind
whatsoever, or restrictive agreement, conditional sales agreement, option,
encumbrance or charge of any kind whatsoever.

 

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

 

"GAAP" shall mean United States generally accepted accounting principles,
consistently applied.

 

"Governmental Entity" means any (a) federal, state, local or other government;
(b) governmental or quasi-governmental authority of any nature (including any
governmental agency, branch, bureau, department or other entity and any court or
other tribunal); (c) body exercising, or entitled to exercise any
administrative, executive, judicial, legislative, police, regulatory,
arbitration, mediation or taxing authority or power of any nature; or
(d) official of any of the foregoing.

 

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"Hazardous Substances" shall mean any toxic or hazardous substance, material, or
waste, and any other contaminant, pollutant or constituent thereof, including,
without limitation, (a) any "hazardous substance," "pollutants," or
"contaminant" (as defined in Sections 101(14) and (33) of CERCLA or the
regulations issued pursuant to Section 102 of CERCLA and found at 40 C.F.R. §
302, each as of the date of this Agreement; (b) any substance that is, as of the
date of this Agreement, designated pursuant to Section 311(b)(2)(A) of the
Federal Water Pollution Control Act, as amended (33 U.S.C. §§ 1251,
1321(b)(2)(A)) ("FWPCA"); (c) hazardous waste having the characteristics
identified under or listed pursuant to Section 3001 of the Resource Conservation
and Recovery Act, as amended (42 U.S.C. §§ 6901, 6921) ("RCRA") as of the date
of this agreement; (d) substances containing petroleum, as that term is defined
in Section 9001(8) of RCRA, as of the date of this Agreement; (e) toxic
pollutant that is listed, as of the date of this Agreement, under Section 307(a)
of FWPCA; (f) hazardous air pollutant that is listed under Section 112 of the
Clean Air Act, as amended (42 U.S.C. §§ 7401, 7412) as of the date of this
Agreement.

 

"Intellectual Property Rights" shall have the meaning set forth in Section 3.10.

 

"Knowledge" shall mean the actual knowledge of the party to whom such knowledge
is imputed or the knowledge of the party after reasonable due inquiry and
investigation, including inquiry of any employees of the Buyer that have
responsibility for such matter. For the purposes of this definition, any
applicable party shall be deemed to have knowledge of information in documents
that are or have been in his possession (including in electronic format).

 

"Law" means any law, rule or regulation of any federal, state or local
governmental authority having jurisdiction over the Buyer and in effect and
applicable to the Buyer as of the date of this Agreement.

 

"Licenses" means all of the licenses, permits and other authorizations issued by
any federal, state or local governmental authorities to the Buyer or used in the
operation of its business, all of which are listed on Schedule 3.5 hereto, with
any additions thereto between the date hereof and the Closing Date.

 

"Material Adverse Effect" shall mean a material adverse effect on the business,
Assets, liabilities, condition (financial or otherwise), cash flows, prospects
or results of operations of the Buyer, taken as a whole.

 

"Person" means an individual, a partnership, a corporation, a limited liability
company, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization or a governmental entity or any department, agency
or political subdivision thereof.

 

"Personal Property" means all of the interest of the Buyer in all machinery,
equipment, computer programs, computer software, tools, motor vehicles,
furniture, leasehold improvements, office equipment, supplies, plant, spare
parts and other tangible personal property which are owned by or leased to the
Buyer, or otherwise used or possessed by the Buyer, together with any additions
or deletions thereto expressly permitted by Seller or this Agreement between the
date hereof and the Closing Date.

 

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"Real Property" means all of the Buyer's owned or occupied real property,
leasehold interests, easements, real estate licenses, rights to access and
rights of way, all of which are identified in Schedule 3.6 hereto, together with
any additions or deletions thereto expressly permitted by Seller or this
Agreement between the date hereof and the Closing Date.

 

"Related Document" shall mean any document attached as an exhibit hereto or
required of the Seller or Buyer as a condition to closing under Articles VII and
VIII hereof.

 

"Release" shall mean any manner of spilling, leaking, dumping, discharging,
releasing, migrating or emitting, including the definitions given to any of such
terms under CERCLA or any other environmental Law.

 

"Securities" shall mean, collectively, Unit One, Unit Two, the Goldenshare and
the shares of Common Stock issued or issuable pursuant to the conversion or
exercise of each of the foregoing.

 

"Subsidiary" shall mean, with respect to the Buyer, any entity of which a
majority of the voting power or equity interest is owned, directly or
indirectly, by the Buyer.

 

"Tax" shall mean any federal, territorial, state, county, local, or foreign
income, gross receipts, license, payroll, wage, employment, excise, utility,
communications, production, occupancy, severance, stamp, occupation, premium,
windfall profits, environmental, customs duties, capital stock, capital levy,
franchise, profits, withholding, social security (or similar), unemployment,
disability, real property, real property gains, recordation, business license,
workers' compensation, Pension Benefit Guaranty Corporation, personal property,
sales, use, transfer, registration, value added, ad valorem, alternative or
add-on minimum, estimated, or other tax, fee, charge, premium, imposition of any
kind whatsoever, in effect as of the date of this Agreement, however
denominated, imposed by any Tax Authority, including, without limitation, the
Commonwealth of Puerto Rico, together with any interest, penalties or other
additions to tax and any interest on any such interest, penalties and additions
to tax payable in respect thereof.

 

"Taxable Period" means any taxable year or any other period that is treated as a
taxable year with respect to which any Tax may be imposed under any applicable
statute, rule or regulation of any Tax Authority.

 

"Tax Authority" shall mean the Internal Revenue Services ("IRS") and any other
federal, territorial, state, local or foreign authority responsible for the
administration and/or collection of any Taxes.

 

"Tax Laws" shall mean the Code, and any other federal, state, county, local or
foreign laws related to any Tax, as well as any regulations, administrative
pronouncements, rules or requirements pursuant thereto, each as in effect and
applicable to the warranting party as of the date of this Agreement.

 

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"Tax Returns" shall mean reports, estimates, declarations of estimated tax,
information statements and returns, including information returns or reports
with respect to backup withholding and other payments to third parties, relating
to or required to be filed with any Tax Authority by any Tax Law in connection
with any Taxes.

 

ARTICLE II

PURCHASE AND SALE OF STOCK

 

2.1 Purchase and Sale of Stock. Upon the terms and subject to the conditions
contained in this Agreement, at the Closing, Buyer shall purchase and acquire
from Seller, and Seller shall sell, transfer, assign, convey and deliver to
Buyer, all right, title and interest in and to the Stock, free and clear of any
Encumbrance. At the Closing, the Seller shall deliver to Buyer the Stock, along
with appropriate transfer instruments executed by the Seller.

 

2.2 Purchase Price. The Purchase Price shall be an amount equal to $[ ] [equal
to [ ]] (the "Purchase Price"). The Purchase Price shall be payable at the
Closing as follows:

 

(a) Cash. Buyer will pay to the Seller an aggregate amount in cash equal to Two
Hundred and Fifty Thousand Dollars ($250,000), by wire transfer of immediately
available funds to an account(s) designated by Seller (the "Closing Date Cash
Payment").

 

(b) Equity. Buyer will issue two units of its Series A Convertible Preferred
Stock of Buyer ("Preferred Stock"). The first unit of Preferred Stock ("Unit
One") will be issued to the Company, and be convertible into 84.9% of the issued
and outstanding capital stock of Buyer on a fully-diluted basis, and will be
convertible into shares of common stock, par value $0.0001 per share, of the
Buyer (the "Common Stock"), beginning on the six month anniversary of the date
of its issuance. In addition, Seller shall receive a goldenshare in the form of
a warrant ("Goldenshare"), which will be exercisable for that number of shares
of Common Stock required to insure that Unit One shall always be convertible
into an aggregate of 84.9% of the then fully-diluted issued and outstanding
capital stock of Buyer. The second unit of Preferred Stock ("Unit Two") will be
issued to Keith Houlihan, and be convertible into 3.9% of the issued and
outstanding capital stock of Buyer on a fully-diluted basis, and will be
convertible into Common Stock beginning on the six month anniversary of the date
of its issuance. Unit One, Unit Two and the Goldenshare shall bear such
restrictive legends as are required under applicable Law.

 

2.3 Purchase Price Allocation; Withholding. Buyer and Seller agree to the
allocation of the Purchase Price (including as appropriate any assumed
liabilities) among the assets of Seller as set forth on Schedule 2.3 hereof,
which is prepared in accordance with Section 1060 of the Code and applicable
regulations thereunder (and any similar provision of state, local or foreign
Law, as appropriate). The parties shall report for all Tax Law purposes and file
all Tax Returns (including but not limited to IRS Form 8594) in a manner
consistent with such allocation and shall take no Tax position inconsistent or
contrary thereto.

 

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ARTICLE III

REPRESENTATIONS AND WARRANTIES OF BUYER

 

The Buyer represents and warrants to Seller as follows:

 

3.1 No Violation; Authorization.The execution and delivery of this Agreement and
each Related Document does not, and the consummation by the Buyer of the
transactions contemplated hereby and thereby and compliance with the terms
hereof and thereof by Buyer will not (subject only to obtaining any required
consents, approvals, authorizations, exemptions or waivers set forth on Schedule
3.9), (i) to the Buyer's Knowledge, conflict with, or result in any violation
of, any statute, regulation, rule, injunction, judgment, order, decree, ruling,
charge or other restriction of any government, governmental agency, or court to
which the Buyer is subject; (ii) conflict with, or result in any violation of,
any provision of Buyer's organizational documents; or (iii) result in any
violation of or default on the part of the Buyer (with or without notice or
lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to loss of a material benefit
under or result in the creation of any Encumbrance of any kind upon the Stock
under, any provision of any note, bond, mortgage, indenture, deed of trust,
license, lease, contract, commitment or loan or other agreement to which the
Buyer is a party or by which any of the Buyer's respective properties or assets
are bound. The execution, delivery and performance of this Agreement and the
Related Documents to which Buyer is or is to become a party have been duly and
validly authorized by all necessary corporate action on the part of Buyer.

 

3.2 Due Organization; Subsidiaries. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Florida,
and has full corporate power and authority and all requisite rights, licenses,
permits and franchises to own, lease and operate the Assets that it currently
owns, leases or operates and to conduct the Business as it is now being
conducted. Buyer is duly licensed, registered and qualified to do business as a
foreign corporation and is in good standing in all jurisdictions in which the
ownership, leasing or operation of its Assets, or the conduct of the Business,
requires such qualification, except where the failure to be so licensed,
registered or qualified would not have a Material Adverse Effect. Schedule 3.2
sets forth each state or other jurisdiction in which the Buyer is licensed or
qualified to do business. The Buyer has delivered to Seller an accurate and
complete copy of the organizational documents of Buyer, and each agreement,
trust, proxy or other arrangement among the stockholders or directors of the
Buyer, and each other agreement or document affecting any ownership rights or
interests, or any management rights or economic rights, of the Buyer, or any
rights to share in the profits of or to receive distributions or the return of
capital from the Buyer, along with an accurate and complete copy of the contents
of the minute book of the Buyer. Schedule 3.2 sets forth the only Subsidiaries
of Buyer, and Buyer is not a stockholder, partner, joint venturer or other
equity owner of any entity.

 

3.3 Binding Obligation. Assuming due authorization, execution and delivery of
this Agreement by Seller, this Agreement (and when executed and delivered at
Closing, each Related Document) will be duly executed by the Buyer and
constitute the legal, valid, and binding obligation of the Buyer, enforceable
against the Buyer in accordance with their respective terms, except that (i)
such enforce-ment may be limited by or subject to any bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter in effect relating
to or limit-ing credi-tors' rights generally and (ii) the remedy of specific
per-formance and injunctive and other forms of equitable relief are subject to
certain equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.

 

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3.4 Capitalization. The capitalization, including debt and equity, of the Buyer
is accurately and completely described in the Financial Statements attached
hereto as Schedule 3.4. The Securities are duly authorized, validly issued,
fully paid and non-assessable, and were not issued in violation of any
preemptive, subscription or other right of any person to acquire securities,
ownership interests or rights in the Buyer. There are no outstanding
subscriptions, options, convertible or exchangeable securities, preemptive
rights, warrants, calls or agreements relating to the issuance or transfer of
the Securities. All ownership interests or rights in the Buyer, whether or not
currently outstanding, were issued in compliance (and if reacquired or cancelled
by the Buyer, reacquired or cancelled in compliance) with all applicable Laws,
including securities Laws. Except as set forth in the organizational documents
of the Buyer, there are no voting trusts or other agreements, arrangements or
understandings applicable to the exercise of voting rights, control, rights to
share in profits and losses, rights to receive dividends or the return of
capital. Except as set forth in the organizational documents of the Buyer and
applicable Laws, there are no restrictions affecting the transferability of the
Securities.

 

3.5 Licenses. Schedule 3.5 hereto contains a true and complete list of all of
the Licenses, including any non-assignable licenses, permits and other
governmental authorizations (which shall be denoted as non-assignable). Except
as set forth on Schedule 3.5, the Licenses comprise all of the licenses, permits
and other authorizations necessary from any governmental agency to conduct the
Business, and none of the foregoing are subject to any restriction or condition
which would limit the full operation of the Business as presently operated. All
Licenses are validly issued, and the applications therefor are complete and
accurate and did not omit to state any facts necessary in order to make the
statements therein not misleading. The Licenses are in full force and effect,
and, to the Knowledge of Buyer, the conduct of the Business is in full
accordance therewith. All fees and other charges relating to the Licenses which
were due on or prior to the Closing Date have been paid in full.

 

3.6 Real Property. Schedule 3.6 hereto sets forth an accurate and complete list
of all the Real Property of the Buyer (including, in the case of leases, name of
lessor, expiration date and monthly rent). The Buyer is not a lessor of any Real
Property. Each of the leases in connection with the Real Property is in full
force and effect, and the Buyer has delivered to Seller accurate and complete
copies of each such lease. Except as set forth on Schedule 3.6, there are no
parties in possession of all or any portion of the Real Property other than the
Buyer, whether as lessees, tenants at will, trespassers or otherwise. To the
Knowledge of Buyer, no zoning, building or other federal, state or municipal
law, ordinance, regulation or restriction is violated by the continued
maintenance, operation or use of the Real Property or any tract or portion
thereof or interest therein in its present manner, nor does the current use of
the Real Property and all parts thereof as aforesaid violate any restrictive
covenants of record affecting the Real Property. To the Knowledge of Seller, all
necessary licenses, permits and authorizations required by any governmental
authority with respect to the Real Property have been obtained, have been
validly issued and are in full force and effect. The Buyer is not, and to the
Knowledge of Buyer, no other party is, in default under any lease or other
instrument of conveyance. All leasehold interests (including the improvements
thereon) are available for immediate use in the conduct and operation of the
Business. Other than as set forth in Schedule 3.6, there is no Real Property
that is owned by, used by, leased by or otherwise occupied by the Company.

 

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3.7 Title to and Condition of Personal Property. Schedule 3.7 hereto contains a
list of the items of Personal Property that comprise all Personal Property with
a value in excess of $5,000 used in connection with the Business as of a recent
date indicated on such schedule. The Buyer owns and has good and marketable
title to all Personal Property free and clear of any Encumbrance, except for
Encumbrances that shall be discharged or removed by the Buyer prior to or at
Closing. The Buyer is not, and to the Knowledge of Buyer no other party is, in
default under any of the leases, licenses and other agreements relating to the
Personal Property listed on Schedule 3.7. The Buyer has delivered to Seller an
accurate and complete copy of each lease, license or other agreement relating to
the Personal Property. Except as otherwise disclosed on Schedule 3.7 hereto, the
Personal Property constituting tangible property is in good operating condition
(ordinary wear and tear excepted) and is available for immediate use in such
business operations.

 

3.8 Contracts. Schedule 3.8 hereto lists all of the Contracts in effect on the
date hereof, including, but not limited to, all Licenses, Real Property leases,
employment agreements, licenses to intellectual property and all other contracts
or agreements to which the Buyer is a party (and, for all oral agreements,
provides a summary of the material terms of such Contract) (each, a "Material
Contract"). On or prior to the date hereof, the Buyer has provided Seller with
true and complete copies of all written Material Contracts set forth on Schedule
3.8. All of the Material Contracts listed on Schedule 3.8 are in full force and
effect, and are valid, binding and enforceable in accordance with their terms.
Except as otherwise disclosed on Schedule 3.8: (i) there is no default or breach
by the Buyer, or to the Knowledge of Buyer, any other party to any Material
Contract set forth on Schedule 3.8; (ii) there is no fact or circumstance that
exists that would constitute a default, or would entitle any party to terminate
any such Material Contracts or to make a claim or set-off against the Buyer or
any of its Affiliates, or otherwise to amend such Material Contract or prevent
such Material Contract from being renewed in accordance with its terms; (iii)
the Buyer is not restricted by agreement from carrying on the Business as and
where conducted on the Closing Date; and (iv) there are currently no
negotiations pending or in progress to revise any Material Contract, other than
negotiations in the ordinary course of business intended to make the terms of
certain Material Contracts more favorable to the Buyer. The Buyer has not
received any written notice of default, termination, or nonrenewal under any
such Material Contract.

 

3.9 Consents. Schedule 3.9 sets forth (i) those Material Contracts which require
consent, approval or notice to consummate the transactions contemplated hereby,
and (ii) all other consents, governmental or otherwise, required to consummate
the transactions contemplated hereby. Except for the Consents described in
Schedule 3.9 hereto, no consent, authorization, approval, order, license,
certificate or permit of or from, or declaration or filing with, any federal,
state, local or other governmental authority or any court or other tribunal, and
no consent or waiver of any party to any Contract to which the Buyer is a party
is required or declaration to or filing with any governmental or regulatory
authority, or any other third party is required to (a) execute this Agreement,
(b) consummate this Agreement and the transactions contemplated hereby, (c)
permit the Seller to sell the Stock to Buyer, or (d) enable Seller to operate
the Buyer after the Closing Date in the same manner as it is presently operated.

 

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3.10 Intellectual Property. The Buyer has, or has rights to use, all patents,
patent applications, trademarks, trademark applications, service marks, trade
names, trade secrets, inventions, copyrights, licenses and other intellectual
property rights and similar rights as described in the reports filed with the
Securities and Exchange Commission ("SEC") as necessary or required for use in
connection with the Business and which the failure to so have could have a
Material Adverse Effect (collectively, the "Intellectual Property Rights"). The
Buyer has not received a notice (written or otherwise) that any of, the
Intellectual Property Rights has expired, terminated or been abandoned, or is
expected to expire or terminate or be abandoned, within two (2) years from the
date of this Agreement. The Buyer has not received, since December 31, 2014, a
written notice of a claim or otherwise has any Knowledge that the Intellectual
Property Rights violate or infringe upon the rights of any Person, except as
could not have or reasonably be expected to have a Material Adverse Effect. To
the Knowledge of Buyer, all such Intellectual Property Rights are enforceable
and there is no existing infringement by another Person of any of the
Intellectual Property Rights. Buyer has taken reasonable security measures to
protect the secrecy, confidentiality and value of all of their Intellectual
Property Rights, except where failure to do so could not have or reasonably be
expected to have a Material Adverse Effect, individually or in the aggregate.

 

3.11 SEC Reports; Financial Statements. The Buyer has filed all reports,
schedules, forms, statements and other documents required to be filed by Buyer
under the Securities Act of 1933, as amended (the "Securities Act"), and the
Exchange Act of 1934, as amended (the "Exchange Act"), including pursuant to
Section 13(a) or 15(d) thereof, for the two (2) years preceding the date hereof
(or such shorter period as Buyer was required by law or regulation to file such
material) (the foregoing materials, including the exhibits thereto and documents
incorporated by reference therein, being collectively referred to herein as the
"SEC Reports") on a timely basis or has received a valid extension of such time
of filing and has filed any such SEC Reports prior to the expiration of any such
extension. As of their respective dates, the SEC Reports complied in all
material respects with the requirements of the Securities Act and the Exchange
Act, as applicable, and none of the SEC Reports, when filed, contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading. The
Company has never been an issuer subject to Rule 144(i) under the Securities
Act. The financial statements of the Company included in the SEC Reports comply
in all material respects with applicable accounting requirements and the rules
and regulations of the SEC with respect thereto as in effect at the time of
filing. Such financial statements have been prepared in accordance with GAAP,
except as may be otherwise specified in such financial statements or the notes
thereto and except that unaudited financial statements may not contain all
footnotes required by GAAP, and fairly present in all material respects the
financial position of the Buyer and its consolidated Subsidiaries as of and for
the dates thereof and the results of operations and cash flows for the periods
then ended, subject, in the case of unaudited statements, to normal, immaterial,
year-end audit adjustments.

 

3.12 Insurance. Schedule 3.12 sets forth an accurate and complete list
(including the name of the insurer, coverage, premium and expiration date) of
all binders, policies of insurance, self-insurance programs or fidelity bonds
("Insurance") maintained by Buyer, or in which the Buyer is a named insured,
true and complete copies of which have been provided or made available to Buyer.
All Insurance contains valid and enforceable policies or binders for the benefit
of the Buyer, and all such policies or binders are in full force and effect and,
to the Buyer's Knowledge, are in amounts and for risks, casualties and
contingencies customarily insured against by enterprises in operations similar
to the Business. There are no pending or asserted claims against any Insurance
as to which any insurer has denied liability, and there are no claims under any
Insurance that have been disallowed or improperly filed. Schedule 3.12 sets
forth the insurance claims experience for the last two full fiscal years and the
interim period through the date hereof with respect to the Business. No notice
of cancellation or nonrenewal with respect to, or material increase of premium
for, any Insurance has been received by the Buyer.

 

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3.13 Employee Plans; ERISA.

 

(a) Schedule 3.13(a) contains a list of each employee benefit plan, agreement,
arrangement, policy or commitment (whether or not an "employee benefit plan"
within the meaning of Section 3(3) of ERISA), including, but not limited to, any
employment, consulting, bonus, deferred compensation, incentive compensation,
vacation, severance, termination or post-employment pay, disability,
hospitalization or other medical, dental, vision, life or other insurance, stock
purchase, stock option, stock appreciation, stock award, pension, profit
sharing, 401(k) or retirement plan, agreement, arrangement, policy or commitment
(other than immaterial unwritten policies), and each other employee benefit
plan, agreement, arrangement, policy or commitment arising out of the employment
or the termination of an employee, former employee, retiree or sales personnel
by the Buyer, whether written or oral, tax-qualified under the Code or
non-qualified, whether covered by ERISA or not, which is currently maintained or
contributed to by the Buyer or any trade or business (whether or not
incorporated) that is under common control, or that is treated as a single
employer, with the Buyer under Sections 414(a), (c), (m) or (o) of the Code
(each, a "Commonly Controlled Entity") covering their employees, former
employees, retirees or sales personnel or with respect to which the Buyer or any
Commonly Controlled Entity, respectively, has or in the future could have any
direct or indirect, actual or contingent liability (each, a "Plan" and
collectively, the "Plans"). Except as set forth in Schedule 3.13(a), neither the
Buyer nor any Commonly Controlled Entity has any legally binding oral or written
plan or other commitment, whether covered by ERISA or not, to create or
participate in any additional plan, agreement or arrangement or to modify or
change any existing Plan in any manner that would affect any of its employees,
former employees, retirees or sales personnel. The Buyer has made available to
Seller true and complete copies of the Plans and the trust agreements and any
contracts relating to the Plans and all other relevant documents governing or
relating to the Plans in effect on the date hereof (including the latest summary
plan description, the latest annual report (and all attachments) filed with the
Internal Revenue Service with respect to each of the Plans, and the latest
favorable determination letter issued by the Internal Revenue Service for each
of the Plans, including any amendments to any of the foregoing. Neither the
Buyer nor any Commonly Controlled Entity will incur any liability in connection
with any Plan solely as a result of the consummation of the transactions
contemplated by this Agreement.

 

(b) Neither the Buyer nor any Commonly Controlled Entity maintains, nor have
they ever maintained or contributed to, a "multiemployer plan," as that term is
defined in Section 414(f) of the Code or Sections 3(37) or 4001(a)(31) of ERISA,
or an "employee benefit pension plan," as defined in Section 3(2) of ERISA, that
is subject to Section 412 of the Code, Section 302 of ERISA or Title IV of
ERISA. Except as set forth on Schedule 3.13(b), neither the Buyer nor any
Commonly Controlled Entity has terminated any "employee benefit plan" as defined
in Section 3(3) of ERISA.

 

(c) Full payment has been made of all amounts (other than current outstanding
routine claims for benefits) that the Buyer is required to contribute or pay
under the terms of any Plan, and all contributions to any Plan that are required
or recommended with respect to any period of time prior to the Closing have been
made or such amounts have been accrued in accordance with generally accepted
accounting principles. There are no funded benefit obligations for which
contributions have not been made or properly accrued and there are no unfunded
benefit obligations that have not been accounted for by reserves, or otherwise
properly footnoted in accordance with GAAP on the financial statements of the
Buyer.

 

  10

 

  

(d) Each of the Plans is and has been operated and administered in all material
respects in accordance with applicable Laws, including but not limited to, ERISA
and the Code, and all required material governmental filings and material
participant disclosures have been made on a timely basis. No prohibited
transaction within the meaning of Section 406 of ERISA or 4975 of the Code, or
breach of fiduciary duty under Title I of ERISA, has occurred with respect to
any Plan or with respect to the Buyer. The Buyer does not maintain any Plan that
is subject to Section 401(a) of the Code, other than its 401(k) plan set forth
on Schedule 3.13(a).

 

(e) There are no pending, or to the Knowledge of Seller, threatened or
anticipated, claims, litigation, administrative actions or proceedings against
or otherwise involving any of the Plans or related trusts, or any fiduciary
thereof, by any governmental agency, or by any employee, former employee, leased
employee, former leased employee, retiree or sales personnel or by any
participant or beneficiary covered under any of the Plans, or otherwise
involving the Plans (other than routine claims for benefits), nor, to the
Knowledge of Seller, is there any basis for one. There is no judgment, decree,
injunction, rule or order of any court, governmental body, commission, agency or
arbitrator outstanding against or in favor of any Plan or, to the Knowledge of
the Seller, any fiduciary thereof in that capacity. No Assets of the Buyer are
allocated to or held in a "rabbi trust" or similar funding vehicle.

 

(f) Each Plan that is a "group health plan" (as defined in Section 607(1) of
ERISA) has been operated in compliance in all material respects with the
provisions of COBRA (Section 4980B of the Code), the Health Insurance
Portability and Accountability Act of 1996 and any applicable similar state law.
The Buyer is not the sponsor of, or a participating employer in, any Plan that
is an "employee welfare benefit plan" within the meaning of Section 3(1) of
ERISA that is not a fully insured plan. There are no reserves, assets, surpluses
or prepaid premiums with respect to any employee welfare benefit plan. The Buyer
does not currently provide and has no current obligation to provide for
post-retirement or post-employment health and welfare benefits, including but
not limited to, severance, salary continuation, termination, disability, death,
or retiree health or medical benefits except as required by applicable Law.

 

(g) Except as set forth on Schedule 3.13(g), the consummation of the
transactions contemplated by this Agreement will not, of itself, entitle any
current or former employee or leased or contract employee of the Buyer to
severance pay, unemployment compensation or any similar payment or accelerate
the time of payment or vesting, or increase the amount of compensation due to,
or in respect of, any current or former leased or contract employee, nor will it
result in the breach of any agreement with any current or former employee or
leased or contract employee.

  

 

(h) None of the Assets is subject to any Encumbrance under Section 302(f) of
ERISA or Section 412(n) of the Code.

 

  11

 

  

3.14 Employees.

 

(a) Buyer is in compliance in all material respects with all applicable Laws
respecting employment and employment practices, terms and conditions of
employment and wages and hours and is not engaged in any unfair labor practice.

 

(b) There are no agreements or arrangements between Buyer and a consultant,
former consultant, employee or former employee obligating the Buyer to make any
payment to any such individual as a result of the transactions contemplated by
this Agreement or the termination of any Employee in connection therewith. The
transactions contemplated by this Agreement or the termination of any Employee
in connection therewith shall not result in any payment being made under any
agreement or arrangement between Buyer and a consultant, former consultant,
employee or former employee that would be subject to the excise tax imposed by
Section 4999 of the Code.

 

(c) Other than those loans reflected on the Financial Statements, there are no
loans outstanding from Buyer to any of the Employees.

 

(d) The Buyer is not in breach of any material terms of employment of any of the
Employees, nor to the Knowledge of Buyer, is any Employee in breach of any
material term of his employment relationship.

 

(e) Except as specifically set forth on Schedule 3.14(e), none of the Employees
is the subject of any disciplinary action nor is any Employee engaged in any
grievance procedure, nor, to the Knowledge of Buyer, is there any matter or fact
in existence that can reasonably be foreseen as likely to give rise to the same.

 

(f) With respect to all Employees, the Buyer has complied in all material
respects with the employment eligibility verification form requirements under
the Immigration and Naturalization Act, as amended ("INA"), in recruiting,
hiring, reviewing and documenting prospective employees for employment
eligibility verification purposes and the Buyer has complied in all material
respects with the paperwork provisions and anti-discrimination provisions of the
INA. With respect to all Employees, the Buyer has obtained and maintained the
employee records and I-9 forms in proper order as required by United States law.
To the Knowledge of Buyer, Buyer does not employ any workers unauthorized to
work in the United States.

 

  12

 

  

3.15 Labor Relations. The Buyer is not a party to, nor subject to, any
collective bargaining agreements. None of the employees of the Company are
represented by a union or subject to a collective bargaining agreement, no union
organizational campaign is in progress, to the Knowledge of Buyer, with respect
to such employees, and no question concerning representation exists respecting
such employees.

  

 

3.16 Taxes.

 

(a) Except as set forth on Schedule 3.16(a), all Tax Returns of the Buyer for
all Pre-Closing Tax Periods required by applicable Law to have been filed on or
prior to the Closing Date were duly and timely filed with the relevant Tax
Authority, and such Tax Returns were, when filed, true, complete and correct and
otherwise in conformity with applicable Tax Law in all material respects. All
Taxes (whether or not required to be shown on any Tax Return) required under
applicable Tax Law to have been paid by the Buyer on or prior to the Closing
Date were duly and timely paid in full, except any such Taxes ("Contested
Taxes"): (i) that are being contested in good faith and by appropriate
proceedings pursued diligently and in such a manner as not to cause any material
adverse effect upon the condition (financial or otherwise) or operations of the
Buyer; and (ii) for which the Buyer shall have set aside on its books
appropriate reserves. Schedule 3.16(a) identifies all Contested Taxes and the
status of any proceeding with respect thereto. Except as set forth on Schedule
3.16(a), all Taxes that the Buyer was required by law to withhold, deposit or
collect have been duly withheld, deposited or collected by the Buyer and, to the
extent required, have been timely paid by the Buyer to the relevant Tax
Authority, with any such Taxes that have been withheld, deposited and/or
collected but not yet paid to the relevant Tax Authority being held (and which
will continue to be held immediately following the Closing) by the Buyer in a
segregated account. The Buyer has timely complied with all information reporting
and backup withholding requirements, including maintenance of required records
with respect thereto, in connection with amounts paid or owing to any employee,
creditor, independent contractor or other third party.

 

(b) Except as set forth on Schedule 3.16(b), no Tax Return of the Buyer has been
subject to an Audit, nor is there any Audit in progress, pending or threatened
in writing, involving the Buyer. No information regarding any Tax matter
relating to the Buyer has been requested in writing by any Tax Authority.

 

(c) There is not currently outstanding any waiver of any applicable statute of
limitations nor any consent for the extension of the time for the assessment of
any Tax against the Buyer.

 

(d) There are no Tax liens upon the property or assets of the Buyer, except
liens for Taxes not yet due and payable and for which adequate reserves have
been established on the relevant entity's books and financial records (in
accordance with sound accounting practices) for the payment thereof.

 

  13

 

  

(e) The Buyer has not agreed to, or has been required to, make any adjustment
under Section 481(a) of the Code (and comparable provisions of any other
applicable Tax Law) by reason of a change in accounting method or otherwise.

 

(f) The Buyer is not liable for the Taxes of any Person including, without
limitation, as a transferee or successor, by contract, indemnity under Treasury
Regulations Section 1.1502-6 (and comparable provisions of any other applicable
Tax Law), or otherwise.

 

(g) The Buyer has never been a party to any Tax sharing agreement, Tax indemnity
agreement or other similar Tax sharing arrangement.

 

(h) No claim has ever been issued to the Buyer by a Tax Authority in a
jurisdiction where the Buyer does not file Tax Returns that it is or may be
subject to taxation by that jurisdiction.

 

(i) Schedule 3.16(i) sets forth all foreign, state and local jurisdictions in
which the Buyer is or has been subject to Tax and each type of Tax payable in
such jurisdiction.

 

(j) The Buyer has, within the meaning of Section 6662(d)(2)(B)(ii)(I) of the
Code (and comparable provisions of any other applicable Tax Law), adequately
disclosed on its federal income Tax Returns the relevant facts affecting any
item or position taken for which substantial authority (within the meaning of
Section 6662(d)(2)(B)(i) of the Code and comparable provisions of any other
applicable Tax Law) did not exist at the time the Tax Return was filed. The
Buyer has not reflected on any Tax Return any item the tax treatment for which
there was no "reasonable basis" (within the meaning of Section
6662(d)(2)(B)(ii)(II) of the Code and comparable provisions of any other
applicable Tax Law).

 

(k) The Buyer will not be required to report any taxable income for any
Post-Closing Tax Period as a result of: (i) any agreement or arrangement, any
debt instrument or loan, with respect to which any of them may have to recognize
"phantom income" for Tax purposes (i.e., taxable income or gain in advance of
the receipt of a payment of a corresponding amount of cash) including, without
limitation, under the original issue discount rules of Code Sections 1271 et.
seq. or otherwise; (ii) a Code Section 1031 like-kind exchange; (iii) any
transaction which is being reported under the installment method of Code Section
453; or (iv) any comparable provisions of any other applicable Tax Law.

 

(l) The Buyer has provided to Seller true and complete copies of (i) all Audit
reports, statements of deficiencies, notices, letter rulings, determination
letters or similar documents, elections, disclosures of controversial positions,
protests, correspondence, closing or other agreements which relate to any Taxes
for which the Buyer was or could be liable, and (ii) all Tax Returns of the
Buyer (together with all related Tax Return workpapers).

 

  14

 

  

(m) Except to the extent that the following requested information is set forth
on a Tax Return that has been furnished to Seller pursuant to Section
3.16(l)(ii) at least 10 business days prior to the Closing Date, Schedule
3.16(m) sets forth, for federal, state, local and foreign income and franchise
Tax purposes and as of the first day of the current Taxable Period of the Buyer,
such entity's adjusted basis in its assets, by category, the original and
remaining useful life of such assets, the method under which such assets are
being depreciated and the original unadjusted basis of such assets. The Buyer
will not, as of immediately prior to the Closing, have any net operating losses,
built-in losses or other Tax attributes subject to limitation under Section 382,
383 or 384 of the Code, the consolidated return regulations under Section 1502
of the Code or under any other comparable provision of applicable Tax Law.

 

(n) The Buyer has not constituted either a "distributing corporation" or a
"controlled corporation" (within the meaning of Section 355(a)(1)(A) of the
Code) in a distribution of stock to which Section 355 of the Code (or so much of
Section 356 of the Code as relates to Section 355 of the Code) applies and which
occurred within two years of the date of this Agreement.

 

(o) No Tax Authority is asserting or threatening to assert a claim against the
Buyer under or as a result of Section 482 of the Code or any similar provision
of state, local or foreign law.

 

(p) Except as set forth on Schedule 3.16(p), no power of attorney has been
granted by or with respect to the Buyer with respect to any matter relating to
Taxes.

 

(q) Schedule 3.16(q) sets forth all elections with respect to Taxes made by the
Buyer.

 

(r) The Buyer has not entered into or been a party to any arrangement designed
wholly or partly for the purpose of it or any other Person avoiding or evading
Tax.

 

3.17 Claims; Legal Actions. Except as disclosed on Schedule 3.17, there are no
actions, suits, proceedings, orders, investigations or claims pending or, to the
Knowledge of Buyer, threatened against Buyer, or pending or threatened by the
Buyer, against any third party, at law or in equity, or before or by any
governmental department, commission, board, bureau, agency or instrumentality
(including, without limitation, any actions, suits, proceedings or
investigations with respect to the transactions contemplated by this Agreement),
and to the Knowledge of Buyer there is no basis for any of the foregoing. The
Buyer is not subject to any arbitration proceedings under collective bargaining
agreements or otherwise or, to the Knowledge of Buyer, any governmental
investigations or inquiries (including, without limitation, inquiries as to the
qualification to hold or receive any license or permit), and, to the Knowledge
of Buyer, there is no basis forany of the foregoing. Except as disclosed on
Schedule 3.17, the Buyer is not subject to any judgment, order or decree of any
court or other governmental agency, and the Buyer has not received any written
opinion or memorandum from legal counsel to the effect that it is exposed, from
a legal standpoint, to any liability.

 

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3.18 Compliance with Laws. Buyer, the Business and the Assets conform, in all
material respects, to all applicable statutes, codes, ordinances, licensing
requirements and other Laws. The Buyer has, since its inception, complied in all
material respects with all Laws, decrees, filing and reporting requirements,
awards and orders applicable to the Buyer, including those relating to
employment, employee benefits, marketing, sale and distribution of products,
labeling of products, trade regulation, antitrust and warranties; and to the
Knowledge of Buyer there is not any liability arising from or related to any
violations thereof. No notice from any governmental body or other Person of any
violations of any Law in connection with the Assets or operations of the
Business has been received by the Buyer.

 

3.19 Undisclosed Liabilities.The Buyer has no indebtedness, liabilities or
obligations, accrued, contingent or otherwise except as set forth on Schedule
3.19(a). Except as set forth on Schedule 3.19(b) hereto, there are no
extraordinary claims against the Buyer by third parties relating to acts or
omissions by the Buyer arising outside the ordinary course of the Business.

 

3.20 Assets and Title. The Assets include all of the assets used in connection
with the Business. The Buyer owns and has good and marketable title to all of
the Assets, and as of the Closing Date the Assets shall be free and clear of all
Encumbrances. The books of account of the Buyer are complete and correct in all
material respects. At the Closing, all such books and records shall be located
at the business office of the Buyer.

 

3.21 Interim Change. Except as set forth in Schedule 3.21, since December 31,
2014 the Business has been conducted and operated only in the ordinary course,
consistent with past practices. In addition, except as set forth on Schedule
3.21, since December 31, 2014:

 

(a) there has been no Material Adverse Effect on the Assets or the Buyer;

 

(b) except in the ordinary course of business, no party has accelerated,
terminated, modified or cancelled any agreement, contract, lease or license (or
series of related agreements, contracts, leases and licenses) to which the Buyer
is a party or by which it is bound, or has threatened the same;

 

(c) the Buyer has not borrowed any amount or incurred or become subject to any
liabilities in excess of Ten Thousand Dollars ($10,000), except current
liabilities incurred in the ordinary course of business and liabilities under
contracts entered into in the ordinary course of business;

 

(d) the Buyer has not mortgaged or pledged any Asset or Common Stock, or
subjected any Asset or Common Stock, to any Encumbrance, except liens for Taxes
not yet due and payable;

 

  16

 

  

(e) the Buyer has not sold, leased, assigned, transferred or otherwise disposed
of, or agreed to sell, lease, assign, transfer or otherwise dispose of at some
future date, or granted an option or other right to any party to acquire, any of
the Assets (other than in the ordinary course of business), nor has the Buyer
forgiven or canceled any debts owing to the Buyer or waived any claims or
rights;

 

(f) the Buyer has not sold, assigned, transferred, or permitted to lapse, any
Intellectual Property Rights;

 

(g) the Buyer has not made any change in any method of accounting or accounting
practice or its practices with respect to the other payment or other discharge
of debts;

 

(h) the Buyer has not suffered any extraordinary losses, whether or not in the
ordinary course of business, or consistent with past practice;

 

(i) the Buyer has not made capital expenditures or commitments therefor that
aggregate in excess of Ten Thousand Dollars ($10,000);

 

(j) the Buyer has not made any loans or advances to, guarantees for the benefit
of or any investments in, any Persons;

 

(k) the Buyer has not suffered any damage, destruction or casualty loss, not
fully covered by insurance (subject to payment of the applicable deductible);

 

(l) the Buyer has not acquired (including, without limitation, by merger,
consolidation or acquisition of stock or assets) any operating business,
corporation, partnership, limited liability company, joint venture, association
or other business organization or division thereof, or any assets, outside of
the ordinary course of business, or entered into any commitment to do so;

 

(m) the Buyer has not, except for this Agreement or any other agreement
contemplated hereby, entered into any agreement, contract, lease or license (or
series of related agreements, contracts, leases or licenses) outside of the
ordinary course of business;

 

(n) the Buyer has not discharged or satisfied any Encumbrance or paid any
obligation or liability, other than current liabilities in the ordinary course
of business;

 

(o) Buyer has not declared, made any payment, set aside or made any distribution
to its stockholders, or redeemed, purchased or otherwise acquired any Common
Stock;

 

  17

 

  

(p) the Buyer has not granted to any officer or employee any increase in
compensation or benefits;

 

(q) the Buyer has not: (i) paid any pension, retirement allowance or other
employee benefit to any Person; or (ii) adopted or agreed to adopt any pension,
retirement or other employee benefit plan, program or policy;

 

(r) the Buyer has not entered into any agreement (i) in which the obligation
exceeds Ten Thousand Dollars ($10,000) or (ii) which may not be terminated by
the Buyer at any time, without penalty, upon fifteen (15) days' notice;

 

(s) the Buyer has not disposed of any Asset valued in excess of Five Thousand
Dollars ($5,000) outside the ordinary course of business;

 

(t) the Buyer has not amended its certificate of formation, by-laws or other
organizational documents; and

 

(u) the Buyer has not agreed to take any of the actions set forth above in this
Section 3.21.

 

3.22 Environmental Claims. (i) The Buyer's operations at all facilities owned
by, or leased to or used by, the Buyer and that are used in the conduct of the
Business (the "Premises") are in compliance in all material respects with all
federal, state and local environmental Laws and regulations; (ii) there is not
occurring, at any location currently owned by or leased to the Buyer, any
Release of any Hazardous Substance, and there has not been, during the time of
the Buyer's occupation of such location, any such Release; (iii) there has not
been at any location previously owned by or leased to the Buyer, any Release of
any Hazardous Substance during the time of the Buyer's ownership or occupation
of such location; (iv) there are no Hazardous Substances or other condition or
use of the Premises, whether natural or man-made, which has caused any damage,
or which, to the Knowledge of the Buyer, poses a threat of causing damage, to
the health of persons, to property, to natural resources, or to the environment;
(v) the Buyer has not received any written communication from any Person that
alleges that the Buyer is not in compliance with applicable environmental Laws;
and (vi) the Buyer has not, in connection with the Business, sent or arranged
for the transportation of Hazardous Substances or wastes to a site which,
pursuant to CERCLA or any similar state law has been placed or is proposed to be
placed, on the "National Priorities List" of hazardous waste sites or its state
equivalent or which is subject to a claim, an administrative order or other
request to take "removal" or "remedial" action by any person as those terms are
defined under CERCLA.

 

3.23 Brokerage. Except as set forth on Schedule 3.23, the Buyer has not incurred
any liability for brokerage commissions, finders' fees or other similar
compensation in connection with the transactions contemplated by this Agreement
based on any arrangement or agreement binding upon the Buyer.

 

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3.24 Affiliated Transactions. Except as set forth in Schedule 3.24, no Affiliate
of the Buyer: (i) owns any debt, equity or other interest or investment in any
Person that is a competitor, lessor, lessee, licensor, licensee, customer,
supplier, distributor sales agent or advertiser of the Business; (ii) has any
cause of action or other claim whatsoever against or, owes any material amount
to, or is owed any material amount by the Buyer, except for accrued compensation
(including but not limited to accrued vacation pay), employee benefits and
similar matters; (iii) has any interest in or owns any Intellectual Property
Rights or any other property or right used in the conduct of the Business; or
(iv) is a party to any Contract to which the Buyer is a party.

 

3.25 Banking Relationships and Investments. Schedule 3.25 sets forth an accurate
and complete list of all banks and financial institutions in which the Buyer has
an account, deposit, safe-deposit box, lock box or line of credit or other loan
facility or relationship, including the names of all persons authorized to draw
on those accounts or deposits, or to borrow under such lines of credit or other
loan facilities, or to obtain access to such boxes. Schedule 3.255 sets forth an
accurate and complete list of all certificates of deposit, debt or equity
securities and other investments owned, beneficially or of record, by the Buyer
(the "Investments"). The Buyer has good and marketable title to all of the
Investments.

 

3.26 Powers of Attorney. There are no outstanding powers of attorney executed on
behalf of either the Buyer or any of its Subsidiaries.

 

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

 

3.28 Export Control. The Buyer has at all times conducted its export and related
transactions in all material respects in accordance with (i) all applicable U.S.
export, re-export, and anti-boycott Laws and regulations, including the Export
Administration Regulations, the Arms Export Control Act and International
Traffic in Arms Regulations, and U.S. economic sanctions laws and regulations
administered by the U.S. Treasury Department's Office of Foreign Assets Control
and (ii) all other applicable import and export controls in the other countries
in which the Buyer conducts business.

 

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3.29 Purchase for Own Account. Buyer hereby confirms that the Stock purchased
hereunder will be acquired for investment for Buyer's own account, not as a
nominee or agent, and not with a view to the resale or distribution of any part
of the Stock in contravention of applicable Law.

 

3.30 Full Disclosure. No representation or warranty made by Buyer herein or in
any Related Document contains or will contain any untrue statement of any fact,
or omits any fact necessary in order to make any statement herein or therein, in
light of the circumstances in which it was made, not misleading. The Buyer has
disclosed to Seller all facts of which they have Knowledge that are material to
the Business, the Assets, liabilities, prospects, condition (financial or
otherwise) or results of operations of the Buyer.

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF SELLER

 

Seller represents and warrants to the Buyer as follows:

 

4.1 Organization; Due Authorization. Seller is a limited liability company duly
organized, validly existing, and in good standing under the laws of the State of
[Florida], and has full corporate power to execute, deliver and perform this
Agreement and any Related Document to which it is a party. The execution,
delivery and performance of this Agreement and the Related Documents have been
duly and validly authorized by all necessary corporate actions on the part of
Seller.

 

4.2 Binding Obligation. Assuming due authorization, execution and delivery of
this Agreement by the Buyer, this Agreement (and when executed and delivered at
Closing, each Related Document) will be duly executed by Seller and constitute
the legal, valid, and binding obligation of Seller, enforceable against Seller
in accordance with their respective terms, except that (i) such enforcement may
be limited by or subject to any bankruptcy, insolvency, reorganization,
moratorium or similar laws now or hereafter in effect relating to or limit-ing
creditors' rights generally and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief are subject to certain equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.

 

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4.3 Absence of Consents; No Violation. Subject to the Buyer obtaining the
Consents, no consent, authorization, approval, order, license, certificate or
permit of or from, or declaration or filing with any federal, state, local or
other governmental authority or any court or other tribunal, and no consent or
waiver of any party to any material contract to which Seller is a party is
required for the execution, delivery and performance of this Agreement and each
of the Related Documents. Subject to the Buyer obtaining the Consents, the
execution and delivery of this Agreement and each Related Document by Seller,
and the consummation of the transactions contemplated hereby and thereby and
compliance with the terms hereof and thereof does not and will not, conflict
with, or result in any violation of or default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material benefit under or result
in the creation of any Encumbrance of any kind upon any of the properties or
assets of Seller under, any provision of (i) the certificate of incorporation,
by-laws or other organizational documents of Seller, (ii) any note, bond,
mortgage, indenture, deed of trust, license, lease, contract, commitment or loan
or other agreement to which Seller is a party or by which any of its properties
or assets are bound, or (iii) any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Seller or its property or assets.

 

4.4 Brokerage. Except as set forth on Schedule 4.4, Seller has not incurred any
liability for brokerage commissions, finders' fees or other similar compensation
in connection with the transactions contemplated by this Agreement based on any
arrangement or agreement binding upon Seller.

 

4.5 Certain Proceedings. There are no actions, suits, proceedings, orders,
investigations or claims pending or, to the Knowledge of Seller, threatened
against Seller, at law or in equity, or before or by any governmental
department, commission, board, bureau, agency or instrumentality that would
materially affect Seller's ability to consummate the transactions contemplated
by this Agreement.

 

4.6 Additional Seller Representations.

 

(a) Seller holds of record and beneficially all of the Stock purported to be
owned by Seller as set forth opposite Seller's name on Schedule 4.6. Seller has
good and marketable title to all of the Stock in Seller's name as set forth on
Schedule 4.6 and all right, power, authority and capacity to sell, assign,
transfer and deliver all right, title and interest, both legal and equitable, in
and to the Stock set forth next to such Seller's name on Schedule 4.6, free and
clear of all Encumbrances. All of the Stock held by Seller has been duly
authorized, is validly issued, fully paid and non-assessable. Seller has not
violated any applicable Laws in connection with the sale of any Stock. Upon
delivery to Buyer at the Closing of the Stock and upon receipt by Seller of the
Closing Date Cash Payment, Unit One and Goldenshare, good and valid title to
such Stock will pass to Buyer, free and clear of any Encumbrances.

 

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ARTICLE V

COVENANTS OF BUYER

 

5.1 Pre-Closing Covenants. Except as contemplated or required by this Agreement,
commencing on the date hereof until the Closing Date, Buyer shall operate the
Business in the ordinary course of business in accordance with past practices;
provided, however:

 

(a) Negative Covenants. Buyer shall not, without the prior written consent of
Seller:

 

(i) General. Take any action referenced in Section 3.21 hereof;

 

(ii) Compensation. Except as contemplated herein, (A) increase the compensation
of any person employed by the Buyer, (B) pay or grant bonuses or other benefits
payable or to be payable to any person employed by the Buyer, or (C) enter into
any employment, severance or similar agreement with any employee of the Buyer
which does not by its terms terminate, or cannot be terminated or satisfied by
the Buyer without premium or penalty, prior to or at the Closing;

 

(iii) Dividends, Distributions. (A) Declare, set aside or pay any dividend or
distribution that is payable in cash, stock, membership interests or other
property with respect to the Buyer; (B) redeem, purchase or otherwise acquire
directly or indirectly any shares or membership interests of the Buyer, or any
other securities thereof or any rights, warrants, or options to acquire any such
shares or other securities; (C) authorize for issuance, issue, sell, pledge,
deliver or agree to commit to issue, sell or pledge (whether through the
issuance or granting of any options, warrants, calls, subscriptions, equity
appreciation rights or other rights or other agreements) any equity or debt
securities of the Buyer, or any other securities that are convertible into or
exchangeable for shares or membership interests of any class of the Buyer; or
(D) split, combine or reclassify the outstanding shares or membership interests
of the Buyer, or authorize the issuance of any other securities in respect of,
in lieu of or in substitution for shares of any equity securities of the Buyer;
or

 

(iv) No Inconsistent Action. Take any action, or fail to take any action, which
is inconsistent with their obligations hereunder or which could reasonably be
anticipated to hinder or delay the consummation of the transaction con-templated
by this Agreement. Such inconsistent action shall include, but is not limited
to, the following: (a) failing to preserve substantially the relationships with
the employees, suppliers and customers of the Buyer, except in the ordinary
course of business; (b) failing to perform, in all material respects, any
required obligations pursuant to any Contracts, leases or permits; (c) failing
to comply with all applicable Laws; (d) failing to confer with Seller regarding
operational matters of a material nature; (e) failing to report periodically to
Seller regarding the status and results of business operations; (f) adopting any
plan of liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization of the Buyer; or (g) settling or
compromising any claim or action against the Buyer.

 

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(b) Affirmative Covenants. Buyer shall do, and shall cause the Company to do,
the following:

 

(i) Access to Information. From the date hereof through the Closing Date, the
Buyer shall give Seller and its representatives reasonable access during normal
business hours to all properties, facilities, personnel, books, contracts,
leases, commitments and records, and during this period the Buyer shall furnish
Seller with all financial and operating data and other information as to the
Business and its assets, properties, rights and claims, as Seller may from time
to time reasonably request. In particular, the Buyer shall (A) afford to the
officers, employees, directors, attorneys, accountants, appraisers and other
authorized representatives of Seller reasonable access, during normal business
hours, to the offices, plants, properties, books and records of the Buyer in
order that Seller may have full opportunity to make such legal, financial,
accounting, environmental and other reviews or investigations of the Business
and the Assets as Seller shall desire to make, and (B) use its commercially
reasonable efforts to cause its independent public accountants to permit
Seller's independent public accountants to inspect their work papers and other
records relating to the Business and the Assets;

 

(ii) Preservation of Business. Use commercially reasonable efforts to maintain
and preserve the Assets and the Business, and maintain and preserve consistent
with the ordinary course of business, the goodwill of and present relationships
with suppliers, advertisers, customers and others having business relations with
the Buyer;

 

(iii) Notification. Promptly notify Seller in writing of the following:

 

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

 

(B) any notice or other communication from any governmental entity in connection
with the transactions contemplated by this Agreement;

 

(C) any notice or other communication from any governmental entity with respect
to condemnation proceedings and fees to be paid to the Buyer in connection
therewith;

 

(D) any actions, suits, claims, investigations or proceedings commenced or
threatened, relating to or involving or otherwise affecting the Buyer that, if
pending on the date of this Agreement, would have been required to have been
disclosed in the Schedules hereto or that relate to the consummation of the
transactions contemplated by this Agreement;

 

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(E) without prejudice to the termination rights of the parties hereunder, the
occurrence, or failure to occur, of any condition, event or development that (1)
causes any representation or warranty of the Seller and/or the Buyer contained
in this Agreement to be untrue or inaccurate, at any time from the date hereof
to the Closing Date, or (2) would have been required to be set forth or
described in the Schedules hereto if existing or known at the date of this
Agreement; and

 

(F) any failure on the part of the Seller or the Buyer to comply with or perform
in any respect any agreement or covenant to be complied with or performed by it
or them hereunder; provided that the delivery of any notice pursuant to this
Section 5.1(b)(iii) shall not limit or otherwise affect the remedies available
hereunder to Buyer; and

 

(iv) Supplemental Disclosure. Provide information in writing to Seller with
respect to any matter hereafter arising or discovered which, if existing or
known at the date of this Agreement, would have been required to be set forth in
a Schedule to, or representation or warranty set forth in, this Agreement;
provided that no such information shall constitute an amendment of such Schedule
or of any statement, representation or warranty in this Agreement and shall not
cure any breach of any representation or warranty made in this Agreement for
purposes of indemnification of Seller by the Buyer under Article X hereof.

 

ARTICLE VI

SPECIAL COVENANTS AND AGREEMENTS

 

6.1 Fees and Expenses. Except as otherwise provided in this Agreement, each
party shall pay its own expenses incurred in connection with the authorization,
preparation, execution and performance of this Agreement, including all fees and
expenses of counsel, accountants, agents and other representatives; provided
that expenses of the Buyer incurred up to the Closing Date shall be paid by the
Buyer.

 

6.2 Announcements. Commencing on the date hereof, Buyer shall not make any
public announcement or press release concerning the transactions contemplated
hereby without the written consent of the Seller.

 

6.3 Cooperation. Buyer and Seller shall cooperate fully with each other and
their respective counsel and accountants in connection with any actions required
to be taken as a part of their respective obligations under this Agreement,
including, but not limited to, the obtaining of Consents. After the Closing, the
Seller and Buyer shall take such actions, and shall execute and deliver to any
other party such further documents as, in the reasonable opinion of counsel for
such other party, may be necessary to ensure, complete and evidence the full and
effective consummation of the transactions contemplated by this Agreement.

 

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6.4 Litigation Support. In the event and for so long as Buyer or Seller is
actively contesting or defending against any action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand in connection with (i) any
transaction contemplated under this Agreement, or (ii) any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act, or transaction on or prior to the Closing Date
involving the Buyer or the Company, Buyer and Seller will cooperate in the
contest or defense, make available their personnel, and provide such testimony
and access to their books and records as shall be necessary in connection with
the contest or defense, all at the sole cost and expense of the contesting or
defending party.

 

6.5 Tax Covenants.

 

(a) Tax Indemnification. Buyer shall indemnify the Company and Seller, and hold
them harmless from and against, without duplication, any loss, claim, liability,
expense, or other damage attributable to (i) all Taxes (or the non-payment
thereof) of Buyer for all Taxable Periods ending on or before the Closing Date
("Pre-Closing Tax Periods") and the portion of all Taxable Periods that includes
(but does not end on) the Closing Date (such period a "Straddle Period") to the
extent such Taxes are allocable to the portion of such period occurring on or
before the Closing Date, and (ii) all Taxes of any member of an affiliated,
consolidated, combined or unitary group of which the Buyer (or any predecessor
of any of the foregoing) is or was a member on or prior to the Closing Date,
including pursuant to Treasury Regulation Section 1.1502-6 or any analogous or
similar state, local, or foreign law or regulation, which are attributable to
the Pre-Closing Tax Period (all such Taxes listed in this sentence being
"Pre-Closing Taxes"). In the case of any Straddle Period, the amount of any
Pre-Closing Taxes (i) based on or measured by income, receipts, or payroll of
the Buyer shall be determined based on an interim closing of the books as of the
close of business on the Closing Date, and (ii) the amount of other Pre-Closing
Taxes of the Buyer shall be deemed to be the amount of such Tax for the entire
Straddle Period multiplied by a fraction the numerator of which is the number of
days in the Straddle Period ending on the Closing Date and the denominator of
which is the total number of days in such Straddle Period.

 

(b) Tax Returns. Buyer shall duly prepare, or cause to be prepared, and timely
file, or cause to be timely filed, solely at Buyer's expense, all Tax Returns
required to be filed by the Buyer for any Pre-Closing Tax Period ("Pre-Closing
Tax Returns"). All Pre-Closing Tax Returns shall be prepared in accordance with
historic practices of the Buyer, to the extent permitted by applicable Law. To
the extent permitted by applicable Law, the Seller shall include any income,
gain, loss, deduction or other Tax items for any Pre-Closing Tax Period on their
Tax Returns in a manner consistent with the schedules furnished by the Buyer to
Seller for such periods. Buyer shall be solely liable for any and all late
filing fees, interest or penalties incurred as a result of the late filing of
any Pre-Closing Tax Return. Buyer shall permit Seller to review and comment on
each Pre-Closing Tax Return prior to filing and shall make such revisions to
such Pre-Closing Tax Returns as are reasonably requested by Seller. Buyer shall
duly prepare, or cause to be prepared, and timely file, or cause to be timely
filed, all Tax Returns required to be filed by the Buyer for any Straddle Period
("Straddle Tax Return") and for any Taxable Period beginning after the Closing
Date (a "Post-Closing Tax Period" and such returns "Post-Closing Tax Returns").
The cost of preparing all Straddle Tax Returns and Post-Closing Tax Returns
shall be borne by the Buyer. Buyer shall permit Seller to review and comment on
each Straddle Tax Return prior to filing.

 

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(c) Cooperation on Tax Matters. Buyer and Seller shall cooperate fully, as and
to the extent reasonably requested by the other party, in connection with Tax
matters (including, without limitation, any Audit) involving the Buyer. Such
cooperation shall include the retention and (upon the other party's request) the
provision of records and information which are reasonably relevant to such
Audit. Buyer shall not dispose of any records relating to Taxes paid or payable
by the Buyer and which are attributable to Pre-Closing Tax Periods prior to the
later of six (6) months after the expiration of the applicable limitations
period on assessment with respect to any such Taxes, or the final resolution of
all Audits or litigation initiated prior to the expiration of the applicable
limitations period.

 

(d) Audits. With respect to Audits relating to Pre-Closing Tax Periods (a
"Pre-Closing Audit") the Seller shall control (at the Buyers' sole cost and
expense) all proceedings and may take any action (or decline to take any action)
with respect to any Pre-Closing Audit in the sole discretion of the Seller,
provided that any such action (or inaction) does not increase the Tax liability
of the Buyer for any Straddle Period or any Post-Closing Tax Period. In the
event that such action or inaction would increase the Tax liability of the Buyer
for any Straddle Period or any Post-Closing Tax Period, then no such action or
inaction may be implemented or effectuated without the prior written consent of
Seller (which consent shall not be unreasonably withheld or delayed). Buyer
shall furnish Seller with the usual form of power of attorney (Form 2848 or
similar state or local form) and provide to Seller such records and information
as may be necessary for Seller to control any Pre-Closing Audit proceeding.

 

(e) Section 338(h)(10) Election. Seller shall join with Buyer in making an
election under Section 338(h)(10) of the Code (and any corresponding election
under any other comparable provision of applicable Tax Law) with respect to the
purchase and sale of the Stock hereunder ("338(h)(10) Election"). Seller shall
include any income, gain, loss, deduction, or other Tax item resulting from the
338(h)(10) Election on their Tax Returns to the extent required by applicable
Tax Law.

 

(f) Transfer Taxes. All transfer, documentary, sales, use, stamp, registration
and other such Taxes and fees (including any penalties and interest) incurred in
connection with this Agreement shall be paid by Buyer when due, and Buyer shall,
at its own expense, file all necessary Tax Returns and other documentation with
respect to all such transfer, documentary, sales, use, stamp, registration and
other Taxes and fees, and, if required by applicable Law, Buyer shall, and shall
cause its affiliates to, join in the execution of any such Tax Returns and other
documentation.

 

(g) Status. Prior to the Closing Date, Buyer shall maintain its respective
classification under the Code and applicable Tax Law as an association taxable
as a corporation and shall not take or allow any action that would change the
tax classification of Buyer.

 

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6.6 Confidentiality Obligations.

 

(a) Except as necessary for the consummation of the transactions contemplated
hereby, each party hereto shall keep confidential any materials and information
that are obtained from the other party in connection with the transactions
contemplated hereby, except to the extent that such materials or information
have become or become publicly available; are or become readily available to the
industry; have been obtained from independent sources; were known to such party
on a non-confidential basis prior to disclosure to such party by the other
party; or are required to be disclosed to or by order of a governmental agency
or a court of law or otherwise required by law to be disclosed. In the event
that this Agreement is terminated pursuant to Section 9.1, each party will
return to the other party all documents, work papers and other written material
obtained by it in connection with the transaction contemplated hereby, and Buyer
shall not use any of the information and or documents that it has obtained or
developed from the Seller during its due diligence to compete with the Seller.

 

(b) Buyer expressly acknowledges that the covenants contained in Section 6.6,
are integral to the sale by Seller of the Stock and that without the protection
of such covenants, Seller would not have entered into this Agreement, that the
consideration received by Seller bears no relationship to the damages Seller may
suffer in the event of any breach of any of the covenants of Section 6.6. If
this Section 6.6 shall nevertheless for any reason be held to be excessively
broad, it shall be enforceable to the extent compatible with applicable Laws
that shall then apply. Buyer hereby further acknowledges that money damages will
be impossible to calculate and may not adequately compensate Seller in
connection with an actual or threatened breach by it of the provisions of this
Section 6.6. Accordingly, Buyer hereby expressly waives all rights to raise the
adequacy of Seller's remedies at law as a defense if Seller seeks to enforce by
injunction or other equitable relief the due and proper performance and
observance of the provisions of this Section 6.6. In addition, Seller shall be
entitled to pursue any other available remedies at law or equity, including the
recovery of money damages, in respect of the actual or threatened breach of the
provisions of this Section 6.6.

 

(c) Buyer hereby expressly waives any right to assert inadequacy of
consideration as a defense to enforcement of the confidentiality covenants in
this Section 6.6 should such enforcement ever become necessary.

 

6.7 No Debt Payments in Cash. To the extent that Buyer has to issue a debt
instrument ("Buyer Debt") in order to obtain funding to be able to pay the
Closing Date Cash Payment, all payments required to be made in accordance with
the Buyer Debt must only be made with Common Stock of the Buyer, and not with
cash or cash equivalents.

 

6.8 David C. Langle Salary. Mr. Langle shall remain as the interim Chief
Financial Officer of Buyer for a period of at least three months from Closing,
at a salary to be agreed to between him and Buyer. At Closing, Mr. Langle shall
accept an amount not to exceed $10,000, in the aggregate, for any accrued, but
unpaid salary due to Mr. Langle prior to Closing.

 

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6.9 Sands Consults. SCS, LLC shall be due a cash fee of $50,000, payable by
Buyer at Closing. The Buyer shall secure the $50,000 cash fee referenced in this
Section 6.9 by obtaining financing from the Buyer's existing investors and/or
lenders. In addition to the cash fee referenced herein, Buyer shall, at Closing,
issue to SCS, LLC a warrant to purchase a number of shares of Common Stock of
Buyer equal to 2.99% of the issued and outstanding Common Stock of Buyer on the
Closing Date. Such warrant shall have a three-year term, an exercise price of
$0.01, and provide for the ability to exercise such warrant on a cashless basis
during the entire term of the warrant.

 

ARTICLE VII

CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER

 

7.1 Conditions to Obligations of Buyer. Each and all of the obligations of Buyer
to consummate the transactions contemplated by this Agreement are subject to
fulfillment prior to or at the Closing of the following conditions, except to
the extent that Buyer may waive any one or more thereof in its sole discretion:

 

(a) Representations and Warranties. All representations and warranties of the
Seller in this Agreement and the Related Documents shall be true and complete in
all material respects, disregarding for this purpose any qualification or
exception for, or reference to, materiality or Material Adverse Effect in any
such representation or warranty, at and as of the Closing Date as though such
representations and warranties were made at and as of such time, except for
representations and warranties that speak as of a specific date or time, which
need only be true and correct as of such date and time.

 

(b) Covenants and Conditions. The Seller shall have in all material respects
performed and complied with all covenants, agreements and conditions required by
this Agreement to be performed or complied with by them prior to or on the
Closing Date.

 

(c) Deliveries. The Seller shall have made or cause to be made, or stand willing
and able to make or cause to be made, all the deliveries to Buyer set forth in
Section 8.1 hereof.

 

(d) Adverse Change. Since December 31, 2014, there shall not have occurred a
Material Adverse Effect.

 

(e) Good and Marketable Title to Stock. At Closing, (i) the title of the Seller
to the Stock will be free and clear of all Encumbrances and (ii) the title to
all of the Stock will be transferred to Buyer, free and clear of all
Encumbrances.

 

 

(f) No Adverse Proceedings. No action, suit, proceeding or investigation before
any court, administrative agency or other governmental authority shall be
pending or, to the Knowledge of the Seller, threatened against Seller or the
Company wherein an unfavorable judgment, decree or order would prevent the
carrying out of this Agreement or any of the transactions contemplated hereby,
declare unlawful the transactions contemplated hereby or cause such transactions
to be rescinded, or which could reasonably be expected to materially adversely
affect the right of Buyer to own and exercise all rights under the Stock, or to
materially adversely affect the Assets or the Business operations (financial or
otherwise) of the Company.

 

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(g) Consents. All Consents shall have been obtained and copies shall have been
delivered to Buyer.

 

(h) Regulatory Approvals. All authorizations, approvals, orders, licenses,
certificates and permits as may be required to permit the consummation of the
transactions contemplated hereby and the transfer of any and all Licenses
necessary for Buyer to operate the Business after the Closing shall have been
obtained, shall remain in full force and effect and shall be reasonably
satisfactory in form and substance to Buyer and its counsel.

 

7.2 Conditions to Obligations of Seller. Each and all of the obligations of
Seller to consummate the transactions contemplated by this Agreement are subject
to fulfillment prior to or at the Closing of the following conditions, except to
the extent that Seller may waive one or more thereof:

 

(a) Representations and Warranties. All representations and warranties of Buyer
contained in this Agreement and the Related Documents shall be true and complete
in all material respects, disregarding for this purpose any qualification or
exception for, or reference to, materiality in any such representation or
warranty, at and as of the Closing Date as though such representations and
warranties were made at and as of such time, except for representations and
warranties that speak as of a specific date or time, which need only be true and
correct as of such date and time.

 

(b) Covenants and Conditions. Buyer shall have in all material respects
performed and complied with all covenants, agreements, and conditions required
by this Agreement to be per-formed or complied with by it prior to or on the
Closing Date.

 

(c) Deliveries. Buyer shall have made or cause to be made, or stand willing and
able to make or cause to be made, all the deliveries set forth in Section 8.3
hereof.

 

(d) Series A Preferred Stock. Buyer shall have delivered to Seller all 1,000
shares of Series A Preferred Stock of Buyer, along with executed stock powers
providing for the transfer of such Series A Preferred Stock to Seller.

 

(e) Litigation. Buyer shall have resolved, to Seller's sole satisfaction, all
outstanding, pending, or threatened litigation to which Buyer is a party.

  

 

(f) Information Statement. At least twenty (20) days shall have elapsed since
the filing by Buyer of an Information Statement on Form 14C relating to the
amendment of Buyer's Certificate of Incorporation in order to authorize
additional shares of preferred stock of Buyer, and establish a new series of
preferred stock.

 

(g) No Adverse Proceeding. No action, suit, proceeding or investigation before
any court, administrative agency or other governmental authority shall be
pending or, to the Knowledge of Buyer, threatened against Buyer wherein an
unfavorable judgment, decree or order would prevent the carrying out of this
Agreement or any of the transactions contemplated hereby, declare unlawful the
transactions contemplated hereby or cause such transactions to be rescinded.

 

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ARTICLE VIII

CLOSING AND CLOSING DELIVERIES

 

8.1 Closing. Subject to Article IX hereof, the Closing shall take place within
three (3) days following the satisfaction or waiver by Buyer and Seller, in
their respective sole discretion, of all of the conditions to Closing set forth
in Article VII hereof, but not later than the Final Termination Date, or such
other time, place and date as may be mutually agreed upon by the parties hereto
(the "Closing Date"). Buyer shall notify Seller of the Closing Date not less
than three (3) days before the Closing Date.

 

8.2 Deliveries by the Company and Seller. Prior to or on the Closing Date, the
Company and the Seller shall deliver or cause to be delivered to Buyer the
following, in form and substance reasonably satisfactory to Buyer and its
counsel:

 

(a) Transfer of Stock. Certificate(s) representing the Stock duly endorsed in
blank for transfer, which Stock shall constitute 100 percent of the issued and
outstanding capital stock of the Company on the Closing Date, along with any
assignments, stock powers or other transfer documents reasonably satisfactory to
Buyer and its counsel;

 

(b) Good Standing. A certificate of Good Standing of Seller, issued by the
secretary of state of the state of incorporation of Seller; and

 

(c) Other. Duly executed copies of all other deeds, endorsements, assignments,
consents and instruments as, in the opinion of Buyer's counsel, are necessary to
transfer the Stock and carry out all other transactions contemplated by this
Agreement.

 

8.3 Deliveries by Buyer. Prior to or on the Closing Date, Buyer shall deliver or
cause to be delivered to Seller the following, in form and substance reasonably
satisfactory to Seller:

 

(a) Closing Date Cash Payment. The Closing Date Cash Payment;

 

(b) Unit One. Certificates of Designation for Unit One, in the form attached
here to as Exhibit A, stamped with evidence that it has been filed with the
secretary of state of the State of Florida, along with a certificate evidencing
Unit One, issued to Seller at the Closing;

 

(c) Goldenshare. The Goldenshare, in the form of Exhibit B hereto, duly executed
by Buyer;

 

(d) Unit Two. Certificate of Designation for Unit Two, in the form attached here
to as Exhibit C, stamped with evidence that it has been filed with the secretary
of state of the State of Florida, along with a certificate evidencing Unit Two,
issued to Keith Houlihan at the Closing;

 

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(e) Buyer's Certificate. A certificate, dated as of the Closing Date, executed
by an officer of Buyer, which states that the warranties and representations
made by Buyer on the date that Agreement is executed continue to be true in all
material respects as of the Closing Date in accordance with Section 7.2(a); and
that Buyer shall have performed and complied, in all material respects, with all
covenants, agreements and conditions required by this Agreement to be performed
by it as of the Closing Date, in accordance with Section 7.2(b);

 

(f) Officer's Certificate. A certificate, dated as of the Closing Date, executed
by the Chief Executive Officer of Buyer, certifying that the resolutions, as
attached to such certificate, were duly adopted by Buyer's board of directors,
authorizing and approving the execution of this Agreement and the consummation
of the transactions contemplated hereby and that such resolutions remain in full
force and effect;

 

(g) Good Standing. A certificate of Good Standing of Buyer issued by the
secretary of state of Florida dated within five (5) days prior to the Closing
Date;

 

(h) Pay-Off Letters and UCC-3 Termination Statements. Pay-off letters from
lenders and related UCC-3 Termination Statements terminating any outstanding
Encumbrances on the Assets of Buyer, that will be terminated at the Closing;

 

(i) Conversion of Debt. Any outstanding debt of Buyer existing immediately prior
to the Closing shall be converted into Common Stock of the Buyer, which such
Common Stock shall be subject to a 180 day lockup period during which time sales
of such Common Stock are prohibited;

 

(j) Resignations. Resignations of all current directors and officers of Buyer,
except for Mr. David C. Langle, whom shall remain as the interim Chief Financial
Officer of Buyer; and

 

(k) Other. Duly executed copies of all other instruments and documents as, in
the reasonable opinion of Seller's counsel, are necessary to carry out all other
transactions contemplated by this Agreement.

 

ARTICLE IX

TERMINATION

 

9.1 Termination. This Agreement may be terminated by Seller or Buyer, if the
terminating party is not then in breach of any material obligation under this
Agreement (provided that Section 6.66 will continue in full force and effect),
on written notice to the other at any time prior to Closing as follows:

 

(a) by mutual consent of Buyer and the Seller;

 

(b) by Buyer, if there has been a material misrepresentation, material breach of
warranty or material breach of a covenant by the Seller (or by the Company in
the case of a covenant by the Seller to cause the Company to take or refrain
from taking an action) set forth in this Agreement, the Related Documents or the
Schedules and Exhibits hereto, which has not been cured or waived within five
(5) business days after written notification thereof by Buyer to the Seller;

 

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(c) by the Seller, if there has been a material misrepresentation, material
breach of warranty or material breach of a covenant by Buyer set forth in this
Agreement, the Related Documents, or the Schedules and Exhibits hereto, which
has not been cured or waived within five (5) business days after written
notification thereof by the Seller to Buyer;

 

(d) by either Buyer or the Seller by notice to the other party if the Closing
shall not have been consummated on or before [ ], 2015 (the "Final Termination
Date"), unless extended by written agreement of Buyer and the Seller.

 

9.2 Effect of Termination. In the event of termination of this Agreement as
provided in Section 9.1, this Agreement shall forthwith become of no further
force and effect, except that the covenants and agreements set forth in Sections
6.1, 6.6, 9.2, 9.3 and 11.9 shall survive such termination indefinitely, and
except that nothing in Section 9.1 or this Section 9.2 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 any party to compel
specific performance by another party of its obligations under this Agreement.

 

9.3 Specific Performance. The parties recognize that in the event the Buyer
should refuse to perform under the provisions of this Agreement, monetary
damages alone will not be adequate. Seller shall therefore be entitled, in
addition to any other remedies which may be available, including money damages,
to obtain specific performance of the terms of this Agreement. In the event of
any action to enforce this Agreement specifically, the Buyer hereby waives the
defense that there is an adequate remedy at law.

 

ARTICLE X

SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND INDEMNIFICATION

 

10.1 Survival. All representations and warranties contained in this Agreement or
in any Related Document delivered pursuant hereto shall survive the Closing and
shall be fully effective and enforceable for a period of two (2) yearsfollowing
the Closing Date (unless a different period is specifically assigned thereto in
this Agreement), but shall thereafter be of no further force or effect, except
as they relate to claims for indemnification timely made pursuant to this
Article X; provided, however, that the representations and warranties contained
in Section 3.1 ("No Violation; Authorization"), Section 3.4 ("Capitalization"),
Section 3.13 ("Employee Plans; ERISA"), Section 3.16 ("Taxes") and Section 3.22
("Environmental Claims") shall survive until 90 days after the expiration of the
applicable statute of limitations period. Any claim for indemnification asserted
in writing before the two year anniversary of the Closing Date or the other
applicable survival period set forth in this Section 10.1 shall survive until
resolved or judicially determined.

 

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10.2 Indemnification.

 

(a) Indemnification by Seller. Subject to the limitations and the provisions set
forth in this Agreement, Seller shall indemnify and hold harmless Buyer from and
against any and all loss, damage, expense (including court costs, amounts paid
in settlement, judgments, reasonable attorneys' fees or other expenses for
investigating and defending), suit, action, claim, liability or obligation
(collectively, "Damages") related to, caused by or arising from: (i) any
misrepresentation or breach of any representation or warranty contained herein
or in any Related Document by the Company or Seller; (ii) the failure to fulfill
any covenant or agreement contained herein or in any Related Document by the
Company or Seller; (iii) third party claims arising in breach of contract,
breach of warranty, product liability, unfair competition, personal or other
injury, tort or infringement of property rights of others or other third party
claims, in each case which claim is with respect to any and all activities of
the Company, Seller or any Affiliate thereof in connection with the conduct of
the Business on or prior to the Closing Date; and (iv) any and all actions,
suits, proceedings, claims, demands, assessments, judgments, costs and expenses,
including reasonable legal fees, in enforcing this indemnity against the Seller.

 

(b) Indemnification by Buyer. Subject to the limitations and provisions set
forth in this Agreement, Buyer shall indemnify and hold harmless the Seller
against any Damages related to, caused by or arising from: (i) any
misrepresentation, breach of any representation or warranty, or failure to
fulfill any covenant or agreement contained herein or in any Related Document by
Buyer; (ii) any and all liabilities and obligations of the Company, or arising
out of or related to the ownership of the Assets after the Closing Date; (iii)
third party claims arising in breach of contract, breach of warranty, product
liability, unfair competition, personal or other injury, tort or infringement of
property rights of others or other third party claims, in each case which claim
is with respect to any and all activities of the Company, Buyer or any Affiliate
thereof in connection with the conduct of the Business after the Closing Date;
and (iv) any and all actions, suits, proceedings, claims, demands, assessments,
judgments, costs and expenses, including reasonable legal fees, in enforcing
this indemnity against Buyer.

 

(c) Tax Damages. The calculation of, and the liability for, Damages related to
Taxes shall be governed solely by Section 6.5 and Sections 10.2, 10.3, 10.4,
10.5 and 10.6, but only to the extent such latter sections are not inconsistent
with specific provisions of Section 6.5.

 

10.3 Notice of Claims. Any party seeking indemnification shall give prompt
written notice to the indemnifying party of the facts and circumstances giving
rise to the claim (the "Notice") for which such indemnified party intends to
assert a right to indemnification under this Agreement ("Claims"). Failure to
give Notice shall not relieve any indemnifying party of any obligations which
the indemnifying party may have to the indemnified party under this Article X,
except to the extent that such failure has prejudiced the indemnifying party
under the provisions for indemnification contained in this Agreement. The
indemnifying party shall reimburse an indemnified party promptly after delivery
of a Notice certifying that the indemnified party has incurred Damages after
compliance with the terms of this Article X; provided, however, the party
receiving the Notice shall have the option to contest any such Damages or its
obligations to indemnify therefor in accordance with the terms of this
Agreement, at such party's own cost and expense. Such option shall be exercised
by the giving of notice by the exercising party to the other party within twenty
(20) days of receipt of a Notice. If the parties do not agree upon the amount of
Damages, the party seeking indemnification may seek appropriate legal remedy in
accordance with this Agreement.

 

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10.4 Limitations on Indemnification Obligation. The Seller shall not be liable
for indemnification to Buyer under Sections 10.2(a)(i), and Buyer shall not be
liable for indemnification to the Seller under Section 10.2(b)(i), under this
Agreement until the aggregate amount of all Claims of Buyer or the Seller under
Sections 10.2(a)(i) or 10.2(b)(i), as the case may be, exceeds Five Thousand
Dollars ($5,000) (the "Threshold Amount"), at which time Buyer or the Seller, as
the case may be, shall be entitled to recover the aggregate amount of all
Claims, including the Threshold Amount. Buyer shall provide the Seller, and the
Seller shall provide Buyer, with Notice of all Claims included in the Threshold
Amount. The maximum liability of Buyer or the Seller under this Agreement for
indemnification obligations under Sections 10.2(a)(i) or 10.2(b)(i), as the case
may be, shall not exceed the Purchase Price (such maximum liability amount, the
"Cap"). Notwithstanding the foregoing, the Threshold Amount and the Cap shall
not apply: (i) in the event of fraud or willful misrepresentation by the
indemnifying party; or (ii) to indemnification obligations for Damages in
connection with (x) a breach of the representations and warranties contained in
Sections 3.1 3.1 ("No Violation; Authorization"), 3.4 ("Capitalization"), 3.13
("Employee Plans; ERISA"), 3.16 ("Taxes") and Section 3.22 ("Environmental
Claims") or (y) a breach of any covenants of the Company or the Seller,
including, without limitation, 6.55 ("Tax Covenants") and 6.7 ("Confidentiality
Obligations"). For the sole purpose of calculating the amount of monetary
damages that Buyer may be entitled to under this Article X (as opposed to
determining if there has been a breach of a representation or warranty), the
representations and warranties of the Company and the Seller shall not be deemed
qualified by any references to materiality, Material Adverse Effect or
Knowledge. All indemnification payments under Section 10.2 shall be deemed
adjustments to the Purchase Price.

 

10.5 Assumption and Defense of Third-Party Action. If any Claim by Buyer or the
Seller hereunder arises out of a claim by a third party (a "Third-Party Claim"),
the indemnifying party shall have the right, at its own expense and upon written
notice to the indemnified party of its intent to do so within twenty (20) days
of the Notice, to participate in or assume control of the defense of the
Third-Party Claim, with counsel reasonably satisfactory to the indemnified
party, and to settle or compromise any such Third-Party Claim; provided,
however, that such settlement or compromise shall be effected only with the
consent of the indemnified party, which consent shall not be unreasonably
withheld. The indemnified party shall have the right to employ counsel to
represent it if, in its reasonable judgment, it is advisable for it to be
represented by separate counsel, and in that event the fees and expenses of such
separate counsel shall be paid by the indemnified party. The indemnified party
shall have the right to control the defense of any Third-Party Claim,
notwithstanding the indemnifying party's election to control the defense, if it
notifies the indemnifying party that it is assuming the defense of such Claim
and that the indemnifying party is relieved of its obligations to the claimant
with respect to such Third-Party Claim and to the indemnified party, whereupon
the indemnifying party shall be relieved of its obligations under this Article X
with respect to such Third-Party Claim. Except as provided in the preceding
sentences, if the indemnifying party does not elect to assume control of the
defense of any Third-Party Claim, the indemnifying party shall be bound by the
results obtained by the indemnified party with respect to such Third-Party
Claim. The indemnifying party agrees to render such assistance as may reasonably
be requested in order to insure the proper and adequate defense of any
Third-Party Claim. It is expressly agreed and understood that any defense by the
indemnifying party of any Third-Party Claims affecting or involving the Business
shall not be conducted in a manner which adversely affects or impairs the value
or usefulness of the Business, the Assets or the Stock.

 

10.6 Remedies Exclusive. The remedies provided in Section 10.2, subject to the
limitations set forth in this Article X, and except for the remedy of specific
performance where otherwise set forth in this Agreement, shall be the exclusive
remedy available for any breach of a representation, warranty, covenant, or
other agreement contained in this Agreement; provided, however, that nothing
herein shall limit the rights of the parties to seek any remedy based upon fraud
or criminal misconduct.

 

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ARTICLE XI

MISCELLANEOUS

 

11.1 Notices. All notices, demands and requests required or permitted to be
given under the provisions of this Agreement shall be (i) in writing, (ii)
delivered by personal delivery, or sent by commercial delivery service or
registered or certified mail, return receipt requested or sent by telecopy,
(iii) deemed to have been given on the date of personal delivery or the date set
forth in the records of the delivery service or on the return receipt or, in the
case of a telecopy, upon receipt thereof if received during normal business
hours and otherwise on the next business day and (iv) addressed as follows:

 

If to the Company or the Seller:

 

The Brace Shop, LLC

6560 W. Rogers Circle, Suite 19

Boca Raton, FL 33487

Attn.: President

Telecopy No.:

 

With a copy to:

 

Pryor Cashman LLP

7 Times Square

New York, NY 10036

Attn.: M. Ali Panjwani, Esq.

Telecopy No.: (212) 798-6319

 

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If to Buyer:

 

Sanomedics, Inc.

444 Brickell Avenue, Suite 415

Miami, FL 33131

Attn.: Chief Executive Officer

Telecopy No.:

 

With a copy to:

 

[__________]

 

or to any such other or additional persons and addresses as the parties may from
time to time designate in a writing delivered in accordance with this Section
11.1.

 

11.2 Benefit and Binding Effect. Neither Buyer nor the Seller may assign this
Agreement without the prior written consent of the other party. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. Except as specifically set forth or
referred to herein, nothing herein expressed or implied is intend-ed or shall be
construed to confer upon or give to any Person other than the parties hereto and
their respective successors or assigns any rights or remedies under or by reason
of this Agreement.

 

11.3 Headings. The headings herein are included for ease of reference only and
shall not control or affect the meaning or construction of the provisions of
this Agreement.

 

11.4 Gender and Number. Words used herein, regardless of the gender and number
specifically used, shall be deemed and construed to include any other gender,
masculine, feminine or neuter, and any other number, singular or plural, as the
context requires.

 

11.5 Counterparts. This Agreement may be signed in any number of counterparts
with the same effect as if the signature on each such counterpart were upon the
same instrument.

 

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11.6 Entire Agreement. This Agreement, all Schedules and Exhibits hereto and all
documents, writings, instruments and certificates delivered or to be delivered
by the parties pursuant hereto collectively represent the sole and entire
understanding and agreement between Buyer and Seller with respect to the subject
matter hereof. All Schedules and Exhibits attached to this Agreement shall be
deemed part of this Agreement and incorporated herein, as if fully set forth
herein. This Agreement supersedes all prior negotiations and understandings
between Buyer and Seller whatsoever with respect to the subject matter hereof,
and all letters of intent and other writings relating to such negotiations and
understandings.

 

11.7 Amendment. This Agreement shall not be amended, supplemented or modified
except by an agreement in writing which makes specific reference to this
Agreement or an agreement delivered pursuant hereto, as the case may be, and
which is signed by the party against which enforce-ment of any such amendment,
supplement or modification is sought.

 

11.8 Severability. If in any jurisdiction any provision of this Agreement or its
application to any party or circumstance is restricted, prohibited or held
unenforceable, such provision shall, as to such jurisdiction, be ineffective
only to the extent of the restriction, prohibition or unenforceability without
invalidating the remaining provisions hereof and without affecting the validity
or enforceability of such provision in any other jurisdiction or its application
to other parties or circumstances. In addition, if any one or more of the
provisions contained in this Agreement shall for any reason in any jurisdiction
be held excessively broad as to time, duration, geographical scope, activity or
subject, it shall be construed, by limiting and reducing it, so as to be
enforceable to the extent compatible with the applicable Law of such
jurisdiction as it shall then appear.

 

11.9 Governing Law; Consent to Jurisdiction.

 

(a) The parties acknowledge and agree that this Agreement constitutes a contract
pertaining to a transaction covering in the aggregate not less than $1,000,000
and that their choice of law and choice of jurisdiction specified below have
been made pursuant to and in accordance with Sections 5-1401 and 5-1402,
respectively, of the New York General Obligations Law. Accordingly, the parties
acknowledge and agree that this Agreement shall be governed by the laws of the
State of New York, as to all matters including matters of validity,
construction, effect, performance and liability, without consideration of
conflicts of laws provisions contained therein, and any New York State or
Federal Court sitting in New York County shall have exclusive jurisdiction of
all disputes with respect to an alleged breach of any representation, warranty,
agreement or covenant of this Agreement, including, but not limited to, any
dispute relating to the construction or interpretation of the rights and
obligations of any party.

 

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(b) The parties hereby irrevocably and unconditionally submit to the exclusive
jurisdiction of any New York State or Federal court sitting in New York County
in any action or proceeding commenced by the other party or to which such party
is a party arising out of or relating to this Agreement or any Related Document
or any transaction contemplated hereby or thereby. The parties hereby
irrevocably waive, to the fullest extent they may effectively do so under
applicable Law, the defense of an inconvenient forum to the maintenance of such
action or proceeding. The parties also irrevocably and unconditionally consent
to the service of any and all process in any such action or proceeding by the
mailing of copies of such process by overnight courier to such party and its
counsel at their respective addresses specified in Section 11.1. The parties
further irrevocably and unconditionally agree that a final judgment in any such
action or proceeding (after exhaustion of all appeals or expiration of the time
for appeal) shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law.

 

11.10 Third Party Beneficiaries. This Agreement is solely for the benefit of the
parties hereto and no provision of this Agreement shall be deemed to confer upon
third parties, either express or implied, any remedy, claim, liability,
reimbursement, cause of action or other right.

 

11.11 Further Assurances and Consents. From time to time after the Closing Date,
without further consideration, the Seller and Buyer shall use reasonable
efforts, to cooperate with the other party or parties to obtain any necessary
third party consents or approvals to the assignment to Buyer of any contracts,
leases, licenses and permits included in the Assets.

 

[remainder of page intentionally left blank; signature page follows]

 

  38

 

  

This Agreement has been executed by the parties hereto as of the date first
above written.

 

 

BUYER:

 

SANOMEDICS, INC.

 

 

 

 

 

By:

/s/ Keith Houlihan

 

 

Name:

Keith Houlihan

 

 

Title:

President

 

 

 

 

 

 

 

 

 

 

COMPANY:

 

THE BRACE SHOP, LLC

 

 

 

 

 

 

By:

/s/ Lynne Shapiro

 

 

Name:

Lynne Shapiro

 

 

Title:

CEO

 

 

 

 

 

 

 

 

 

 

SELLER:

 

 

 

 

 

 

By:

/s/ Lynne Shapiro

 

 

 

Lynne Shapiro

 

 

 

 

 

 

 

39

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