July
8, 2016


 


PRIVATE
& CONFIDENTIAL


 





RIO
GRANDE NEUROSCIENCES, INC. (the “Company”)


Chairman
and CEO


6401 Richards Ave.


Santa
Fe, NM 87508





Attn.:
Mr. Steven Gluckstern, Chairman & CEO


 


Subject:
Purchase of the Stock of Rio Grande Neurosciences, Inc.


 


Dear
Steven,


 


This
binding letter agreement (“LOI”), which has been approved by the Boards of Directors of each of the parties hereto
and is subject only to completion of Definitive Documents and required Shareholder approvals outlines the intentions of Endonovo
Therapeutics, Inc. (“Buyer”) with respect to the purchase (“Transaction”) of all of the outstanding Common
and Preferred Shares (the “Stock”) of the Company on terms as follows:


 


1.Structure
of Transaction. The Buyer shall acquire all of the outstanding Stock of the Company from the holders thereof (the “Sellers”).


 


2.Purchase
Price. The aggregate purchase price for the Stock, described above shall be notionally $21,500,000 (Twenty One Million,
Five Hundred Thousand Dollars). Buyer will cooperate with Sellers where possible to minimize Sellers’ tax liabilities.


 


		3.	Payment
                                         of Purchase Price. The Purchase Price shall include: 



 


	 	i.	    CASH:
	 	 	 
	 	 	$1,000,000
    paid in Fed funds via wire transfer at Closing to be distributed among the Sellers pro rata, less any Holdback Amount negotiated
    between the parties as a result of the discovery of any potential Seller liability per section 1 of this Agreement.
	 	 	 
	 	 	$500,000
    paid in Fed Funds via wire transfer at Closing representing full payment on a new Note of the Buyer in favor of the Sellers
    to beissued simultaneously with the signing of this LOI. In the event a Transaction is not consummated for any reason other
    than the Seller’s inability to perform, this Note will become due and payable in full on January 8, 2017 and can be
    paid in cash or freely tradeable shares (valued with a 75% of the average per share price for the 10 business days at the
    Buyer’s discretion.)


 




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	 		Cash is to be used by Seller to settle all outstanding payables of the Company; any excess to go towards the retirement of outstanding Senior Secured debt of the Company.
	 	 	 	 
	 	 	a.
    	Holdback Amount, if applicable, payable at the earlier of either a) the conclusion of the negotiated term of such amount,
    or b) the satisfaction or elimination of the related liability for which the Holdback Amount was withheld.
	 	 	 	 
	 	ii.	MARKETABLE SECURITIES (“Securities”) to be distributed among the Sellers pro rata:
	 	 	 
	 	 	100,000,000 (One Hundred Million) Common Shares of Stock (deemed value of $15,000,000) of Endonovo Therapeutics Inc. (“Shares”).
	 	 	 
	 	 	50,000,000 (Fifty Million) Common Stock Warrants of Endonovo Therapeutics (deemed value of $5,000,000), based on the value of the shares at the time of Closing. Said warrants will be exercisable at the lesser of $0.50 or 87.5% of the average per share price for the 10 business days prior to and including the date of Closing on a “cashless” basis into Shares of the Buyer. The warrants will carry the usual and customary provisions for transactions of this type but, in particular, include the following provisions and conditions:
	 	 	 	 
	 		a.
    	Warrants
    will be exercisable for a period of 5 years from Closing
	 	 	 	 
	 		b.	50%
    of the warrants cannot be exercised for at least one year after Closing, and the remaining warrants cannot be exercised for
    at least 2 years.


 


Leak
out: Shares shall be subject to a limitation of 10% of the trading volume on any given day and no sales shall be made after 3:30
PM on any day. If requested, Seller will provide Buyer with copies of your trade confirmations. Seller broker will acknowledge
that it is aware of this agreement.


 


5.
Audit. Buyer understands that Sellers, at their sole expense, have completed a certified GAAP audit of the Company’s
operations for calendar years 2014 and 2015, said audited financial statements having been prepared by a licensed and reputable
accounting firm. Sellers have furnished or shall furnish the results of said audit to the Buyer at the time of the acceptance
of this LOI, or as soon thereafter as possible. Seller shall arrange with the auditor that it will sign all necessary consents
for Buyer’sfilings with the Securities and Exchange Commission for fees of no more than $1,000 per consent.


 




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6.Non-Compete
Agreements. As a condition to the closing of the Transaction, Sellers shall enter into a reasonable and customary five
(5) year noncompete agreements covering the United States, Canada and any other jurisdiction that Buyer finds during its due diligence
that Seller either operates in or may operate in the future with respect to the Business.


 


7.Employee,
Board and Other Arrangements. A condition to the closing of the Transaction is Buyer’s ability to enter into an
employment contract with Steven Gluckstern as Executive Chairman of the Board for a term of three years, at $250,000 and participation
in the Endonovo contemplated employee stock option program to be issued annually in an amount no less than those issued to the
CEO. Additionally, through due diligence, Buyer will identify certain current employees of the Business to be designated by the
Buyer as “key” for similar positions on similar terms of employment and/or assume current employment contracts. Buyer
and Seller shall agree on timing and content of disclosure of the Transaction to employees of the Company.


 


The
Buyer shall adopt an Employee Stock Option Plan at Closing representing 15% of the then Outstanding Shares.


 


At
the Closing, the Board of Directors of the Buyer shall be increased to a minimum of seven individuals and shall include: Alan
Collier, Steven Gluckstern, Stephen Juelsgaard and John Wilkerson subject to approval of Buyer which will not be unreasonable
withheld. The remaining three positions to be appointed by the Buyer subject to approval, not to be unreasonably withheld, by
the Seller. Buyer shall provide a list of its nominees prior to closing and Sellers shall approve such list.


 


Research,
Manufacturing and Operational headquarters of the Buyer shall be established/maintained in Santa Fe, NM (existing headquarters
of the Seller). Location of the Corporate headquarters to be determined.


 


8.Further
Conditions to Closing. Closing of the Transaction is also subject to the following conditions:


 


	 	i.	The
    Assets shall be free and clear of all liens and encumbrances and Buyer shall receive good and marketable title thereto; Buyer
    acknowledges 10% Gross Profit Royalty Agreement (obligation) to be put in place by the Company and will be assumed by the
    Buyer.
	 	 	 
	 	ii.	The
    financial condition of the Seller, including, but not limited to, assets and liabilities of the Seller, shall be as set forth
    in the financial statements dated December 31, 2015 except for changes arising as a result of the conduct of the Company’s
    business in its ordinary course since December 31, 2015and consistent with its historical practices. Seller shall not give
    any new or special discounts or pricing on inventory or accounts receivable without prior written consent of Buyer. Buyer
    acknowledges the $8,500,000 Secured Senior Debt that will be put in place by the Company and will be assumed by the Buyer.


 




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	 	iii.	All
    taxes due and payable by the Company have been paid at expense of the Seller, without regard to any deferral by reason of
    extension, payment programs, or any other reason, shall have been paid in full;
	 	 	 
	 	iv.	There
    shall have been no material changes, events or developments adversely affecting the Company or the Buyer;
	 	 	 
	 	v.	Buyer
    shall have received financing under terms acceptable to both Buyer and Seller to complete the Transaction.
	 	 	 
	 	vi.	All
    state, local and other governmental approvals and all other consents or approvals of any third parties necessary to complete
    the Transaction shall be have been received; and
	 	 	 
	 	vii.	Seller
    and Company shall provide usual and customary representations, warranties, covenants and indemnification of obligations (to
    be defined in the Asset Purchase Agreement).
	 	 	 
	 	viii.	The
    parties hereto shall disclose to each other any existing, pending or threatened litigation that the Company or Buyer is involved
    in, including but not limited to by customers, vendors, employees and third parties, as well as any existing, pending, or
    threatened inquiry, investigation or action from any state or federal government authority as any such actions affect the
    amount of Seller liability (hereinafter referred as “Known Liabilities”). Said disclosure shall include copies
    of all correspondence, sent and received, whether by letter or electronically, and a status report of each issue.
	 	 	 
	 	ix.	All
    receivables shall be under 45 days from invoice date and collectible. No receivable account debtor shall have in excess of
    20% of the entire account over 90 days from invoice date owing to the Company. All accounts payable shall be under 45 days
    from invoice date. All inventory shall be less than 180 days old. Any amounts not consistent with this Paragraph 6(ix) shall
    reduce the amount of the cash per Paragraph 2(a) and the related total price.


 


9.
 Due Diligence. The Buyer’s and Sellers’ (the “Parties”) willingness to proceed with this transaction
is subject only to confirmatory business, financial and legal due diligence to be completed within 14 days of the signing of this
LOI. Parties agree to cooperate with each other in a prompt and timely fashion in connection with the completion of the due diligence
process. Parties shall permit representatives of the each to have full access at all reasonable times, and in a manner so as not
to interfere with the normal business operations of the Parties, to all customers, suppliers, premises, properties, personnel,
books, records, contracts and documents of or pertaining to Parties or the Business of the Parties. Such representatives shall
be permitted to make copies and extracts from such documents.





 


10. Conduct
of Business. Prior to closing of the Transaction, the Parties shall:


 


	 	i.	Maintain
    the operations and goodwill of their respective businesses and shall retain the services of present officers and employees,
    and continue their relationships with persons having business dealings with the Parties;
	 	 	 
	 	ii.	maintain
    all of the Assets in their current condition, ordinary wear and tear excepted, and insurance on all of the Assets in such
    amounts and of such kinds comparable to that in effect on the date of this letter; and
	 	 	 
	 	iii.	maintain
    the books, accounts and records of Seller consistent with past practices, including recognition of revenues and expenses,
    continue to collect accounts receivable and pay accounts payable utilizing normal procedures and without discontinuing or
    accelerating payment of such accounts and comply with all contractual and other obligations applicable to the Seller;
	 	 	 
	 	iv.	not
    make any change to, or otherwise amend in any way, the contracts with, salaries, wages or other compensation of, any officer,
    director, employee, agent or other similar representative of the Parties (including any increase in any benefits or benefit
    plan costs or any change in any bonus, insurance, pension, compensation or other benefit plan) Notwithstanding anything to
    the contrary, the existing management team of the Buyer will be entering into new contracts with Buyer which will include
    severance packages, IP bonuses, earn outs, and royalties from existing IP.;
	 	 	 
	 	v.	Not
    hire any officer, director, employee, agent or other similar representative except non-management level employees hired in
    the normal course of business;
	 	 	 
	 	vi.	Not
    incur any indebtedness for borrowed money and not pledge, grant liens or security interests in any of the Assets;
	 	 	 
	 	vii.	Not
    sell, transfer or dispose of any Assets except for sales of equipment in the ordinary course of business.


 


11.
No Solicitation. Because this is a binding LOI Seller and the Company shall not, nor shall the shareholders, directors,
officers, employees, shareholders, agents or representatives of the Company encourage, facilitate, solicit, authorize the solicitation
of, or enter into any discussion with any third party (including the provision of any information to a third party) concerning
any offer or possible offer from any such third party or enter into any agreement or understanding of any kind to purchase, lease,
or otherwise acquire all or a substantial portion of the Assets, the business or any capital stock of the Seller. . The Definitive
Purchase and Sale Agreement shall be drafted by Buyer’s attorneys.


 




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12.Additional
Financing. Through Aegis Capital Corp., upon closing, the Buyer will file a S-1 to raise a minimum of $10,000,000 of gross
proceeds with the majority thereof to be applied for working capital and research and development s determined by the Buyer’s
board of directors. Additionally, Buyer, post Closing, will utilize its existing financing instruments for working capital, corporate
awareness and development of existing IP (initially $250,000) and newly acquired IP.


 


13.Expenses.
The Buyer and Sellers each shall be responsible for the payment of its own expenses and professional fees incurred in
connection with the negotiation and consummation for the proposed transaction described herein.


 


14.Confidentiality.
No disclosure of the proposed transaction terms described herein (other than to the advisors and consultants of the Buyer and
Sellers) shall be made without the approval of both parties, except as required by law. As this is a binding LOI, Buyer
will be required to file a current report on Form 8-K with the Securities and Exchange Commission.


 


15.Broker
Fee. The Buyer acknowledges that it shall be solely responsible for any fees or expenses due or payable to Aegis Capital
Corp.


 


16.Closing
Date. Subject to Sellers’ performance of its obligations set forth in this letter and Buyer’s ability to undertake
and complete such actions as are necessary to effect the Transactions contemplated by this letter, Buyer shall close the funding
of the Transaction on or before September 15, 2016.


 


17.Miscellaneous.
This Agreement shall be construed under the laws of the State of California in the venue of the County of Los Angeles. In
case of a dispute the prevailing party shall be entitled to all of its reasonable legal fees and costs. All disputes shall be
resolved through binding arbitration. All obligations of Buyer shall be the sole responsibility of the newly formed
acquisition entity. This Agreement contains the entire agreement between the parties and supersedes all prior and
contemporaneous agreements, representations and understandings (either oral or written) of the parties. No modification,
amendment, supplement or waiver of any of the provisions of this Agreement shall be effective unless in writing specifically
referring hereto and executed by both parties.


 


18.Voting
Agreement. Alan Collier and Steven Gluckstern each agree to vote their respective shares in the Buyer and Seller in favor
of the Transaction. Additionally, Collier and Gluckstern agree to enter into a Voting Trust upon Closing which, among other things,
will cover voting for the members of the Buyer’s Board of Directors.


 


If
the above accurately sets forth your understanding of our mutual intentions, please so indicate by signing a copy of this letter
agreement in the space provided below and returning it to the Buyer no later than July 8, 2016


 




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Very
truly yours,


 


	ENDONOVO
    THERAPEUTICS, INC.	 
	 	 	 
	 		 
	By:	Alan
    Collier, Chairman, Sole Director and CEO	 


 


AGREED
& ACCEPTED:


 


this
day of _______________, 2016


 


	RIO
    GRANDE NEUROSCIENCES, INC.	 
	 	 
	 	 	 
	By:	Steven
    Gluckstern, Chairman and CEO	 


 




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