Document:

Exhibit 10.3

 

REGISTRATION
RIGHTS AGREEMENT

 

This
Registration Rights Agreement (the “Agreement”) is made and entered into as of this __ day of November, 2013 by and
among Lustros, Inc., a Utah corporation (the “Company”), and the “Investors” named in that certain Purchase
Agreement, of even date herewith, by and among the Company and the Investors (the “Purchase Agreement”).  Capitalized
terms used herein have the respective meanings ascribed thereto in the Purchase Agreement unless otherwise defined herein.

 

The
parties hereby agree as follows:

 

1.      Certain
Definitions.

 

As
used in this Agreement, the following terms shall have the following meanings:

 

“Common
Stock” means the Company’s common stock, par value $0.001 per share, and any securities into which such shares
may hereinafter be reclassified.

 

“Investors”
means the Investors identified in the Purchase Agreement and any Affiliate or permitted transferee of any Investor who is a subsequent
holder of any Registrable Securities.

 

“Prospectus”
means (i) the prospectus included in any Registration Statement, as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable Securities covered by such Registration Statement and by
all other amendments and supplements to the prospectus, including post-effective amendments and all material incorporated by reference
in such prospectus, and (ii) any “free writing prospectus” as defined in Rule 405 under the 1933 Act.

 

“Register,”
“registered” and “registration” refer to a registration made by preparing and filing a Registration
Statement or similar document in compliance with the 1933 Act (as defined below), and the declaration or ordering of effectiveness
of such Registration Statement or document.

 

“Registrable
Securities” means (i) the Shares and (ii) up to 1,875,000 shares of Company common stock underlying the warrants to be
issued under the Purchase Agreement (“Warrant Shares”, and with the Shares, the “Registrable Securities”),
and (iii) any other securities issued or issuable with respect to or in exchange for Registrable Securities, whether by merger,
charter amendment or otherwise; provided, that, a security shall cease to be a Registrable Security upon (A) sale pursuant to a
Registration Statement or Rule 144 under the 1933 Act, or (B) such security becoming eligible for sale without restriction by the
Investors pursuant to Rule 144.

 

“Registration
Statement” means any registration statement of the Company filed under the 1933 Act that covers the resale of any of
the Registrable Securities pursuant to the provisions of this Agreement, amendments and supplements to such Registration Statement,
including post-effective amendments, all exhibits and all material incorporated by reference in such Registration Statement.

 

“Required
Investors” means the Investors holding a majority of the Registrable Securities.

 

“SEC”
means the U.S. Securities and Exchange Commission.

 

“Shares”
means the shares of Common Stock issued pursuant to the Purchase Agreement 
and ____ shares of the Common Stock of the Company beneficially owned by other stockholders of the Company.

 

“1933
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

“1934
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

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2.      Registration.

 

(a)          Registration
Statements.

 

(i)           Promptly
following the closing of the purchase and sale of the securities contemplated by the Purchase Agreement (the “Closing Date”)
but no later than thirty (30) days after the Closing Date (the “Filing Deadline”), the Company shall prepare and file
with the SEC one Registration Statement on Form S-1 (or, if Form S-1 is not then available to the Company, on such form of registration
statement as is then available to effect a registration for resale of the Registrable Securities), covering the resale of the Registrable
Securities.  Subject to any SEC comments, such Registration Statement shall include the plan of distribution attached
hereto as Exhibit A; provided, however, that no Investor shall be named as an “underwriter” in the Registration
Statement without the Investor’s prior written consent.  Such Registration Statement also shall cover, to the extent
allowable under the 1933 Act and the rules promulgated thereunder (including Rule 416), such indeterminate number of additional
shares of Common Stock resulting from stock splits, stock dividends or similar transactions with respect to the Registrable Securities.  Other
than the Shares, such Registration Statement shall not include any shares of Common Stock or other securities for the account of
any other holder without the prior written consent of the Required Investors.  The Registration Statement (and each amendment
or supplement thereto, and each request for acceleration of effectiveness thereof) shall be provided in accordance with Section
3(c) to the Investors and their counsel prior to its filing or other submission.  

 

(b)          Expenses.  The
Company will pay all expenses associated with each registration, including filing and printing fees, the Company’s counsel
and accounting fees and expenses, costs associated with clearing the Registrable Securities for sale under applicable state securities
laws, listing fees, reasonable fees and expenses of one counsel to the Investors and the Investors’ reasonable expenses in
connection with the registration, but excluding discounts, commissions, fees of underwriters, selling brokers, dealer managers
or similar securities industry professionals with respect to the Registrable Securities being sold.

 

(c)          Effectiveness.

 

(i)           The
Company shall use commercially reasonable efforts to have the Registration Statement declared effective as soon as practicable.  The
Company shall notify the Investors by facsimile or e-mail as promptly as practicable, and in any event, within twenty-four (24)
hours, after any Registration Statement is declared effective and shall simultaneously provide the Investors with copies of any
related Prospectus to be used in connection with the sale or other disposition of the securities covered thereby.   

 

(ii)          For
not more than thirty (30) consecutive days or for a total of not more than sixty (60) days in any twelve (12) month period, the
Company may suspend the use of any Prospectus included in any Registration Statement contemplated by this Section in the event
that the Company determines in good faith that such suspension is necessary to (A) delay the disclosure of material non-public
information concerning the Company, the disclosure of which at the time is not, in the good faith opinion of the Company, in the
best interests of the Company or (B) amend or supplement the affected Registration Statement or the related Prospectus so that
such Registration Statement or Prospectus shall not include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein, in the case of the Prospectus in light of the circumstances
under which they were made, not misleading (an “Allowed Delay”); provided, that the Company shall promptly (a) notify
each Investor in writing of the commencement of and the reasons for an Allowed Delay, but shall not (without the prior written
consent of an Investor) disclose to such Investor any material non-public information giving rise to an Allowed Delay, (b) advise
the Investors in writing to cease all sales under the Registration Statement until the end of the Allowed Delay and (c) use commercially
reasonable efforts to terminate an Allowed Delay as promptly as practicable.

 

 

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(d)          Rule
415; Cutback  If at any time the SEC takes the position that the offering of some or all of the Registrable Securities
in a Registration Statement is not eligible to be made on a delayed or continuous basis under the provisions of Rule 415 under
the 1933 Act or requires any Investor to be named as an “underwriter”, the Company shall use its best efforts to persuade
the SEC that the offering contemplated by the Registration Statement is a valid secondary offering and not an offering “by
or on behalf of the issuer” as defined in Rule 415 and that none of the Investors is an “underwriter”.  The
Investors shall have the right to participate or have their counsel participate in any meetings or discussions with the SEC regarding
the SEC’s position and to comment or have their counsel comment on any written submission made to the SEC with respect thereto.  No
such written submission shall be made to the SEC to which the Investors’ counsel reasonably objects.  In the event
that, despite the Company’s best efforts and compliance with the terms of this Section 2(d), the SEC refuses to alter its
position, the Company shall (i) remove from the Registration Statement such portion of the Registrable Securities (the “Cut
Back Shares”) and/or (ii) agree to such restrictions and limitations on the registration and resale of the Registrable Securities
as the SEC may require to assure the Company’s compliance with the requirements of Rule 415 (collectively, the “SEC
Restrictions”); provided, however, that the Company shall not agree to name any Investor as an “underwriter”
in such Registration Statement without the prior written consent of such Investor.  Any cut-back imposed on the Investors
pursuant to this Section 2(d) shall be allocated among the Investors on a pro rata basis, unless the SEC Restrictions otherwise
require or provide or the Investors otherwise agree.  No liquidated damages shall accrue as to any Cut Back Shares until
such date as the Company is able to effect the registration of such Cut Back Shares in accordance with any SEC Restrictions (such
date, the “Restriction Termination Date” of such Cut Back Shares).  From and after the Restriction Termination
Date applicable to any Cut Back Shares, all of the provisions of this Section 2 (including the liquidated damages provisions) shall
again be applicable to such Cut Back Shares; provided, however, that (i) the Filing Deadline and/or the Qualification Deadline,
as applicable, for the Registration Statement including such Cut Back Shares shall be ten (10) Business Days after such Restriction
Termination Date, and (ii) the date by which the Company is required to obtain effectiveness with respect to such Cut Back Shares
under Section 2(c) shall be the 90th day immediately after the Restriction Termination Date .

 

(e)          If
a Registration Event occurs, then the Company will make payments to each Investor as a special dividend, and not as a penalty,
at a rate equal to 1% of the original issuance price per share of Registrable Securities then held by each Investor, for each calendar
month of the Registration Default Period (pro-rated for any period less than thirty (30) days), up to a maximum of 12% of the total
purchase price of the Shares purchased by such Investor in the Offering; provided, however, if a Registration Event
occurs (or is continuing) on a date more than six months after a Holder acquired the Registrable Securities (and thus the six month
holding period under Rule 144(d) of the Act has elapsed), special dividends shall be paid only with respect to that portion of
the Investor’s Registrable Securities that cannot then be immediately resold in reliance upon Rule 144 of the Act. Each such
payment shall be due and payable within ten days after the end of each calendar month of the Registration Default Period until
the termination of the Registration Default Period and within ten days after such termination. Such payments shall constitute the
Investor’s exclusive remedy for such events. The Registration Default Period shall terminate upon (i) the filing of the Registration
Statement in the case of clause (a) of the definition of Registration Event, (ii) the ability of sales to be made pursuant to the
Registration Statement after the Effectiveness Date in the case of clause (b) of the definition of Registration Event,  (iii)
the ability of the Holder to effect sales pursuant to the Registration Statement in the case of clause (c) of the definition of
Registration Event, (iv) the listing or inclusion and/or trading of the Common Stock on an Approved Market, as the case may be,
in the case of clause (c) of the definition of Registration Event, and (v) in the case of the events described in clauses (b) and
(c) of the definition of Registration Event, the earlier termination of the Registration Default Period. The amounts payable as
special dividends pursuant to this paragraph shall be payable in lawful money of the United States. Amounts payable as special
dividends to each Investor hereunder with respect to each share of Registrable Securities shall cease when any Investor no longer
holds such shares of Registrable Securities or such shares of Registrable Securities can be immediately sold by the Investor in
reliance on Rule 144(b)(i) of the Act. The Company may require the Investor to furnish to the Company a certified statement as
to the number of shares of Common Stock beneficially owned by the Investor and, if required by the Commission, the natural persons
thereof that have voting and dispositive control over the Shares.

 

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“Approved Market”
means the FINRA Over-The-Counter Bulletin Board, the Nasdaq National Market, the Nasdaq Capital Market, the New York Stock Exchange,
Inc. , the NYSE MKT, and the OTC Markets OTCQB and the OTCQX.

 

“Effectiveness
Date” means, with respect to the initial Registration Statement required to be filed hereunder, the 150th
calendar day following the Filing Date.

 

“Registration
Default Period” means the period following the Registration Default Date during which any Registration Event occurs and
is continuing.

 

“Registration
Event” means the occurrence of any of the following events: (a) the Company fails to file with the Securities and Exchange
Commission the Registration Statement on or before the Registration Filing Date; (b) after the Effectiveness
Date, sales cannot be made pursuant to the Registration Statement for any reason (including without limitation by reason
of a stop order, or the Company’s failure to update the Registration Statement) except as excused pursuant to Section 3(a)
hereof and except due to a requirement to sticker a prospectus and/or file a post-effective amendment thereto, which time period
may not exceed 45 trading days during any calendar year; or (c) the Common Stock generally or the Registrable Securities specifically
are not listed or included for quotation on an Approved Market, or trading of the Common Stock is suspended
or halted on any Approved Market, which at the time constitutes the principal market for the Common Stock,
for more than two full, consecutive trading days; provided, however, a Registration Event shall not be deemed to
occur if all or substantially all trading in equity securities (including the Common Stock) is suspended or halted on an Approved
Market for any length of time.

 

“Registration
Filing Date” means the date which is forty-five (45) days from the date of the final closing date in connection with
the Offering.

 

3.      Company
Obligations.  The Company will use commercially reasonable efforts to effect the registration of the Registrable
Securities in accordance with the terms hereof, and pursuant thereto the Company will, as expeditiously as possible:

 

(a)           use
commercially reasonable efforts to cause such Registration Statement to become effective and to remain continuously effective for
a period that will terminate upon the earlier of (i) the date on which all Registrable Securities covered by such Registration
Statement as amended from time to time, have been sold, and (ii) the date on which all Registrable Securities covered by such Registration
Statement may be sold pursuant to Rule 144, subject to any restrictions under Rule 144 (the “Effectiveness Period”)
and advise the Investors in writing when the Effectiveness Period has expired;

 

(b)          prepare
and file with the SEC such amendments and post-effective amendments to the Registration Statement and the Prospectus as may be
necessary to keep the Registration Statement effective for the Effectiveness Period and to comply with the provisions of the 1933
Act and the 1934 Act with respect to the distribution of all of the Registrable Securities covered thereby;

 

(c)           provide
copies to and permit counsel designated by the Investors to review each Registration Statement and all amendments and supplements
thereto no fewer than seven (7) days prior to their filing with the SEC and not file any document to which such counsel reasonably
objects;

 

 

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(d)          furnish
to the Investors and their legal counsel (i) promptly after the same is prepared and publicly distributed, filed with the SEC,
or received by the Company (but not later than two (2) Business Days after the filing date, receipt date or sending date, as the
case may be) one (1) copy of any Registration Statement and any amendment thereto, each preliminary prospectus and Prospectus and
each amendment or supplement thereto, and each letter written by or on behalf of the Company to the SEC or the staff of the SEC,
and each item of correspondence from the SEC or the staff of the SEC, in each case relating to such Registration Statement (other
than any portion of any thereof which contains information for which the Company has sought confidential treatment), and (ii) such
number of copies of a Prospectus, including a preliminary prospectus, and all amendments and supplements thereto and such other
documents as each Investor may reasonably request in order to facilitate the disposition of the Registrable Securities owned by
such Investor that are covered by the related Registration Statement;

 

(e)          use
commercially reasonable efforts to (i) prevent the issuance of any stop order or other suspension of effectiveness and, (ii) if
such order is issued, obtain the withdrawal of any such order at the earliest possible moment;

 

(f)            prior
to any public offering of Registrable Securities, use commercially reasonable efforts to register or qualify or cooperate with
the Investors and their counsel in connection with the registration or qualification of such Registrable Securities for offer and
sale under the securities or blue sky laws of such jurisdictions requested by the Investors and do any and all other commercially
reasonable acts or things necessary or advisable to enable the distribution in such jurisdictions of the Registrable Securities
covered by the Registration Statement; provided, however, that the Company shall not be required in connection therewith
or as a condition thereto to (i) qualify to do business in any jurisdiction where it would not otherwise be required to qualify
but for this Section 3(f), (ii) subject itself to general taxation in any jurisdiction where it would not otherwise be so subject
but for this Section 3(f), or (iii) file a general consent to service of process in any such jurisdiction;

 

(g)          use
commercially reasonable efforts to cause all Registrable Securities covered by a Registration Statement to be listed on each securities
exchange, interdealer quotation system or other market on which similar securities issued by the Company are then listed;

 

(h)          immediately
notify the Investors, at any time prior to the end of the Effectiveness Period, upon discovery that, or upon the happening of any
event as a result of which, the Prospectus includes an untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing,
and promptly prepare, file with the SEC and furnish to such holder a supplement to or an amendment of such Prospectus as may be
necessary so that such Prospectus shall not include an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing; and

 

(i)           otherwise
use commercially reasonable efforts to comply with all applicable rules and regulations of the SEC under the 1933 Act and the 1934
Act, including, without limitation, Rule 172 under the 1933 Act, file any final Prospectus, including any supplement or amendment
thereof, with the SEC pursuant to Rule 424 under the 1933 Act, promptly inform the Investors in writing if, at any time during
the Effectiveness Period, the Company does not satisfy the conditions specified in Rule 172 and, as a result thereof, the Investors
are required to deliver a Prospectus in connection with any disposition of Registrable Securities and take such other actions as
may be reasonably necessary to facilitate the registration of the Registrable Securities hereunder; and make available to its security
holders, as soon as reasonably practicable, but not later than the Availability Date (as defined below), an earnings statement
covering a period of at least twelve (12) months, beginning after the effective date of each Registration Statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the 1933 Act, including Rule 158 promulgated thereunder (for the purpose
of this subsection 3(i), “Availability Date” means the 45th day following the end of the fourth fiscal quarter that
includes the effective date of such Registration Statement, except that, if such fourth fiscal quarter is the last quarter of the
Company’s fiscal year, “Availability Date” means the 90th day after the end of such fourth fiscal quarter).

  

 

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(j)           With
a view to making available to the Investors the benefits of Rule 144 (or its successor rule) and any other rule or regulation of
the SEC that may at any time permit the Investors to sell shares of Common Stock to the public without registration, the Company
covenants and agrees to:  (i) make and keep public information available, as those terms are understood and defined in
Rule 144, until the earlier of (A) six months after such date as all of the Registrable Securities may be sold without restriction
by the holders thereof pursuant to Rule 144 or any other rule of similar effect or (B) such date as all of the Registrable Securities
shall have been resold; (ii) file with the SEC in a timely manner all reports and other documents required of the Company under
the 1934 Act; and (iii) furnish to each Investor upon request, as long as such Investor owns any Registrable Securities, (A) a
written statement by the Company that it has complied with the reporting requirements of the 1934 Act, (B) a copy of the Company’s
most recent Annual Report on Form 10-K or Quarterly Report on Form 10-Q, and (C) such other information as may be reasonably requested
in order to avail such Investor of any rule or regulation of the SEC that permits the selling of any such Registrable Securities
without registration.

 

4.      Due
Diligence Review; Information.  The Company shall make available, during normal business hours, for inspection and
review by the Investors, advisors to and representatives of the Investors (who may or may not be affiliated with the Investors
and who are reasonably acceptable to the Company), all financial and other records, all SEC Filings (as defined in the Purchase
Agreement) and other filings with the SEC, and all other corporate documents and properties of the Company as may be reasonably
necessary for the purpose of such review, and cause the Company’s officers, directors and employees, within a reasonable
time period, to supply all such information reasonably requested by the Investors or any such representative, advisor or underwriter
in connection with such Registration Statement (including, without limitation, in response to all questions and other inquiries
reasonably made or submitted by any of them), prior to and from time to time after the filing and effectiveness of the Registration
Statement for the sole purpose of enabling the Investors and such representatives, advisors and underwriters and their respective
accountants and attorneys to conduct initial and ongoing due diligence with respect to the Company and the accuracy of such Registration
Statement.

 

The Company shall
not disclose material nonpublic information to the Investors, or to advisors to or representatives of the Investors, unless prior
to disclosure of such information the Company identifies such information as being material nonpublic information and provides
the Investors, such advisors and representatives with the opportunity to accept or refuse to accept such material nonpublic information
for review and any Investor wishing to obtain such information enters into an appropriate confidentiality agreement with the Company
with respect thereto.

 

5.      Obligations
of the Investors.

 

(a)          Each
Investor shall furnish in writing to the Company such information regarding itself, the Registrable Securities held by it and the
intended method of disposition of the Registrable Securities held by it, as shall be reasonably required to effect the registration
of such Registrable Securities and shall execute such documents in connection with such registration as the Company may reasonably
request.  At least five (5) Business Days prior to the first anticipated filing date of any Registration Statement, the
Company shall notify each Investor of the information the Company requires from such Investor if such Investor elects to have any
of the Registrable Securities included in the Registration Statement.  An Investor shall provide such information to
the Company at least two (2) Business Days prior to the first anticipated filing date of such Registration Statement if such Investor
elects to have any of the Registrable Securities included in the Registration Statement.

 

(b)          Each
Investor, by its acceptance of the Registrable Securities agrees to cooperate with the Company as reasonably requested by the Company
in connection with the preparation and filing of a Registration Statement hereunder, unless such Investor has notified the Company
in writing of its election to exclude all of its Registrable Securities from such Registration Statement.

 

(c)           Each
Investor agrees that, upon receipt of any notice from the Company of either (i) the commencement of an Allowed Delay pursuant to
Section 2(c)(ii) or (ii) the happening of an event pursuant to Section 3(h) hereof, such Investor will immediately discontinue
disposition of Registrable Securities pursuant to the Registration Statement covering such Registrable Securities, until the Investor
is advised by the Company that such dispositions may again be made.

 

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6.      Indemnification.

 

(a)           Indemnification
by the Company.  The Company will indemnify and hold harmless each Investor and its officers, directors, members,
managers, employees and agents, successors and assigns, and each other person, if any, who controls such Investor within the meaning
of the 1933 Act, against any losses, claims, damages or liabilities, joint or several, to which they may become subject under the
1933 Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are
based upon: (i) any untrue statement or alleged untrue statement or omission or alleged omission of any material fact contained
in any Registration Statement, any preliminary Prospectus or final Prospectus, or any amendment or supplement thereof; (ii) any
blue sky application or other document executed by the Company specifically for that purpose or based upon written information
furnished by the Company filed in any state or other jurisdiction in order to qualify any or all of the Registrable Securities
under the securities laws thereof (any such application, document or information herein called a “Blue Sky Application”);
(iii) the omission or alleged omission to state in a Blue Sky Application a material fact required to be stated therein or necessary
to make the statements therein not misleading; (iv) any violation by the Company or its agents of any rule or regulation promulgated
under the 1933 Act applicable to the Company or its agents and relating to action or inaction required of the Company in connection
with such registration; or (v) any failure to register or qualify the Registrable Securities included in any such Registration
Statement in any state where the Company or its agents has affirmatively undertaken or agreed in writing that the Company will
undertake such registration or qualification on an Investor’s behalf and will reimburse such Investor, and each such officer,
director or member and each such controlling person for any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action; provided, however, that the
Company will not be liable in any such case if and to the extent that any such loss, claim, damage or liability arises out of or
is based upon an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information
furnished by such Investor or any such controlling person in writing specifically for use in such Registration Statement or Prospectus.

  

(b)           Indemnification
by the Investors.  Each Investor agrees, severally but not jointly, to indemnify and hold harmless, to the fullest
extent permitted by law, the Company, its directors, officers, employees, stockholders and each person who controls the Company
(within the meaning of the 1933 Act) against any losses, claims, damages, liabilities and expense (including reasonable attorney
fees) resulting from any untrue statement of a material fact or any omission of a material fact required to be stated in the Registration
Statement or Prospectus or preliminary Prospectus or amendment or supplement thereto or necessary to make the statements therein
not misleading, to the extent, but only to the extent that such untrue statement or omission is contained in any information furnished
in writing by such Investor to the Company specifically for inclusion in such Registration Statement or Prospectus or amendment
or supplement thereto.  In no event shall the liability of an Investor be greater in amount than the dollar amount of
the proceeds (net of all expense paid by such Investor in connection with any claim relating to this Section 6 and the amount of
any damages such Investor has otherwise been required to pay by reason of such untrue statement or omission) received by such Investor
upon the sale of the Registrable Securities included in the Registration Statement giving rise to such indemnification obligation.

 

(c)           Conduct
of Indemnification Proceedings.  Any person entitled to indemnification hereunder shall (i) give prompt notice to
the indemnifying party of any claim with respect to which it seeks indemnification and (ii) permit such indemnifying party to assume
the defense of such claim with counsel reasonably satisfactory to the indemnified party; provided that any person
entitled to indemnification hereunder shall have the right to employ separate counsel and to participate in the defense of such
claim, but the fees and expenses of such counsel shall be at the expense of such person unless (a) the indemnifying party has agreed
to pay such fees or expenses, or (b) the indemnifying party shall have failed to assume the defense of such claim and employ counsel
reasonably satisfactory to such person or (c) in the reasonable judgment of any such person, based upon written advice of its counsel,
a conflict of interest exists between such person and the indemnifying party with respect to such claims (in which case, if the
person notifies the indemnifying party in writing that such person elects to employ separate counsel at the expense of the indemnifying
party, the indemnifying party shall not have the right to assume the defense of such claim on behalf of such person); and provided, further,
that the failure of any indemnified party to give notice as provided herein shall not relieve the indemnifying party of its obligations
hereunder, except to the extent that such failure to give notice shall materially adversely affect the indemnifying party in the
defense of any such claim or litigation.  It is understood that the indemnifying party shall not, in connection with
any proceeding in the same jurisdiction, be liable for fees or expenses of more than one separate firm of attorneys at any time
for all such indemnified parties.  No indemnifying party will, except with the consent of the indemnified party, consent
to entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such indemnified party of a release from all liability in respect of such claim or litigation.

 

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(d)          Contribution.  If
for any reason the indemnification provided for in the preceding paragraphs (a) and (b) is unavailable to an indemnified party
or insufficient to hold it harmless, other than as expressly specified therein, then the indemnifying party shall contribute to
the amount paid or payable by the indemnified party as a result of such loss, claim, damage or liability in such proportion as
is appropriate to reflect the relative fault of the indemnified party and the indemnifying party, as well as any other relevant
equitable considerations.  No person guilty of fraudulent misrepresentation within the meaning of Section 11(f) of the
1933 Act shall be entitled to contribution from any person not guilty of such fraudulent misrepresentation.  In no event
shall the contribution obligation of a holder of Registrable Securities be greater in amount than the dollar amount of the proceeds
(net of all expenses paid by such holder in connection with any claim relating to this Section 6 and the amount of any damages
such holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission)
received by it upon the sale of the Registrable Securities giving rise to such contribution obligation.

 

7.      Miscellaneous.

 

(a)          Amendments
and Waivers.  This Agreement may be amended only by a writing signed by the Company and the Required Investors.  The
Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company
shall have obtained the written consent to such amendment, action or omission to act, of the Required Investors.

 

(b)          Notices.  All
notices and other communications provided for or permitted hereunder shall be made as set forth in Section 9.4 of the Purchase
Agreement.

 

(c)          Assignments
and Transfers by Investors.  The provisions of this Agreement shall be binding upon and inure to the benefit of
the Investors and their respective successors and assigns.  An Investor may transfer or assign, in whole or from time
to time in part, to one or more persons its rights hereunder in connection with the transfer of Registrable Securities by such
Investor to such person, provided that such Investor complies with all laws applicable thereto and provides written notice of
assignment to the Company promptly after such assignment is effected.

 

(d)          Assignments
and Transfers by the Company.  This Agreement may not be assigned by the Company (whether by operation of law or
otherwise) without the prior written consent of the Required Investors, provided, however, that in the event that the Company
is a party to a merger, consolidation, share exchange or similar business combination transaction in which the Common Stock is
converted into the equity securities of another Person, from and after the effective time of such transaction, such Person shall,
by virtue of such transaction, be deemed to have assumed the obligations of the Company hereunder, the term “Company”
shall be deemed to refer to such Person and the term “Registrable Securities” shall be deemed to include the securities
received by the Investors in connection with such transaction unless such securities are otherwise freely tradable by the Investors
after giving effect to such transaction.

 

(e)          Benefits
of the Agreement.  The terms and conditions of this Agreement shall inure to the benefit of and be binding upon
the respective permitted successors and assigns of the parties.  Nothing in this Agreement, express or implied, is intended
to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations,
or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

  

(f)           Counterparts;
Faxes.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.  This Agreement may also be executed via facsimile,
which shall be deemed an original.

 

(g)          Titles
and Subtitles.  The titles and subtitles used in this Agreement are used for convenience only and are not to be
considered in construing or interpreting this Agreement.

 

    	8

    	 

    

 

(h)           Severability.  Any
provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof but shall be interpreted
as if it were written so as to be enforceable to the maximum extent permitted by applicable law, and any such prohibition or unenforceability
in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.  To the extent
permitted by applicable law, the parties hereby waive any provision of law which renders any provisions hereof prohibited or unenforceable
in any respect.

 

(i)            Further
Assurances.  The parties shall execute and deliver all such further instruments and documents and take all such other
actions as may reasonably be required to carry out the transactions contemplated hereby and to evidence the fulfillment of the
agreements herein contained.

 

(j)            Entire
Agreement.  This Agreement is intended by the parties as a final expression of their agreement and intended to be
a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained
herein.  This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject
matter.

 

(k)           Governing
Law; Consent to Jurisdiction; Waiver of Jury Trial.  This Agreement shall be governed by, and construed in accordance
with, the internal laws of the State of New York without regard to the choice of law principles thereof.  Each of the
parties hereto irrevocably submits to the exclusive jurisdiction of the courts of the State of New York located in New York County
and the United States District Court for the Southern District of New York for the purpose of any suit, action, proceeding or judgment
relating to or arising out of this Agreement and the transactions contemplated hereby.  Service of process in connection
with any such suit, action or proceeding may be served on each party hereto anywhere in the world by the same methods as are specified
for the giving of notices under this Agreement.  Each of the parties hereto irrevocably consents to the jurisdiction
of any such court in any such suit, action or proceeding and to the laying of venue in such court.  Each party hereto
irrevocably waives any objection to the laying of venue of any such suit, action or proceeding brought in such courts and irrevocably
waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. EACH
OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS
THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.

 

 

IN WITNESS WHEREOF,
the parties have executed this Agreement or caused their duly authorized officers to execute this Agreement as of the date first
above written.

 

	The Company:	LUSTROS, INC.	 
	 	 	 
	 	By:	 	 
	 	Name: 	 
	 	Title:  Chief Executive Officer	 

 

 

	The Investors:	 	 
	 	 	 
	 	By:	 	 
	 	Name:	 
	 	Title:	 

 

 

    	9

    	 

    

 

Exhibit A

 

Plan of Distribution

 

The selling stockholders,
which as used herein includes donees, pledgees, transferees or other successors-in-interest selling shares of common stock or interests
in shares of common stock received after the date of this prospectus from a selling stockholder as a gift, pledge, partnership
distribution or other transfer, may, from time to time, sell, transfer or otherwise dispose of any or all of their shares of common
stock or interests in shares of common stock on any stock exchange, market or trading facility on which the shares are traded or
in private transactions.  These dispositions may be at fixed prices, at prevailing market prices at the time of sale,
at prices related to the prevailing market price, at varying prices determined at the time of sale, or at negotiated prices.

 

The selling stockholders
may use any one or more of the following methods when disposing of shares or interests therein:

 

- ordinary brokerage
transactions and transactions in which the broker-dealer solicits purchasers;

 

- block trades
in which the broker-dealer will attempt to sell the shares as agent, but may position and resell a portion of the block as principal
to facilitate the transaction;

 

- purchases by
a broker-dealer as principal and resale by the broker-dealer for its account;

 

- an exchange
distribution in accordance with the rules of the applicable exchange;

 

- privately negotiated
transactions;

 

- short sales
effected after the date the registration statement of which this Prospectus is a part is declared effective by the SEC;

 

- through the
writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;

 

- broker-dealers
may agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share; and

 

- a combination
of any such methods of sale.

 

The selling stockholders
may, from time to time, pledge or grant a security interest in some or all of the shares of common stock owned by them and, if
they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of
common stock, from time to time, under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other
applicable provision of the Securities Act amending the list of selling stockholders to include the pledgee, transferee or other
successors in interest as selling stockholders under this prospectus.  The selling stockholders also may transfer the
shares of common stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be
the selling beneficial owners for purposes of this prospectus. 

 

In connection
with the sale of our common stock or interests therein, the selling stockholders may enter into hedging transactions with broker-dealers
or other financial institutions, which may in turn engage in short sales of the common stock in the course of hedging the positions
they assume.  The selling stockholders may also sell shares of our common stock short and deliver these securities to
close out their short positions, or loan or pledge the common stock to broker-dealers that in turn may sell these securities.  The
selling stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or the
creation of one or more derivative securities which require the delivery to such broker-dealer or other financial institution of
shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus
(as supplemented or amended to reflect such transaction).

 

    	10

    	 

    

 

The aggregate
proceeds to the selling stockholders from the sale of the common stock offered by them will be the purchase price of the common
stock less discounts or commissions, if any.  Each of the selling stockholders reserves the right to accept and, together
with their agents from time to time, to reject, in whole or in part, any proposed purchase of common stock to be made directly
or through agents.  We will not receive any of the proceeds from this offering.

 

The selling stockholders
also may resell all or a portion of the shares in open market transactions in reliance upon Rule 144 under the Securities Act of
1933, provided that they meet the criteria and conform to the requirements of that rule.

 

The selling stockholders
and any underwriters, broker-dealers or agents that participate in the sale of the common stock or interests therein may be "underwriters"
within the meaning of Section 2(11) of the Securities Act.  Any discounts, commissions, concessions or profit they earn
on any resale of the shares may be underwriting discounts and commissions under the Securities Act.  Selling stockholders
who are "underwriters" within the meaning of Section 2(11) of the Securities Act will be subject to the prospectus delivery
requirements of the Securities Act.

 

To the extent
required, the shares of our common stock to be sold, the names of the selling stockholders, the respective purchase prices and
public offering prices, the names of any agents, dealer or underwriter, any applicable commissions or discounts with respect to
a particular offer will be set forth in an accompanying prospectus supplement or, if appropriate, a post-effective amendment to
the registration statement that includes this prospectus.

 

In order to comply
with the securities laws of some states, if applicable, the common stock may be sold in these jurisdictions only through registered
or licensed brokers or dealers.  In addition, in some states the common stock may not be sold unless it has been registered
or qualified for sale or an exemption from registration or qualification requirements is available and is complied with.

  

We have advised
the selling stockholders that the anti-manipulation rules of Regulation M under the Exchange Act may apply to sales of shares in
the market and to the activities of the selling stockholders and their affiliates.  In addition, to the extent applicable
we will make copies of this prospectus (as it may be supplemented or amended from time to time) available to the selling stockholders
for the purpose of satisfying the prospectus delivery requirements of the Securities Act.  The selling stockholders may
indemnify any broker-dealer that participates in transactions involving the sale of the shares against certain liabilities, including
liabilities arising under the Securities Act.

 

We have agreed
to indemnify the selling stockholders against liabilities, including liabilities under the Securities Act and state securities
laws, relating to the registration of the shares offered by this prospectus.

 

We have agreed
with the selling stockholders to keep the registration statement of which this prospectus constitutes a part effective until the
earlier of (1) such time as all of the shares covered by this prospectus have been disposed of pursuant to and in accordance with
the registration statement or (2) the date on which the shares may be sold without restriction pursuant to Rule 144 of the Securities
Act.

 

 

    	11Unassociated Document

Exhibit 10.38

ASSET PURCHASE AGREEMENT

BY AND AMONG

LATTICE INCORPORATED,

as Purchaser and Issuer

AND

INNOVISIT LLC,

as Seller

DATED AS OF NOVEMBER 1, 2013

 

 

 

 

 

 

 

 

 

 

 

 

  

  

  

ASSET PURCHASE AGREEMENT

 

THIS ASSET PURCHASE AGREEMENT, dated as of November 1, 2013 (this “Agreement”), is made by and among Lattice Incorporated, a Delaware corporation (“Lattice” or the “Buyer”) and Innovisit LLC, an Alabama limited liability company (herein “Innovisit” or “Seller”); and

WHEREAS, Lattice has approached Innovisit desiring to purchase substantially all the assets of Innovisit excluding the Excluded Assets (as defined herein); and

WHEREAS, Innovisit is willing to sell certain assets of Innovisit (other than the Excluded Assets as defined herein) to Lattice on the terms and conditions herein contained (“Transaction”); and

WHEREAS, Lattice desires to acquire the Acquired Assets (as defined herein) of Innovisit on the terms and conditions herein contained.

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

ARTICLE I

RECITALS, PURCHASE AND SALE

 

 

SECTION 1.1.     Incorporation of Recitals.  Each of the parties hereby agree that the recitals set forth above are true and correct and are hereby incorporated into the terms of this Agreement by this reference.

SECTION 1.2.     Closing.  The consummation and close of the acquisition of assets provided for herein (the “Closing”) shall occur no later than 10:00 a.m. (Montgomery, Alabama time) November 1, 2013 (the actual date of such consummation being herein referred to as the “Closing Date”), unless extended by the parties hereto by written amendment to this Agreement, and shall take place at the offices of Rushton, Stakely, Johnston & Garrett, P.A., in Montgomery, Alabama, or at such other place as the parties shall mutually agree.  The parties shall mutually agree to the actual date and time of the Closing Date.

SECTION 1.3.     Acquired Assets.  Subject to the terms and conditions herein contained, Innovisit hereby sells, assigns, transfers, conveys and delivers to Lattice, and Lattice shall purchase, acquire and accept,  free and clear of any Lien, claim, or encumbrance of whatever kind or character, the following assets and rights used in connection with its business but is not acquiring the Excluded Assets:

 

 

  

2

  

(a)           The equipment, furniture, supplies, computer hardware and other tangible personal property of Innovisit (the “Personal Property”) described on Schedule 1.3 (a) attached hereto.

 

(b)           The work-in-process and other inventory of Innovisit listed on Schedule 1.3(b) to be attached hereto by Sellers (the “Inventory”).

 

(c)           To the extent transferable and assignable under applicable law, and except for any Excluded Assets, all franchises, licenses, permits, consents authorizations, approvals, and certificates of any regulatory, administrative or other government agency or body relating to the Acquired Assets (the “Permits”) listed on Schedule 1.3(c) attached hereto;

 

(d)           The Intellectual Property (as defined herein) of Innovisit listed on Schedule 1.3(d) attached hereto;

 

(e)           The claims and rights under the contracts, agreements, leases, license agreements, franchise rights and agreements, policies, purchase and sales orders ( the “Pending Sales Orders”), engagement letters, executory commitments, instruments, guaranties, indemnifications, arrangements, and understandings of Innovisit, whether oral or written, to which Innovisit is a party (whether or not legally bound thereby) (the “Contracts”), listed on Schedule 1.3 (e).

 

(f)           All causes of action, judgments and claims or demands against others of whatever kind or description except such causes of actions, judgments, claims or demands attributable to the Excluded Assets;

 

(g)           All books of account, records, customer lists, vendor lists, files, papers, records, promotional marketing and advertising materials, catalogs, brochures, forms, plans, manuals and handbooks relating to the conduct of the Business or otherwise relating to the conduct of the Business or otherwise relating to the Acquired Assets or usable in connection with the Business;

 

(h)           All goodwill (excluding any unamortized goodwill reflected on the financial statements of Innovisit); and

 

(i)           All of Innovisit's telephone numbers, including, without limitation, all local and toll free telephone numbers.

 

SECTION 1.4.     Purchase Consideration.   In exchange for the Acquired Assets and other consideration, Corporation shall pay the sum of $590,000 U.S. Dollars (“Purchase Price”), with such obligation to be evidenced by the Promissory Note in the form attached hereto as Exhibit “A” to be duly executed and delivered at Closing with principal only payments due and payable as follows: (i) $250,000 due on November 30, 2013  and (ii) equal installment payments of $60,000 on January 1, 2014, April 31, 2014, July 31, 2014, October 31, 2014 with a final payment of $100,000 on January 31, 2015.  The Parties hereto do hereby agree to allocate the Purchase Price among the assets in Acquired Assets in the manner set forth in Schedule 1.4 hereof.  Each party hereto shall report on their income tax returns the Purchase Price in accordance with such allocations and shall file with their respective income tax returns a Form 8594 allocating the Purchase Price in accordance with such allocation.  Lattice, as Buyer, shall secure the Note with the Acquired Assets and all proceeds and products, cash or non-cash arising or preceding therefrom and from the other collateral as described in and pursuant to the  Security Agreement and Control Agreements attached to this Agreement in its Exhibit “B” and “C”.

  

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SECTION 1.5.     Excluded Assets.  Notwithstanding Section 1.3 hereof, Seller is not selling, and Buyer is not purchasing, (i) any cash on hand, cash on deposit and other liquid or marketable investments of Seller held in connection with the Business as of the Closing Date, (ii) any insurance policies owned by Seller, (iii) any accounts or notes receivable of Seller accrued in connection with the Business prior to November 1, 2013, (iv) the organizational documents, seals, minutes books and other documents and records relating to the existence and operation of Seller as a corporation; (v) the permits to be maintained by the Seller for the Excluded Assets and (vi) the other assets, rights, claims, contracts, properties and interests listed in Schedule 1.5 hereof; (collectively, items described in changes (i) through (vi) hereof are referred to as the “Excluded Assets”).

SECTION 1.6.     Assumed Liabilities.  At Closing, Lattice shall assume, pay, perform, fulfill and discharge, when due and payable in accordance with the terms and conditions of  their respective relevant governing agreements and instruments, the liabilities and obligations of Seller set forth on Schedule 1.6 attached hereto (individually, an “Assumed Liability” and, collectively the “Assumed Liabilities”) arising from and after the Closing Date, but only if Seller shall have paid, to the Closing Date, all amounts then due and owing on such Assumed Liabilities and otherwise be in compliance with all contract terms in the relevant governing agreements.  Except for the Assumed Liabilities, Buyer is not assuming, and shall not be in any way liable or responsible for any of Seller’s debts, liabilities or obligations of any nature, kind or amount, whether such debts, liabilities or obligations are fixed, contingent, liquidated or unliquidated, known or unknown.

SECTION 1.7.     Actions and Deliveries at the Closing.  At the Closing, (i) Seller will execute and deliver to Buyer the various certificates, resolutions, instruments, agreements and documents referred to in Section 4.1 hereof required to be executed or delivered, or both, by Seller and otherwise take, or cause to be taken, the actions required to be taken in Section 4.1 hereof, and (ii) Lattice will execute and deliver to Seller the various certificates, resolutions, instruments and documents referred to in Section 4.2 hereof required to be executed or delivered, or both, by Lattice and otherwise take, or cause to be taken, the actions required to be take in Section 4.2 hereof.

ARTICLE II

 

REPRESENTATIONS AND WARRANTIES OF SELLERS

Except as set forth in a Schedule, Innovisit represents and warrants to Lattice that all of the statements contained in this Article II are true and correct as of the date of this Agreement, or if made as of a specified date, as of such date.  Each disclosure set forth in each Schedule is identified by reference to, or has been grouped under a heading referring to, a specific individual section of this Agreement for convenience of reference only, and shall be deemed a qualification or exception to such section and any other section of the Schedule to which its applicability is reasonably apparent on the face of such disclosure regardless of whether or not such other section is specifically referenced.

  

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SECTION 2.1.     Ownership of the Acquired Assets.  As of the date of this Agreement, Innovisit is the sole title and beneficial owner of the Acquired Assets and holds good and marketable title free and clear of all Liens (except Permitted Liens) and is the beneficial owner of such Acquired Assets (except as disclosed in the Schedules).

SECTION 2.2.     Power and Authority; Enforceability.  Innovisit has the requisite power and authority to execute and deliver this Agreement and the other Transaction Documents to which it is party, to perform its respective obligations hereunder and thereunder, and to consummate the transactions contemplated hereby and thereby.  The execution, delivery and performance of this Agreement and the other Transaction Documents, have been duly authorized by all requisite member action of Innovisit.

SECTION 2.3.     Binding Agreement.  This Agreement and the other Transaction Documents to which Innovisit is a party have been duly executed and delivered to Lattice and constitutes the legal, valid and binding agreement of Innovisit, enforceable against Innovisit in accordance with its terms, except as enforceability may be limited except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

SECTION 2.4.     No Conflict; Required Filings or Consents.

(a) No Conflict.  Except as indicated on Schedule 2.4(a) hereto, the execution, delivery and performance of this Agreement and other Transaction Documents to which Innovisit is a party and to the consummation by Innovisit of the Transaction and compliance by Innovisit with the provisions of this Agreement, to Innovisit’s knowledge, will not conflict with, result in any violation, breach of or default under (with or without notice or lapse of time, or both), require any consent, waiver or approval under, give rise to any right of termination, cancellation or acceleration of any right, obligation or loss of a benefit under, or result in the creation of any Lien upon any of the properties or assets (including intangible assets) of Innovisit or any restriction on the conduct of any of the businesses or operations of Innovisit under (i) any of the Organizational Documents of Innovisit, (ii) result in the imposition of a Lien on the Acquired Assets or (iii) any Contract to which Acquired Assets are bound or (iv) any Innovisit Permit or, subject to the governmental filings and other matters referred to in Section 2.4(a), any Law applicable to such Innovisit Parties or its properties or assets.

(b) Required Filings or Consents. Except as set forth in Schedule 2.4(b) or except as may otherwise be required by the status of Lattice, to Innovisit’s knowledge, no consent, approval, Order or authorization or permit of, action by, or in respect of, or registration, declaration or filing with, or notification to any Governmental Authority is required to be made, obtained, performed or given by or with respect to Innovisit in connection with the execution, delivery and performance of this Agreement by Innovisit or the consummation by Innovisit of the Transaction, except for such consents, approvals, Orders, authorizations, permits, actions, registrations, declarations, filings or notifications, the failure of which to be made, obtained, performed or given as have not had and would not reasonably be likely to have, individually or in the aggregate a material adverse effect on the ability of Innovisit to consummate the Transaction.

  

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SECTION 2.5.     Representation by Counsel.  Innovisit, and Pritchett each: (i) have been represented by independent counsel (or each has had the opportunity to consult with independent counsel and has declined to do so); (ii) has had the full right and opportunity to consult with such attorney and other advisors and has availed himself, herself or itself of this right and opportunity; (iii) has carefully read and fully understands this Agreement in its entirety and has had it fully explained to him by such counsel; (iv) is fully aware of the contents hereof and the meaning, intent and legal effect thereof; and (v) is competent to execute this Agreement and has executed this Agreement free from coercion, duress or undue influence.

SECTION 2.6.     Information Supplied.  To the Knowledge of Innovisit, none of the information supplied by or on behalf of Innovisit, and none of the information to be supplied in respect of Innovisit, in each case, specifically will contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading.

SECTION 2.7.     Sufficiency of Assets.

The Acquired Assets constitute all the rights, title, interests and other assets, tangible and intangible, relating to, used or held for use by Innovisit in the operation or conduct of the business of Innovisit, except for the Excluded Assets, and except for the Excluded Assets, to Innovisit’s Knowledge are sufficient for ownership and operation of the Business in substantially the same manner as it has been conducted prior to the date of this Agreement.

SECTION 2.8.    Contracts.

(a)  In respect to each Contract listed on Schedule 1.2(f) hereof, each Contract is in full force and effect and constitutes the valid and legally binding obligation of Innovisit enforceable against Innovisit in accordance with its terms and conditions, subject to applicable bankruptcy, insolvency, moratorium or other similar laws relating to creditors’ rights and general principles of equity each of said Pending Sales Orders is valid, still pending, on time, and is not the subject of any cancellation and Sellers have no knowledge of any potential cancellation or reduction of any Pending Sales Order;

(b)   Neither Innovisit nor, to the Knowledge of Innovisit, the counterparty thereto is in material breach or default that presently would permit or give rise to a right of termination, modification or acceleration thereunder, except for breaches or defaults which would not, individually or in the aggregate, have a Material Adverse Effect on the Business.

  

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SECTION 2.9.     Intellectual Property.

(a)  Schedule 1.2(d) sets forth a true, correct and complete list of all Intellectual Property used by Innovisit in the Business except for any Excluded Assets. Innovisit owns all of the Intellectual Property used or held for use by Innovisit in connection with the Business, free and clear of any liens, mortgages, security interests, pledges, restrictions, defects of title or other claims, charges or encumbrances of any nature whatsoever, and no other person or entity has any proprietary, financial or other interest, direct or indirect, in whole or in part, in any of the Intellectual Property.  The Intellectual Property and Innovisit’s use thereof do not infringe upon or unlawfully or wrongfully violate any Intellectual Property right enforceable in the United States owned or claimed by any other person or entity, or otherwise use any material that defames, slanders, libels or violates any right of publicity, right of privacy or other proprietary right of any other person or entity, and Innovisit has not received notice of any claim or threatened claim to the contrary.  All rights of Innovisit in and to the Intellectual Property are fully valid and enforceable, and Innovisit has not received notice of any claim or threatened claim to the contrary.  To Innovisit’s Knowledge, the Intellectual Property is not being infringed upon or unlawfully or wrongfully used by any other person or entity.  Innovisit has not provided any other person or entity with notice of any claim or threatened claim to the contrary.  No present or former employee of Innovisit, and no other person, owns or has any proprietary, financial or other interest, direct or indirect, in whole or in part, in any of the Intellectual Property, or in any application therefor, which Innovisit owns, possesses, or uses in the Business as now or heretofore conducted.  Innovisit has taken all reasonable and appropriate steps to protect, maintain and defend its rights in and to the Intellectual Property and, where applicable, to preserve the confidentiality of the Intellectual Property.

(b)           The Intellectual Property includes  any and all rights (whether by ownership or license under the License Agreements) for processes, methods, devices, designs, software programs, modules, routines, data, text or graphic files, source or object codes and other components of the Acquired Assets and such operational elements include all written or electronic documentation applicable thereto.

SECTION 2.10.     Legal Compliance.  To the Knowledge of Innovisit, (a) Innovisit is in compliance in all material respects with all material Laws applicable to the Business or the Acquired Assets, and (b) neither Innovisit nor any manager, member of officer of Innovisit has received any written notice within the past twelve (12) months relating to violations or alleged violations or material defaults under any Decree or any Permit, in each case, with respect to the Business, where the failure to cure such noncompliance, violation or default would result in a Material Adverse Effect on the Business or the Acquired Assets.

SECTION 2.11.     Litigation.  As of the date of this Agreement, there is no Action pending or, to the Knowledge of Innovisit, threatened in writing before any Governmental Entity (i) brought by or against Innovisit or otherwise affecting the Business or the Acquired Assets and (ii) that, if adversely determined, would have a Material Adverse Effect on the Acquired Assets.

SECTION 2.12.    Permits.   Schedule 2.12 contains a list of all material Permits that Innovisit holds as of the date hereof in connection with the operations of the Business.  There is no Litigation pending, nor to the Knowledge of Innovisit, threatened in writing, that seeks the revocation, cancellation, suspension, failure to renew or adverse modification of any material Permits.  To the knowledge of Innovisit, all required filings with respect to the material Permits have been made and all required applications for renewal thereof have been filed.

  

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SECTION 2.13.     Brokers’ Fees.  Innovisit has not entered into any Contract to pay any fees or commissions to any broker, finder or agent with respect to the Transaction contemplated by this Agreement for which Lattice could become liable or obligated to pay.

SECTION 2.14.     Employees.   Except as set forth on Schedule 2.14 hereto, Innovisit is not a party to or bound by any currently effective employment contract, deferred compensation agreement, bonus plan, incentive plan, profit sharing plan, retirement agreement or other employee compensation agreement or arrangement with any collective bargaining agent.  No employee of Innovisit is represented by any labor union or covered by any collective bargaining agreement. There is no pending or, to Innovisit's Knowledge, threatened labor dispute involving Innovisit and any group of its employees.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF LATTICE

Except as set forth in Lattice’s SEC Reports filed with the SEC prior to the date of this Agreement, Lattice represents and warrants to Innovisit that all of the statements contained in this Article III are true and correct as of the date of this Agreement, or if made as of a specified date, as of such date.

SECTION 3.1.   Organization and Qualification; Organizational Documents; Subsidiaries.

(a) Organization and Qualification.  Lattice and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization (as applicable), with the requisite corporate power and authority to own and use its properties and assets and to carry on its business as currently conducted.  Neither Lattice nor any Subsidiary is in violation or default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents.  Lattice and each of the Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in (i) a material adverse effect on the legality, validity or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business, prospects or condition (financial or otherwise) of Lattice and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on Lattice’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document and no Proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such corporate power and authority or qualification.

  

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(b) Organizational Documents.  Lattice has delivered or made available to Innovisit prior to the execution of this Agreement, true, correct and complete copies of the Organizational Documents of Lattice, and each such instrument is in full force and effect.  Lattice is not in violation of its Organizational Documents.

SECTION 3.2.     Authorization; Enforcement.  Lattice has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by each of the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder.  The execution and delivery of each of the Transaction Documents by Lattice and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of Lattice and no further action is required by Lattice, its board of directors or its stockholders in connection therewith.  Each Transaction Document has been (or upon delivery will have been) duly executed by Lattice and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of Lattice enforceable against Lattice in accordance with its terms except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

SECTION 3.3.     No Conflicts.  The execution, delivery and performance of the Transaction Documents by Lattice and the consummation by Lattice of the transactions contemplated hereby and thereby do not and will not: (i) conflict with or violate any provision of Lattice’s or any Subsidiary’s Organizational Documents, or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of Lattice or any Subsidiary, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any contract, agreement, credit facility, debt or other instrument (evidencing a Lattice or Subsidiary debt or otherwise) or other understanding to which Lattice or any Subsidiary is a party or by which any property or asset of Lattice or any Subsidiary is bound or affected, or (iii) conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which Lattice or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of Lattice or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.

SECTION 3.4.     Filings, Consent and Approvals.  Except as set forth in Schedule 3.4, Lattice is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other person in connection with the execution, delivery and performance by lattice of the Transaction Documents.

  

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SECTION 3.5.     SEC Reports; Financial Statements.  Lattice has filed all reports, schedules, forms, statements and other documents required to be filed by Lattice under the Securities act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter period as Lattice 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 financial statements of Lattice included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing.  Such financial statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the period involved (“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 Lattice 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.

SECTION 3.6.     Litigation.  Except as set forth in the SEC Reports, there is no action, suit, inquiry, notice of violation, claim, charge, complaint, inquiry, investigation, examination, hearing, petition, arbitration, medication or other proceeding, in each case before any Governmental Authority, whether civil, criminal, administrative or otherwise, in Law or in equity pending or, to the Knowledge of Lattice, threatened against or affecting Lattice, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”) which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect.  Neither Lattice nor any Subsidiary, nor, to the best of the Knowledge of Lattice, any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty.

SECTION 3.7.     Labor Relation.  No material labor dispute exists or, to the knowledge of Lattice, is imminent with respect to any of the employees of Lattice which could reasonably be expected to result in a Material Adverse Effect.  None of Lattice’s employees is a member of a union that relates to such employee’s relationship with Lattice, and neither Lattice nor any of its Subsidiaries is a party to a collective bargaining agreement, and Lattice and its Subsidiaries believe that their relationships with their employees are good.  No executive officer, to the knowledge of Lattice, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant, and, to the knowledge of Lattice, the continued employment of each such executive officer does not subject Lattice or any of its Subsidiaries to any liability with respect to any of the foregoing matters.  To the knowledge of Lattice, Lattice and its Subsidiaries are in compliance with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment wages and hours, except where the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

  

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SECTION 3.8.     Compliance.  Neither Lattice nor any Subsidiary (i) is in material default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by Lattice or any Subsidiary under), nor has Lattice or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any order of any court, arbitrator or governmental body, or (iii) to the knowledge of Lattice, is or has been in violation of any statute, rule or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws applicable to its business and all such laws that affect the environment, except in each case could not have or reasonably be expected to result in a Material Adverse Effect.

SECTION 3.9.     Regulatory Permits.  Lattice possesses all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct its businesses as described in the SEC Reports, except where the failure to possess such permits could not have or reasonably be expected to result in a Material Adverse Effect (“Material Permits”), and Lattice has not received any notice of proceedings relating to the revocation or modification of any Material Permit.

SECTION 3.10.     Title to Assets.  Lattice and the Subsidiaries have good and marketable title in fee simple to all real property owned by them and good and marketable title in all personal property owned by them that is material to the business of Lattice and the Subsidiaries, in each case free and clear of all Liens, except for Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by Lattice and the Subsidiaries, Liens for the payment of federal, state or other taxes, the payment of which is neither delinquent nor subject to penalties.  Any real property and facilities held under lease by Lattice and the Subsidiaries are held by them under valid, subsisting and enforceable leases with which Lattice and the Subsidiaries are in compliance.

ARTICLE IV

CONDITIONS TO CLOSING

SECTION 4.1.     Conditions to Obligations of Buyer.  The obligations of Buyer to consummate the transactions contemplated herein are subject, at the option of Buyer, to satisfaction of the following conditions:

  

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(a) Seller shall have complied with covenants and agreements contained herein, and the representations and warranties contained in Article II hereof shall be true and correct on the date hereof and as of the Closing;

(b) Buyer shall have received a certificate, dated the Closing Date, of an executive officer of Seller, certifying as to the matters specified in section 4.1(a) hereof.

(c) Seller shall have delivered to Buyer certified copies of resolutions duly adopted by members and managers of Seller authorizing and approving the execution, delivery and performance of this Agreement, including the Exhibits and  Schedules hereto, and the consummation of the transactions contemplated herein;

(d) Seller shall have executed and delivered to Buyer such bills of sale, title documents,  and other instruments of sale, transfer, conveyance, assignment and delivery covering the Assets or any part thereof, executed by Seller or other appropriate parties, as Buyer may reasonably require to assure the full and effective sale, transfer, conveyance, assignment and delivery to Buyer of the Acquired Assets;

(e) Buyer shall have received a fully executed Employment Agreement between Buyer and Pritchett in form and content satisfactory to Buyer and Pritchett;

(f) Seller shall have caused any and all mortgages, pledges, security interests and liens on the Acquired Assets to be released and shall have provided Buyer with documentary evidence to such effect in form and content satisfactory to Buyer;

(g) The parties shall have obtained all consents, authorizations, approvals and permits necessary for the consummation of the transactions contemplated herein, and all filings and all notices necessary to consummate the transactions contemplated herein shall have been made.

SECTION 4.2.     Conditions to Obligations of Seller.  The obligations of Seller  to consummate the transactions contemplated herein are subject, at the option of Seller, to satisfaction of the following conditions:

(a) Buyer shall have complied with its covenants and agreements contained herein, and the representations and warranties contained in Article III hereof shall be true and correct on the date hereof and as of the Closing Date;

(b) Seller shall have received a certificate, dated the Closing Date, of an executive officer of Buyer certifying as to the matters specified in section 4.2(a) hereof;

(c) Buyer shall have delivered to Seller certified copies of resolutions duly adopted by the Board of Directors of Buyer authorizing and approving the execution and delivery of this Agreement and the consummation of the transactions contemplated herein;

  

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(d) Seller shall have received from Buyer the fully executed and delivered original of the Note described herein and a fully executed original of the Security Agreement and Control Agreement, all in form and content required by this Agreement;

(e) Buyer shall have  hired the employees; and

(f) Shall have delivered to Seller such other documents, instruments and certificates as may be reasonably requested by Seller.

ARTICLE V

COVENANTS FOLLOWING THE CLOSING DATE

AND ADDITIONAL UNDERTAKINGS

SECTION 5.1.     Seller Employees.  At or prior to the Closing, Buyer shall have employed all of the employees of Seller listed in Schedule 5.2 as this is an obligation of Buyer hereunder and a condition precedent to the performance of Seller’s obligations hereunder.

SECTION 5.2.     Waiver of Bulk Transfer Compliance.  To the extent permitted by Law, Buyer and Seller hereby waives any compliance with bulk sales laws and other similar laws in any applicable jurisdiction in respect of the transactions contemplated by this Agreement.

 

SECTION 5.3.     Collection of Accounts Receivable.

(a)           The parties hereto agree that the accounts receivable of Seller as of the Closing Date are Excluded Assets and are not being purchased by Buyer hereunder.  For the time period provided hereunder and in the manner provided hereunder, Buyer agrees to reasonably cooperate with Seller to receive payments made on the accounts receivable of Seller.  The parties hereto do hereby further agree that customers and clients of the Business may, within the time periods stated below, have invoices from both Seller and Buyer for services rendered and products sold.  For any payments received by Buyer, which payment medium (whether by check, wire or other negotiable draft) references payment of a specific invoice or bill, the parties hereto agree that such payment shall be credited against such specific invoice or billing to the benefit of the party who issued such invoice or billing.  In the event a payment is received by Buyer from a customer or client without any specific reference or direction to apply the payment to any specific invoice or bill, and both parties have invoices or bills outstanding with such customers or clients, then said payment shall be treated as a payment in the manner set forth in subsection 5.3(b) below.  If a payment is received by Buyer from a customer or client of the Business for which Buyer has no outstanding invoice, then Buyer shall contact Seller and, upon proof satisfactory to Buyer that Seller has outstanding invoices or bills to said customer, said payment shall be remitted to Seller and shall be applied to the oldest outstanding invoice first and then the next oldest and so on until such payment is applied completely.

  

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(b)           For any payment received within sixty (60) days after the Closing Date from a customer or client of the Business who has invoices or bills from both Buyer and Seller, then the payment shall be applied towards accounts receivable of that customer or client accrued within one hundred fifty (150) days prior to November 1, 2013, commencing with the oldest invoice or bill first within said 150 day period and then, to the extent of any remaining balance after application to said oldest invoice or bill, to the next oldest invoice within that 150 day period and so on until applied through the current invoice or bill (whether Seller’s or Buyer’s invoice or bill), and, to the extent of any remaining balance after application to the current invoice or bill, said payment shall be applied to any account receivable of Seller for that customer or client that was accrued more than one hundred fifty (150) days prior to November 1, 2013.  For any payment received more than sixty (60) days after the Closing Date from a customer or client of the Business, then the payment shall be applied towards accounts receivable of that customer or client accrued within ninety (90) days prior to November 1, 2013, commencing with the oldest invoice or bill first within said 90 day period and then, to the extent of any remaining balance after application to said oldest invoice or bill, to the next oldest invoice within that 90 day period and so on until applied through the current invoice or bill, and, to the extent of any remaining balance after application to the current invoice or bill, said payment shall be applied to any account receivable of Seller for that customer or client that was accrued more than ninety (90) days prior to November 1, 2013.

               (c)       The manner and method of payment to Seller by Buyer for payments received and applied towards Seller’s accounts receivable shall be made in accordance with the provisions of this subsection.  At closing, Seller shall provide to Buyer a listing of all accounts receivable listing customer number of invoice, date of invoice, and amount.  Within ten (10) days after the end of each calendar month, commencing with November 2013, Buyer shall provide to Seller a listing of all payments received from customers or clients who have any accounts receivable owed to Seller as of the Closing Date, together with a schedule showing the proposed application (based on the foregoing rules set forth in subsection 5.3(b) above) of the amounts credited to those accounts receivable.  Seller shall have a ten (10) day period after receipt of said listing and schedule to discuss the same with Buyer.  If Buyer and Seller are in agreement as to the application of said payments within said 10-day period for Seller to discuss the same with Buyer, Buyer shall remit within five (5) calendar days after agreement the amounts so agreed upon to be remitted to Seller.  In the event Buyer and Seller are unable to agree upon the application of the payments to Seller’s accounts receivable, then the President of Buyer and the President of Seller shall meet to resolve the disputes, with such determination to be final and conclusive on each of the parties hereto.

  

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ARTICLE VI

INDEMNITY

 

 

SECTION 6.1.     Survival of Representations, Warranties, Covenants and Obligations.  All representations, warranties, covenants and obligations in this Agreement shall survive the closing for a period of twelve (12) months. A claim for indemnification relating to the representations and warranties or breach of covenants obligations (except for a claim under the Note, which shall survive until the applicable statute of limitations period expires thereon) in this Agreement may be made at any time prior to the first anniversary of the Closing Date (the “Survival Termination Date”).

SECTION 6.2.     Innovisit Agreement to Indemnify. Subject to the limitations contained in Sections 6.1, 6.3 and 6.7, upon the terms and subject to the conditions of this Article IV,  Innovisit will severally indemnify, defend and hold harmless Lattice and its officers, directors, employees, and agents (collectively, the “Corporation Indemnified Parties”) at any time, from and against, and shall reimburse such persons for, any and all demands, claims, actions or causes of action, assessments, losses, damages, liabilities, diminution of value, costs and expenses, including, taxes, interest, penalties and reasonable attorneys’ fees and expenses (collectively, “Damages”) asserted against, relating to, imposed upon or incurred by Lattice or any Corporation Indemnified Parties arising from or in connection with: (i) a breach of any representation of Innovisit contained in this Agreement, or (ii) the breach of any agreement or covenant of Innovisit contained in this Agreement (collectively, the matters in clauses (i) and (ii), “Corporation Claims”).

SECTION 6.3.     Lattice’s Agreement to Indemnify.  Upon the terms and subject to the conditions of this Article, Lattice will indemnify, defend and hold harmless Innovisit and its Affiliates, (the “Innovisit Indemnified Parties”) at any time after the Closing, from and against, and shall reimburse such persons for, any and all Damages asserted against, relating to, imposed upon or incurred by the Innovisit Indemnified Parties or any of them arising from or in connection with: (i) a breach of any representation of Lattice contained in or made pursuant to this Agreement, or (ii) the breach of any agreement or covenant of Lattice contained in this Agreement or in the Transaction Documents (unless the breach resulted from an action of an Innovisit Indemnified Party).

SECTION 6.4.     Claim Procedures. If a Person is entitled to indemnification under this Article VI (the “Indemnified Party”), such party may make claim under this Article VI (a “Claim”) by delivering to the party required to provide indemnification hereunder (the “Indemnifying Party”) written notice of such claim (the “Claims Notice”). The Claims Notice shall state the nature and basis of such Claim or action, to the extent known, and the amount in dispute under such claim or action, if known at such time. The Indemnifying Party shall respond to the Indemnified Party (a “Claim Response”) within thirty (30) days (the “Response Period”) after the date that the Claims Notice is received by the Indemnifying Party. If the Indemnifying Party fails to give a Claim Response within the Response Period, the Indemnifying Party will be deemed not to dispute the Claim described in the related Claims Notice. If the Indemnifying Party elects not to dispute a Claim described in a Claims Notice, whether by failing to give a timely Claim Response or by written notice to the Indemnified Party, then the amount of Damages, to the extent known at the time, set forth in such Claims Notice will be conclusively deemed to be an obligation of the Indemnifying Party, and the Indemnifying Party shall pay within thirty (30) days after the last day of the applicable Response Period the amount of Damages due pursuant to this Article VI. If the Indemnifying Party delivers a Claim Response not relating to a Third-Party Claim within the Response Period indicating that it disputes one or more of the matters identified in the Claims Notice, the Indemnifying Party and the Indemnified Party shall promptly meet and act in good faith to settle the dispute before otherwise seeking to enforce their respective rights under this Article VI.

  

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SECTION 6.5.     Third-Party Claim

(a) In the event any claim for indemnification under this Article VI is based on a claim asserted by a third party (i.e., a Person other than a party hereto or its Affiliates, or agents) (a “Third-Party Claim”), the party seeking indemnification shall give prompt written notice to such other party of the Third-Party Claim, which notice shall specify in reasonable detail the basis of such claim and the facts pertaining thereto, and indicating the best estimate of the amount to the extent determinable or estimable as of such notice date of the Damages that has been requested by the Indemnified Party; provided that the failure to so notify any Indemnifying Party shall not relieve such Indemnifying Party of its obligations hereunder except to the extent such failure shall have prejudiced such Indemnifying Party.

(b) In the event of any Third-Party Claim, the Indemnifying Party shall have the right, exercisable by written notice to the Indemnified Party within thirty (30) days of receipt of a Claims Notice to assume and conduct the defense of the underlying Third-Party Claim with counsel selected by the Indemnifying Party and reasonably satisfactory to the Indemnified Party; provided, that the Indemnified Party may retain separate co-counsel at its sole cost and expense and participate in the defense of the Third-Party Claim (other than any fees and expenses of such separate counsel that are incurred prior to the date the Indemnifying Party effectively assumes control of the defense, which, notwithstanding the foregoing, shall be borne by the Indemnifying Party). Notwithstanding the foregoing, the Indemnifying Party shall not have the right to assume control of the defense of any Third-Party Claim and shall pay the reasonable fees and out-of-pocket expenses of separate counsel retained by all such Indemnified Parties with respect to such Third-Party Claim if: (i) the Indemnifying Party does not conduct the defense of the Third-Party Claim with reasonable diligence; or (ii) the Third-Party Claim seeks non-monetary, equitable or injunctive relief, (ii) alleges violations of criminal law, or (iii) includes as the named parties in any such Third-Party Claim both an Indemnified Party and an Indemnifying Party, and either a defense is available to an Indemnified Party that is not available to an Indemnifying Party or applicable ethical guidelines provide that, in either case, it would be inappropriate to have the same counsel represent both parties. If the Indemnifying Party has assumed such defense as provided in this Section 4.5(b), the Indemnifying Party will not be liable for any attorney’s fees and legal expenses subsequently incurred by any Indemnified Party in connection with the defense of such claim. If the Indemnifying Party does not assume the defense of any Third-Party Claim in accordance with this Section 4.5(b), the Indemnified Party may continue to defend such claim at the reasonable cost of the Indemnifying Party, which Indemnifying Party shall pay as expenses are incurred, and the Indemnifying Party may still participate in, but not control, the defense of such Third-Party Claim at the Indemnifying Party’s sole cost and expense.

  

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SECTION 6.6.     Settlement.

(a) If the Indemnifying Party does not assume and conduct the defense of the Third-Party Claim in accordance with Section 6.5(b), or is not entitled to do so, the Indemnified Party shall not consent to the entry of any judgment or enter into any settlement with respect to the Third-Party Claim without the written consent of the Indemnifying Party (such consent not to be unreasonably withheld, conditioned or delayed).

(b) If the Indemnifying Party assumes and conducts the defense of the Third-Party Claim in accordance with Section 6.5(b), the Indemnifying Party shall not, without the written consent of the Indemnified Party (such consent not to be unreasonably withheld or delayed), consent to the entry of any judgment or enter into any settlement with respect to the Third-Party Claim that: (A) involves any action or admission by the Indemnified Party other than the payment of money (which is paid in full by the Indemnifying Party), or (B) provides for injunctive or other non-monetary relief against the Indemnified Party, or (C) does not grant an unconditional release of the Indemnified Party from all liability with respect to such Third-Party Claim.

(c) In any Third-Party Claim, the party responsible for the defense of such claim shall, to the extent reasonably requested by the other party, keep such other party informed as to the status of such claim, including, all settlement negotiations and offers. The Indemnified Party shall use commercially reasonable efforts to make available to the Indemnifying Party and its representatives all books and records of the Indemnified Party relating to such Third-Party Claim and shall cooperate with the Indemnifying Party in the defense of the Third-Party Claim, including by making available personnel as witnesses in connection with any action.

SECTION 6.7.     Exclusive Remedy. The provisions for indemnification set forth in this Article VI are the exclusive remedies for damages caused as a result of breaches of the representations, warranties and covenants contained in this Agreement, it being understood that the remedies of injunction and specific performance shall remain available to the parties hereto. In this regard, the parties hereto waive and relinquish any and all other remedies for damages to the extent such claim is based upon breaches of the representations, warranties and covenants contained in this Agreement. Subject to the limitations and conditions hereinabove set forth, (i) an Indemnifying Party under this Article V shall not be liable for any duplicative damages, or punitive or exemplary damages with respect to any indemnity claim; provided, however, that such limitation shall not apply to the extent awarded to a third party in a Third-Party Claim and required to be paid by the Indemnified Party, and (ii) each Indemnified Party shall be expressly precluded from making any indemnification claim based on (x) diminution of value, to the extent arising from special or unique circumstances relating to the Indemnified Party that were not reasonably foreseeable as of the date of this Agreement, or (y) consequential damages.

  

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ARTICLE VII

GENERAL PROVISIONS

SECTION 7.1  Notices. All notices, requests, claims, demands and other communications under this Agreement shall be in writing and shall be deemed given if delivered personally, sent via facsimile (receipt confirmed), sent by a nationally recognized overnight courier (providing proof of delivery), or mailed in the United States by certified or registered mail, postage prepaid, to the parties at the following addresses (or at such other address for a party as shall be specified by like notice):

           (a) if to Lattice, to:

 

 

Lattice, Inc.

7150 N. Park Drive

Suite 500

Pennsauken, New Jersey 08109

Attention: Joseph Noto, CFO

with copies (which shall not constitute notice hereunder) to:

 

 

Becker Meisel LLC

220 Lake Drive East, Suite 102

Cherry Hill, NJ 08002

Fax No: (856) 779-8716

Attention: Timothy J. Szuhaj, Esq.

(b) if to the Innovisit Parties, to:

Innovisit LLC

Attention:  Scott Pritchett

5415 Lamco Street

Montgomery, Alabama 36117

with copies (which shall not constitute notice hereunder) to:

Rushton, Stakely, Johnston & Garrett, P.A.

184 Commerce Street

Montgomery, Alabama 36104

Fax No: (334) 481-0824

Attention:  Christopher S. Simmons, Esq.

 

 

SECTION 7.2     Definitions. As used in this Agreement, the following terms have the respective meanings set forth below.

  

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“Action” means any action, suit, inquiry, notice of violation, claim, charge, complaint, inquiry, investigation, examination, hearing, petition, arbitration, mediation or other proceeding, whether civil, criminal, administrative or otherwise, in Law or in equity pending or threatened against or affecting a Person or any of their subsidiaries, properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign).

“Affiliate” means, with respect to any Person, another Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such first Person, where “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management policies of a Person, whether through the ownership of voting securities, by contract, as trustee or executor or otherwise; provided, however, that for the purposes of this Agreement Lattice shall be deemed not to be an Affiliate of any of the Innovisit Parties.

“Business” means the business activities of Innovisit as it has been conducted and disclosed to Lattice.

“Contract” means any binding agreement, arrangement, contract, subcontract, settlement agreement, lease, sublease, instrument, note, option, bond, mortgage, indenture, trust document, loan or credit agreement, license or sublicense, whether written or oral.

“Disclosure Schedule” or “Schedules” means the Schedule attached to this Agreement.

 “Governmental Authority” means any United States federal, state, local or other government or any governmental, regulatory, administrative or self-regulatory authority, agency, bureau, board, commission, court, judicial or arbitral body, department, political subdivision, tribunal or other instrumentality thereof.

“Indebtedness” means, with respect to any Person, without duplication, any of the following: (a) any indebtedness for borrowed money, (b) any obligations evidenced by bonds, debentures, notes or other similar instruments, (c) any obligations to pay the deferred purchase price of property or services, except trade accounts payable and other liabilities that would be reflected as current liabilities on a balance sheet prepared in accordance with GAAP arising in the ordinary course of business, (d) any obligations as lessee under capitalized leases, (e) any indebtedness created or arising under any conditional sale or other title retention agreement with respect to acquired property, (f) any reimbursement, payment or similar obligations, contingent or otherwise, under acceptance credit, letters of credit or similar facilities, (g) interest rate swap agreements and (h) any binding obligation of such Person (or its Subsidiaries) to guarantee any of the types of payments described in the foregoing clauses on behalf of any other Person.

“Knowledge” means (a) with respect to Innovisit Parties, the actual knowledge of Scott Pritchett and (b) with respect to Lattice, the actual knowledge of Paul Burgess and Joseph Noto. For the purposes of Section 2.4, Knowledge with respect to Pritchett will mean actual knowledge after due inquiry.

  

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“Law” means any statute or law (including common law), constitution, code, ordinance, rule, or regulation and any Order.

“Liens” means with respect to any asset (including any security), any mortgage, claim, lien, pledge, charge, security interest, proxy, power of attorney, voting trust or agreement, or encumbrance of any kind in respect of such asset.

“Material Adverse Effect” means any event, circumstance, change, development or effect that, individually or in the aggregate with all other events, circumstances, changes, developments or effects, is materially adverse to the assets, business, results of operations or condition (financial or otherwise) of a Person and its subsidiaries, taken as a whole.

“Order” means any award, injunction, judgment, decree, order, ruling, subpoena, assessment, writ or verdict or other decision issued, promulgated or entered by or with any Governmental Authority of competent jurisdiction.

“Organizational Documents” means, with respect to any Person, the certificate of incorporation and by-laws or similar organizational documents of such Person, as amended and currently in effect.

“Permit” means, with respect to any Innovisit Parties, all authorizations, permits, licenses, certificates, easements, concessions, franchises, variances, exemptions, consents, registrations, approvals and clearances of all Governmental Authorities and third Persons which are required for such Innovisit Parties to own, lease, and operate its properties and other assets and to carry on its businesses as they are now being conducted.

“Permitted Liens” means any Liens (i) created by the Organizational Documents of Innovisit, (ii) applicable state and federal securities Laws or (iii) listed in Schedule ___.

“Person” means an association, a corporation, an individual, a partnership, a limited liability company, a trust or any other entity or organization, including a Governmental Authority.

“SEC” means the United States Securities and Exchange Commission.

“Securities Act” means the Securities Act of 1933, as amended.

“Subsidiary” means, with respect to any specified Person, (a) a corporation of which more than fifty percent (50%) of the voting or capital stock is, as of the time in question, directly or indirectly owned by such Person and (b) any partnership, limited liability company, joint venture, association, or other entity in which such Person, directly or indirectly, owns more than fifty percent (50%) of the equity or economic interest thereof or has the power to elect or direct the election of more than fifty percent (50%) of the members of the governing body of such entity.

“Transaction Documents” means this Agreement (including all Schedules and Exhibits hereto), the Note, the Security Agreement, the Control Agreement, the Disclosure Schedules and all other agreements, certificates, instruments, documents and writings executed and delivered by Lattice or Innovisit in connection with the Transaction.

  

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SECTION 7.3     Interpretation. Unless otherwise expressly provided, for the purposes of this Agreement, the following rules of interpretation shall apply:

(a) The article and section headings contained in this Agreement are for convenience of reference only and shall not affect in any way the meaning or interpretation hereof.

(b) When a reference is made in this Agreement to an article or a section, paragraph, exhibit or schedule, such reference shall be to an article or a section, paragraph, exhibit or schedule hereof unless otherwise clearly indicated to the contrary.

(c) Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.”

(d) The words “hereof,” “herein” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement.

(e) The word “extent” in the phrase “to the extent” shall mean the degree to which a subject or other thing extends, and such phrase shall not mean simply “if.”

(f) The meaning assigned to each term defined herein shall be equally applicable to both the singular and the plural forms of such term, and words denoting any gender shall include all genders. Where a word or phrase is defined herein, each of its other grammatical forms shall have a corresponding meaning.

(g) A reference to “$,” “U.S. dollars” or “dollars” shall mean the legal tender of the United States for the payment of public and private debts.

(h) A reference to any period of days shall be deemed to be to the relevant number of calendar days, unless otherwise specified.

(i) All terms defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein.

(j) Unless otherwise defined, a reference to any accounting term shall have the meaning as defined under GAAP.

(k) The parties have participated jointly in the negotiation and drafting of this Agreement (including the Innovisit Parties Disclosure Schedules and Exhibits hereto). In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions hereof.

  

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(l) Any statute defined or referred to herein or in any agreement or instrument that is referred to herein means such statute as from time to time amended, modified or supplemented, including by succession of comparable successor statutes and shall also be deemed to include all rules and regulations promulgated thereunder, and references to all attachments thereto and instruments incorporated therein.

SECTION 7.4     Counterparts. This Agreement may be executed in two or more counterparts, each of which when executed shall be deemed to be an original, and all of which together will be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties. For purposes of this Agreement, facsimile signatures or signatures by other electronic form of transfer shall be deemed originals, and the parties agree to exchange original signatures as promptly as possible.

SECTION 7.5     Entire Agreement; Third-Party Beneficiaries.  This Agreement and the other Transaction Documents (including the Confidentiality Agreement and the documents and instruments referred to herein) constitute the entire agreement, and supersede all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter of this Agreement and this Agreement is not intended to and shall not confer upon any Person other than the parties hereto any rights or remedies hereunder. Without limiting the foregoing, the representations and warranties in this Agreement are the product of negotiations among the parties hereto and are for the sole benefit of the parties hereto. In some instances, the representations and warranties in this Agreement may represent an allocation among the parties hereto of risks associated with particular matters regardless of the knowledge of any of the parties hereto. Consequently, Persons other than the parties hereto may not rely upon the representations and warranties in this Agreement as characterizations of actual facts or circumstances as of the date of this Agreement or as of any other date.

SECTION 7.6     Governing Law.  This Agreement and any claim, controversy or dispute arising under or related thereto, the relationship of the parties, and/or the interpretation and enforcement of the rights and duties of the parties, whether arising in Law or in equity, in contract, tort or otherwise, shall be governed by, and construed and interpreted in accordance with, the Laws of the State of Delaware, without regard to its rules regarding conflicts of law to the extent that the application of the Laws of another jurisdiction would be required thereby.

SECTION 7.7     Assignment.  Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned, in whole or in part, by operation of Law or otherwise by either of the parties hereto without the prior written consent of the other party hereto. Any assignment in violation of the preceding sentence shall be void. Subject to the preceding two sentences, this Agreement will be binding upon, inure to the benefit of, and be enforceable by, the parties and their respective successors and permitted assigns.

SECTION 7.8     Effect of Disclosure. The disclosure of any matter in the Innovisit Parties Disclosure Schedule shall expressly not be deemed to constitute an admission by Innovisit Parties or Lattice, respectively, or to otherwise imply, that any such matter is material for the purpose of this Agreement.

  

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SECTION 7.9     Severability. If any term or other provision of this Agreement is held to be invalid, illegal or incapable of being enforced by any rule of Law or public policy by a court of competent jurisdiction, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect, insofar as the foregoing can be accomplished without materially affecting the economic benefits anticipated by the parties to this Agreement.  Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible to the fullest extent permitted by applicable Law in an acceptable manner to the end that the Transaction is fulfilled to the extent possible.

SECTION 7.10     Waiver and Amendment; Remedies Cumulative.  Subject to applicable Law, (a) any provision of this Agreement or any inaccuracies in the representations and warranties of any of the parties or compliance with any of the agreements or conditions contained in this Agreement may be waived or (b) the time for the performance of any of the obligations or other acts of the parties here may be extended at any time prior to Closing. Any agreement on the part of a party to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of the party against whom waiver is sought; provided, that any extension or waiver given in compliance with this Section 7.12 or failure to insist on strict compliance with an obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. Subject to applicable Law, any of the provisions of this Agreement may be amended at any time by the mutual written agreement of Lattice and the Innovisit Parties. No failure or delay on the part of any party hereto in the exercise of any right hereunder shall impair such right or be construed to be a waiver of, or acquiescence in, any breach of any representation, warranty or agreement herein, nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or of any other right. All rights and remedies existing under this Agreement are cumulative to, and not exclusive of, any rights or remedies otherwise available.

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IN WITNESS WHEREOF, Lattice and Innovisit have caused this Agreement to be executed under seal by their respective officers thereunto duly authorized, or individually, all as of the date first written above.

	 	“LATTICE” OR “BUYER”:	 
	 	 	 
	 	 
LATTICE INCORPORATED

	 
	 	 	 	 
	
 

	
By: 

	/s/ Paul Burgess	 
	 	 	Name: Paul Burgess	 
	 	 	Title: President 	 
	 	 	 	 

                                                                           

	 	 
“SELLER”:

	 
	 	 	 
	 	 
INNOVISIT, LLC.

	 
	 	 	 	 
	
 

	
By: 

	
Icotech, Inc. 

Its Sole Member

	 
	 	 	 	 
	 	By:	/s/ Scott Pritchett	 
	 	 	Name: Scott Pritchett	 
	 	 	Title: President	 

                                                                                                           

 

 

 

 

 

 

 

 

 

 

 

 

[Signature Page to Asset Purchase Agreement]

 

 

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