Document:

ex10-1.htm

Exhibit 10.1

 

TENTH AMENDMENT TO 

AMENDED AND RESTATED REVOLVING CREDIT AND SECURITY AGREEMENT 

 

This TENTH AMENDMENT TO AMENDED AND RESTATED REVOLVING CREDIT AND SECURITY AGREEMENT (this “Amendment”), effective as of March 31, 2017, is entered into by and among ENSERVCO CORPORATION, a Delaware corporation (“Enservco”), DILLCO FLUID SERVICE, INC., a Kansas corporation (“Dillco”), HEAT WAVES HOT OIL SERVICE LLC, a Colorado limited liability company (“Heat Waves”), and HEAT WAVES WATER MANAGEMENT LLC, a Colorado limited liability company (“Heat Waves Water,” and together with Enservco, Dillco and Heat Waves, and each Person joined to the Credit Agreement (as defined below) as a borrower from time to time, each, a “Borrower” and collectively, “Borrowers”), PNC BANK, NATIONAL ASSOCIATION (“PNC”), as the sole Lender on the date hereof, and PNC, as Agent for the Lenders (in such capacity, “Agent”), with reference to the following facts:

 

RECITALS

 

A.     The parties to this Amendment have entered into an Amended and Restated Revolving Credit and Security Agreement dated as of September 12, 2014, as amended by the Consent and First Amendment to Amended and Restated Revolving Credit and Security Agreement dated as of February 27, 2015, the Second Amendment to Amended and Restated Revolving Credit and Security Agreement dated as of March 29, 2015, the Third Amendment to Amended and Restated Revolving Credit and Security Agreement dated as of July 16, 2015, the Fourth Amendment to Amended and Restated Revolving Credit and Security Agreement and First Amendment to Amended and Restated Pledge and Security Agreement dated as of October 19, 2015, the Fifth Amendment to Amended and Restated Revolving Credit and Security Agreement dated as of December 31, 2015, the Sixth Amendment to Amended and Restated Revolving Credit and Security Agreement dated as of March 29, 2016, the Seventh Amendment to Amended and Restated Revolving Credit and Security Agreement dated as of August 10, 2016, the Joinder and Eighth Amendment to Amended and Restated Revolving Credit and Security Agreement dated as of October 4, 2016, and the Ninth Amendment to Amended and Restated Revolving Credit and Security Agreement dated as of December 31, 2016 (as may be further amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), pursuant to which the Lenders provide certain credit facilities to Borrowers;

 

B.     Any and all initially capitalized terms used in this Amendment without definition shall have the respective meanings assigned thereto in the Credit Agreement; 

 

C.     Borrowers have requested Agent and the Lenders amend certain provisions of the Credit Agreement as more fully set forth herein; and

 

D.     Agent and the Lenders are willing to make such amendments to the Credit Agreement, in accordance with, and subject to the terms and conditions set forth herein.

 

 

1

 

 

NOW, THEREFORE, in consideration of the agreements hereinafter set forth, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

 

 

ARTICLE I
AMENDMENTS TO CREDIT AGREEMENT

 

1.01     New Definitions. The following definitions are hereby added to Section 1.2 of the Credit Agreement in the appropriate alphabetical order:

 

“Tenth Amendment” shall mean the Tenth Amendment to Amended and Restated Revolving Credit and Security Agreement dated as of the Tenth Amendment Effective Date.

 

“Tenth Amendment Availability Block” means a reserve in the amount of $1,000,000 against borrowing availability under the Revolving Advances facility, which shall be imposed as of Tenth Amendment Effective Date and shall remain in effect throughout the remainder of the Term.

 

“Tenth Amendment Effective Date” shall mean March 31, 2017.

 

“Tenth Amendment Letter of Credit” shall mean an irrevocable standby letter of credit in the face amount of $1,500,000 issued by Signature Bank for the benefit of PNC, in form and substance satisfactory to Agent in its Permitted Discretion. 

 

1.02     Amendment to Definition of Adjusted EBITDA Section 1.2 of the Credit Agreement is hereby further amended by amending and restating the definition of “Adjusted EBITDA” to read in full as follows (additions to text are indicated in bold and italics and are underscored):

 

‘“Adjusted EBITDA’ shall mean, for any period, EBIDTA for such period plus: (A) depletion, (B) amortization of deferred financing costs, (C) impairment, (D) non-cash expenses relating to share based payments recognized under ASC Topic 718 and ASC Subtopic 505-50, (E) pre-tax unrealized gains and losses on foreign currency, (F) pre-tax unrealized gain and losses on any Interest Rate Hedge or other Hedge Liabilities or commodity price risk management activities, (G) losses on derivatives for such period, (H) losses on sale of damaged, obsolete or worn-out equipment for such period, (i) losses on sale of investments for such period; minus (X) gains on derivatives for such period, (ii) gains on sale of damaged, obsolete or worn-out equipment for such period, and (iii) gains on sale of investments for such period, and (I) for any period of four or fewer consecutive fiscal quarters that includes the fiscal quarter of Borrowers ending March 31, 2017, the face amount of the Tenth Amendment Letter of Credit.”

 

1.03     Amendments to Formula Amount Provision; Imposition of Tenth Amendment Availability Block.. 

 

A.     Section 2.1(a)(y) of the Credit Agreement is hereby amended by replacing the period at the end of clause (v) with the word “minus” and by adding a new clause (vi) immediately following clause (v), to read in full as follows:

 

“(vi)     the Tenth Amendment Availability Block.”

 

 

2

 

 

B.     Section 2.1(a)(y) of the Credit Agreement is hereby further amended by amending and restating the last paragraph thereof to read in full as follows (additions to text are indicated in bold and italics and are underscored):

 

“The amount derived from (x) Section 2.1(a)(y)(i), plus Section 2.1(a)(y)(ii), plus Section 2.1(a)(y)(iii), minus (y) Sections 2.1(a)(y)(iv), (v) and (vi) at any time and from time to time shall be referred to as the “Formula Amount.” The Revolving Advances shall be evidenced by one or more secured promissory notes (collectively, the “Revolving Credit Note”) substantially in the form attached hereto as Exhibit 2.1(a).”

 

1.04     Amendments to Financial Covenants. Section 6.5(a) of the Credit Agreement is hereby amended and restated in its entirety as follows (additions to text are indicated in bold and italics and are underscored):

 

“6.5     Financial Covenants.

 

“(a)     Fixed Charge Coverage Ratio. Commencing on March 31, 2017 and continuing as of the last day of each fiscal quarter ending thereafter, Borrowers will cause to be maintained as of the last day of each such fiscal quarter (the ‘compliance test date’ as used in this Section 6.5), a Fixed Charge Coverage Ratio of not less than 1.25 to 1.00 in respect of each compliance test date. For the purpose of this covenant, the Fixed Charge Coverage Ratio shall be determined on the basis of Adjusted EBITDA for, as applicable, (i) the trailing four-quarter period ending on the applicable compliance test date or (ii) the shorter cumulative period commencing on October 1, 2016 and ending on the applicable compliance test date. For the avoidance of doubt, the Fixed Charge Coverage Ratio shall not be measured for the fiscal quarter ended December 31, 2016.

 

(b)     Leverage Ratio. Commencing on March 31, 2017 and continuing as of the last day of each fiscal quarter ending thereafter, Borrowers will maintain as of the end of each such fiscal quarter a ratio of Funded Debt to Adjusted EBITDA (the ‘Leverage Ratio’) of not greater than the applicable amount set forth below opposite such fiscal quarter: 

 

	
Fiscal Quarter Ending:
	
Maximum Leverage Ratio

	
March 31, 2017 
	
5.50:1.00

	
June 30, 2017
	
4.50:1.00

	
September 30, 2017
	
4.50:1.00

	
December 31, 2017
	
7.00:1.00

	
March 31, 2018 
	
5.50:1.00

 

For the purpose of this covenant, the Leverage Ratio shall be determined on the basis of Adjusted EBITDA for , as applicable, (i) the trailing four-quarter period ending on the applicable compliance test date or (ii) the shorter cumulative period commencing on October 1, 2016 and ending on the applicable compliance test date.

 

(c)     Intentionally Deleted.”

 

 

3

 

 

1.05     Amendment to Term Provision. Section 13.1 of the Credit Agreement is hereby amended by amending and restating the first sentence thereof to read in full as follows (changes to text are indicated in bold and italics and are underscored): 

 

“This Agreement, which shall inure to the benefit of and shall be binding upon the respective successors and permitted assigns of each Borrower, Agent and each Lender, shall become effective on the date hereof and shall continue in full force and effect until April 30, 2018 (the ‘Term’) unless sooner terminated as herein provided.”

 

1.06     Additional Subordinated Indebtedness. No later than May 15, 2017, Enservco shall receive at least $1,000,000 of additional unsecured Indebtedness that is subordinated to the Obligations in a manner satisfactory to Agent in its Permitted Discretion. Enservco shall use all of the proceeds of such Indebtedness to pay down the principal balance of the Revolving Advances. Upon such pay down, Agent shall impose a permanent block against availability under the Revolving Advances facility in an amount equal to the amount of such pay down.

 

1.07     Application of Proceeds of Tenth Amendment Letter of Credit. If Agent makes a drawing under the Tenth Amendment Letter of Credit, Agent shall apply all of the proceeds of the Tenth Amendment Letter of Credit to pay down the principal balance of the Revolving Advances. Upon such pay down, Agent shall impose a permanent block against availability under the Revolving Advances facility in an amount equal to the amount of such pay down. 

 

ARTICLE II
Conditions Precedent

 

2.01     Closing Conditions. This Amendment shall become effective as of the day and year first set forth above (the “Tenth Amendment Effective Date”) upon satisfaction of the following conditions (in each case, in form and substance reasonably acceptable to Agent):

 

	 	
(a)
	
Amendment. Agent shall have received from Borrowers this Amendment, duly executed by Borrowers and by PNC, as Agent and as the sole Lender as of the Tenth Amendment Effective Date;

 

	 	
(b)
	
Fee Letter. Agent shall have received from Borrowers the fee letter agreement by and between Borrowers and Agent, dated the Tenth Amendment Effective Date (the “Fee Letter”), duly executed by Borrowers and by PNC as Agent and as the sole Lender as of the Tenth Amendment Effective Date;

 

	 	
(c)
	
Tenth Amendment Letter of Credit. Agent shall have received the Tenth Amendment Letter of Credit;

 

	 	
(d)
	
Fees and Expenses. (a) Agent shall have received from Borrowers the fee described in the Fee Letter that is due and payable on the Tenth Amendment Effective Date and (b) Agent’s counsel shall have received from Borrowers payment of all outstanding fees and expenses previously incurred and all fees and expenses incurred in connection with this Amendment, to the extent invoiced to Borrowers on or before the Tenth Amendment Effective Date; 

  

 

4

 

 

	 	
(e)
	
Default. No Default or Event of Default shall have occurred and be continuing; and

 

	 	
(f)
	
Representations and Warranties. The representations and warranties set forth in the Credit Agreement must be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof).

 

ARTICLE III
Miscellaneous

 

3.01     Survival of Representations and Warranties. All representations and warranties made in the Credit Agreement or in any Other Document and any related agreements to which any Borrower is a party, and each of the representations and warranties contained in any certificate, document or financial or other statement furnished at any time under or in connection with the Credit Agreement, the Other Documents or any related agreement is true and correct in all material respects on and as of the date hereof as though made on and as of the date hereof, other than representations and warranties relating to a specific earlier date, and in such case such representations and warranties are true and correct in all material respects as of such earlier date.

 

3.02     Authority. Each Borrower has full power, authority and legal right to enter into this Amendment and to perform all its respective Obligations hereunder and under the Other Documents (as amended or modified hereby). This Amendment has been duly executed and delivered by such Person, and this Amendment constitutes the legal, valid and binding obligation of such Person enforceable in accordance with its terms, except as such enforceability may be limited by any applicable bankruptcy, insolvency, moratorium or similar laws affecting creditors’ rights generally. The execution, delivery and performance of this Amendment (a) are within such Person’s corporate, limited liability company or limited partnership powers (as applicable), have been duly authorized by all necessary company or partnership (as applicable) action, are not in contravention of law or the terms of such Person’s operating agreement, bylaws, partnership agreement, certificate of formation, articles of incorporation or other applicable documents relating to such Person’s formation or to the conduct of such Person’s business or of any material agreement or undertaking to which such Person is a party or by which such Person is bound, (b) will not, in any material respect, conflict with or violate any law or regulation, or any judgment, order or decree of any Governmental Body, (c) will not require the Consent of any Governmental Body or any other Person, except those Consents which have been duly obtained, made or compiled prior to the date hereof and which are in full force and effect or except those which the failure to have obtained would not have, or could not reasonably be expected to have, a Material Adverse Effect and (d) will not conflict with, nor result in any breach in any of the provisions of or constitute a default under or result in the creation of any Lien except Permitted Encumbrances upon any asset of any Borrower or Guarantor under the provisions of any material agreement, charter document, operating agreement or other instrument to which any Borrower or Guarantor is a party or by which it or its property is a party or by which it may be bound.

 

 

5

 

 

3.03     No Default. After giving effect to this Amendment, no event has occurred and is continuing that constitutes a Default or an Event of Default.

 

3.04     References to the Credit Agreement. The Credit Agreement, each of the Other Documents, and any and all other agreements, documents or instruments now or hereafter executed and delivered pursuant to the terms hereof, or pursuant to the terms of the Credit Agreement as amended hereby, are hereby amended so that any reference therein to the Credit Agreement shall mean a reference to the Credit Agreement as amended by this Amendment.

 

3.05     Credit Agreement Remains in Effect. The Credit Agreement and the Other Documents remain in full force and effect, and Borrowers ratify and confirm their agreements and covenants contained therein. Borrowers hereby confirm that, after giving effect to this Amendment, no Event of Default or Default has occurred and is continuing. The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of the Agent or the Lenders under any of the Other Documents, nor constitute a waiver of any provision of any of the Other Documents.

 

3.06     Submission of Amendment. The submission of this Amendment to the parties or their agents or attorneys for review or signature does not constitute a commitment by Agent or the Lenders to modify any of their respective rights and remedies under the Other Documents, and this Amendment shall have no binding force or effect until all of the conditions to the effectiveness of this Amendment have been satisfied as set forth herein.

 

3.07     Severability. Any provision of this Amendment held by a court of competent jurisdiction to be invalid or unenforceable shall not impair or invalidate the remainder of this Amendment and the effect thereof shall be confined to the provision so held to be invalid or unenforceable.

 

3.08     Counterparts. This Amendment may be executed in one or more counterparts, each of which when so executed shall be deemed to be an original, but all of which when taken together shall constitute one and the same instrument.

 

3.09     Headings. The headings, captions and arrangements used in this Amendment are for convenience only and shall not affect the interpretation of this Amendment.

 

3.10     Expenses of Agent. Borrowers agree to pay on demand all costs and expenses reasonably incurred by Agent in connection with the preparation, negotiation and execution of this Amendment, including, without limitation, the costs and fees of Agent’s legal counsel.

 

3.11     General Release. From and after the Tenth Amendment Effective Date, each Borrower hereby agrees that, without any further act, Agent and PNC as the sole Lender as of the Tenth Amendment Effective Date, are fully and forever released and discharged from any and all claims for damages or losses to any Borrower or to any property of any Borrower (whether any such damages or losses are known or unknown, foreseen or unforeseen, or patent or latent), including, without limitation, any tort claim, demand, action or cause of action of any nature, whatsoever, arising under or relating to the Credit Agreement or the Other Documents or any of the transactions related thereto, prior to the date hereof, and each Borrower hereby waives application of California Civil Code Section 1542. Each Borrower certifies that it has read the following provisions of California Civil Code Section 1542:

  

A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor.

 

 

6

 

 

Each Borrower understands and acknowledges that the significance and consequence of this waiver of California Civil Code Section 1542 is that even if such Borrower should eventually suffer additional damages arising out of the facts referred to above, it will not be able to make any claim for those damages. Furthermore, each Borrower acknowledges that it intends these consequences even as to claims for damages that may exist as of the date of this release but which such Borrower does not know exist, and which, if known, would materially affect such Borrower’s decision to execute this Agreement, regardless of whether such Borrower’s lack of knowledge is the result of ignorance, oversight, error, negligence, or any other cause.

 

3.12     NO ORAL AGREEMENTS. THIS AMENDMENT, TOGETHER WITH THE FEE LETTER, AS WRITTEN, REPRESENTS THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

 

[Signature Pages Follow]

 

 

7

 

 

IN WITNESS WHEREOF, the parties have entered into this Amendment by their respective duly authorized officers as of the date first above written. 

 

 

	
 
	
BORROWERS:  

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
ENSERVCO CORPORATION,
a Delaware corporation

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
By:
	
/s/ Rick D. Kasch

	
 
	
 
	
Rick D. Kasch
President

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
DILLCO FLUID SERVICE, INC.,
a Kansas corporation  

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
By:
	
/s/ Rick D. Kasch

	
 
	
 
	
Rick D. Kasch
President

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
HEAT WAVES HOT OIL SERVICE LLC,
a Colorado limited liability company  

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
By:
	
/s/ Rick D. Kasch

	
 
	
 
	
Rick D. Kasch
Manager 

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
HEAT WAVES WATER MANAGEMENT LLC,
a Colorado limited liability company  

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
By:
	
/s/ Rick D. Kasch

	 	 	Rick D. Kasch
Manager

  

 

8

 

 

	
 
	
AGENT AND SOLE LENDER:  

	
 
	
 
	
 

	
 
	
PNC BANK, NATIONAL ASSOCIATION  

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
By: 
	
/s/ Mark Tito

	
 
	
 
	
Mark Tito
Vice President 

 

 

9mlgt_ex101.htm

EXHIBIT 10.1

 

SPIN-OFF AGREEMENT

 

This SPIN-OFF AGREEMENT, dated as of March 31, 2017 (this “Agreement”), is entered into by and among mLight Tech, Inc., a Florida corporation (“Seller”), The Ding King Training Institute, Inc., a California corporation (“Spin-Off Subsidiary”), and Todd Sudeck, an individual having the primary residential address at 3011 Rivoli, Newport Beach CA 92660 (“Buyer”).

 

R E C I T A L S:

 

WHEREAS, Seller is the owner of all of the issued and outstanding capital stock and equity interests of Spin-Off Subsidiary (the “Shares”);

 

WHEREAS, this Agreement is made in connection with the closing of a Securities Purchase Agreement, dated as of the date hereof (the “Purchase Agreement”) between the Buyer, the Seller and other third parties listed in the Purchase Agreement; 

 

WHEREAS, Buyer desires to purchase the Shares from Seller, on the terms and subject to the conditions specified in this Agreement, on the terms and subject to the conditions specified in this Agreement;

 

WHEREAS, Seller desires to sell and transfer the Shares to Buyer, on the terms and subject to the conditions specified in this Agreement;

 

NOW, THEREFORE, in consideration of the premises and the covenants, promises and agreements herein set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending legally to be bound, agree as follows:

 

ARTICLE I
PURCHASE AND SALE OF SPIN-OFF SUBSIDIARY STOCK AND SELLER LOANS TO SPIN-OFF SUBSIDIARY 

 

1.1 Purchase and Sale of Shares. Subject to the terms and conditions provided below, Seller shall sell and transfer to Buyer and Buyer shall purchase from Seller, on the Closing Date (as defined in Section 3.1), the Shares, as set forth in Exhibit A attached hereto

 

1.2 Intentionally left blank. 

 

1.3 Consideration Shares. The purchase price for the Shares and the Seller Loans shall be 2,500,000 shares of common stock of the Seller, par value $0.001 per share owned by the Buyer (the “Consideration Shares”), deliverable by Buyer to Seller as provided in Section 2.3. 

 

	 
	1
	

 
	 

 

ARTICLE II.

CLOSING

 

2.1 Closing. The closing of the purchase and sale of the Shares (the “Closing”) shall take place remotely by electronic exchange of signature pages, on the date hereof (the “Closing Date”).

 

2.2 Transfer of Shares. At the Closing, Seller shall deliver to Buyer: (a) book entry of the Spin-Off Subsidiary dated as of the date hereof evidencing the Seller’s beneficiary ownership of the Shares; and (b) duly executed corporate document of the Spin-Off Subsidiary authorizing recording the Buyer as the owner of the Shares at the Closing. 

 

2.3 Transfer of Consideration Shares. At the Closing, Buyer shall deliver to Seller: (a) certificates representing the Consideration Shares, duly endorsed to Seller or as directed by Seller, which delivery shall vest Seller with good and marketable title to such Consideration Shares, free and clear of all liens and encumbrances; and (b) duly executed stock power(s) assigning and transferring the Consideration Shares to the Seller.

 

2.4 Transfer of Records. On or before the Closing, Seller shall transfer to Spin-Off Subsidiary all existing corporate books and records in Sellers possession relating to Spin-Off Subsidiary and its business, including but not limited to all agreements, litigation files, real estate files, personnel files and filings with governmental agencies; provided, however, when any such documents relate to both Seller and Spin-Off Subsidiary, only copies of such documents need be furnished. On or before the Closing, Buyer and Spin-Off Subsidiary shall transfer to Seller all existing corporate books and records in the possession of Buyer or Spin-Off Subsidiary relating to Seller, including but not limited to all corporate minute books, stock ledgers, certificates and corporate seals of Seller and all agreements, litigation files, real property files, personnel files and filings with governmental agencies; provided, however, when any such documents relate to both Seller and Spin-Off Subsidiary or its business, only copies of such documents need be furnished.

 

2.5 Further Assurances. At or after the Closing, and without further consideration, Seller, Spin-Off Subsidiary and Buyer, will each execute and deliver to one another such further instruments of conveyance and transfer as each may reasonably request in order to more effectively convey the Shares to Buyer, to convey the Consideration Shares to Seller, and to effectuate the consummation of the transactions provided for herein.

 

ARTICLE III.

BUYER’S REPRESENTATIONS AND WARRANTIES.

 

Buyer represents and warrants to Seller that:

 

3.1 Capacity and Enforceability. Buyer has the power, authority and legal capacity to execute and deliver this Agreement and the documents to be executed and delivered by Buyer at the Closing pursuant to the transactions contemplated this Agreement. This Agreement and all such documents constitute valid and binding agreements of Buyer, enforceable in accordance with their terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, fraudulent conveyance or similar laws affecting the enforcement of creditors’ rights generally and subject to general principles of equity (regardless of whether enforcement is sought in a proceeding of law or in equity).

 

3.2 Compliance. Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby by Buyer will result in the breach of any term or provision of, or constitute a default under, or violate any agreement, indenture, instrument, order, law or regulation to which Buyer is a party or by which Buyer is bound.

 

	 
	2
	

 
	 

 

3.3 Purchase for Investment. Buyer is financially able to bear the economic risks of acquiring the Shares and the other transactions contemplated hereby and has no need for liquidity in its investment in the Shares. Buyer has such knowledge and experience in financial and business matters in general, and with respect to businesses of a nature similar to the business of Spin-Off Subsidiary (after giving effect to the Assignment), so as to be capable of evaluating the merits and risks of, and making an informed business decision with regard to, the acquisition of the Shares and the other transactions contemplated hereby. Buyer is acquiring the Shares solely for its own account and not with a view to or for resale in connection with any distribution or public offering thereof, within the meaning of any applicable securities laws and regulations, unless such distribution or offering is registered under the Securities Act of 1933, as amended (the “Securities Act”), or an exemption from such registration is available. Buyer has (i) received all the information he has deemed necessary to make an informed decision with respect to the acquisition of the Shares and the other transactions contemplated hereby; (ii) had an opportunity to make such investigation as he has desired pertaining to Spin-Off Subsidiary (after giving effect to the Assignment) and the acquisition of an interest therein and the other transactions contemplated hereby, and to verify the information which is, and has been, made available to it; and (iii) had the opportunity to ask questions of Seller concerning Spin-Off Subsidiary (after giving effect to the Assignment). Buyer acknowledges that Grunewald is a current director and officer of Spin-Off Subsidiary and, as such, Grunewald has actual knowledge of the business, operations and financial affairs of Spin-Off Subsidiary (after giving effect to the Assignment). Buyer has received no public solicitation or advertisement with respect to the offer or sale of the Shares. Buyer realizes that the Shares are “restricted securities” as that term is defined in Rule 144 promulgated by the Securities and Exchange Commission under the Securities Act, the resale of the Shares is restricted by federal and state securities laws and, accordingly, the Shares must be held indefinitely unless their resale is subsequently registered under the Securities Act or an exemption from such registration is available for their resale. Buyer understands that any resale of the Shares must be registered under the Securities Act (and any applicable state securities law) or be effected in circumstances that, in the opinion of counsel for Spin-Off Subsidiary at the time, create an exemption or otherwise do not require registration under the Securities Act (or applicable state securities laws). Buyer acknowledges and consents that certificates now or hereafter issued for the Shares will bear a legend substantially as follows:

 

THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR QUALIFIED UNDER ANY APPLICABLE STATE SECURITIES LAWS (THE “STATE ACTS”), HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO A REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND QUALIFICATION UNDER THE STATE ACTS OR PURSUANT TO EXEMPTIONS FROM SUCH REGISTRATION OR QUALIFICATION REQUIREMENTS (INCLUDING, IN THE CASE OF THE SECURITIES ACT, THE EXEMPTIONS AFFORDED BY SECTION 4(a)(1) OF THE SECURITIES ACT AND RULE 144 THEREUNDER). AS A PRECONDITION TO ANY SUCH TRANSFER, THE ISSUER OF THESE SECURITIES SHALL BE FURNISHED WITH AN OPINION OF COUNSEL OPINING AS TO THE AVAILABILITY OF EXEMPTIONS FROM SUCH REGISTRATION AND QUALIFICATION AND/OR SUCH OTHER EVIDENCE AS MAY BE SATISFACTORY THERETO THAT ANY SUCH TRANSFER WILL NOT VIOLATE THE SECURITIES LAWS.

 

3.4 Title to Consideration Shares. Buyer is the sole record and beneficial owner of the Consideration Shares. At Closing, Buyer will have good and marketable title to the Consideration Shares, which Consideration Shares are, and at the Closing will be, free and clear of all options, warrants, pledges, claims, liens and encumbrances, and any restrictions or limitations prohibiting or restricting transfer to Buyer. The Consideration Shares represent all of the issued and outstanding securities of Seller. Buyer has good and marketable title to, and all other legal rights to possess and use, sell, assign, transfer and convey the Consideration Shares, free and clear of all Liens. Upon consummation of the transactions contemplated by this Agreement at the Closing, good and marketable title to the Consideration Shares, free and clear of all Liens (other than Liens incurred or imposed by Buyer), will pass to Seller. As used herein, “Lien” means any interest (including any security interest), pledge, mortgage, lien, encumbrance, charge, claim or other right of third parties, including any spousal interests (community or otherwise), whether created by law or in equity, including any such restriction on the use, voting, transfer, receipt of income or other exercise of any attributes of ownership.

 

	 
	3
	

 
	 

 

ARTICLE IV.

SELLER’S REPRESENTATIONS AND WARRANTIES.

 

Seller represents and warrants to Buyer that: 

 

4.1 Organization and Good Standing. Seller is a corporation duly incorporated, validly existing, and in good standing under the laws of the State of Florida and is properly qualified to do business and is in good standing in each state in which it is required to be so qualified. Spin-off Subsidiary is a corporation duly incorporated, validly existing, and in good standing under the laws of Malta, and is properly qualified to do business and is in good standing in each state and country in which it is required to be so qualified. 

 

4.2 Authority and Enforceability. Seller and Spin-Off Subsidiary have full power and authority to enter into this Agreement and to consummate the transactions contemplated hereby and to perform its obligations hereunder. The execution and delivery of this Agreement and the documents to be executed and delivered at the Closing pursuant to the transactions contemplated hereby, and performance in accordance with the terms hereof and thereof, have been duly authorized by Seller and Spin-Off Subsidiary, including requisite approval by Seller’s board of directors and shareholders, and approval by the board of directors of Spin-Off Subsidiary, and all such documents constitute valid and binding agreements of Seller and Spin-Off Subsidiary enforceable in accordance with their terms.

 

4.3 Capitalization; Subsidiaries. Seller owns all of the issued and outstanding stock of Spin-Off Subsidiary. The Shares constitute all of the issued and outstanding securities of Spin-Off Subsidiary. Seller does not have any subsidiaries or have any ownership interest in any other Person, other than Spin-Off Subsidiary. 

 

4.4 Title to Shares. Seller is the sole record and beneficial owner of the Shares. At Closing, Buyer will have good and marketable title to the Shares, which Shares are, and at the Closing will be, free and clear of all options, warrants, pledges, claims, liens and encumbrances, and any restrictions or limitations prohibiting or restricting transfer to Buyer. The Shares represent all of the issued and outstanding securities of Spin-Off Subsidiary. Seller has good and marketable title to, and all other legal rights to possess and use, sell, assign, transfer and convey the Shares, free and clear of all Liens. Upon consummation of the transactions contemplated by this Agreement at the Closing, good and marketable title to the Shares, free and clear of all Liens (other than Liens incurred or imposed by Buyer), will pass to Buyer. As used herein, “Lien” means any interest (including any security interest), pledge, mortgage, lien, encumbrance, charge, claim or other right of third parties, including any spousal interests (community or otherwise), whether created by law or in equity, including any such restriction on the use, voting, transfer, receipt of income or other exercise of any attributes of ownership.

 

4.5 Binding Obligations. Assuming this Agreement has been duly and validly authorized, executed and delivered by the parties hereto other than the Seller and Spin-Off Subsidiary, this Agreement is duly authorized, executed and delivered by Seller and Spin-Off Subsidiary, and constitutes the legal, valid and binding obligation of Seller and Spin-Off Subsidiary, enforceable against each of them in accordance with its terms, except as such enforcement is limited by general equitable principles, or by bankruptcy, insolvency and other similar laws affecting the enforcement of creditors rights generally.

 

4.6 Ability to Carry Out Obligations. The execution and delivery of this Agreement by Seller and Spin-Off Subsidiary and the performance by Seller and Spin-Off Subsidiary of its obligations hereunder will not cause, constitute, or conflict with or result in (a) any breach or violation of any of the provisions of or constitute a default under any agreement to which such Seller or Spin-Off Subsidiary is a party, or by which Seller or Spin-Off Subsidiary is bound, or (b) an event that would result in the creation or imposition of any lien, charge, or encumbrance upon the Shares being sold by Seller pursuant to this Agreement.

 

	 
	4
	

 
	 

 

ARTICLE V 

OTHER AGREEMENTS

 

5.1 Expenses. Each party hereto shall bear its expenses separately incurred in connection with this Agreement and with the performance of its obligations hereunder.

 

5.2 Confidentiality. 

 

(a) Seller, Spin-Off Subsidiary and Buyer will maintain in confidence, and will cause their respective directors, officers, employees, agents, and advisors (collectively, “Representatives”), as applicable, to maintain in confidence, any written, oral, or other information obtained in confidence from another party in connection with this Agreement or the transactions contemplated by this Agreement, unless: (i) such information is already known to such party (other than by reason of a breach of a confidentiality obligation by such party or any third party of which such party is aware) or to others not bound by a duty of confidentiality or such information becomes publicly available through no fault of such party, (ii) the use of such information is necessary or appropriate in making any required filing with the Commission, or obtaining any consent or approval required for the consummation of the transactions contemplated by this Agreement, or (iii) the furnishing or use of such information is required by or necessary or appropriate in connection with legal proceedings or applicable Law, including, without limitation, any rules and regulations of the Commission, a stock exchange or self-regulatory organization. 

 

(b) In the event that any party is required to disclose any information of another party pursuant to this Agreement, the party requested or required to make the disclosure (the “Disclosing Party”) shall provide the party that provided such information (the “Providing Party”) with prompt notice of any such requirement so that the Providing Party may seek a protective order or other appropriate remedy and/or waive compliance with the provisions of this Section 5.2. If, in the absence of a protective order or other remedy or the receipt of a waiver by the Providing Party, the Disclosing Party is nonetheless, legally compelled to disclose the information of the Providing Party, the Disclosing Party may, without liability hereunder, disclose only that portion of the Providing Party’s information which such counsel advises is legally required to be disclosed, provided that the Disclosing Party exercises its reasonable efforts to preserve the confidentiality of the Providing Party’s information, including, without limitation, by cooperating with the Providing Party to obtain an appropriate protective order or other relief assurance that confidential treatment will be accorded the Providing Party’s information.

 

(c) Notwithstanding the foregoing in Section 5.2(a) and (b) or Section 5.4, Seller on behalf of itself and its Representatives, expressly acknowledges and agrees that the records, books, data and other confidential information concerning the Spin-Off Subsidiary’s financial status, products, accounts, client development (including customer and prospect lists), sales activities and procedures, promotional and marketing techniques, plans and strategies, financing, research, development, technology, trade secrets, know-how, software, Intellectual Property and expansion plans and credit and financial data concerning customers and suppliers and other information involving Spin-Off Subsidiary obtained by Seller or its Representatives through Seller’s or its Representatives past affiliation with Spin-Off Subsidiary are considered by Buyer to be confidential and are valuable, special and unique assets of Spin-Off Subsidiary, access to and knowledge of which are essential to preserve the goodwill and going business value of Spin-Off Subsidiary for the benefit of Buyer. Seller further agrees that all knowledge and information described in the preceding sentence not in the public domain (unless such knowledge and information is in the public domain as a result of a breach by Seller of this Agreement) obtained by Seller or its Representatives as a result of Seller’s or its Representatives past affiliation with Spin-Off Subsidiary or Buyer shall be considered confidential information of the Buyer (collectively, the “BuyerConfidential Information”). In recognition of the foregoing, Seller hereby agrees that Seller will not, and will not permit its Representatives, on and after the Closing, to: (x) disclose, or cause to be disclosed, any of the Buyer Confidential Information to any person or entity for any reason or purpose whatsoever, except and to the extent such disclosure is required by any applicable Law (including any disclosure requirements of the SEC or stock exchange on which the securities of Seller is listed or quoted) or Order (provided, that Seller shall, (i) to extent reasonably possible, give the Buyer prompt notice of such required disclosure prior to disclosure; (ii) cooperate with the Buyer in the event that it elects to contest such disclosure in its entirety or a portion thereof or seek a protective order with respect thereto; and (iii) in any event only disclose the Buyer Confidential Information, or portion thereof, specifically required (after giving effect to any order obtained pursuant to clause (ii) above); or (y) make use of any of the Buyer Confidential Information for Seller’s or its Affiliates’ or Representatives own purposes or for the benefit of any person or entity (except Buyer or Buyer’s Affiliates) under any circumstances. 

 

	 
	5
	

 
	 

 

(i) For the purposes of this Agreement, an “Affiliate” is a person or entity that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, another specified person or entity.

 

(d) No party shall make any public announcement concerning this transaction without the prior written approval of all other parties, other than as may be required by applicable law or judicial process.

 

5.3 Brokers’ Fees. In connection with the transactions specifically contemplated by this Agreement, no party to this Agreement has employed the services of a broker and each agrees to indemnify the other against all claims of any third parties for fees and commissions of any brokers claiming a fee or commission related to the transactions contemplated hereby.

 

5.4 Access to Information Post-Closing; Cooperation. 

 

(a) Following the Closing, Buyer and Spin-Off Subsidiary shall afford to Seller and its authorized accountants, counsel and other designated representatives, reasonable access (and including using reasonable efforts to give access to persons or firms possessing information) and duplicating rights during normal business hours to allow records, books, contracts, instruments, computer data and other data and information, in each case created prior to the Closing (collectively, “Information”) within the possession or control of Buyer or Spin-Off Subsidiary insofar as such access is reasonably required by Seller to comply with applicable law or the order of a Governmental Authority. Information may be requested under this Section 5.4(a) for, without limitation, audit, accounting, third party claims, litigation and tax purposes, as well as for purposes of fulfilling legal disclosure and reporting obligations and performing this Agreement and the transactions contemplated hereby. No Information of Spin-Off Subsidiary existing at the Closing Date and required to be maintained by applicable Law shall be destroyed by Buyer or Spin-Off Subsidiary for a period of seven (7) years after Closing.

 

(b) Following the Closing, Seller shall afford to Buyer and Spin-Off Subsidiary and each of their authorized accountants, counsel and other designated representatives reasonable access (including using reasonable efforts to give access to persons or firms possessing information) and duplicating rights during normal business hours to Information within Seller’s possession or control relating to the business of Spin-Off Subsidiary insofar as such access is reasonably required by Buyer. Information may be requested under this Section 5.4(b) for, without limitation, audit, accounting, claims, litigation and tax purposes as well as for purposes of fulfilling disclosure and reporting obligations and for performing this Agreement and the transactions contemplated hereby. No Information existing at the Closing Date and required to be maintained by applicable Law shall be destroyed by Seller (and Seller shall not permit it Representatives to destroy such Information) for a period of seven (7) years after Closing.

 

(c) At all times following the Closing, Seller, Buyer and Spin-Off Subsidiary shall use their reasonable efforts to make available to the other on written request, the current and former officers, directors, employees and agents of Seller or Spin-Off Subsidiary for any of the purposes set forth in Section 5.4(a) or (b) above or as witnesses to the extent that such persons may reasonably be required in connection with any legal, administrative or other proceedings in which Seller or Spin-Off Subsidiary may from time to be involved.

 

(d) The party to whom any Information or witnesses are provided under this Section 5.4 shall reimburse the provider thereof for all out-of-pocket expenses actually and reasonably incurred, including, without limitation, reasonable attorney’s fees, in providing such Information or witnesses.

 

	 
	6
	

 
	 

 

(e) Seller, Buyer, Spin-Off Subsidiary and their respective employees and agents shall each hold in strict confidence all Information concerning the other party or parties in their possession or furnished by the other or the other’s Representative pursuant to this Agreement with the same degree of care as such party utilizes as to such party’s own confidential information (except to the extent that such Information is (i) in the public domain through no fault of such party or (ii) later lawfully acquired from any other source by such party without, so such party’s knowledge, any breach of a confidentiality obligation), and each party shall not release or disclose such Information to any other person, except such party’s auditors, attorneys, financial advisors, bankers, other consultants and advisors or persons to whom such party has a valid obligation to disclose such Information, unless compelled to disclose such Information by judicial or administrative process or, as advised by its counsel, by other requirements of law. In the case of a conflict between this Section and Section 5.2, Section 5.2 shall control. 

 

(f) Seller, Buyer and Spin-Off Subsidiary shall each use their best efforts to forward promptly to the other party all notices, claims, correspondence and other materials which are received and determined to pertain to the other party.

 

5.5 Filings and Consents. Seller shall make or cause to be made and shall obtain or cause to be obtained, if any, all filings and consents which must be made and/or obtained prior to and after the Closing to consummate the purchase and sale of the Shares and to report any such transactions to the SEC and any other Governmental Authority. Seller shall indemnify the Buyer Indemnified Parties (as defined in Section 6.2 below) against any Losses (as defined in Section 6.1 below) incurred by such Buyer Indemnified Parties by virtue of the failure to make and/or obtain any such filings or consents. 

 

5.6 Insurance. Buyer acknowledges that on the Closing Date, effective as of the Closing, any insurance coverage and bonds provided by Seller for Buyer or for Spin-Off Subsidiary, and all certificates of insurance evidencing that Buyer or Spin-Off Subsidiary maintain any required insurance by virtue of insurance provided by Seller, will terminate with respect to any insured damages resulting from matters occurring subsequent to Closing. 

 

5.7 Audits. Seller will allow Spin-Off Subsidiary and its counsel to participate at Spin-Off Subsidiary’s expense in any audit of Seller’s consolidated federal income tax returns to the extent that such audit raises issues that relate to and increase the tax liability of Spin-Off Subsidiary. Seller shall have the absolute right, in its sole discretion, to engage professionals and direct the representation of Seller in connection with any such audit and the resolution thereof, without receiving the consent of Buyer or Spin-Off Subsidiary or any other party acting on behalf of Buyer or Spin-Off Subsidiary, provided that Seller will not settle any such audit in a manner which could adversely affect Spin-Off Subsidiary after the Closing Date without Spin-Off Subsidiary’s prior written consent. In the event that after Closing any tax authority informs Buyer or Spin-Off Subsidiary of any notice of proposed audit, claim, assessment or other dispute concerning an amount of taxes which pertain to Seller, or to Spin-Off Subsidiary during the period prior to Closing, Buyer or Spin-Off Subsidiary must promptly notify Seller of the same within 15 business days of the date of the notice from the tax authority. In the event Buyer or Spin-Off Subsidiary does not notify Seller within such 15 business day period, Spin-Off Subsidiary, will indemnify Seller for any incremental interest, penalty or other assessments resulting from the delay in giving notice. To the extent of any conflict or inconsistency, the provisions of this Section 5.7 shall control over the provisions of Section 6.2 below.

 

	 
	7
	

 
	 

 

5.8 Cooperation on Tax Matters. Buyer, Seller and Spin-Off Subsidiary shall cooperate fully, as and to the extent reasonably requested by any party, in connection with the filing of tax returns pursuant to this Section and any audit, litigation or other proceeding with respect to taxes. Such cooperation shall include the retention and (upon the other party’s request) the provision of records and information which are reasonably relevant to any such audit, litigation or other proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. Spin-Off Subsidiary shall (i) retain all books and records with respect to tax matters pertinent to Spin-Off Subsidiary and Seller relating to any taxable period beginning before the Closing Date until the expiration of the statute of limitations (and, to the extent notified by Seller, any extensions thereof) of the respective taxable periods, and abide by all record retention agreements entered into with any taxing authority, and (ii) give the other parties reasonable written notice prior to transferring, destroying or discarding any such books and records and, if Seller so requests, Buyer agrees to provide copies of such books and records in the possession of Spin-Off Subsidiary.

 

5.9 Liabilities of Spin-Off Subsidiary. Except for the promissory notes as set forth in Section 5.10 of this Agreement, following the date hereof, Seller shall be released from and Buyer shall be responsible for any liability of Spin-Off Subsidiary existing as of and beyond the Closing Date including any direct or indirect indebtedness, guaranty, endorsement, claim, loss, damage, deficiency, cost, expense, obligation or responsibility, fixed or unfixed, known or unknown, asserted choate or inchoate, liquidated or unliquidated, secured or unsecured (each, “Liability of Spin-Off Subsidiary”). 

 

5.10 Transfer of Existing Promissory Note. Upon the Closing, Seller agrees to issue each holder (each, a “Holder”) of certain promissory notes (each, a “Subsidiary Note”) as listed in Exhibit B issued by Spin-Off Subsidiary a promissory note (“MLGT Notes”) substantially in the same terms and conditions as each applicable Subsidiary Note except that the mature date shall be extended to June 30, 2017 in the form attached hereto as Exhibit C. In consideration of the issuance of MLGT Notes, each holder of Subsidiary Notes and Spin-Off Subsidiary agree that each applicable Subsidiary Note shall be void upon closing. Each Holder hereby waives any and all past breaches caused by an event of default in each applicable Subsidiary Note and further agrees to release, acquit, and forever discharge Spin-Off Subsidiary, from any and all rights, actions, claims, debts, demands, costs, contracts, liabilities, obligations, damages and causes of action whether known, suspected or unknown, whether in law or in equity, which Holder had or now have or may claim to have by reason of those matters set forth in the Subsidiary Note, and any other matters which may relate, or which may have been related, to any subject matter which was, or could have been, raised in connection to the Subsidiary Note.

 

5.11 Further Assurances. Following the date hereof, Seller shall take such steps and actions, and provide such cooperation and assistance to Buyer and Spin-Off Subsidiary and any of their successors, assigns and legal representatives, including the execution and delivery of any affidavits, declarations, oaths, exhibits, assignments, powers of attorney, or other documents, as may be reasonably necessary or appropriate to effect, evidence or perfect the sale of the Shares to Buyer or any assignee or successor thereof.

 

	 
	8
	

 
	 

 

ARTICLE VI 

INDEMNIFICATION

 

6.1 Indemnification by Buyer. Buyer, covenants and agrees to indemnify, defend, protect and hold harmless Seller, and its respective officers, directors, employees, stockholders, agents, representatives and Affiliates (collectively, the “Seller Indemnified Parties”) at all times from and after the date of this Agreement, from and against all losses, liabilities, damages, claims, actions, suits, proceedings, demands, assessments, adjustments, costs and expenses (including specifically, but without limitation, reasonable attorneys’ fees and expenses of investigation), whether or not involving a third party claim (collectively, “Losses”), incurred by any Seller Indemnified Party as a result of or arising from: (i) any breach of the representations and warranties of Buyer set forth herein or in certificates delivered in connection herewith, (ii) any claim of Liability of Spin-Off Subsidiary as set forth in Section 5.9 above, and (iii) any breach or nonfulfillment of any covenant or agreement on the part of Buyer under this Agreement; provided that Buyer shall have no obligation to indemnify Seller for Losses for which Seller is obligated to indemnify a Buyer Indemnified Party (defined below) pursuant to Section 6.2 below. 

 

6.2 Indemnification by Seller. From and after the Closing, Seller agrees, to indemnify the Buyer and Spin-Off Subsidiary and each of their respective officers, directors, employees, stockholders, agents, representatives and Affiliates (collectively, the “Buyer Indemnified Parties”), as applicable, against all Losses incurred by such Buyer Indemnified Parties, caused by (i) any breach of any representation or warranty made by Seller in this Agreement or in any document or certificate delivered by Seller pursuant to this Agreement; and (ii) any breach of any covenant or obligation of Seller in this Agreement or any documents attached or delivered pursuant to this Agreement; and (iii) any fraud on behalf of Seller or any liability of Spin-Off Subsidiary which arose prior to the Closing and which was not disclosed to Buyer by Seller. Notwithstanding any other provision of this Agreement: (1) Seller’s aggregate liability in respect of all claims that the Buyer or Spin-Off Subsidiary may have against Seller pursuant to this Agreement will not exceed Three Hundred and Fifty Thousand ($350,000); and (2) Seller shall not have any liability for any breach of any representation, warranty, covenant or other obligation of the Spin-Off Subsidiary set forth in this Agreement. 

 

6.3 Third Party Claims.

 

(a) Defense. If any claim or liability should be asserted against any of the Buyer Indemnified Parties or the Seller Indemnified Parties (each, as applicable, whether or not involving a Third Party Claim, an “Indemnitee”) by a third party after the Closing (a “Third-Party Claim”) for which Buyer has an indemnification obligation under the terms of Section 6.1 or for which Seller has an indemnification obligation under the terms of Section 6.2, then the Indemnitee shall notify the indemnifying party (as applied to Buyer, or Seller, as applicable (whether or not involving a third-party claim), the “Indemnitor”) within 20 days after the Third-Party Claim is asserted by a third party (said notification being referred to as a “Claim Notice”) and give the Indemnitor a reasonable opportunity to take part in any examination of the books and records of the Indemnitee relating to such Third-Party Claim and to assume the defense of such Third-Party Claim and, in connection therewith, to conduct any proceedings or negotiations relating thereto and necessary or appropriate to defend the Indemnitee and/or settle the Third-Party Claim. The expenses (including reasonable attorneys’ fees) of all negotiations, proceedings, contests, lawsuits or settlements with respect to any Third-Party Claim shall be borne by the Indemnitor. If the Indemnitor agrees to assume the defense of any Third-Party Claim in writing within 20 days after the Claim Notice of such Third-Party Claim has been delivered, through counsel reasonably satisfactory to Indemnitee, then the Indemnitor shall be entitled to control the conduct of such defense, and any decision to settle such Third-Party Claim, and shall be responsible for any expenses of the Indemnitee in connection with the defense of such Third-Party Claim so long as the Indemnitor continues such defense until the final resolution of such Third-Party Claim. The Indemnitor shall be responsible for paying all settlements made or judgments entered with respect to any Third-Party Claim the defense of which has been assumed by the Indemnitor. Except as provided in subsection (b) below, both the Indemnitor and the Indemnitee must approve any settlement of a Third-Party Claim, which approval shall not be unreasonably withheld. A failure by the Indemnitee to timely give the Claim Notice shall not excuse Indemnitor from any indemnification liability except only to the extent that the Indemnitor is materially and adversely prejudiced by such failure.

 

	 
	9
	

 
	 

 

(b) Failure to Defend. If the Indemnitor shall not agree to assume the defense of any Third-Party Claim in writing within 20 days after the Claim Notice of such Third-Party Claim has been delivered, or shall fail to continue such defense until the final resolution of such Third-Party Claim, then the Indemnitee may defend against such Third-Party Claim in such manner as it may deem appropriate and the Indemnitee may settle such Third-Party Claim, in its sole discretion, on such terms as it may deem appropriate; provided however, that the Indemnitor shall (i) promptly reimburse the Indemnitee for the amount of all settlement payments and expenses, legal and otherwise, incurred by the Indemnitee in connection with the defense or settlement of such Third-Party Claim, or (ii) shall pay, in advance of any settlement or proceedings and in installments as reasonably agreed to by the parties, such sums and expenses reasonably expected to be incurred in connection with the defense of the Third-Party Claim and any settlement thereof. If no settlement of such Third-Party Claim is made, then the Indemnitor shall satisfy any judgment rendered with respect to such Third-Party Claim before the Indemnitee is required to do so, and pay all expenses, legal or otherwise, incurred by the Indemnitee in the defense against such Third-Party Claim.

 

(c) Non-Third-Party Claims. Upon discovery of any claim for which Indemnitor has an indemnification obligation under the terms of Section 6.1 or Section 6.2 which does not involve a claim by a third party against the Indemnitee, the Indemnitee shall give prompt notice to Indemnitor of such claim and, in any case, shall give Indemnitor such notice within 30 days of such discovery. A failure by Indemnitee to timely give the foregoing notice to Indemnitor shall not excuse Indemnitor from any indemnification liability except to the extent that Indemnitor is materially and adversely prejudiced by such failure.

 

6.4 Survival. Anything in this Agreement to the contrary notwithstanding, the liability of each Indemnitor under this Article VI shall survive as follows: (a) an Indemnitor’s liability for breach of any representation or warranty of such Indemnitor in this Agreement shall survive until and terminate upon the first (1st) anniversary of the Closing date, provided that such liability shall survive if, prior to the first (1st) anniversary of the Closing Date, any Indemnitee shall have asserted a claim for indemnification for Losses incurred by such Indemnitee pursuant to this Article VI in writing to the appropriate party, which claim shall identify its basis with reasonable specificity (a “Claim”), in which case the liability for such Claim shall continue until it shall have been finally settled, decided or adjudicated, (b) an Indemnitor’s liability for Losses incurred as a result of such Indemnitor’s breach of any covenant or agreement to be performed by such Indemnitor after the Closing, shall survive indefinitely, and (c) liability of an Indemnitor for Losses arising out of Third-Party Claims for which such Indemnitor has an indemnification obligation, which liability shall survive until the statute of limitation applicable to any third party’s right to assert a Third-Party Claim bars assertion of such claim.

 

6.5 Exclusive Remedy. Except for Claims based on actions for specific performance, injunctive relief or equitable remedies brought in accordance with this Agreement, the sole and exclusive remedy of any Seller or Buyer Indemnitee for any and all claims or Losses relating to or arising out of or in connection with this Agreement or the transactions contemplated by this Agreement and the facts and circumstances relating and pertaining thereto (whether any such claim may be made in contract, breach of warranty, tort, or otherwise, and whether arising by statute, common law or otherwise) shall be an action for indemnity pursuant to this Article VI, which shall be governed and limited by this Article VI. 

 

	 
	10
	

 
	 

 

ARTICLE VII 

MISCELLANEOUS.

 

7.1 Definitions. Capitalized terms used herein without definition have the meanings ascribed to them in the Securities Purchase Agreement.

 

7.2 Notices. All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been duly given (i) if delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed, (ii) mailed by certified or registered mail with postage prepaid, on the third (3rd) business day after the date on which it is so mailed, or (iii) sent by facsimile transmission, without receipt of confirmation that such transmission has been received:

 

	
 
	(a)	If to Seller, addressed to:
	
 
	
 
	
 

	
 
	
 
	
mLight Tech, Inc.

c/o Hunter Taubman Fischer & Li LLC

1450 Broadway, 26th Floor

New York, NY 10018

Attn: Todd Sudeck, CEO 

	
 
	
 
	
 

	
 
	
With a copy to (which shall not constitute notice hereunder):

	
 
	
 
	
 

	
 
	
 
	
Hunter Taubman Fischer Li LLC 

1450 Broadway, 26th Floor 

New York, NY 10018

Attn: Arila Zhou 

Email Address: azhou@htflawyers.com 

	
 
	
 
	
 

	
 
	
(b) 
	
If to Buyer or Spin-Off Subsidiary, addressed to:

	
 
	
 
	
 

	
 
	
 
	
Todd Sudeck 

3011 Rivoli, 

Newport Beach CA 92660

Email Address: todd@dingking.com 

	
 
	
 
	
 

	
 
	
With a copy to (which shall not constitute notice hereunder):

	
 
	
 
	
 

	
 
	
 
	
Robert Huston 

10 Jetty Drive, 

Corona del Mar, CA 92625

Email Address: bob_huston@yahoo.com 

 

	 
	11
	

 
	 

 

or to such other address as any party hereto shall specify pursuant to this Section 7.2 from time to time.

 

7.3 Exercise of Rights and Remedies. Except as otherwise provided herein, no delay of or omission in the exercise of any right, power or remedy accruing to any party as a result of any breach or default by any other party under this Agreement shall impair any such right, power or remedy, nor shall it be construed as a waiver of or acquiescence in any such breach or default, or of any similar breach or default occurring later; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default occurring before or after that waiver.

 

7.4 Reformation and Severability. In case any provision of this Agreement shall be invalid, illegal or unenforceable, it shall, to the extent possible, be modified in such manner as to be valid, legal and enforceable but so as to most nearly retain the intent of the parties, and if such modification is not possible, such provision shall be severed from this Agreement, and in either case the validity, legality and enforceability of the remaining provisions of this Agreement shall not in any way be affected or impaired thereby.

 

7.5 Further Acts and Assurances. From and after the Closing, Seller, Buyer and Spin-Off Subsidiary agree that each will act in a manner supporting compliance, including compliance by its Affiliates, with all of its obligations under this Agreement and, from time to time, shall, at the request of another party hereto, and without further consideration, cause the execution and delivery of such other instruments of conveyance, transfer, assignment or assumption and take such other action or execute such other documents as such party may reasonably request in order more effectively to convey, transfer to and vest in Buyer, and to put Spin-Off Subsidiary in possession of, all Shares and to convey, transfer to and vest in Buyer, the Shares, and, in the case of any contracts and rights that cannot be effectively transferred without the consent or approval of another person that is unobtainable, to use its best reasonable efforts to ensure that Spin-Off Subsidiary receives the benefits thereof to the maximum extent permissible in accordance with applicable law or other applicable restrictions, and shall perform such other acts which may be reasonably necessary to effectuate the purposes of this Agreement.

 

7.6 Entire Agreement; Amendments. This Agreement contains the entire understanding of the parties relating to the subject matter contained herein. This Agreement cannot be amended or changed except through a written instrument signed by all of the parties hereto.

 

7.7 Assignment. No party may assign his, her or its rights or obligations hereunder, in whole or in part, without the prior written consent of the other parties. This Agreement will be binding on and enforceable against all permitted successors and assignees. 

 

7.8 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to principles of conflicts or choice of laws thereof.

 

7.9 Counterparts. This Agreement may be executed in one or more counterparts, with the same effect as if all parties had signed the same document. Each such counterpart shall be an original, but all such counterparts taken together shall constitute a single agreement. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature page was an original thereof.

 

	 
	12
	

 
	 

 

7.10 Section Headings and Gender. The section headings used herein are inserted for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement. All personal pronouns used in this Agreement shall include the other genders, whether used in the masculine, feminine or neuter and the singular shall include the plural, and vice versa, whenever and as often as may be appropriate.

 

7.11 Specific Performance; Remedies. Each of the parties to this Agreement acknowledges and agrees that, if any provision of this Agreement is not performed in accordance with its specific terms or is otherwise breached, irreparable damages would be incurred by the other parties to this Agreement. Accordingly, the parties to this Agreement agree that any party will be entitled to seek an injunction or injunctions to prevent breaches of the provisions of this Agreement and to enforce specifically this Agreement and its terms and provisions in any action instituted in any court of the United States or any state thereof having jurisdiction over the parties and the matter, subject to Section 7.8, in addition to any other remedy to which they may be entitled, at law or in equity. Except as expressly provided herein, the rights, obligations and remedies created by this Agreement are cumulative and are in addition to any other rights, obligations or remedies otherwise available at law or in equity, and nothing herein will be considered an election of remedies. 

 

7.12 Submission to Jurisdiction; Process Agent; No Jury Trial.

 

(a) Each party to the Agreement hereby submits to the jurisdiction of the Courts of State of California, in any action arising out of or relating to this Agreement, and agrees that all claims in respect of the action may be heard and determined in any such court. Each party to the Agreement also agrees not to bring any action arising out of or relating to this Agreement in any other court. Each party to the Agreement agrees that a final judgment in any action so brought will be conclusive and may be enforced by action on the judgment or in any other manner provided at law or in equity. Each party to the Agreement waives any defense of inconvenient forum to the maintenance of any action so brought and waives any bond, surety or other security that might be required of any other party with respect thereto.

 

(b) EACH PARTY TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS RIGHTS TO JURY TRIAL OF ANY DISPUTE BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OTHER AGREEMENTS RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT OR ANY DEALINGS AMONG THEM RELATING TO THE TRANSACTIONS CONTEMPLATED HEREBY. The scope of this waiver is intended to be all encompassing of any and all actions that may be filed in any court and that relate to the subject matter of the transactions, including contract claims, tort claims, breach of duty claims and all other common law and statutory claims. Each party to the Agreement hereby acknowledges that this waiver is a material inducement to enter into a business relationship and that they will continue to rely on the waiver in their related future dealings. Each party to the Agreement further represents and warrants that it has reviewed this waiver with its legal counsel, and that each knowingly and voluntarily waives its jury trial rights following consultation with legal counsel. NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED ORALLY OR IN WRITING, AND THE WAIVER WILL APPLY TO ANY AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING HERETO. In the event of commencement of any action, this Agreement may be filed as a written consent to trial by a court.

 

	 
	13
	

 
	 

 

7.13 Construction. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. If an ambiguity or question of intent or interpretation arises, this Agreement will be construed as if drafted jointly by the parties hereto and no presumption or burden of proof will arise favoring or disfavoring any party because of the authorship of any provision of this Agreement. Any reference to any federal, state, local or foreign law will be deemed also to refer to law as amended and all rules and regulations promulgated thereunder, unless the context requires otherwise. The words “include,” “includes,” and “including” will be deemed to be followed by “without limitation.” The words “this Agreement,” “herein,” “hereof,” “hereby,” “hereunder,” and words of similar import refer to this Agreement as a whole and not to any particular subdivision unless expressly so limited. The parties hereto intend that each representation, warranty and covenant contained herein will have independent significance. If any party hereto has breached any representation, warranty or covenant contained herein in any respect, the fact that there exists another representation, warranty or covenant relating to the same subject matter (regardless of the relative levels of specificity) which that party has not breached will not detract from or mitigate the fact that such party is in breach of the first representation, warranty or covenant.

 

7.14 General Releases. 

 

(a) Each party hereto, respectively, on its own behalf and on behalf of its Affiliates (each such party and its Affiliates, a “Releasor”), effective on the Closing Date: (i) irrevocably and unconditionally releases, waives and forever discharges each other party to this Agreement and such other party’s respective officers, directors, stockholders, successors, Representatives and permitted assigns (each, a “Releasee”), from any and all claims and Liabilities, but only to the extent arising prior to the Closing (collectively all claims and Liabilities released pursuant to this Section 7.13(a)(i) are referred to as the “Released Claims”); and (ii) irrevocably agrees to refrain from directly or indirectly asserting any claim or demand or commencing (or causing to be commenced) any suit, action or proceeding of any kind against any of the Releasees, based upon or in connection with any matter released or purported to be released pursuant to this Section 7.13(a).

 

(b) For the avoidance of doubt, this Section 7.13 does not constitute a release with respect to claims or Liabilities arising out of, based on or resulting from this Agreement, the Purchase Agreement, or the agreements or exhibits attached hereto and thereto. As used in this Agreement, “Liabilities” means, collectively, any debt, claim, cause of action, obligation, or liability. 

 

[Signature page follows this page]

 

	 
	14
	

 
	 

 

IN WITNESS WHEREOF, the parties hereto have duly executed this Spin-Off Agreement as of the day and year first above written.

 

 

	 	SELLER:
 

mLight Tech, Inc.
	
	 	 	 	 
		By:	/s/ Todd Sudeck 	
	
 
	
Name: 
	Todd Sudeck	 
	 	Title: 	Chief Executive Officer	 

 

 

 

[Signature Page to Spin-Off Agreement]

	 
	15
	

 
	 

 

	
 
	
SPIN-OFF SUBSIDIARY: 

The Ding King Training Institute, Inc. 
	
 

	
 
	
 
	
 
	
 

	
 
	
By: 
	
/s/ Todd Sudeck 
	
 

	
 
	
Name: 
	
Todd Sudeck
	
 

	
 
	
Title: 
	
Chief Executive Officer
	
 

 

 

 

[Signature Page to Spin-Off Agreement]

 

	 
	16
	

 
	 

  

	
 
	
BUYER:
	
 

	
 
	
 
	
 
	
 

	
 
	
By: 
	
/s/ Todd Sudeck 
	
 

	
 
	
Name: 
	
Todd Sudeck
	
 

    

 

 

[Signature Page to Spin-Off Agreement]

 

	 
	17
	

 
	 

 

	
 
	
HOLDER (For the purpose of Section 5.10 only)

 

SCI Inc.
	
 

	
 
	
 
	
 
	
 

	
 
	
By: 
	
/s/ William H. Burton
	
 

	
 
	
Name: 
	
William H. Burton 
	
 

	
 
	
Title: 
	
President
	
 

 

 

 

[Signature Page to Spin-Off Agreement]

 

	 
	18
	

 
	 

 

	
 
	
HOLDER (For the purpose of Section 5.10 only)
	
 

	
 
	
 
	
 
	
 

	
 
	
By: 
	
/s/ Elsa Sung
	
 

	
 
	
Name: 
	
Elsa Sung
	
 

 

 

 

[Signature Page to Spin-Off Agreement]

 

	 
	19
	

 
	 

  

	
 
	
HOLDER (For the purpose of Section 5.10 only)
	
 

	
 
	
 
	
 
	
 

	
 
	
By: 
	
/s/ Dahuai Zhang
	
 

	
 
	
Name: 
	
Dahuai Zhang
	
 

 

 

 

 

[Signature Page to Spin-Off Agreement]

 

	 
	20
	

 
	 

 

EXHIBIT A

 

	
Spin-Off Subsidiary
	
 
	
Shares
	
 
	
Number of Shares
	
 
	
Certificate No(s).

	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
The Ding King Training Institute, Inc.
	
 
	
Common Stock
	
 
	
5,000
	
 
	
No certificate as a private company

 

 

 

[Signature Page to Spin-Off Agreement]

 

	 
	21
	

	

 

EXHIBIT B

 

	

Name of Holder
	
 
	
Address of Holder
	
 
	
Issuance Date
	
 
	
Amount of Principal on the Note 
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
SCI Inc.
	
 
	
1067 East Highway 24, Woodland Park CO 80863
	
 
	
March 31, 2017
	
 
	$	25,000	
 

	
Elsa Sung
	
 
	
401 SW4th AVE APT 208, Fort Lauderdale, FL 33315
	
 
	
March 31, 2017
	
 
	$	25,000	
 

	
Dahuai Zhang
	
 
	
 
	
 
	
March 31, 2017
	
 
	$	83,000	
 

 

 

 

[Signature Page to Spin-Off Agreement]

 

	 
	22
	

	

 

EXHIBIT C

 

Form of Promissory Note

 

PROMISSORY NOTE

 

Original Principal Amount

 

	
March 31, 2017
	
$________

 

mLight Tech, Inc., a Florida corporation (the "Makers”), for value received, promises to pay to ____________ (the "Holder"), or its registered assigns, the principal sum of US $___________ (__________) (the "Principal Amount"). The Makers will pay to the Holder the principal amount and 5% annual rate of interest thereon as described in Section 1 below until the maturity date described below.

 

WHEREAS:

 

I. FOR VALUE RECEIVED. Makers by this promissory note (the "Note"), hereby promises to pay the Holder, a principal sum of ________ ($_______) bearing 5% annual rate of interest, and to pay a balloon payment of $_________ at the end of period of twelve months. This Note is unsecured and will mature on June 30, 2017.

 

II. All principal payments payable under this Note are payable in lawful money of the United States of America in immediately available funds.

 

III. This Note shall be governed by and construed in accordance with the laws of the State of California, United States of America.

 

IV. In the event that the principal hereof on this Note is not paid when due, Holder, to the extent permitted by applicable law, shall have the right to received interest earned on the unpaid balance of the Note at an annualized interest rate of 18% per year.

 

	 	mlight Tech, Inc.	
	 	 	 	 
		By:	/s/ Todd Sudeck	
	
 
	
Name: 
	Todd Sudeck	 
	 	Title: 	President	 

 

 

 

[Signature Page to Spin-Off Agreement]

 

 

	
23

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00269-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00269-of-00352.parquet"}]]