Florida
|
000-28831
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84-1047159
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(State of Incorporation or organization)
|
(Commission File No.)
|
(I.R.S. Employer Identification No.)
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10.1 | Option Agreement, dated June 27, 2016, by Capstone Companies, Inc. and Involve, LLC |
10.2 | Promissory Note, dated June 27, 2016, by Neil Singer in favor of Capstone Companies, Inc. |
10.3 | Subordination Agreement, dated June 27, 2016, by Capstone Companies, Inc. and Koch Minerals, LLC |
10.4 | Securities Purchase Agreement, dated June 27, 2016, by Capstone Companies, Inc., Neil Singer and AC Kinetics, Inc. |
10.5 | Termination Agreement, dated June 27, 2016, by Capstone Companies, Inc. and AC Kinetics, Inc. |
Page
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ARTICLE 1 OPTION TO PURCHASE
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1
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1.1
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Grant of Option and Term
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1
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1.2
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Duties Upon Exercise of Option
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2
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1.3
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Failure to Exercise Option
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2
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ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY
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3
|
|
2.1
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Authority, Validity, Effect and No Conflict
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3
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2.2
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Consents
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3
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ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SELLER
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3
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3.1
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Existence and Good Standing
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3
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3.2
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Authority, Validity, Effect and No Conflict
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3
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3.3
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Consents
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4
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3.4
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Securities
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4
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ARTICLE 4 ADDITIONAL AGREEMENTS
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4
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4.1
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Escrow
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4
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4.2
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No Transfer of Securities without Entry Into Joinder Agreement
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5
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4.3
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Waiver and Release
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5
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ARTICLE 5 MISCELLANEOUS
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6
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5.1
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Assignment
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6
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5.2
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Headings
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6
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5.3
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Integration, Modification and Waiver
|
6
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5.4
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Construction
|
6
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5.5
|
Severability
|
7
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5.6
|
Notices
|
7
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5.7
|
Governing Law
|
7
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5.8
|
Jurisdiction and Venue
|
8
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5.9
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Waiver of Jury Trial
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8
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5.10
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No Third Party Beneficiaries
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8
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5.11
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Counterparts
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9
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(a)
|
Seller hereby grants to the Company options to repurchase the Securities at a purchase price of $0.01 per share in five (5) increments of 5,000,000 shares (each, an "
Option
" and collectively the "
Options
") for $50,000 per Option (the "
Exercise Price
"), for a total purchase price of $250,000 in the aggregate if all Options are exercised.
|
(b)
|
Each Option may be exercised or not by the Company in its sole discretion, by written notice from the Company to Seller (each, an "
Exercise Notice
"). For the avoidance of doubt, the Company's ability to exercise any Option is not contingent upon the occurrence of any transaction involving Seller and/or any of its Affiliates or any Affiliates of Neil Singer.
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(c)
|
Each unexercised Option shall terminate on the Termination Date (as defined below). For the avoidance of doubt, the Company may not exercise any Option that has not been exercised before the expiration of the Option Period (as defined below).
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(d)
|
The following terms used in this Agreement shall have the meanings set forth below:
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(i)
|
The "
First Exercise Date
" means the first date that the Company exercises any Option in accordance with the terms of this Agreement.
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(ii)
|
The "
Termination Date
" means the earlier of (A) the twelve (12) month anniversary of the First Exercise Date or (B) the thirty-six (36) month anniversary of the Effective Date.
|
(iii)
|
The "
Option Period
" means the period between the Effective Date and the Termination Date.
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(a)
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The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the Florida.
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(b)
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The Company has all requisite power and authority to enter into and perform its obligations under this Agreement and to consummate the transactions contemplated hereby. This Agreement has been duly approved by all requisite action and this Agreement has been duly executed and delivered by the Company pursuant to all necessary authorization and is the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation, fraudulent conveyance and other similar Laws and principles of equity affecting creditors' rights and remedies generally (the "
General Enforceability Exceptions
").
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(c)
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Neither the execution of this Agreement by the Company, nor the performance by the Company of its obligations hereunder will (i) violate or conflict with the organizational or governing documents of the Company or any Law, Permit or Order, (ii) violate, conflict with or result in a breach or termination of, or otherwise give any Person additional rights or compensation under, or the right to terminate or accelerate, or constitute (with notice or lapse of time, or both) a default under the terms of any note, deed, mortgage, or other Contract to which the Company is a party or by which any of its assets or properties are bound or (iii) result in the creation or imposition of any Lien with respect to, or otherwise have an adverse effect upon, its assets or properties.
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(a)
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Seller has all requisite authority and full legal capacity to enter into and perform its obligations under this Agreement and to consummate the transactions contemplated hereby. This Agreement has been duly approved by all requisite action and has been duly executed and delivered by Seller pursuant to all necessary authorization and is the legal, valid and binding obligation of Seller, enforceable against Seller in accordance with its terms, subject to the General Enforceability Exceptions.
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(b)
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Neither the execution of this Agreement by Seller, nor the performance by Seller of its obligations hereunder will violate or conflict with the organizational documents of Seller or any Law, Permit or Order or any Contract to which Seller is a party or by which Seller may be bound.
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(a)
|
On the date hereof, the Company and Seller, as applicable, shall deposit, and Escrow Agent hereby acknowledges receipt of, the Certificate and duly executed stock powers in blank with the Escrow Agent, to be held in escrow pending written release by Seller and the Company in accordance with the terms hereof. Seller and the Company each hereby appoint the Escrow Agent to serve as, and the Escrow Agent hereby agrees to act as, escrow agent, and to hold the Certificate (and any Revised Certificate, as instructed by the Parties in accordance with the terms of this Agreement) in escrow pursuant to the terms and conditions set forth herein. The Escrow Agent shall not release the Certificate or any Revised Certificate except as directed in a writing signed by an authorized representative of each of Seller and the Company directing the Escrow Agent to release the Certificate or such Revised Certificate, as applicable, (i) to the Company at an Option Closing pursuant to
Section
1.2
(including for cancellation following receipt of a Revised Certificate in accordance with
Section
1.2
), or (ii) in the event that not all of the Options are exercised before the expiration of the Option Period, to Seller. All notices, requests, claims, demands and other communications to the Escrow Agent hereunder shall be in writing in accordance with the procedures set forth in
Section
5.6
to the following address: Nason Yeager Gerson White & Lioce, P.A., 3001 PGA Boulevard, Suite 305, Palm Beach Gardens, Florida 33410, Attn: Michael D. Harris, Esq. For purposes of this Agreement, "
Escrow Agent
" means Nason Yeager Gerson White & Lioce, P.A.
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(b)
|
If, at any time, (i) there shall exist any dispute between Seller and the Company with respect to the holding or disposition of all or any portion of the Securities or any other obligations of the Escrow Agent hereunder or (ii) the Escrow Agent is unable to determine, to the Escrow Agent's satisfaction, the proper disposition of all or any portion of the Securities or the Escrow Agent's proper actions with respect to its obligations hereunder, then the Escrow Agent may, in its sole discretion, petition any court of competent jurisdiction (including, for the avoidance of doubt, the Florida Circuit Court in and for Palm Beach County, and if jurisdiction in the Florida Circuit Court shall be unavailable, the federal courts of the U.S. sitting in the State of
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(c)
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Seller shall retain ownership of the Securities and shall be entitled to exercise any and all voting rights pertaining to the Securities until the Option Closing occurs with respect to such Securities.
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(a)
|
The Company, on behalf of itself, its Affiliates and each of their respective heirs, administrators, executors, officers, directors, employees, stockholders, partners, managers, members, agents and representatives, and the successors and assigns of each (individually, a "
Releasor
", collectively, the "
Releasors
"), FULLY AND FINALLY RELEASES, ACQUITS AND FOREVER DISCHARGES, AND COVENANTS NOT TO SUE, the Seller and its respective Affiliates (and, to the extent they would be liable in respect of their position with the foregoing, each of the present and former officers, directors, stockholders, members, partners, managers, representatives, employees, agents, Affiliates, subsidiaries, predecessors, successors, assigns, beneficiaries, heirs, executors, insurers, personal representatives and attorneys of the foregoing) (the "
Released Parties
") from or for any and all Actions, Liens, Contracts, offers, Liabilities and compensation of any kind or nature whatsoever, KNOWN OR UNKNOWN, SUSPECTED OR UNSUSPECTED, FORESEEN OR UNFORESEEN, KNOWN OR UNKNOWN, DISCLOSED OR UNDISCLOSED, MATURED OR UNMATURED, FIXED OR CONTINGENT, PAST, PRESENT OR FUTURE, IN LAW OR IN EQUITY ("
Released Matters
"), which Releasors presently have, have ever had or may hereafter have against the Released Parties arising contemporaneously with or prior to the Effective Date, or on account of or arising out of any matter, cause or event occurring contemporaneously with or prior to the Effective Date (including the entry into this Agreement);
provided, however
, that nothing contained herein operates to release any obligations of Seller or any of its Affiliates or any other Released Party arising under this Agreement. In compliance with any Law which requires a specific release of unknown claims or benefits, the Company acknowledges that this release includes a release of unknown claims (except claims of fraud), and hereby expressly waives and relinquishes any and all such claims, rights or benefits that such may have which are unknown at the effective time of this release. Each Party understands and agrees that if, hereafter, it discovers facts different from or in addition to those that it now knows or believe to be true, that the waivers and releases granted hereby will be and remain effective in all respects notwithstanding such different or additional facts or the discovery of such facts except in the case of claims of fraud.
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(b)
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The Company further agrees not to institute any Action, and will not cooperate or assist in any such Action, against the Released Parties, or any of them, pursuing any Released Matter released pursuant to
Section
4.3(a)
.
|
(c)
|
The Company represents that it has not assigned any Released Matter or potential Released Matter against the Released Parties to any other Person.
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(d)
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It is understood and agreed that Seller (on behalf of itself and the other Released Parties) does not admit any Liability regarding the matters released hereby.
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Witness
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Name:
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(a)
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Junior Creditor represents and warrants to Senior Creditor as follows:
|
(i)
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This Agreement has been duly executed and delivered by Junior Creditor and is a valid and binding obligation of Junior Creditor, enforceable against Junior Creditor in accordance with its terms.
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(ii)
|
Junior Creditor has no lien on or other security interest in any existing or future assets of any Loan Party, whether real or personal.
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(iii)
|
Junior Creditor is the only holder of the Junior Note and has not encumbered, hypothecated or otherwise transferred any Junior Debt or any interest of Junior Creditor therein to any other Person. Similarly, Junior Creditor has not assigned or otherwise transferred any rights of Junior Creditor under the Junior Note.
|
(iv)
|
No Person has guaranteed the payment or performance of any Junior Debt or agreed to purchase or otherwise acquire any Junior Debt.
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(v)
|
A true and complete copy of the Junior Note is attached as
Exhibit A
hereto.
|
(b)
|
Each Loan Party (by virtue of its execution and delivery of the Acknowledgment and Agreement attached hereto) represents and warrants to Senior Creditor as follows:
|
(i)
|
This Agreement has been duly executed and delivered by such Loan Party and is a valid and binding obligation of such Loan Party, enforceable against such Loan Party in accordance with its terms.
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(ii)
|
Such Loan Party has not encumbered (or agreed to encumber at any time) any of its existing or future properties, real or personal, in any respect to secure its obligation to pay any Junior Debt.
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(iii)
|
To each Loan Party's knowledge, after making due inquiry, the Junior Creditor is (A) the holder of the Junior Debt and has not encumbered, hypothecated or otherwise transferred any Junior Debt or any interest of Junior Creditor therein to any other Person and (B) the only Person entitled to enforce any rights under the Junior Note.
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(iv)
|
No Person has guaranteed the payment or performance of any Junior Debt or agreed to purchase or otherwise acquire any Junior Debt.
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(v)
|
A true and complete copy of the Junior Note is attached as
Exhibit A
hereto.
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(a)
|
General
. Notwithstanding anything to the contrary in any document evidencing any Junior Debt, Junior Creditor agrees and covenants that the Junior Debt is and shall be subordinate in right of payment to the prior payment in full of the Senior Debt to the extent set forth in this Agreement. The Senior Debt shall not be deemed to have been paid in full until the Satisfaction of the Senior Debt.
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(b)
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Payment of Junior Debt
. Until the Satisfaction of the Senior Debt, Junior Creditor shall not be entitled to receive any payments of principal, interest, fees or any other amounts payable from any Loan Party in respect of any Junior Debt.
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(a)
|
Insolvency or Dissolution of Loan Parties
. Upon any payment or distribution of all or any of the assets or securities of any Loan Party of any kind or character, whether in cash, property or securities, upon any dissolution, winding up, liquidation, reorganization, arrangement, adjustment, protection, relief or composition of any Loan Party or its debts, whether voluntary or involuntary or in bankruptcy, insolvency, receivership, arrangement, reorganization, relief or other proceedings, or upon any assignment for the benefit of creditors or any other marshaling of the assets and liabilities of any Loan Party or otherwise (any such event being an "
Insolvency Event
"), all Senior Debt shall first be indefeasibly paid in full before Junior Creditor shall be entitled to receive any payment or other transfer in respect of any Junior Debt. Upon the occurrence of any Insolvency Event in respect of any Loan Party, any payment or distribution of assets or securities of such Loan Party of any kind or character, whether in cash, property or securities, to which Junior Creditor would be entitled except for the provisions of this
Article III
, shall be made by such Loan Party or by any receiver, trustee in bankruptcy, liquidating trustee, agent or other Person making such payment or distribution, directly to Senior Creditor for application (in the case of cash) to, or as collateral (in the case of non‑cash property or securities) for, the payment or prepayment in full of all Senior Debt.
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(b)
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Demand for or Acceleration of Payment of Junior Debt
. If any Junior Debt is declared due and payable or the maturity thereof is accelerated for any reason, Senior Creditor shall be entitled to receive payment in full of all amounts due or to become due in respect of the Senior Debt (whether or not a default or event of default has occurred thereunder or such Senior Debt is or has been declared to be due and payable) before Junior Creditor shall be entitled to receive any payment or other transfer in respect of any Junior Debt.
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(c)
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Certain Payments Held in Trust
. In the event that, notwithstanding the foregoing provisions prohibiting such payment or distribution, Junior Creditor receives any payment or distribution in respect of any Junior Debt in violation of the provisions of this Agreement, then and in such event such payment or distribution shall be received and held in trust for Senior Creditor and shall be paid over or delivered to Senior Creditor for application (in the case of cash) to, or as collateral (in the case of non‑cash property or securities) for, the payment or prepayment of all Senior Debt in full.
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(a)
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Authorization to Senior Creditor to Act
. If an Insolvency Event occurs, Senior Creditor is irrevocably authorized and empowered (in its own name or in the name of Junior Creditor or otherwise), but shall have no obligation, to demand, sue for, collect and receive every payment or distribution referred to in
Section
3.2(a)
above and to file claims and proofs of claim with respect to the Junior Debt in any bankruptcy or other insolvency proceeding, and in each case to apply any payment or other distribution of assets or securities in the manner and to the extent provided in
Section
3.2(a)
above.
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(b)
|
Specific Performance; Indemnification
. Senior Creditor is entitled to specific performance of the provisions of this Agreement, at any time when Junior Creditor shall have failed to comply with any of the provisions of this Agreement. Junior Creditor hereby irrevocably waives any defense based on the adequacy of a remedy at Law that might be asserted as a bar to such remedy of specific performance. Junior Creditor acknowledges that the provisions of this
Article III
are intended to be enforceable at all times, whether before or after the commencement of an Insolvency Event. Junior Creditor shall indemnify, defend and hold harmless Senior Creditor for any losses, liabilities, taxes, claims, debts, damages, judgments, settlements, costs, fines, expenses (including attorneys' fees), penalties or other obligations incurred by Senior
|
(a)
|
Junior Debt
. Junior Creditor will cause each instrument now or hereafter held by or on behalf of Junior Creditor evidencing any Junior Debt to contain, in a conspicuous manner, the following legend:
|
(b)
|
Further Assurances
. Junior Creditor will further mark Junior Creditor's books of account, if any, in such a manner as shall be effective to give proper notice of the effect of this Agreement, and will, in the case of any Junior Debt which is not evidenced by any instrument, upon Senior Creditor's request cause such Junior Debt to be evidenced by an appropriate instrument or instruments endorsed with the above legend. Junior Creditor will, at Junior Creditor's expense and at any time and from time to time, promptly execute and deliver all further instruments and documents, and take all commercially reasonable further action, that may be necessary or desirable, or that Senior Creditor may request, in order to protect any right or interest granted or purported to be granted hereby or to enable Senior Creditor to exercise and enforce its rights and remedies hereunder.
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(a)
|
All rights and interests of Senior Creditor under this Agreement, and all agreements and obligations of Junior Creditor under this Agreement, shall remain in full force and effect irrespective of: (i) any lack of validity or enforceability of instruments or agreements evidencing or otherwise relating to any Senior Debt; (ii) any change in the time, manner or place of payment of, or in any other term of, any Senior Debt, or any other amendment or waiver of or any consent to departure from any instruments or agreements evidencing or otherwise relating to any Senior Debt; (iii) any exchange, release or non‑perfection of any collateral, any release of any Person liable in whole or in part, or any release or amendment or waiver of or consent to departure from any guaranty, for any Senior Debt; or (iv) any other circumstance that might otherwise constitute a defense available to, or a discharge of, a surety.
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(b)
|
The provisions of this
Article III
shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any Senior Debt is rescinded or must otherwise be returned by Senior Creditor upon the insolvency, bankruptcy or reorganization of any Loan Party or otherwise, all as though such payment had not been made.
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(c)
|
Junior Creditor hereby waives promptness, diligence, notice of acceptance and any other notice with respect to any Senior Debt and this
Article III
and any requirement that Senior Creditor protect, secure, perfect or insure any security interest or lien or any property subject thereto or exhaust any right or take any action against any Loan Party or any other Person or any collateral.
|
(d)
|
No failure on the part of Senior Creditor to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by Law or equity.
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(e)
|
The provisions of this
Article III
, and all other provisions of this Agreement, constitute a continuing agreement and shall (i) remain in full force and effect until the Satisfaction of the Senior Debt, (ii) be binding upon Junior Creditor and Junior Creditor's successors, permitted assigns, heirs and personal representatives, as applicable, and (iii) inure to the benefit of and be enforceable by Senior Creditor and its successors and assigns. Without limiting the generality of the foregoing clause (iii), Senior Creditor may assign or otherwise transfer its rights under this Agreement to any other Person, and such other Person shall thereupon become vested with all such rights granted to Senior Creditor herein or otherwise. Notwithstanding anything to the contrary herein, no Junior Creditor may assign or otherwise transfer this Agreement to any other Person without the prior written consent of Senior Creditor. Any purported assignment or transfer by Junior Creditor in violation of this Agreement will be null and void.
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(a)
|
Junior Creditor will not cancel or otherwise discharge any Junior Debt (except upon payment in full thereof to the extent permitted by
Article III
) without the prior written consent of Senior Creditor, which consent shall not be unreasonably withheld so long as no Insolvency Event has occurred and is continuing.
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(b)
|
Junior Creditor will not sell, assign, pledge, encumber or otherwise dispose of any Junior Debt held by Junior Creditor unless each such sale, assignment, pledge, encumbrance or disposition is made expressly subject to this Agreement.
|
(c)
|
Junior Creditor will not permit the terms of any Junior Debt held by Junior Creditor to be amended or otherwise modified in any respect without obtaining the prior written consent of Senior Creditor. Similarly, Junior Creditor will not permit the Junior Note to be amended or otherwise modified in any respect without obtaining the prior written consent of Senior Creditor.
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(d)
|
Junior Creditor will not secure the payment of any Junior Debt, or obtain a lien, security interest or other charge or encumbrance of any nature whatsoever against any Loan Party's property, whether now owned or hereafter acquired; and, notwithstanding the foregoing, should Junior Creditor have or obtain at any time any lien, security interest or other charge or encumbrance of any nature whatsoever (including any judgment lien) against any property of any Loan Party, such lien, security interest or other charge or encumbrance shall be in all respects subject, junior and subordinate to all liens, security interests or other charges or encumbrances of any nature whatsoever (including any judgment lien) at any time granted or suffered by such Loan Party in favor of Senior Creditor, and without regard to the method or manner of creation, attachment or perfection of any such liens, security interests or other charges and encumbrances and without regard to the order of filing of any Uniform Commercial Code financing statements, mortgages or other lien perfection documents or the issuance or recordation of any judgment liens.
|
(e)
|
Junior Creditor will not accept or be the beneficiary under any guaranty, debt purchase agreement or similar assurance of payment or performance from any Person who has guaranteed or hereafter guarantees any Senior Debt, or who is or hereafter becomes a co-borrower under any Senior Debt, or who otherwise has assured or hereafter assures payment of any Senior Debt, in each case without obtaining the prior written consent of Senior Creditor, and then only upon first entering into a subordination agreement with Senior Creditor whereby Junior Creditor's payment and other rights in respect of such guarantor, co-borrower or other obligor are subordinated in substantially the same manner as Junior Creditor's payment and other rights in respect of the Loan Parties are subordinated under this Agreement. If, notwithstanding the foregoing, Junior Creditor fails to enter into such subordination agreement, all payment, lien and other rights of Junior Creditor with respect to such guarantor, co-borrower or other obligor shall nonetheless be subject, junior and subordinate to all payment, lien and other rights of Senior Creditor with respect to such guarantor, co-borrower or other obligor.
|
(a)
|
The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement. Any reference to any Law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. Unless the context clearly indicates otherwise: (i) each definition herein includes the singular and the plural, (ii) each reference herein to any gender includes the masculine, feminine and neuter where appropriate, (iii) the words "include" and "including" and variations thereof shall not be deemed terms of limitation, but rather shall be deemed to be followed by the words "without limitation," (iv) the words "hereof," "herein," "hereto," "hereby," "hereunder" and derivative or similar words refer to this Agreement as an entirety and not solely to any particular provision of this Agreement, (v) each reference in this Agreement to a particular Article, Section, Exhibit or Schedule means an Article or Section of, or an Exhibit or Schedule to, this Agreement, unless another agreement is specified, (vi) unless otherwise specified, any definition of or reference to any agreement, instrument, document or Law herein shall be construed as referring to such agreement, instrument, document or Law as it may from time to time be amended, supplemented or otherwise modified, and (vii) unless otherwise specified, any references to "$" or "Dollars" shall mean U.S. Dollars.
|
(b)
|
The Section and other headings in this Agreement and any index at the beginning of this Agreement are for convenience of reference only and shall not limit or otherwise affect any of the terms of this Agreement. Similarly, any page footers or headers or similar word processing, document or page identification numbers in this Agreement or any index or exhibit are for convenience of reference only and shall not limit or otherwise affect any of the terms of this Agreement, nor shall there be any requirement that any such footers or other numbers be consistent from page to page. Defined terms used in this Agreement may be set forth in
Section
1.1
or other Sections of this Agreement. As used in this Agreement, the word "or" shall be disjunctive but not necessarily exclusive. Any reference to a Person's "assets" or "property" or the like shall include any stock or other securities, including investment property and financial assets, in which such Person has an ownership or other interest. Any recitals or preliminary statements above constitute an integral part of this Agreement.
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Page
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ARTICLE 1 PURCHASE
|
4
|
|
1.1
|
Purchase of Securities
|
4
|
1.2
|
Purchase Price and Payment
|
4
|
1.3
|
Termination of Rights as Stockholder
|
4
|
ARTICLE 2 CLOSING, DELIVERIES AND OTHER ACTIONS
|
4
|
|
2.1
|
Time and Place of the Closing
|
4
|
2.2
|
Deliveries by the Stockholder
|
5
|
2.3
|
Deliveries by the Company and the Purchaser
|
5
|
ARTICLE 3 REPRESENTATIONS AND WARRANTIES RELATED TO THE STOCKHOLDER
|
5
|
|
3.1
|
Title to the Securities
|
5
|
3.2
|
Authority, Validity, Effect and No Conflict
|
6
|
3.3
|
Consents
|
6
|
3.4
|
Receipt of Information
|
7
|
3.5
|
No Future Participation
|
7
|
3.6
|
No Other Company Securities
|
7
|
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND THE COMPANY
|
7
|
|
4.1
|
Authority, Validity and Enforceability
|
7
|
4.2
|
No Conflict
|
8
|
4.3
|
Consents
|
8
|
4.4
|
Status; Investment Purpose
|
8
|
ARTICLE 5 ADDITIONAL AGREEMENTS
|
8
|
|
5.1
|
Further Assurances
|
8
|
5.2
|
Press Release, Announcements and Disclosure
|
8
|
5.3
|
Waiver, Release and Assignment.
|
9
|
5.4
|
Withholding
|
10
|
ARTICLE 6 DEFINITIONS
|
10
|
|
6.1
|
Definitions
|
10
|
ARTICLE 7 MISCELLANEOUS
|
14
|
|
7.1
|
Assignment
|
14
|
7.2
|
Headings
|
14
|
7.3
|
Integration, Modification and Waiver
|
14
|
7.4
|
Construction
|
14
|
7.5
|
Severability
|
15
|
7.6
|
Notices
|
15
|
7.7
|
Governing Law
|
16
|
7.8
|
Jurisdiction and Venue
|
16
|
7.9
|
Waiver of Jury Trial
|
16
|
7.10
|
No Third Party Beneficiaries
|
17
|
7.11
|
Counterparts
|
17
|
Exhibit A | Form of Option Agreement |
Exhibit B | Form of Subordination Agreement |
Exhibit C | Form of Note |
Schedule 3.4 | Koch Transaction Documents and Asset Transfers Documents |
(a)
|
stock certificates evidencing the Securities duly endorsed in blank or accompanied by an instrument of transfer duly executed by the Stockholder, transferring the Securities to the Purchaser free and clear of all Liens (other than Liens existing under securities Laws), dated as of the Closing Date;
|
(b)
|
the Option Agreement, duly executed by the Stockholder;
|
(c)
|
the Subordination Agreement duly executed by the Stockholder and dated as of the Closing Date; and
|
(d)
|
a termination agreement (the "
Termination Agreement
") terminating all contracts between Stockholder and the Company other than those specifically identified therein, duly executed by the Stockholder and any other parties to the Contracts listed on the schedules thereto necessary to make such Termination Agreement valid with respect to such Contract and dated as of the Closing Date.
|
(a)
|
the Option Agreement, duly executed by Involve and dated as of the Closing Date;
|
(b)
|
an acknowledgment of the Subordination Agreement, duly executed by ACK, NLO and Newco and dated as of the Closing Date;
|
(c)
|
the Termination Agreement, duly executed by the Company and any other parties to the Contracts listed on the schedules thereto necessary to make such Termination Agreement valid with respect to such Contract and dated as of the Closing Date;
|
(d)
|
the Additional Consideration; and
|
(e)
|
the Note, duly executed by the Purchaser and dated as of the Closing Date.
|
(a)
|
As of the Closing, the Stockholder shall own, and shall deliver to the Purchaser, the Securities, free and clear of any and all Liens (other than Liens existing under securities Laws).
|
(b)
|
The Stockholder acquired the Securities solely for its own account for investment purposes and not with a view to, or for offer or sale in connection with, any distribution thereof, and the Stockholder has held the Securities for a period of at least six (6) months. The Securities have not been and will not be registered under the Securities Act of 1933, as amended, which term, as used herein, includes the rules and regulations of the Securities and Exchange Commission thereunder (the "
Securities Act
") and may not be offered or sold except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and any state securities laws, as applicable. Subject to the accuracy of the representations and warranties of the Purchaser set forth in this Agreement, it is not necessary in connection with the sale of the Securities to the Purchaser to register the Securities under the Securities Act or any state securities laws, as the Securities are eligible for resale pursuant to an applicable exemption from registration under the Securities Act and state securities laws and regulations, as applicable.
|
(a)
|
The Stockholder is a Florida corporation duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its formation.
|
(b)
|
Each of the Stockholder and its Affiliates, as applicable, has all requisite power and authority to enter into and perform its respective obligations under this Agreement and any Ancillary Agreement to which such entity is a party and to consummate the transactions contemplated hereby and thereby. This Agreement and any such Ancillary Agreements have been duly approved by all requisite action and have been duly executed and delivered by the Stockholder and/or such Affiliates, as applicable, pursuant to all necessary authorization and are the legal, valid and binding obligations of the Stockholder and/or such Affiliates, as applicable, enforceable against the Stockholder and/or such Affiliates, as applicable, in accordance with their terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation, fraudulent conveyance and other similar Laws and principles of equity affecting creditors' rights and remedies generally (the "
General Enforceability Exceptions
").
|
(c)
|
Neither the execution of this Agreement or the Ancillary Agreements by the Stockholder and/or its Affiliates, as applicable, nor the performance by the Stockholder and/or such Affiliates, as applicable, of its obligations hereunder or thereunder will (i) violate or conflict with the organizational or governing documents of the Stockholder and/or such Affiliates, as applicable, or any Law, Permit or Order, (ii) violate, conflict with or result in a breach or termination of, or otherwise give any Person additional rights or compensation under, or the right to terminate or accelerate, or constitute (with notice or lapse of time, or both) a default under the terms of any note, deed, mortgage, or other Contract to which the Stockholder and/or such Affiliates, as applicable, is a party or by which any of its assets or properties are bound or (iii) result in the creation or imposition of any Lien with respect to, or otherwise have an adverse effect upon, the Securities.
|
(a)
|
The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware.
|
(b)
|
The Purchaser is an individual with due capacity, and the Company and its and the Purchaser's respective Affiliates have the requisite power and authority to enter into and perform their respective obligations under this Agreement and any Ancillary Agreement to which such Person is a party and to consummate the transactions contemplated hereby and thereby. This Agreement and any such Ancillary Agreements have been duly approved by all requisite action and have been duly executed and delivered by the Purchaser, the Company and/or such Affiliates, as applicable, pursuant to all necessary authorization, as applicable, and are the legal, valid and binding obligations of the Purchaser, the Company and/or such Affiliates, as applicable, enforceable against them in accordance with their terms, subject to the General Enforceability Exceptions.
|
(a)
|
The Stockholder on behalf of itself and each of its Affiliates and each of their respective heirs, administrators, executors, officers, directors, employees, stockholders, partners, managers, members, agents and representatives, and the successors and assigns of each (individually, a "
Releasor
", collectively, the "
Releasors
"), FULLY AND FINALLY RELEASES, ACQUITS AND FOREVER DISCHARGES, AND COVENANTS NOT TO SUE, the Purchaser, the Company and their respective Affiliates (including Convolve, Inc., Newco and NLO), as well as Koch, (and, to the extent they would be liable in respect of their position with the foregoing, each of the present and former officers, directors, stockholders, members, partners, managers, representatives, employees, agents, Affiliates, subsidiaries, predecessors, successors, assigns, beneficiaries, heirs, executors, insurers, personal representatives and attorneys of the foregoing) (the "
Released Parties
") from or for any and all Actions, Liens, Contracts, offers, Liabilities and compensation of any kind or nature whatsoever, KNOWN OR UNKNOWN, SUSPECTED OR UNSUSPECTED, FORESEEN OR UNFORESEEN, KNOWN OR UNKNOWN, DISCLOSED OR UNDISCLOSED, MATURED OR UNMATURED, FIXED OR CONTINGENT, PAST, PRESENT OR FUTURE, IN LAW OR IN EQUITY ("
Released Matters
"), which Releasors presently have, have ever had or may hereafter have against the Released Parties arising contemporaneously with or prior to the Closing Date or on account of or arising out of any matter, cause or event occurring contemporaneously with or prior to the Closing Date, as well as the Note Assignments, Asset Transfers or Koch Transactions, including (i) any claims related to ownership in or of, or in any portion or aspect of Intellectual Property that is owned, held or used by the Purchaser or the Company and (ii) any claims related to that certain Royalty Agreement, dated as of January 15, 2013, by and between the Company and the Stockholder, that certain letter agreement, dated as of January 15, 2013, by and between the Company and the Stockholder, or any other agreements to which the Stockholder and/or any Affiliate thereof, on the one hand, and the Company, the Purchaser and/or any Affiliate thereof, on the other hand, is a party;
provided, however
, that nothing contained herein operates to release any obligations of the Company, the Purchaser or their respective Affiliates, as applicable, arising under this Agreement or the Ancillary Agreements. In compliance with any Law which requires a specific release of unknown claims or benefits, the Stockholder acknowledges that this release includes a release of unknown claims (except claims of fraud), and hereby expressly waives and relinquishes any and all such claims, rights or benefits that such may have which are unknown at the effective time of this release. Each Party understands and agrees that if, hereafter, it discovers facts different from or in addition to those that it now knows or believe to be true, that the waivers and releases granted hereby will be and remain effective in all respects notwithstanding such different or additional facts or the discovery of such facts except in the case of claims of fraud. The Releasor hereby waives any claims or rights in and to the Intellectual Property that is owned, held or used by the Purchaser or the Company.
|
(b)
|
The Stockholder further agrees not to institute any Action, and will not cooperate or assist in any such Action, against the Released Parties, or any of them, pursuing any Released Matter released pursuant to
Section
5.3(a)
.
|
(c)
|
The Stockholder shall indemnify, defend and hold harmless the Released Parties from any Liabilities incurred or suffered by any of such Persons based upon, arising out of, or otherwise related to a breach of
Section
5.2
or this
Section
5.3
by any Releasor.
|
(d)
|
The Stockholder represents that it has not assigned any Released Matter or potential Released Matter against the Released Parties to any other Person.
|
(e)
|
It is understood and agreed that the Purchaser and the Company (on behalf of themselves and the other Released Parties) do not admit any Liability regarding the matters released hereby.
|
(f)
|
To the extent that the Stockholder in fact possesses any right, title or interest in any degree or any portion or aspect of NLO IP respecting technology for AC induction motor control, the Stockholder hereby assigns and transfers all such right, title and interest to the Company. To the extent that the Stockholder in fact possesses any right, title or interest in any degree or in any portion or aspect of NLO IP other than that respecting technology for AC induction motor control, the Stockholder hereby assigns and transfers all such right, title and interest to the Purchaser.
|
Name: | Neil Singer |
Title: | President |
Name: | James G. McClinton |
1.
|
Credit Agreement, by and between ACK NLO, LLC and Koch Minerals, LLC.
|
2.
|
Promissory Note from ACK NLO, LLC in favor of Koch Minerals, LLC.
|
3.
|
Guarantees of NLO Holdco, LLC and AC Kinetics, Inc. of ACK NLO, LLC's obligations under the Credit Agreement in favor of Koch Minerals, LLC.
|
4.
|
Pledge Agreements of NLO Holdco, LLC and AC Kinetics, Inc. in favor of Koch Minerals, LLC.
|
5.
|
Security Agreement, by and between ACK NLO, LLC and Koch Minerals, LLC.
|
6.
|
Option Agreement, by and among Koch Minerals, LLC, ACK NLO, LLC, AC Kinetics, Inc., NLO Holdco, LLC, Neil Singer, individually and in his capacity as Seller Parties' Representative, Lydia Singer, Stuart Landow and Gold Eagle Consulting, Inc., and related Disclosure Schedules.
|
7.
|
Technology Escrow Agreement, by and among EscrowTech International, Koch Minerals, LLC, and ACK NLO, LLC.
|
8.
|
Form of Asset Purchase Agreement, by and among Koch Minerals, LLC, an affiliate of Koch Minerals, LLC and Neil Singer, individually and as Seller Parties' Representative, and related Disclosure Schedules.
|
9.
|
Deferred Purchase Price Letter Agreement, by and among Koch Minerals, LLC and Neil Singer.
|
10.
|
Services Agreement, by and among AC Kinetics, Inc., NLO Holdco, LLC, Stuart Landow and Gold Eagle Consulting, Inc.
|
11.
|
Contribution Agreement, by and among Neil Singer, Lydia Singer, Stuart Landow and Gold Eagle Consulting, Inc.
|
1.
|
Limited Liability Company Agreement of ACK NLO, LLC
|
2.
|
Assignment Agreements by each of Neil Singer and Stuart Landow individually and Gold Eagle Consulting, Inc. in favor of NLO Holdco, LLC.
|
3.
|
Disclaimer and Assignment Agreement by each of Stuart Landow individually and Gold Eagle Consulting, Inc. in favor of AC Kinetics, Inc.
|
4.
|
Disclaimer and Assignment Agreement by Kenneth Pasch individually in favor of Neil Singer.
|
5.
|
Contribution Agreements by each of AC Kinetics, Inc. and NLO Holdco, LLC in favor of ACK NLO, LLC.
|
6.
|
Restrictive Covenant Agreements between ACK NLO, LLC and each of Neil Singer, Stuart Landow and Kenneth Pasch.
|
7.
|
Valuation of the Fair Market Value of VSD and NLO Proprietary Algorithms by IncreMental Advantage, LLC, dated March 16, 2016.
|
Name: | Neil Singer |
Title: | President |
Name: | James G. McClinton |
1.
|
Termination Agreement, dated effective as of June 27, 2016, by and between AC Kinetics, Inc. and Capstone Companies, Inc.
|
2.
|
Securities Purchase Agreement, dated effective as of June 27, 2016, by and among Neil Singer, AC Kinetics, Inc. and Capstone Companies, Inc.
|
3.
|
Option Agreement, effective as of June 27, 2016 by and between Involve LLC and Capstone Companies, Inc.
|
4.
|
Subordination Agreement, made as of June 27, 2016 to be effective as of the Effective Date (as defined therein), by and between Koch Minerals, LLC and Capstone Companies, Inc. and acknowledged and agreed to by each of AC Kinetics, Inc., NLO Holdco, LLC and ACK NLO, LLC.
|
5.
|
Note, dated June 27, 2016, from Neil Singer, in favor of Capstone Companies, Inc.
|
6.
|
Letter Agreement re: Confidentiality Agreement, dated February 3, 2016, by and among AC Kinetics, Inc., Capstone Companies, Inc. and Koch Minerals, LLC.
|
1.
|
Letter Agreement, dated January 15, 2013, by and between AC Kinetics, Inc. and Capstone Companies, Inc.
|
2.
|
Royalty Agreement, dated January 15, 2013, by and between AC Kinetics, Inc. and Capstone Companies, Inc.
|