Exhibit 99.2
STOCK PURCHASE
AGREEMENT
This Stock Purchase Agreement (this “
Agreement
”),
dated as of March 15
th
, 2019, is entered into between Patrick Calderone (“
Seller
”) and Focus Universal,
Inc., a Nevada corporation, with its principal offices located at 2311 East Locust Street, Ontario, California 91761 (“
Buyer
”).
RECITALS:
WHEREAS, Seller owns
2,000 shares of common stock, no par value, of AVX Design and Integration, Inc., a California corporation (the “
Company
”),
equivalent to 100% of the issued and outstanding shares of the Company (the “
Shares
”); and
WHEREAS, Seller wishes
to sell to Buyer, and Buyer wishes to purchase from Seller, the Shares, subject to the terms and conditions set forth herein;
NOW, THEREFORE, in
consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
Article
I
Purchase and sale
Section 1.01 Purchase
and Sale.
Subject to the terms and conditions set forth herein, at the Closing, Seller shall sell, transfer and assign to Buyer,
and Buyer shall purchase from Seller, all of Seller’s right title and interest in a to the Shares, free and clear of any
mortgage, pledge, lien, charge, security interest, claim, community property interest, option, equitable interest, restriction
of any kind (including any restriction on use, voting, transfer, receipt of income, or exercise of any other ownership attribute),
or other encumbrance (each, an “
Encumbrance
”), for the consideration set forth in Section 1.02.
Section 1.02 Purchase
Price.
The aggregate purchase price for the Shares shall be $875,000, subject to adjustment pursuant to
Section 2.05
hereof (the “
Purchase Price
”). Buyer may request that the Company and Seller
make elections under Section 338(h)(10) of the Internal Revenue Code (a “
338(h)(10) Election
”), or other, similar
sections of the Internal Revenue Code (and regulations promulgated thereunder) if it is determined by the parties that such election
will not have any adverse impact on Seller. In the event that a Section 338(h)(10) Election is made, the parties agree to allocate
the Purchase Price for tax purposes as provided in
Section 7.07
Section 1.03 Payment
of the Purchase Price.
The Purchase Price shall be paid at the Closing by delivering the following:
(a) the
sum of
$550,000
by wire transfer of immediately available funds to an account or accounts of Seller designated in writing
by Seller to Buyer;
(b) the
sum of
$275,000
in the form of
39,286
shares of common stock of Buyer; and
(c) the
execution and delivery by Buyer of a promissory note for the sum of
$50,000
, to accrue interest at a rate of 6% per annum,
and payable in 12 equal, successive monthly installments of principal and interest (the “Note”).
Section 1.04 Transactions
to be Effected at the Closing.
(a) At
the Closing, Buyer shall deliver to Seller:
(i) the
Purchase Price, delivered in accordance with the provisions of Section 1.03(a) through (c) in an escrow account with Oak Escrow
Inc, 5 days prior to Closing; and
(ii) stock
certificates evidencing the
39,286
shares of common stock of Buyer, free and clear of all Encumbrances, duly endorsed in
blank or accompanied by stock powers or other instruments of transfer duly executed in blank, with all required stock transfer
tax stamps affixed thereto; and
(iii) the
Transaction Documents and all other agreements, documents, instruments or certificates required to be delivered by Buyer at or
prior to the Closing pursuant to
Section 8.03
of this Agreement.
(b) At
the Closing, Seller shall deliver to Buyer:
(i) stock
certificates evidencing the Shares, free and clear of all Encumbrances, duly endorsed in blank or accompanied by stock powers or
other instruments of transfer duly executed in blank, with all required stock transfer tax stamps affixed thereto in an escrow
account with Oak Escrow Inc, 5 days prior to Closing;
(ii) a
duly executed Form 8023 to effect the 338(h)(10) Election;
(iii) a
certificate of the Secretary (or other officer) of the Company certifying (i) that attached thereto are true and complete copies
of all resolutions of the board of directors and the shareholders of Seller authorizing the execution, delivery, and performance
of this Agreement, and the other agreements, instruments, and documents required to be delivered in connection with this Agreement
or at the Closing (collectively, the “
Transaction Documents
”) and the consummation of the transactions contemplated
hereby and thereby, and that such resolutions are in full force and effect, (ii) the names, titles, and signatures of the officers
of Seller authorized to sign this Agreement and the other Transaction Documents, and (iii) that attached thereto are true and complete
copies of the governing documents of the Company, including any amendments or restatements thereof, and that such governing documents
are in full force and effect;
(iv) resignations
of the directors and officers of the Company, effective as of the Closing Date; and
(v) the
Transaction Documents and all other agreements, documents, instruments or certificates required to be delivered by Seller at or
prior to the Closing pursuant to
Section 8.02
of this Agreement.
Section 1.05 Closing.
Subject to the terms and conditions of this Agreement, the purchase and sale of the Shares contemplated hereby shall take place
at a closing (the “
Closing
”) to be held at 11:00 a.m., Pacific Standard time,
no later than two Business Days after the last of the conditions to Closing set forth in
Article VIII
have been satisfied
or waived (other than conditions which, by their nature, are to be satisfied on the Closing Date), by the electronic exchange of
documents, or at such other time or on such other date or at such other place as Seller and Buyer may mutually agree upon in writing
(the day on which the Closing takes place being the “
Closing Date
”).
Section 1.06 Withholding
Tax.
Buyer and the Company shall be entitled to deduct and withhold from the Purchase Price all Taxes that Buyer and the Company
may be required to deduct and withhold under any provision of Tax Law. All such withheld amounts shall be treated as delivered
to Seller hereunder.
Article
II
Representations and warranties of the Seller
Except as set forth
in the correspondingly numbered Section of the Seller Disclosure Schedules, the Seller represents and warrants to Buyer that the
statements contained in this
Article II
are true and correct as of the date hereof.
Section 2.01 Organization
and Authority of the Company.
The Company is a corporation duly organized, validly existing and in good standing under the
Laws of the state of California. The Seller has full power and authority to enter into this Agreement and the other Transaction
Documents to which the Seller is a party, to carry out its obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. This Agreement has been duly executed and delivered by the Seller, and (assuming due authorization,
execution and delivery by Buyer) this Agreement constitutes a legal, valid and binding obligation of the Seller enforceable against
the Seller in accordance with its terms. When each other Transaction Document to which the Seller is or will be a party has been
duly executed and delivered by the Seller (assuming due authorization, execution and delivery by each other party thereto), such
Transaction Document will constitute a legal and binding obligation of the Seller enforceable against it in accordance with its
terms.
Section 2.02 Capitalization.
(a) The
authorized capital stock of the Company consists of 100 shares of common stock, with no par value (“
Common Stock
”),
of which 100 shares are issued and outstanding and constitute the Shares. All of the Shares have been duly authorized, are validly
issued, fully paid and non-assessable, and are owned of record and beneficially by Seller, free and clear of all Encumbrances.
Upon consummation of the transactions contemplated by this Agreement, Buyer shall own all of the Shares, free and clear of all
Encumbrances.
(b) All
of the Shares were issued in compliance with applicable Laws. None of the Shares were issued in violation of any agreement, arrangement
or commitment to which Seller or the Company is a party or is subject to or in violation of any pre-emptive or similar rights of
any Person.
(c) There
are no outstanding or authorized options, warrants, convertible securities or other rights, agreements, arrangements or commitments
of any character relating to the capital stock of the Company or obligating the Company to issue or sell any shares of capital
stock of, or any other interest in, the Company. The Company does not have outstanding or authorized any stock appreciation, phantom
stock, profit participation or similar rights. There are no voting trusts, stockholder agreements, proxies or other agreements
or understandings in effect with respect to the voting or transfer of any of the Shares.
Section 2.03 No
Subsidiaries.
The Company does not own, or have any interest in any shares or have an ownership interest in any other Person.
Section 2.04 No
Conflicts; Consents.
The execution, delivery and performance by the Seller of this Agreement and the other Transaction Documents
to which he is a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not: (a) conflict
with or result in a violation or breach of, or default under, any provision of the certificate of incorporation, by-laws or other
organizational documents of the Company; (b) conflict with or result in a violation or breach of any provision of any Law or Governmental
Order applicable to the Company; (c) require the consent, notice or other action by any Person under, conflict with, result in
a violation or breach of, constitute a default or an event that, with or without notice or lapse of time or both, would constitute
a default under, result in the acceleration of or create in any party the right to accelerate, terminate, modify or cancel any
Contract to which the Company is a party or by which the Company is bound or to which its properties and assets are subject (including
any Material Contract) or any Permit affecting the properties, assets or business of the Company; or (d) result in the creation
or imposition of any Encumbrance other than Permitted Encumbrances on any properties or assets of the Company. No consent, approval,
Permit, Governmental Order, declaration or filing with, or notice to, any Governmental Authority is required by or with respect
to the Company in connection with the execution and delivery of this Agreement and the other Transaction Documents and the consummation
of the transactions contemplated hereby and thereby, except for such filings as may be required under the HSR Act.
Section 2.05 Financial
Statements.
Complete copies of the Company’s unaudited financial statements consisting of the balance sheet of the Company
as of December 31
st
in each of the years, 2016, 2017, 2018 and the related statements of income and retained earnings,
stockholders’ equity and cash flow for the years then ended (the “
Financial Statements
”)
have been delivered to Buyer. The Financial Statements have been prepared in accordance with GAAP applied on a consistent basis
throughout the period involved, The Financial Statements are based on the books and records of the Company, and fairly present
the financial condition of the Company as of the respective dates they were prepared and the results of the operations of the Company
for the periods indicated. The balance sheet of the Company as of December 31
st
, 2018 is referred to herein as the “
Balance
Sheet
” and the date thereof as the “
Balance Sheet Date
”.
The Company maintains a standard system of accounting established and administered in accordance with GAAP.
Section 2.06 Undisclosed
Liabilities.
The Company has no liabilities, obligations or commitments of any nature whatsoever, asserted or unasserted, known
or unknown, absolute or contingent, accrued or unaccrued, matured or unmatured or otherwise (“
Liabilities
”),
except (a) those which are adequately reflected or reserved against in the Balance Sheet as of the Balance Sheet Date, and (b)
those which have been incurred in the ordinary course of business consistent with past practice since the Balance Sheet Date and
which are not, individually or in the aggregate, material in amount.
Section 2.07 Property.
The property and assets that the Company owns are free and clear of all mortgages, deeds of trust, liens, loans and encumbrances,
except for statutory liens for the payment of current Taxes that are not yet delinquent and encumbrances and liens that arise in
the ordinary course of business and do not materially impair the Company’s ownership or use of such property or assets.
With respect to the property and assets it leases, the Company is in compliance with such leases and, to its knowledge, holds a
valid leasehold interest free of any liens, claims or encumbrances other than those of the lessors of such property or assets.
The Company does not own any real property.
Section 2.08 Condition
and Sufficiency of Assets.
The buildings, plants, structures, furniture, fixtures, machinery, equipment, vehicles and other
items of tangible personal property of the Company are structurally sound, are in good operating condition and repair, and are
adequate for the uses to which they are being put, and none of such buildings, plants, structures, furniture, fixtures, machinery,
equipment, vehicles and other items of tangible personal property is in need of maintenance or repairs except for ordinary, routine
maintenance and repairs that are not material in nature or cost. The buildings, plants, structures, furniture, fixtures, machinery,
equipment, vehicles and other items of tangible personal property currently owned or leased by the Company, together with all other
properties and assets of the Company, are sufficient for the continued conduct of the Company’s business after the Closing
in substantially the same manner as conducted prior to the Closing and constitute all of the rights, property and assets necessary
to conduct the business of the Company as currently conducted.
Section 2.09 Intellectual
Property.
The Company owns or licenses or has acquired on commercially reasonable terms sufficient legal rights to all Company
Intellectual Property without any known conflict with, or infringement of, the rights of others. To the Company’s knowledge,
no product or service marketed or sold (or proposed to be marketed or sold) by the Company violates or will violate any license
or infringes or will infringe any intellectual property rights of any other party. There are no outstanding options, licenses,
agreements, claims, encumbrances or shared ownership interests of any kind relating to the Company Intellectual Property, nor is
the Company bound by or a party to any options, licenses or agreements of any kind with respect to the patents, trademarks, service
marks, trade names, copyrights, trade secrets, licenses, information, proprietary rights and processes of any other Person. The
Company has not received any communications alleging that the Company has violated, or by conducting its business, would violate
any of the patents, trademarks, service marks, tradenames, copyrights, trade secrets, mask works or other proprietary rights or
processes of any other Person.
Section 2.09
of the Company Disclosures Schedule lists all Company Intellectual Property.
For purposes of this
Section 2.09
, the Company shall be deemed to have knowledge of a patent right if the Company has actual
knowledge of the patent right or would be found to be on notice of such patent right as determined by reference to United States
patent laws.
Section 2.10 Inventory.
All inventory of the Company, whether or not reflected in the Balance Sheet, consists of a quality and quantity usable and
sellable in the ordinary course of business consistent with past practice, except for obsolete, damaged, defective or slow-moving
items that have been written off or written down to fair market value or for which adequate reserves have been established. All
such inventory is owned by the Company free and clear of all Encumbrances, and no inventory is held on a consignment basis. The
quantities of each item of inventory (whether raw materials, work-in-process or finished goods) are not excessive, but are reasonable
in the present circumstances of the Company.
Section 2.11 Accounts
Receivable.
The accounts receivable reflected on the Balance Sheet and the accounts receivable arising after the date thereof
(a) have arisen from bona fide transactions entered into by the Company involving the sale of goods or the rendering of services
in the ordinary course of business consistent with past practice; and (b) constitute only valid, undisputed claims of the Company
not subject to claims of set-off or other defenses or counterclaims other than normal cash discounts accrued in the ordinary course
of business consistent with past practice.
Section 2.12 Customers
and Suppliers.
(a)
Section 2.12(a)
of the Company Disclosure Schedules sets forth (i) each customer who has paid aggregate consideration to
the Company for goods or services rendered in an amount greater than or equal to $25,000 for each of the two most recent fiscal
years (collectively, the “
Material Customers
”); and (ii) the amount of consideration paid by each Material Customer
during such periods. The Company has not received any notice, and has no reason to believe, that any of its Material Customers
has ceased, or intends to cease after the Closing, to use its goods or services or to otherwise terminate or materially reduce
its relationship with the Company.
(b)
Section 2.12(b)
of the Company Disclosure Schedules sets forth (i) each supplier to whom the Company has paid consideration
for goods or services rendered in an amount greater than or equal to $25,000 for each of the two most recent fiscal years (collectively,
the “
Material Suppliers
”); and (ii) the amount of purchases from each Material Supplier during such periods.
The Company has not received any notice, and has no reason to believe, that any of its Material Suppliers has ceased, or intends
to cease, to supply goods or services to the Company or to otherwise terminate or materially reduce its relationship with the Company.
Section 2.13 Insurance.
Section 2.13
of the Company Disclosure Schedule sets forth a true and complete list of all current policies of fire, liability,
product liability, umbrella liability, real and personal property, workers’ compensation, vehicular, directors and officers’
liability, fiduciary liability and other casualty and property insurance maintained by the Company or its Affiliates and relating
to the assets, business, operations, Employees, officers and directors of the Company (collectively, the “
Insurance
Policies
”) and true and complete copies of such Insurance Policies have been made available to Buyer. Such Insurance
Policies are in full force and effect and shall remain in full force and effect following the consummation of the transactions
contemplated by this Agreement. Neither the Company nor any of its Affiliates has received any written notice of cancellation of,
premium increase with respect to, or alteration of coverage under, any of such Insurance Policies. Neither the Company nor any
of its Affiliates is in default under, or has otherwise failed to comply with, in any material respect, any provision contained
in any such Insurance Policy.
Section 2.14 Legal
Proceedings; Governmental Orders.
(a) There
are no Actions pending or, to the Company’s Knowledge, threatened (a) against or by the Company affecting any of its properties
or assets (or by or against Seller or any Affiliate thereof and relating to the Company); or (b) against or by the Company, Seller
or any Affiliate of Seller that challenges or seeks to prevent, enjoin or otherwise delay the transactions contemplated by this
Agreement. No event has occurred or circumstances exist that may give rise to, or serve as a basis for, any such Action.
(b) There
are no outstanding Governmental Orders and no unsatisfied judgments, penalties or awards against or affecting the Company or any
of its properties or assets. No event has occurred or circumstances exist that may constitute or result in (with or without notice
or lapse of time) a violation of any such Governmental Order.
Section 2.15 Compliance
With Laws; Permits.
The Company has complied, and is now complying, with all Laws applicable to it or its business, properties
or assets. The Company has all franchises, permits, licenses and any similar authority necessary for the conduct of its business,
the lack of which could reasonably be expected to have a Material Adverse Effect. The Company is not in default in any material
respect under any of such franchises, permits, licenses or other similar authority.
Section 2.16 Employee
& Employee Benefits Matters.
(a)
Section
2.16(a)
of the Company Disclosure Schedules lists: (i) all employees, independent contractors, and consultants of the Company;
and (ii) for each individual described in clause (i), the individual’s title or position, hire date, and compensation, any
Contracts entered into between the Company and such individual, and the fringe benefits provided to each such individual. All compensation
payable to all employees, independent contractors, or consultants of the Company for services performed on or prior to the Closing
Date have been paid in full.
(b) The
Company is not, and has not been, a party to or bound by any collective bargaining agreement or other Contract with a union or
similar labor organization (collectively, “
Union
”), and no Union has represented or purported to represent any
employee of the Company. There has never been, nor has there been any threat of, any strike, work stoppage, slowdown, picketing,
or other similar labor disruption or dispute affecting the Company or any of its employees.
(c) The
Company is and has been in compliance in all material respects with: (i) all applicable employment Laws and agreements regarding
hiring, employment, termination of employment, plant closing and mass layoff, employment discrimination, harassment, retaliation,
and reasonable accommodation, leaves of absence, terms and conditions of employment, wages and hours of work, employee classification,
employee health and safety, engagement and classification of independent contractors, payroll taxes, and immigration with respect
to all employees, independent contractors, and contingent workers; and (ii) all applicable Laws relating to the relations between
it and any labor organization, trade union, work council, or other body representing employees of the Company.
(d) Section
2.16(d) of the Company Disclosure Schedule contains a true and complete list of each “employee benefit plan” as defined
in Section 3(3) of the Employee Retirement Income Security Act of 1974 (as amended, and including the regulations thereunder,
“
ERISA
”), whether or not written and whether or not subject to ERISA, and each supplemental retirement, compensation,
employment, consulting, profit-sharing, deferred compensation, incentive, bonus, equity, change in control, retention, severance,
salary continuation, and other similar agreement, plan, policy, program, practice, or arrangement which is or has been established,
maintained, sponsored, or contributed to by the Company or under which the Company has or may have any Liability (each, a “
Benefit
Plan
”).
(e) For
each Benefit Plan, Seller has made available to Buyer accurate, current, and complete copies of each of the following: (i) the
plan document with all amendments, or if not reduced to writing, a written summary of all material plan terms; (ii) any written
contracts and arrangements related to such Benefit Plan, including trust agreements or other funding arrangements, and insurance
policies, certificates, and contracts; (iii) in the case of a Benefit Plan intended to be qualified under Section 401(a) of the
Code, the most recent favorable determination or national office approval letter issued by the Internal Revenue Service and any
legal opinions issued thereafter with respect to the Benefit Plan’s continued qualification; (iv) the most recent Form 5500
filed with respect to such Benefit Plan; and (v) any material notices, audits, inquiries, or other correspondence from, or filings
with, any Governmental Authority relating to the Benefit Plan.
(f) Each
Benefit Plan and related trust has been established, administered, and maintained in accordance with its terms and in substantial
compliance with all applicable Laws (including ERISA and the Code). Nothing has occurred with respect to any Benefit Plan that
has subjected or could reasonably be expected to subject the Company or, with respect to any period on or after the Closing Date,
Buyer or any of its Affiliates, to a civil action, penalty, surcharge, or Tax under applicable Law or which would jeopardize the
previously-determined qualified status of any Benefit Plan. All benefits, contributions, and premiums relating to each Benefit
Plan have been timely paid in accordance with the terms of such Benefit Plan and all applicable Laws and accounting principles.
Benefits accrued under any unfunded Benefit Plan have been paid, accrued or adequately reserved for to the extent required by GAAP.
(g) The
Company has not: (i) incurred, nor reasonably expects to incur, any material Liability under Title I or Title IV of ERISA or related
provisions of the Code or applicable Law relating to any Benefit Plan; or (ii) incurred, nor reasonably expects to incur, any Liability
to the Pension Benefit Guaranty Corporation. No complete or partial termination of any Benefit Plan has occurred or is expected
to occur.
(h) The
Company has not now or at any time within the previous six years contributed to, sponsored, or maintained any: (i) “multiemployer
plan” as defined in Section 3(37) of ERISA; (ii) “single-employer plan” as defined in Section 4001(a)(15) of
ERISA; (iii) “multiple employer plan” as defined in Section 413(c) of the Code; (iv) “multiple employer welfare
arrangement” as defined in Section 3(40) of ERISA; (v) a leveraged employee stock ownership plan described in Section 4975
(e)(7) of the Code; or (vi) any other Benefit Plan subject to required minimum funding requirements.
(i) Other
than as required under Sections 601 to 608 of ERISA or other applicable Law, no Benefit Plan provides post-termination or retiree
welfare benefits to any individual for any reason.
(j) Neither
the execution of this Agreement nor any of the transactions contemplated by this Agreement will, either alone or in combination
with any other event, (i) entitle any current or former director, officer, employee, independent contractor, or consultant of the
Company to any severance pay, increase in severance pay, or other payment; (ii) accelerate the time of payment, funding, or vesting,
or increase the amount of compensation (including stock-based compensation) due to any such individual; (iii) limit or restrict
the right of the Company to amend or terminate any Benefit Plan; (iv) increase the amount payable under any Benefit Plan; (v) result
in any “excess parachute payments” within the meaning of Section 280G(b) of the Code; or (vi) require a “gross-up”
or other payment to any “disqualified individual” within the meaning of Section 280G(c) of the Code.
Section 2.17 Tax
Returns and Payments.
There are no federal, state, county, local or foreign Taxes due and payable by the Company which have
not been timely paid. There are no accrued and unpaid federal, state, country, local or foreign Taxes of the Company which are
due, whether or not assessed or disputed. No claim has been made by any taxing authority in any jurisdiction where the Company
does not file Tax returns that it is, or may be, subject to Tax by that jurisdiction. There have been no examinations or audits
of any Tax returns or reports by any applicable federal, state, local or foreign governmental agency.
Section 2.18 Books
and Records.
The minute books and stock record books of the Company, all of which have been made available to Buyer, are complete
and correct and have been maintained in accordance with sound business practices. The minute books of the Company contain accurate
and complete records of all meetings, and actions taken by written consent of, the stockholders, the board of directors and any
committees of the board of directors of the Company, and no meeting, or action taken by written consent, of any such stockholders,
board of directors or committee has been held for which minutes have not been prepared and are not contained in such minute books.
At the Closing, all of those books and records will be in the possession of the Company.
Section 2.19 Full
Disclosure.
No representation or warranty by the Seller in this Agreement and no statement contained in the Company Disclosure
Schedules to this Agreement or any certificate or other document furnished or to be furnished to Buyer pursuant to this Agreement
contains any untrue statement of a material fact, or omits to state a material fact necessary to make the statements contained
therein, in light of the circumstances in which they are made, not misleading.
Article
III
Representations and warranties of buyer
Except as set forth
in the correspondingly numbered Section of the Buyer Disclosure Schedules, Buyer represents and warrants to Seller that the statements
contained in this
Article III
are true and correct as of the date hereof.
Section 3.01 Organization
and Authority of Buyer.
Buyer is a corporation duly organized, validly existing and in good standing under the Laws of the
state of Nevada. Buyer has full corporate power and authority to enter into this Agreement and the other Transaction Documents
to which Buyer is a party, to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated
hereby and thereby. This Agreement has been duly executed and delivered by Buyer, and (assuming due authorization, execution and
delivery by Seller) this Agreement constitutes a legal, valid and binding obligation of Buyer enforceable against Buyer in accordance
with its terms. When each other Transaction Document to which Buyer is or will be a party has been duly executed and delivered
by Buyer (assuming due authorization, execution and delivery by each other party thereto), such Transaction Document will constitute
a legal and binding obligation of Buyer enforceable against it in accordance with its terms.
Section 3.02 Capitalization.
(a) The
authorized capital stock of Buyer consists of 75,000,000 shares of common stock, par value $0.001 per share (“
Buyer Common
Stock
”), of which 40,900,000 shares are issued and outstanding. All issued and outstanding shares of Buyer Common Stock
have been duly authorized, are validly issued, fully paid and non-assessable.
(b) There
are no outstanding or authorized options, warrants, convertible securities or other rights, agreements, arrangements or commitments
of any character relating to the capital stock of Buyer or obligating Buyer to issue or sell any shares of capital stock of, or
any other interest in, Buyer. The Buyer does not have outstanding or authorized any stock appreciation, phantom stock, profit participation
or similar rights. There are no voting trusts, stockholder agreements, proxies or other agreements or understandings in effect
with respect to the voting or transfer of any shares of Buyer Common Stock.
Section 3.03 No
Conflicts; Consents.
The execution, delivery and performance by Buyer of this Agreement and the other Transaction Documents
to which it is a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not: (a) conflict
with or result in a violation or breach of, or default under, any provision of the certificate of incorporation, by-laws or other
organizational documents of Buyer; (b) conflict with or result in a violation or breach of any provision of any Law or Governmental
Order applicable to Buyer; (c) require the consent, notice or other action by any Person under, conflict with, result in a violation
or breach of, constitute a default or an event that, with or without notice or lapse of time or both, would constitute a default
under, result in the acceleration of or create in any party the right to accelerate, terminate, modify or cancel any Contract to
which Buyer is a party or by which Buyer is bound or to which its properties and assets are subject (including any Material Contract)
or any Permit affecting the properties, assets or business of Buyer; or (d) result in the creation or imposition of any Encumbrance
other than Permitted Encumbrances on any properties or assets of Buyer. No consent, approval, permit, Governmental Order, declaration
or filing with, or notice to, any Governmental Authority is required by or with respect to Buyer in connection with the execution
and delivery of this Agreement and the other Transaction Documents and the consummation of the transactions contemplated hereby
and thereby, except for such filings as may be required under the HSR Act.
Section 3.04 SEC
Filings.
Buyer’s filings with the U.S. Securities and Exchange Commission (the “
SEC
”) pursuant to
the Securities Act of 1933, as amended (the “
Securities Act
”), and the Securities Exchange Act of 1934, as amended
(the “
Exchange Act
”), are true, correct and complete in all material respects and, as of the Closing Date.
Section 3.05 Legal
Proceedings; Governmental Orders.
There are no outstanding Governmental Orders and no unsatisfied judgments, penalties or awards
against or affecting Buyer or any of its properties or assets. No event has occurred or circumstances exist that may constitute
or result in (with or without notice or lapse of time) a violation of any such Governmental Order.
Section 3.06 Compliance
With Laws; Permits.
Buyer has complied, and is now complying, with all Laws applicable to it or its business, properties or
assets. Buyer has all franchises, permits, licenses and any similar authority necessary for the conduct of its business, the lack
of which could reasonably be expected to have a Material Adverse Effect. Buyer is not in default in any material respect under
any of such franchises, permits, licenses or other similar authority.
Section 3.07 Investment
Purpose.
Buyer is acquiring the Shares solely for the purpose of investment and not with a view to, or for offer or sale in
connection with, any distribution thereof. Buyer acknowledges that the Shares are not registered under the Securities Act of 1933,
as amended, and that the Shares may not be transferred or sold except pursuant to the registration provisions of the Securities
Act of 1933, as amended or pursuant to an applicable exemption therefrom and subject to state securities laws and regulations,
as applicable.
Section 3.08 Legal
Proceedings.
There are no Actions pending or, to Buyer’s knowledge, threatened against or by Buyer or any Affiliate of
Buyer that challenge or seek to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement. No event has
occurred or circumstances exist that may give rise or serve as a basis for any such Action.
Section 3.09 Full
Disclosure.
No representation or warranty by the Buyer in this Agreement and no statement contained in the Buyer Disclosure
Schedules to this Agreement or any certificate or other document furnished or to be furnished to Company pursuant to this Agreement
contains any untrue statement of a material fact, or omits to state a material fact necessary to make the statements contained
therein, in light of the circumstances in which they are made, not misleading.
Article
IV
Covenants
Section 4.01 Conduct
of Business Prior to the Closing.
From the date hereof until the Closing, except as otherwise provided in this Agreement or
consented to in writing by Buyer (which consent shall not be unreasonably withheld or delayed), Seller shall, and shall cause the
Company to, (x) conduct the business of the Company in the ordinary course of business consistent with past practice; and (y) use
reasonable best efforts to maintain and preserve intact the current organization, business and franchise of the Company and to
preserve the rights, franchises, goodwill and relationships of its Employees, customers, lenders, suppliers, regulators and others
having business relationships with the Company.
Section 4.02 Access
to Information.
From the date hereof until the Closing, Seller shall (a) afford the Buyer and its Representatives full and
free access to and the right to inspect all of the properties, assets, premises, books and records, Contracts and other documents
and data related to the Company; (b) furnish the Buyer and its Representatives with such financial, operating and other data and
information related to the Company, as may be reasonably requested; and (c) instruct its Representatives to cooperate with the
Buyer in its investigation of such party. Any investigation pursuant to this
Section 4.02
shall be conducted in such manner
as not to interfere unreasonably with the conduct of the business the Company. No investigation by Buyer or other information received
by Buyer shall operate as a waiver or otherwise affect any representation, warranty or agreement given or made by Seller in this
Agreement.
Section 4.03 Notice
of Certain Events.
From the date hereof until the Closing, Seller shall promptly notify Buyer in writing of any fact, circumstance,
event or action the existence, occurrence or taking of which (a) has had, or could reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect, (b) has resulted in, or could reasonably be expected to result in, any representation
or warranty made by Seller hereunder not being true and correct as of the Closing or (c) has resulted in, or could reasonably be
expected to result in, the failure of any of the conditions set forth in
Section 6.02
to be satisfied.
Section 4.04 Confidentiality.
From and after the Closing, Seller shall, and shall cause his Affiliates to, hold, and shall use its reasonable best efforts
to cause his or their respective Representatives to hold, in confidence any and all information, whether written or oral, concerning
the Company, except to the extent that Seller can show that such information (a) is generally available to and known by the public
through no fault of Seller, any of his Affiliates or their respective Representatives; or (b) is lawfully acquired by Seller, any
of his Affiliates or their respective Representatives from and after the Closing from sources which are not prohibited from disclosing
such information by a legal, contractual or fiduciary obligation. If Seller or any of his Affiliates or their respective Representatives
are compelled to disclose any information by judicial or administrative process or by other requirements of Law, Seller shall promptly
notify Buyer in writing and shall disclose only that portion of such information which Seller is advised by his counsel in writing
is legally required to be disclosed,
provided that
Seller shall use reasonable best efforts to obtain an appropriate protective
order or other reasonable assurance that confidential treatment will be accorded such information.
Section 4.05 Non-competition;
Non-solicitation
1
(a) For
a period of two years commencing on the Closing Date (the “
Restricted Period
”), Seller shall not, directly or
indirectly, (i) engage in or assist others in engaging in the Restricted Business in the Territory; (ii) have an interest in any
Person that engages directly or indirectly in the Restricted Business in the Territory in any capacity, including as a partner,
shareholder, member, employee, principal, agent, trustee or consultant; or (iii) intentionally interfere in any material respect
with the business relationships (whether formed prior to or after the date of this Agreement) between the Company and customers
or suppliers of the Company. Notwithstanding the foregoing, Seller may own, directly or indirectly, solely as an investment, securities
of any Person traded on any national securities exchange if Seller is not a controlling Person of, or a member of a group which
controls, such Person and does not, directly or indirectly, own 5% or more of any class of securities of such Person.
(b) During
the Restricted Period, Seller shall not, directly or indirectly, hire or solicit any employee of the Company or encourage any such
employee to leave such employment or hire any such employee who has left such employment, except pursuant to a general solicitation
which is not directed specifically to any such employees;
provided, that
nothing in this
Section 4.05(b)
shall prevent
Seller or any of his Affiliates from hiring (i) any employee whose employment has been terminated by the Company or Buyer or (ii)
after 180 days from the date of termination of employment, any employee whose employment has been terminated by the employee.
(c) During
the Restricted Period, Seller shall not, directly or indirectly, solicit or entice, or attempt to solicit or entice, any clients
or customers of the Company or potential clients or customers of the Company for purposes of diverting their business or services
from the Company.
(d) If
Sellers breach, or threaten to commit a breach of, any of the provisions of this
Section 4.05
, Buyer and the Company shall
have the following rights and remedies, each of which rights and remedies shall be independent of the others and severally enforceable,
and each of which is in addition to, and not in lieu of, any other rights and remedies available to Buyer or the Company under
law or in equity:
_________________
1
NTD: To
be discussed.
(i) the
right and remedy to have such provision specifically enforced by any court having jurisdiction, it being acknowledged and agreed
that any such breach or threatened breach may cause irreparable injury to each of Buyer and the Company and that money damages
may not provide an adequate remedy to Buyer or the Company; and
(ii) the
right and remedy to recover from the Seller all monetary damages suffered by Buyer or the Company, as the case may be, as the result
of any acts or omissions constituting a breach of this
Section 4.05
.
(e) Seller
acknowledges that the restrictions contained in this
Section 4.05
are reasonable and necessary to protect the legitimate
interests of Buyer and constitute a material inducement to Buyer to enter into this Agreement and consummate the transactions contemplated
by this Agreement. In the event that any covenant contained in this
Section 4.05
should ever be adjudicated to exceed the
time, geography, product or service, or other limitations permitted by applicable Law in any jurisdiction, then any court is expressly
empowered to reform such covenant, and such covenant shall be deemed reformed, in such jurisdiction to the maximum time, geography,
product or service, or other limitations permitted by applicable Law. The covenants contained in this
Section 4.05
and each
provision hereof are severable and distinct covenants and provisions. The invalidity or unenforceability of any such covenant or
provision as written shall not invalidate or render unenforceable the remaining covenants or provisions hereof, and any such invalidity
or unenforceability in any jurisdiction shall not invalidate or render unenforceable such covenant or provision in any other jurisdiction.
Section 4.06 Governmental
Approvals and Consents
(a) Each
party hereto shall, as promptly as possible, (i) make, or cause or be made, all filings and submissions (including those under
the HSR Act) required under any Law applicable to such party or any of its Affiliates; and (ii) use reasonable best efforts to
obtain, or cause to be obtained, all consents, authorizations, orders and approvals from all Governmental Authorities that may
be or become necessary for its execution and delivery of this Agreement and the performance of its obligations pursuant to this
Agreement and the other Transaction Documents. Each party shall cooperate fully with the other party and its Affiliates in promptly
seeking to obtain all such consents, authorizations, orders and approvals. The parties hereto shall not wilfully take any action
that will have the effect of delaying, impairing or impeding the receipt of any required consents, authorizations, orders and approvals.
(b) If
any consent, approval or authorization necessary to preserve any right or benefit under any Contract to which the Company is a
party is not obtained prior to the Closing, Seller shall, subsequent to the Closing, cooperate with Buyer and the Company in attempting
to obtain such consent, approval or authorization as promptly thereafter as practicable. If such consent, approval or authorization
cannot be obtained, Seller shall use reasonable best efforts to provide the Company with the rights and benefits of the affected
Contract for the term thereof, and, if Seller provides such rights and benefits, the Company shall assume all obligations and burdens
thereunder.
Section 4.07 Closing
Conditions
From the date hereof until the Closing, each party hereto shall, and Seller shall cause the Company to, use reasonable
best efforts to take such actions as are necessary to expeditiously satisfy the closing conditions set forth in
Article VI
hereof.
Section 4.08 Public
Announcements.
Unless otherwise required by applicable Law or stock exchange requirements (based upon the reasonable advice
of counsel), no party to this Agreement shall make any public announcements in respect of this Agreement or the transactions contemplated
hereby or otherwise communicate with any news media without the prior written consent of the other party (which consent shall not
be unreasonably withheld or delayed), and the parties shall cooperate as to the timing and contents of any such announcement.
Article
V
Tax matters
Section 5.01 Tax
Covenants.
(a) Without
the prior written consent of Buyer, Seller (and, prior to the Closing, the Company, their Affiliates and their respective Representatives)
shall not, to the extent it may affect, or relate to, the Company, make, change or rescind any Tax election, amend any Tax Return
or take any position on any Tax Return, take any action, omit to take any action or enter into any other transaction that would
have the effect of increasing the Tax liability or reducing any Tax asset of Buyer or the Company in respect of any Post-Closing
Tax Period. Sellers agree that Buyer is to have no liability for any Tax resulting from any action of Sellers, the Company, their
Affiliates or any of their respective Representatives, and agrees to indemnify and hold harmless Buyer (and, after the Closing
Date, the Company) against any such Tax or reduction of any Tax asset.
(b) All
transfer, documentary, sales, use, stamp, registration, value added and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement and the other Transaction Documents, with the exception of the Note (including
any real property transfer Tax and any other similar Tax) shall be borne and paid by Seller when due. Seller shall, at his own
expense, timely file any Tax Return or other document with respect to such Taxes or fees (and Buyer shall cooperate with respect
thereto as necessary).
(c) Buyer
shall prepare, or cause to be prepared, all Tax Returns required to be filed by the Company after the Closing Date with respect
to a Pre-Closing Tax Period. Any such Tax Return shall be prepared in a manner consistent with past practice (unless otherwise
required by Law) and without a change of any election or any accounting method and shall be submitted by Buyer to Seller (together
with schedules, statements and, to the extent requested by Seller, supporting documentation) at least 45 days prior to the due
date (including extensions) of such Tax Return. If Seller objects to any item on any such Tax Return, it shall, within ten days
after delivery of such Tax Return, notify Buyer in writing that it so objects, specifying with particularity any such item and
stating the specific factual or legal basis for any such objection. If a notice of objection shall be duly delivered, Buyer and
Seller shall negotiate in good faith and use their reasonable best efforts to resolve such items. If Buyer and Seller are unable
to reach such agreement within ten days after receipt by Buyer of such notice, the disputed items shall be resolved by a nationally
recognized accounting firm selected by Buyer and reasonably acceptable to Seller (the “
Accounting Referee
”)
and any determination by the Accounting Referee shall be final. The Accounting Referee shall resolve any disputed items within
20 days of having the item referred to it pursuant to such procedures as it may require. If the Accounting Referee is unable to
resolve any disputed items before the due date for such Tax Return, the Tax Return shall be filed as prepared by Buyer and then
amended to reflect the Accounting Referee’s resolution. The costs, fees and expenses of the Accounting Referee shall be borne
equally by Buyer and Seller. The preparation and filing of any Tax Return of the Company that does not relate to a Pre-Closing
Tax Period shall be exclusively within the control of Buyer.
Section 5.02 Termination
of Existing Tax Sharing Agreements.
Any and all existing Tax sharing agreements (whether written or not) binding upon the Company
shall be terminated as of the Closing Date. After such date neither the Company, Sellers nor any of Sellers’ Affiliates and
their respective Representatives shall have any further rights or liabilities thereunder.
Section 5.03 Tax
Indemnification.
Except to the extent treated as a liability in the calculation of Closing Working Capital, Sellers shall indemnify
the Company, Buyer, and each Buyer Indemnitee and hold them harmless from and against (a) any Loss attributable to any breach of
or inaccuracy in any representation or warranty made in
Section 2.17
; (b) any Loss attributable to any breach or violation
of, or failure to fully perform, any covenant, agreement, undertaking or obligation in this
Article V
; (c) all Taxes of
the Company or relating to the business of the Company for all Pre-Closing Tax Periods; (d) all Taxes of any member of an affiliated,
consolidated, combined or unitary group of which the Company (or any predecessor of the Company) is or was a member on or prior
to the Closing Date by reason of a liability under Treasury Regulation Section 1.1502-6 or any comparable provisions of foreign,
state or local Law; and (e) any and all Taxes of any person imposed on the Company arising under the principles of transferee or
successor liability or by contract, relating to an event or transaction occurring before the Closing Date. In each of the above
cases, together with any out-of-pocket fees and expenses (including attorneys’ and accountants’ fees) incurred in connection
therewith. Sellers shall reimburse Buyer for any Taxes of the Company that are the responsibility of Sellers pursuant to this
Section
5.03
within ten Business Days after payment of such Taxes by Buyer or the Company.
Section 5.04 Straddle
Period.
In the case of Taxes that are payable with respect to a taxable period that begins before and ends after the Closing
Date (each such period, a “
Straddle Period
”), the portion of any such Taxes
that are treated as Pre-Closing Taxes for purposes of this Agreement shall be:
(a) in
the case of Taxes based upon, or related to, income or receipts, deemed equal to the amount which would be payable if the taxable
year ended with the Closing Date; and
(b) in
the case of other Taxes, deemed to be the amount of such Taxes for the entire period multiplied by a fraction the numerator of
which is the number of days in the period ending on the Closing Date and the denominator of which is the number of days in the
entire period.
Section 5.05 Contests.
Buyer agrees to give written notice to Sellers of the receipt of any written notice by the Company, Buyer or any of Buyer’s
Affiliates which involves the assertion of any claim, or the commencement of any Action, in respect of which an indemnity may be
sought by Buyer pursuant to this
Article V
(a “
Tax Claim
”);
provided,
that
failure to comply with this provision shall not affect Buyer's right to indemnification hereunder. Buyer shall control
the contest or resolution of any Tax Claim;
provided, however
, that Buyer shall obtain the prior written consent of Seller
(which consent shall not be unreasonably withheld or delayed) before entering into any settlement of a claim or ceasing to defend
such claim; and,
provided further
, that Seller shall be entitled to participate in the defense of such claim and to employ
counsel of his choice for such purpose, the fees and expenses of which separate counsel shall be borne solely by Seller.
Section 5.06 Cooperation
and Exchange of Information.
Seller and Buyer shall provide each other with such cooperation and information as either of them
reasonably may request of the other in filing any Tax Return pursuant to this
Article V
or in connection with any audit
or other proceeding in respect of Taxes of the Company. Such cooperation and information shall include providing copies of relevant
Tax Returns or portions thereof, together with accompanying schedules, related work papers and documents relating to rulings or
other determinations by tax authorities. Each of the Seller and Buyer shall retain all Tax Returns, schedules and work papers,
records and other documents in their possession relating to Tax matters of the Company for any taxable period beginning before
the Closing Date until the expiration of the statute of limitations of the taxable periods to which such Tax Returns and other
documents relate, without regard to extensions except to the extent notified by the other party in writing of such extensions for
the respective Tax periods. Prior to transferring, destroying or discarding any Tax Returns, schedules and work papers, records
and other documents in its possession relating to Tax matters of the Company for any taxable period beginning before the Closing
Date, Seller or Buyer (as the case may be) shall provide the other party with reasonable written notice and offer the other party
the opportunity to take custody of such materials.
Section 5.07 Tax
Treatment of Indemnification Payments.
Any indemnification payments pursuant to this
Article V
shall be treated as an
adjustment to the Purchase Price by the parties for Tax purposes, unless otherwise required by Law.
Section 5.08 Overlap.
To the extent that any obligation or responsibility pursuant to
Article VII
may overlap with an obligation or responsibility
pursuant to this
Article V
, the provisions of this
Article V
shall govern.
Article
VI
Conditions to closing
Section 6.01 Conditions
to Obligations of All Parties.
The obligations of each party to consummate the transactions contemplated by this Agreement
shall be subject to the fulfilment, at or prior to the Closing, of each of the following conditions:
(a) The
filings of Buyer and Seller pursuant to the HSR Act, if any, shall have been made and the applicable waiting period and any extensions
thereof shall have expired or been terminated.
(b) No
Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Governmental Order which is in effect and
has the effect of making the transactions contemplated by this Agreement illegal, otherwise restraining or prohibiting consummation
of such transactions or causing any of the transactions contemplated hereunder to be rescinded following completion thereof.
(c) From
the date of this Agreement, there shall not have occurred any Material Adverse Effect, nor shall any event or events have occurred
that, individually or in the aggregate, with or without the lapse of time, could reasonably be expected to result in a Material
Adverse Effect on either party.
(d) No
Action shall have been commenced against Buyer, Seller or the Company, which would prevent the Closing. No injunction or restraining
order shall have been issued by any Governmental Authority, and be in effect, which restrains or prohibits any transaction contemplated
hereby.
(e) The
Company shall have a Closing Working Capital of at least $100,000 in the form of cash funds in the Company’s bank account.
(f) The
audit performed by a 3
rd
party auditing firm meeting the standards agreed upon by the Buyer and the Seller
Section 6.02 Conditions
to Obligations of Buyer.
The obligations of Buyer to consummate the transactions contemplated by this Agreement shall be subject
to the fulfilment or Buyer’s waiver, at or prior to the Closing, of each of the following conditions:
(a) The
representations and warranties of Seller contained in this Agreement, the other Transaction Documents and any certificate or other
writing delivered pursuant hereto shall be true and correct in all respects (in the case of any representation or warranty qualified
by materiality or Material Adverse Effect) or in all material respects (in the case of any representation or warranty not qualified
by materiality or Material Adverse Effect) on and as of the date hereof and on and as of the Closing Date with the same effect
as though made at and as of such date (except those representations and warranties that address matters only as of a specified
date, the accuracy of which shall be determined as of that specified date in all respects).
(b) Seller
shall have duly performed and complied in all material respects with all agreements, covenants and conditions required by this
Agreement and each of the other Transaction Documents to be performed or complied with by them prior to or on the Closing Date;
provided, that
, with respect to agreements, covenants and conditions that are qualified by materiality, Seller shall have
performed such agreements, covenants and conditions, as so qualified, in all respects.
(c) All
required approvals, consents and waivers shall have been received and executed counterparts thereof shall have been delivered to
Buyer at or prior to the Closing.
(d) The
Transaction Documents (other than this Agreement) shall have been executed and delivered by the parties thereto and true and complete
copies thereof shall have been delivered to Buyer.
(e) Buyer
shall have received a certificate, dated the Closing Date and signed by Seller that each of the conditions set forth in
Section
6.02(a)
and
Section 6.02(b)
have been satisfied.
(f) Buyer
shall have received a certificate of Seller certifying that attached thereto are true and complete copies of all resolutions adopted
by the Company, authorizing the execution, delivery and performance of this Agreement and the other Transaction Documents and the
consummation of the transactions contemplated hereby and thereby, and that all such resolutions are in full force and effect and
are all the resolutions adopted in connection with the transactions contemplated hereby and thereby.
(g) Buyer
shall have received resignations of the directors and officers of the Company pursuant to
Section 1.04(b)
.
(h) Seller
shall have delivered to Buyer a good standing certificate (or its equivalent) for the Company from the Secretary of State of the
state of California.
(i) Seller
shall have delivered, or caused to be delivered, to Buyer stock certificates evidencing the Shares, free and clear of Encumbrances,
duly endorsed in blank or accompanied by stock powers or other instruments of transfer duly executed in blank and with all required
stock transfer tax stamps affixed.
(j) Seller
shall have delivered to Buyer such other documents or instruments as Buyer reasonably requests and are reasonably necessary to
consummate the transactions contemplated by this Agreement.
Section 6.03 Conditions
to Obligations of Sellers.
The obligations of Seller to consummate the transactions contemplated by this Agreement shall be
subject to the fulfilment or Seller’s waiver, at or prior to the Closing, of each of the following conditions:
(a) The
representations and warranties of Buyer contained in this Agreement, the other Transaction Documents and any certificate or other
writing delivered pursuant hereto shall be true and correct in all respects (in the case of any representation or warranty qualified
by materiality or Material Adverse Effect) or in all material respects (in the case of any representation or warranty not qualified
by materiality or Material Adverse Effect) on and as of the date hereof and on and as of the Closing Date with the same effect
as though made at and as of such date (except those representations and warranties that address matters only as of a specified
date, the accuracy of which shall be determined as of that specified date in all respects).
(b) Buyer
shall have duly performed and complied in all material respects with all agreements, covenants and conditions required by this
Agreement and each of the other Transaction Documents to be performed or complied with by it prior to or on the Closing Date;
provided,
that
, with respect to agreements, covenants and conditions that are qualified by materiality, Buyer shall have performed such
agreements, covenants and conditions, as so qualified, in all respects.
(c) No
injunction or restraining order shall have been issued by any Governmental Authority, and be in effect, which restrains or prohibits
any material transaction contemplated hereby.
(d) The
Transaction Documents (other than this Agreement) shall have been executed and delivered by the parties thereto and true and complete
copies thereof shall have been delivered to Seller.
(e) Sellers
shall have received a certificate, dated the Closing Date and signed by a duly authorized officer of Buyer, that each of the conditions
set forth in
Section 6.03(a)
and
Section 6.03(b)
have been satisfied.
(f) Sellers
shall have received a certificate of the Secretary or an Assistant Secretary (or equivalent officer) of Buyer certifying that attached
thereto are true and complete copies of all resolutions adopted by the board of directors of Buyer authorizing the execution, delivery
and performance of this Agreement and the other Transaction Documents and the consummation of the transactions contemplated hereby
and thereby, and that all such resolutions are in full force and effect and are all the resolutions adopted in connection with
the transactions contemplated hereby and thereby.
(g) Sellers
shall have received a certificate of the Secretary or an Assistant Secretary (or equivalent officer) of Buyer certifying the names
and signatures of the officers of Buyer authorized to sign this Agreement, the Transaction Documents and the other documents to
be delivered hereunder and thereunder.
(h) Buyer
shall have delivered to Sellers the Purchase Price in accordance with the provisions of
Section 1.03
hereof.
(i) Buyer
shall have delivered to Sellers such other documents or instruments as Sellers reasonably request and are reasonably necessary
to consummate the transactions contemplated by this Agreement.
Article
VII
Indemnification
Section
7.01 Survival.
Subject to the limitations and other provisions of this Agreement, the representations and warranties contained
herein (other than any representations or warranties contained in
Section 2.17
which are subject to
Article V
) shall
survive the Closing and shall remain in full force and effect until the date that is five years from the Closing Date;
provided,
that
the representations and warranties in
Section 2.01
,
Section 2.02
,
Section 2.16
,
Section 3.01
, and
Section
3.02
shall survive indefinitely and the representations and warranties
in
Section 2.19
and
Section 2.17
shall
survive for the full period of all applicable statutes of limitations (giving effect to any waiver, mitigation or extension thereof)
plus 60 days. All covenants and agreements of the parties contained herein (other than any covenants or agreements contained in
Article V
which are subject to
Article V
) shall survive the Closing indefinitely or for the period explicitly specified
therein. Notwithstanding the foregoing, any claims asserted in good faith with reasonable specificity (to the extent known at such
time) and in writing by notice from the non-breaching party to the breaching party prior to the expiration date of the applicable
survival period shall not thereafter be barred by the expiration of the relevant representation or warranty and such claims shall
survive until finally resolved.
Section 7.02 Indemnification
by Seller.
Subject to the other terms and conditions of this
Article VII
, Seller shall indemnify and defend each of
Buyer and its Affiliates (including the Company) and their respective Representatives (collectively, the “
Buyer
Indemnitees
”) against, and shall hold each of them harmless from and against, and shall pay and reimburse each
of them for, any and all Losses incurred or sustained by, or imposed upon, the Buyer Indemnitees based upon, arising out of, with
respect to or by reason of:
(a) any
inaccuracy in or breach of any of the representations or warranties of Seller contained in this Agreement or in any certificate
or instrument delivered by or on behalf of Seller pursuant to this Agreement (other than in respect of
Section 2.17
, it
being understood that the sole remedy for any such inaccuracy in or breach thereof shall be pursuant to
Article V
), as of
the date such representation or warranty was made or as if such representation or warranty was made on and as of the Closing Date
(except for representations and warranties that expressly relate to a specified date, the inaccuracy in or breach of which will
be determined with reference to such specified date); or
(b) any
breach or non-fulfilment of any covenant, agreement or obligation to be performed by Seller pursuant to this Agreement (other than
any breach or violation of, or failure to fully perform, any covenant, agreement, undertaking or obligation in
Article V
,
it being understood that the sole remedy for any such breach, violation or failure shall be pursuant to
Article V
).
Section 7.03 Indemnification
by Buyer.
Subject to the other terms and conditions of this
Article VII
, Buyer shall indemnify and defend the Seller
and his respective Affiliates and their respective Representatives (collectively, the “
Seller
Indemnitees
”) against, and shall hold each of them harmless from and against, and shall pay and reimburse each
of them for, any and all Losses incurred or sustained by, or imposed upon, the Seller Indemnitees based upon, arising out of, with
respect to or by reason of:
(a) any
inaccuracy in or breach of any of the representations or warranties of Buyer contained in this Agreement or in any certificate
or instrument delivered by or on behalf of Buyer pursuant to this Agreement, as of the date such representation or warranty was
made or as if such representation or warranty was made on and as of the Closing Date (except for representations and warranties
that expressly relate to a specified date, the inaccuracy in or breach of which will be determined with reference to such specified
date); or
(b) any
breach or non-fulfilment of any covenant, agreement or obligation to be performed by Buyer pursuant to this Agreement (other than
Article V
, it being understood that the sole remedy for any such breach thereof shall be pursuant to
Article V
).
(c) For
purposes of this
Article VII
, any inaccuracy in or breach of any representation or warranty shall be determined without
regard to any materiality, Material Adverse Effect or other similar qualification contained in or otherwise applicable to such
representation or warranty.
Section 7.04 Indemnification
Procedures.
The party making a claim under this
Article VII
is referred to as the “
Indemnified
Party
”, and the party against whom such claims are asserted under this
Article VII
is referred to as the
“
Indemnifying Party
”.
(a)
Third
Party Claims.
If any Indemnified Party receives notice of the assertion or commencement of any Action made or brought by any
Person who is not a party to this Agreement or an Affiliate of a party to this Agreement or a Representative of the foregoing (a
“
Third Party Claim
”) against such Indemnified Party with respect to which the Indemnifying Party is obligated
to provide indemnification under this Agreement, the Indemnified Party shall give the Indemnifying Party reasonably prompt written
notice thereof, but in any event not later than 30 calendar days after receipt of such notice of such Third Party Claim. The failure
to give such prompt written notice shall not, however, relieve the Indemnifying Party of its indemnification obligations, except
and only to the extent that the Indemnifying Party forfeits rights or defenses by reason of such failure. Such notice by the Indemnified
Party shall describe the Third Party Claim in reasonable detail, shall include copies of all material written evidence thereof
and shall indicate the estimated amount, if reasonably practicable, of the Loss that has been or may be sustained by the Indemnified
Party. The Indemnifying Party shall have the right to participate in, or by giving written notice to the Indemnified Party, to
assume the defense of any Third Party Claim at the Indemnifying Party’s expense and by the Indemnifying Party’s own
counsel, and the Indemnified Party shall cooperate in good faith in such defense;
provided, that
if the Indemnifying Party
is Seller, such Indemnifying Party shall not have the right to defend or direct the defense of any such Third Party Claim that
(x) is asserted directly by or on behalf of a Person that is a supplier or customer of the Company, or (y) seeks an injunction
or other equitable relief against the Indemnified Party. In the event that the Indemnifying Party assumes the defense of any Third
Party Claim, subject to
Section 7.04(b)
, it shall have the right to take such action as it deems necessary to avoid, dispute,
defend, appeal or make counterclaims pertaining to any such Third Party Claim in the name and on behalf of the Indemnified Party.
The Indemnified Party shall have the right to participate in the defense of any Third Party Claim with counsel selected by it subject
to the Indemnifying Party’s right to control the defense thereof. The fees and disbursements of such counsel shall be at
the expense of the Indemnified Party,
provided, that
if in the reasonable opinion of counsel to the Indemnified Party, (A)
there are legal defenses available to an Indemnified Party that are different from or additional to those available to the Indemnifying
Party; or (B) there exists a conflict of interest between the Indemnifying Party and the Indemnified Party that cannot be waived,
the Indemnifying Party shall be liable for the reasonable fees and expenses of counsel to the Indemnified Party in each jurisdiction
for which the Indemnified Party determines counsel is required. If the Indemnifying Party elects not to compromise or defend such
Third Party Claim, fails to promptly notify the Indemnified Party in writing of its election to defend as provided in this Agreement,
or fails to diligently prosecute the defense of such Third Party Claim, the Indemnified Party may, subject to
Section 7.04(b)
,
pay, compromise, defend such Third Party Claim and seek indemnification for any and all Losses based upon, arising from or relating
to such Third Party Claim. Seller and Buyer shall cooperate with each other in all reasonable respects in connection with the defense
of any Third Party Claim, including making available (subject to the provisions of
Section 4.04
) records relating to such
Third Party Claim and furnishing, without expense (other than reimbursement of actual out-of-pocket expenses) to the defending
party, management employees of the non-defending party as may be reasonably necessary for the preparation of the defense of such
Third Party Claim.
(b)
Settlement
of Third Party Claims.
Notwithstanding any other provision of this Agreement, the Indemnifying Party shall not enter into settlement
of any Third Party Claim without the prior written consent of the Indemnified Party, except as provided in this
Section 7.04(b)
.
If a firm offer is made to settle a Third Party Claim without leading to liability or the creation of a financial or other obligation
on the part of the Indemnified Party and provides, in customary form, for the unconditional release of each Indemnified Party from
all liabilities and obligations in connection with such Third Party Claim and the Indemnifying Party desires to accept and agree
to such offer, the Indemnifying Party shall give written notice to that effect to the Indemnified Party. If the Indemnified Party
fails to consent to such firm offer within ten days after its receipt of such notice, the Indemnified Party may continue to contest
or defend such Third Party Claim and in such event, the maximum liability of the Indemnifying Party as to such Third Party Claim
shall not exceed the amount of such settlement offer. If the Indemnified Party fails to consent to such firm offer and also fails
to assume defense of such Third Party Claim, the Indemnifying Party may settle the Third Party Claim upon the terms set forth in
such firm offer to settle such Third Party Claim. If the Indemnified Party has assumed the defense pursuant to
Section 7.04(a)
,
it shall not agree to any settlement without the written consent of the Indemnifying Party (which consent shall not be unreasonably
withheld or delayed).
(c)
Direct
Claims.
Any Action by an Indemnified Party on account of a Loss which does not result from a Third Party Claim (a “
Direct
Claim
”) shall be asserted by the Indemnified Party giving the Indemnifying Party reasonably prompt written notice thereof,
but in any event not later than 30 days after the Indemnified Party becomes aware of such Direct Claim. The failure to give such
prompt written notice shall not, however, relieve the Indemnifying Party of its indemnification obligations, except and only to
the extent that the Indemnifying Party forfeits rights or defenses by reason of such failure. Such notice by the Indemnified Party
shall describe the Direct Claim in reasonable detail, shall include copies of all material written evidence thereof and shall indicate
the estimated amount, if reasonably practicable, of the Loss that has been or may be sustained by the Indemnified Party. The Indemnifying
Party shall have 30 days after its receipt of such notice to respond in writing to such Direct Claim. The Indemnified Party shall
allow the Indemnifying Party and its professional advisors to investigate the matter or circumstance alleged to give rise to the
Direct Claim, and whether and to what extent any amount is payable in respect of the Direct Claim and the Indemnified Party shall
assist the Indemnifying Party’s investigation by giving such information and assistance (including access to the Company’s
premises and personnel and the right to examine and copy any accounts, documents or records) as the Indemnifying Party or any of
its professional advisors may reasonably request. If the Indemnifying Party does not so respond within such 30 day period, the
Indemnifying Party shall be deemed to have rejected such claim, in which case the Indemnified Party shall be free to pursue such
remedies as may be available to the Indemnified Party on the terms and subject to the provisions of this Agreement.
(d)
Cooperation.
Upon a reasonable request by the Indemnifying Party, each Indemnified Party seeking indemnification hereunder in respect of any
Direct Claim, hereby agrees to consult with the Indemnifying Party and act reasonably to take actions reasonably requested by the
Indemnifying Party in order to attempt to reduce the amount of Losses in respect of such Direct Claim. Any costs or expenses associated
with taking such actions shall be included as Losses hereunder.
(e)
Tax
Claims.
Notwithstanding any other provision of this Agreement, the control of any claim, assertion, event or proceeding in
respect of Taxes of the Company (including, but not limited to, any such claim in respect of a breach of the representations and
warranties in
Section 2.17
hereof or any breach or violation of or failure to fully perform any covenant, agreement, undertaking
or obligation in
Article VII
) shall be governed exclusively by
Article VII
hereof.
Section 7.05 Payments.
Once a Loss is agreed to by the Indemnifying Party or finally adjudicated to be payable pursuant to this
Article VII
,
the Indemnifying Party shall satisfy its obligations within 15 Business Days of such final, non-appealable adjudication by wire
transfer of immediately available funds. The parties hereto agree that should an Indemnifying Party not make full payment of any
such obligations within such 15 Business Day period, any amount payable shall accrue interest from and including the date of agreement
of the Indemnifying Party or final, non-appealable adjudication to and including the date such payment has been made at a rate
per annum equal to 4%. Such interest shall be calculated daily on the basis of a 365 day year and the actual number of days elapsed,
without compounding.
Section 7.06 Tax
Treatment of Indemnification Payments.
All indemnification payments made under this Agreement shall be treated by the parties
as an adjustment to the Purchase Price for Tax purposes, unless otherwise required by Law.
Section 7.07 Effect
of Investigation.
The representations, warranties and covenants of the Indemnifying Party, and the Indemnified Party’s
right to indemnification with respect thereto, shall not be affected or deemed waived by reason of any investigation made by or
on behalf of the Indemnified Party (including by any of its Representatives) or by reason of the fact that the Indemnified Party
or any of its Representatives knew or should have known that any such representation or warranty is, was or might be inaccurate
or by reason of the Indemnified Party’s waiver of any condition set forth in
Section 6.02
or
Section 6.03
,
as the case may be.
Section 7.08 Exclusive
Remedies.
Subject to
Section 4.05
and
Section 9.11
, the parties acknowledge and agree that their sole and exclusive
remedy with respect to any and all claims (other than claims arising from fraud, criminal activity or willful misconduct on the
part of a party hereto in connection with the transactions contemplated by this Agreement) for any breach of any representation,
warranty, covenant, agreement or obligation set forth herein or otherwise relating to the subject matter of this Agreement, shall
be pursuant to the indemnification provisions set forth in
Article V
and this
Article VII
. In furtherance of the
foregoing, each party hereby waives, to the fullest extent permitted under Law, any and all rights, claims and causes of action
for any breach of any representation, warranty, covenant, agreement or obligation set forth herein or otherwise relating to the
subject matter of this Agreement it may have against the other parties hereto and their Affiliates and each of their respective
Representatives arising under or based upon any Law, except pursuant to the indemnification provisions set forth in
Article
V
and this
Article VII
. Nothing in this
Section 7.08
shall limit any Person’s right to seek and obtain
any equitable relief to which any Person shall be entitled or to seek any remedy on account of any Person's fraudulent, criminal
or intentional misconduct.
Article
VIII
Termination
Section 8.01 Termination.
This Agreement may be terminated at any time prior to the Closing:
(a) by
the mutual written consent of Seller and Buyer;
(b) by
Buyer by written notice to Seller if the audit performed by a 3
rd
party auditing firm does not meet the standards agreed
upon between Buyer and Seller.
(c) by
Buyer or Seller in the event that (i) there shall be any Law that makes consummation of the transactions contemplated by this Agreement
illegal or otherwise prohibited or (ii) any Governmental Authority shall have issued a Governmental Order restraining or enjoining
the transactions contemplated by this Agreement, and such Governmental Order shall have become final and non-appealable.
Section 8.02 Effect
of Termination.
If this Agreement is terminated pursuant to this
Article VIII
, (a) each party will redeliver all documents,
work papers and other material of any other party relating to the transactions contemplated hereby, whether so obtained before
or after the execution hereof, to the party furnishing the same, and (b) all further obligations of the parties under this Agreement
shall terminate without further liability of any party to any other party, except that each party shall have all rights and remedies
permitted hereunder and under the other Transaction Documents in respect of any losses resulting from any breach (other than a
breach of a representation and warranty that arises from an event occurring or facts first becoming known after the date hereof
and that is not the result of a breach by a party of its covenants hereunder) or failure by another party hereto or thereto to
perform its obligations hereunder or thereunder prior to the termination of this Agreement; provided, however, that the rights
and obligations of the parties under
Schedule I
(Definitions), this
Section 8.02
(Effect of Termination), and
Article
IX
(Miscellaneous) shall survive such termination.
Article
IX
Miscellaneous
Section 9.01 Expenses.
Except as otherwise expressly provided herein, all costs and expenses, including, without limitation, fees and disbursements
of counsel, financial advisors and accountants, incurred in connection with this Agreement and the transactions contemplated hereby
shall be paid by the party incurring such costs and expenses, whether or not the Closing shall have occurred.
Section 9.02 Notices.
All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall
be deemed to have been given (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee
if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by facsimile or e-mail of a PDF
document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day
if sent after normal business hours of the recipient or (d) on the third day after the date mailed, by certified or registered
mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the following addresses
(or at such other address for a party as shall be specified in a notice given in accordance with this
Section 9.02
):
|
If to Seller:
|
10859 Venice Boulevard
Los Angeles, CA 90034
E-mail: patrick@avxdesign.com
Attention: Patrick Calderone
|
|
If to Buyer:
|
2311 East Locust Street
Ontario, CA 91761
E-mail: desheng@focusuniversal..com
Attention: Desheng Wang, Chief Executive
|
Section 9.03 Interpretation.
For purposes of this Agreement, (a) the words “include,” “includes” and “including” shall
be deemed to be followed by the words “without limitation”; (b) the word “or” is not exclusive; and (c)
the words “herein,” “hereof,” “hereby,” “hereto” and “hereunder” refer
to this Agreement as a whole. Unless the context otherwise requires, references herein: (x) to Articles, Sections, Disclosure Schedules
and Exhibits mean the Articles and Sections of, and Disclosure Schedules and Exhibits attached to, this Agreement; (y) to an agreement,
instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time
to time to the extent permitted by the provisions thereof and (z) to a statute means such statute as amended from time to time
and includes any successor legislation thereto and any regulations promulgated thereunder. This Agreement shall be construed without
regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing
any instrument to be drafted. The Disclosure Schedules and Exhibits referred to herein shall be construed with, and as an integral
part of, this Agreement to the same extent as if they were set forth verbatim herein.
Section 9.04 Headings.
The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.
Section 9.05 Severability.
If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality
or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term
or provision in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or unenforceable,
the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as
closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally
contemplated to the greatest extent possible.
Section 9.06 Entire
Agreement.
This Agreement and the other Transaction Documents constitute the sole and entire agreement of the parties to this
Agreement with respect to the subject matter contained herein and therein] and supersede all prior and contemporaneous understandings
and agreements, both written and oral, with respect to such subject matter. In the event of any inconsistency between the statements
in the body of this Agreement and those in the other Transaction Documents, the Exhibits and Disclosure Schedules (other than an
exception expressly set forth as such in the Disclosure Schedules), the statements in the body of this Agreement will control.
Section 9.07 Successors
and Assigns.
This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns. Neither party may assign its rights or obligations hereunder without the prior written consent
of the other party, which consent shall not be unreasonably withheld or delayed;
provided, however
, that prior to the Closing
Date, Buyer may, without the prior written consent of Sellers, assign all or any portion of its rights under this Agreement to
one or more of its direct or indirect wholly-owned subsidiaries. No assignment shall relieve the assigning party of any of its
obligations hereunder.
Section 9.08 No
Third-party Beneficiaries.
Except as provided in
Section 7.03
and
Article IX
, this Agreement is for the sole
benefit of the parties hereto and their respective successors and permitted assigns and nothing herein, express or implied, is
intended to or shall confer upon any other Person or entity any legal or equitable right, benefit or remedy of any nature whatsoever
under or by reason of this Agreement.
Section 9.09 Amendment
and Modification; Waiver.
This Agreement may only be amended, modified or supplemented by an agreement in writing signed by
each party hereto. No waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in writing
and signed by the party so waiving. No waiver by any party shall operate or be construed as a waiver in respect of any failure,
breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring
before or after that waiver. No failure to exercise, or delay in exercising, any right, remedy, power or privilege arising from
this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or
privilege.
Section 9.10 Governing
Law; Submission to Jurisdiction; Waiver of Jury Trial.
(a) This
Agreement shall be governed by and construed in accordance with the internal laws of the State of California without giving effect
to any choice or conflict of law provision or rule (whether of the State of California or any other jurisdiction) that would cause
the application of Laws of any jurisdiction other than those of the State of California.
(b) ANY
LEGAL SUIT, ACTION OR PROCEEDING ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY MAY BE INSTITUTED IN THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA OR THE COURTS OF THE STATE
OF CALIFORNIA IN EACH CASE LOCATED IN THE CITY OF IRVINE AND COUNTY OF ORANGE, AND EACH PARTY IRREVOCABLY SUBMITS TO THE EXCLUSIVE
JURISDICTION OF SUCH COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING. SERVICE OF PROCESS, SUMMONS, NOTICE OR OTHER DOCUMENT BY MAIL
TO SUCH PARTY’S ADDRESS SET FORTH HEREIN SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY SUIT, ACTION OR OTHER PROCEEDING BROUGHT
IN ANY SUCH COURT. THE PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY OBJECTION TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR
ANY PROCEEDING IN SUCH COURTS AND IRREVOCABLY WAIVE AND AGREE NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH SUIT, ACTION
OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(c) EACH
PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS IS LIKELY
TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER TRANSACTION
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A)
NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE
FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY
MAKES THIS WAIVER VOLUNTARILY, AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS Section 11.10(c).
Section 9.11 Specific
Performance.
The parties agree that irreparable damage would occur if any provision of this Agreement were not performed in
accordance with the terms hereof and that the parties shall be entitled to specific performance of the terms hereof, in addition
to any other remedy to which they are entitled at law or in equity.
Section 9.12 Counterparts.
This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall
be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail or other means of electronic
transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF,
the parties hereto have caused this Agreement to be executed as of the date first written above by their respective officers thereunto
duly authorized.
|
|
SELLERS:
AVX Design and Integration,
Inc.
|
|
|
By_____________________
Name: Patrick Calderone
Title: Trustee
|
|
|
|
|
|
BUYER:
Focus Universal, Inc., a
Nevada Corporation
|
|
|
By_____________________
Name: Desheng Wang
Title: Chief Executive Officer
|
SCHEDULE
I
Definitions
The following terms have
the meanings specified or referred to in this
Schedule A
:
“
Accounting
Referee
” has the meaning set forth in
Section 5.01(c)
.
“
Action
” means
any claim, action, cause of action, demand, lawsuit, arbitration, inquiry, audit, notice of violation, proceeding, litigation,
citation, summons, subpoena or investigation of any nature, civil, criminal, administrative, regulatory or otherwise, whether at
law or in equity.
“
Affiliate
” of
a Person means any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such Person. The term “control” (including the terms “controlled by” and
“under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction
of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.
“
Agreement
” has
the meaning set forth in the preamble.
“
Balance Sheet
” has
the meaning set forth in
Section 2.05
.
“
Balance Sheet
Date
” has the meaning set forth in
Section 2.05
.
“
Business Day
” means
any day except Saturday, Sunday or any other day on which commercial banks located in California are authorized or required by
Law to be closed for business.
“
Buyer
” has
the meaning set forth in the preamble.
“
Buyer Common
Stock
” has the meaning set forth in
Section 3.02(a)
.
“
Buyer Indemnitees
” has
the meaning set forth in
Section 7.02
.
“
Buyer Disclosure
Schedules
” means the Disclosure Schedules delivered by Buyer concurrently with the execution and delivery of this
Agreement.
“
Closing
” has
the meaning set forth in
Section 1.05
.
“
Closing Date
” has
the meaning set forth in
Section 1.05
.
“
Closing Working
Capital
” means: (a) the Current Assets of the Company, less (b) the Current Liabilities of the Company, determined
as of the close of business on the Closing Date.
“
Code
” means
the Internal Revenue Code of 1986, as amended.
“
Common Stock
” has
the meaning set forth in
Section 2.02(a)
.
“
Company
” has
the meaning set forth in the recitals.
“
Company Intellectual
Property
” means all patents, patent applications, trademarks, trademark applications, service marks, service mark
applications, tradenames, copyrights, trade secrets, domain names, mask works, information and proprietary rights and processes,
similar or other intellectual property rights, subject matter of any of the foregoing, tangible embodiments of any of the foregoing,
licenses in, to and under any of the foregoing, and any and all such intellectual property rights that are owned or used by the
Company in the conduct of the Company’s business as now conducted and as presently proposed to be conducted.
“
Contracts
” means
all contracts, leases, deeds, mortgages, licenses, instruments, notes, commitments, undertakings, indentures, joint ventures and
all other agreements, commitments and legally binding arrangements, whether written or oral.
“
Current Assets
” means
cash and cash equivalents, accounts receivable, inventory and prepaid expenses, but excluding (a) the portion of any prepaid expense
of which Buyer will not receive the benefit following the Closing, (b) deferred Tax assets and (c) receivables from any of the
Company’s Affiliates, directors, employees, officers or stockholders and any of their respective Affiliates, determined in
accordance with GAAP applied using the same accounting methods, practices, principles, policies and procedures, with consistent
classifications, judgments and valuation and estimation methodologies that were used in the preparation of the Annual Financial
Statements for the most recent fiscal year end as if such accounts were being prepared and audited as of a fiscal year end.
“
Current Liabilities
” means
accounts payable, accrued Taxes and accrued expenses, but excluding payables to any of the Company’s Affiliates, directors,
employees, officers or stockholders and any of their respective Affiliates, deferred Tax liabilities and the current portion of
long term debt, determined in accordance with GAAP applied using the same accounting methods, practices, principles, policies and
procedures, with consistent classifications, judgments and valuation and estimation methodologies that were used in the preparation
of the Annual Financial Statements for the most recent fiscal year end as if such accounts were being prepared and audited as of
a fiscal year end.
“
Direct Claim
” has
the meaning set forth in
Section 7.04(c)
.
“
Company Disclosure
Schedules
” means the Disclosure Schedules delivered by the Seller and or the Company concurrently with the execution
and delivery of this Agreement.
“
Dollars or
$
” means the lawful currency of the United States.
“
Employees
” means
those Persons employed by the Company immediately prior to the Closing.
“
Encumbrance
” means
any charge, claim, community property interest, pledge, condition, equitable interest, lien (statutory or other), option, security
interest, mortgage, easement, encroachment, right of way, right of first refusal, or restriction of any kind, including any restriction
on use, voting, transfer, receipt of income or exercise of any other attribute of ownership.
“
ERISA
” means
the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder.
“
Exchange Act
” has
the meaning set forth in
Section 3.04
“
Financial Statements
” has
the meaning set forth in
Section 2.05
“
GAAP
” means
United States generally accepted accounting principles in effect from time to time.
“
Governmental
Authority
” means any federal, state, local or foreign government or political subdivision thereof, or any agency
or instrumentality of such government or political subdivision, or any self-regulated organization or other nongovernmental regulatory
authority or quasi-governmental authority (to the extent that the rules, regulations or orders of such organization or authority
have the force of Law), or any arbitrator, court or tribunal of competent jurisdiction.
“
Governmental
Order
” means any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with
any Governmental Authority.
“
HSR Act
” means
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
“
Indemnified
Party
” has the meaning set forth in
Section 7.04
.
“
Indemnifying
Party
” has the meaning set forth in
Section 7.04
.
“
Insurance Policies
” has
the meaning set forth in
Section 2.13
.
“
Law
” means
any statute, law, ordinance, regulation, rule, code, order, constitution, treaty, common law, judgment, decree, other requirement
or rule of law of any Governmental Authority.
“
Liabilities
” has
the meaning set forth in
Section 2.06
.
“
Losses
” means
losses, damages, liabilities, deficiencies, Actions, judgments, interest, awards, penalties, fines, costs or expenses of whatever
kind, including reasonable attorneys’ fees and the cost of enforcing any right to indemnification hereunder and the cost
of pursuing any insurance providers;
provided, however
, that “
Losses
” shall not include punitive damages,
except in the case of fraud or to the extent actually awarded to a Governmental Authority or other third party.
“
Material Adverse
Effect
” means any event, occurrence, fact, condition or change that is, or could reasonably be expected to become,
individually or in the aggregate, materially adverse to (a) the business, results of operations, prospects, condition (financial
or otherwise) or assets of the Company, or (b) the ability of Seller to consummate the transactions contemplated hereby on a timely
basis;
provided, however
, that “Material Adverse Effect” shall not include any event, occurrence, fact, condition,
or change, directly or indirectly, arising out of or attributable to: (i) any changes, conditions or effects in the United States
economy or securities or financial markets in general; (ii) changes, conditions or effects that generally affect the industries
in which the Company operates; (iii) any change, effect or circumstance resulting from an action required or permitted by this
Agreement, except pursuant to
Section 2.04
and
Section 4.06
; or (iv) conditions caused by acts of terrorism or war
(whether or not declared);
provided further, however,
that any event, occurrence, fact, condition, or change referred to
in clauses (i), (ii) or (iv) immediately above shall be taken into account in determining whether a Material Adverse Effect has
occurred or could reasonably be expected to occur to the extent that such event, occurrence, fact, condition, or change has a disproportionate
effect on the Company compared to other participants in the industries in which the Company conducts its businesses.
“
Material Contract
”
means: (a) each Contract of the Company involving aggregate consideration in excess of $250,000 or requiring performance by any
party more than one year from the date hereof, which, in each case, cannot be cancelled by the Company without penalty or without
more than 180 days’ notice; (b) all Contracts that relate to the sale of any of the Company’s assets, other than in
the ordinary course of business, for consideration in excess of $250,000; (c) all Contracts that relate to the acquisition of any
business, a material amount of stock or assets of any other Person or any real property (whether by merger, sale of stock, sale
of assets or otherwise), in each case involving amounts in excess of $250,000; (d) except for Contracts relating to trade receivables,
all Contracts relating to indebtedness (including, without limitation, guarantees) of the Company, in each case having an outstanding
principal amount in excess of $250,000; and (e) all Contracts between or among the Company on the one hand and Sellers or any Affiliate
of Sellers (other than the Company) on the other hand.
“
Material Customers
” has
the meaning set forth in
Section 2.12(a)
.
“
Material Suppliers
” has
the meaning set forth in
Section 2.12(b)
.
“
Note
” has
the meaning set forth in
Section 1.03(c)
.
“
Permitted Encumbrances
” means
(i) liens for Taxes not yet due and payable or being contested in good faith by appropriate procedures and for which there are
adequate accruals or reserves on the Balance Sheet; (ii) mechanics, carriers', workmen's, repairmen's or other like liens arising
or incurred in the ordinary course of business consistent with past practice or amounts that are not delinquent and which are not,
individually or in the aggregate, material to the business of the Company; (iii) easements, rights of way, zoning ordinances and
other similar encumbrances affecting Real Property which are not, individually or in the aggregate, material to the business of
the Company; or (iv) other than with respect to owned Real Property, liens arising under original purchase price conditional sales
contracts and equipment leases with third parties entered into in the ordinary course of business consistent with past practice
which are not, individually or in the aggregate, material to the business of the Company.
“
Person
” means
an individual, corporation, partnership, joint venture, limited liability company, Governmental Authority, unincorporated organization,
trust, association or other entity.
“
Post-Closing
Tax Period
” means any taxable period beginning after the Closing Date and, with respect to any taxable period beginning
before and ending after the Closing Date, the portion of such taxable period beginning after the Closing Date.
“
Pre-Closing
Tax Period
” means any taxable period ending on or before the Closing Date and, with respect to any taxable period
beginning before and ending after the Closing Date, the portion of such taxable period ending on and including the Closing Date.
“
Pre-Closing
Taxes
” means Taxes of the Company for any Pre-Closing Tax Period.
“
Purchase Price
” has
the meaning set forth in
Section 1.02
.
“
Representative
” means,
with respect to any Person, any and all directors, officers, employees, consultants, financial advisors, counsel, accountants and
other agents of such Person.
“
Restricted
Business
” means providing smart automation solutions and installation for residential and commercial applications.
“
Restricted
Period
” has the meaning set forth in
Section 4.05(a)
.
“
SEC
”
has the meaning set forth in
Section 3.04
.
“
Section 338(h)(10)
Election
” has the meaning set forth in
Section 1.02
.
“
Securities
Act
” has the meaning set forth in
Section 3.04
.
“
Seller
”
or “
Sellers
” has the meaning set forth in the preamble.
“
Seller Indemnitees
” has
the meaning set forth in
Section 7.03
.
“
Shares
” has
the meaning set forth in the recitals.
“
Straddle Period
” has
the meaning set forth in
Section 5.04
.
“
Tax Claim
” has
the meaning set forth in
Section 5.05
.
“
Taxes
” means
all federal, state, local, foreign and other income, gross receipts, sales, use, production, ad valorem, transfer, franchise, registration,
profits, license, lease, service, service use, withholding, payroll, employment, unemployment, estimated, excise, severance, environmental,
stamp, occupation, premium, property (real or personal), real property gains, windfall profits, customs, duties or other taxes,
fees, assessments or charges of any kind whatsoever, together with any interest, additions or penalties with respect thereto and
any interest in respect of such additions or penalties.
“
Territory
” means
United States of America and Canada.
“
Third Party
Claim
” has the meaning set forth in
Section 7.04(a)
.
“
Transaction
Documents
” means: (i) this Agreement; (ii) the secured promissory note executed and delivered by Buyer to Sellers
in accordance with the provisions of
Section 1.03
hereof; (iv) the subscription agreements to be entered into between Buyer
and the Seller to subscribe for the amount of 39,286 common shares of stock of Buyer, in accordance with the provisions of
Section
1.03
hereof; and (v) the executive employment agreements to be entered into between the Company and Patrick Calderone;
Exhibit 99.6
CONSULTING AGREEMENT
This Consulting Agreement
(“
Agreement
”) is entered into effective as of
March 15
th
, 2019
by and between Focus Universal,
Inc. (the “
Company
”) and Patrick Calderone (“
Consultant
”). The Company desires to retain
Consultant as an independent contractor to perform consulting services for the Company, and Consultant is willing to perform such
services, on the terms described below. In consideration of the mutual promises contained herein, the parties agree as follows:
1.
Services and Compensation
. Consultant agrees to perform for the Company the services described in
Exhibit A
(the “
Services
”), and the Company agrees to pay Consultant the compensation described in
Exhibit A
for
Consultant’s performance of the Services.
2.
Confidentiality
.
A.
Definition
. “
Confidential Information
” means any non-public information that relates to the actual
or anticipated business or research and development of the Company, technical data, trade secrets or know-how, including, but not
limited to, research, product plans or other information regarding Company’s products or services and markets therefore,
customer lists and customers (including, but not limited to, customers of the Company on whom Consultant called or with whom Consultant
became acquainted during the term of Consultant’s engagement), software, developments, inventions, processes, formulas, technology,
designs, drawing, engineering, hardware configuration information, marketing, finances or other business information. Confidential
Information does not include information that (i) is known to Consultant at the time of disclosure to Consultant by the Company
as evidenced by written records of Consultant, (ii) has become publicly known and made generally available through no wrongful
act of Consultant or (iii) has been rightfully received by Consultant from a third party who is authorized to make such disclosure.
B.
Nonuse and Nondisclosure
. Consultant will not, during or subsequent to the term of this Agreement, (i) use the Confidential
Information for any purpose whatsoever other than the performance of the Services on behalf of the Company or (ii) disclose the
Confidential Information to any third party. Consultant agrees that all Confidential Information will remain the sole property
of the Company. Consultant also agrees to take all reasonable precautions to prevent any unauthorized disclosure of such Confidential
Information, including, but not limited to, having each of Consultant’s employees and contractors, if any, with access to
any Confidential Information execute a nondisclosure agreement. Without the Company’s prior written approval, Consultant
will not directly or indirectly disclose to anyone the existence of this Agreement or the fact that Consultant has this arrangement
with the Company.
C.
Former Client Confidential Information
. Consultant agrees that Consultant will not, during the term of this Agreement,
improperly use or disclose any proprietary information or trade secrets of any former or current employer of Consultant or other
person or entity with which Consultant has an agreement or duty to keep in confidence information acquired by Consultant, if any.
Consultant also agrees that Consultant will not bring onto the Company’s premises any unpublished document or proprietary
information belonging to any such employer, person or entity unless consented to in writing by such employer, person or entity.
D.
Third Party Confidential Information
. Consultant recognizes that the Company has received and in the future will
receive from third parties their confidential or proprietary information subject to a duty on the Company’s part to maintain
the confidentiality of such information and to use it only for certain limited purposes. Consultant agrees that, during the term
of this Agreement and thereafter, Consultant owes the Company and such third parties a duty to hold all such confidential or proprietary
information in the strictest confidence and not to disclose it to any person, firm or corporation or to use it except as necessary
in carrying out the Services for the Company consistent with the Company’s agreement with such third party.
E.
Return of Materials
. Upon the termination of this Agreement, or upon Company’s earlier request, Consultant
will deliver to the Company all of the Company’s property, including but not limited to all electronically stored information
and passwords to access such property, or Confidential Information that Consultant may have in Consultant’s possession or
control.
3.
Intellectual Property Rights
.
A.
Company Ownership
. The Company is and will be the sole and exclusive owner of all right, title, and interest throughout
the world in and to all the results and proceeds of the Services performed under this Agreement (collectively, the “Deliverables”)
and all other writings, technology, inventions, discoveries, processes, techniques, methods, ideas, concepts, research, proposals,
and materials, and all other work product of any nature whatsoever, that are created, prepared, produced, authored, edited, modified,
conceived, or reduced to practice in the course of performing the Services or other work performed in connection with the Services
or this Agreement (collectively, and including the Deliverables, “Work Product”) including all patents, copyrights,
trademarks (together with the goodwill symbolized thereby), trade secrets, know-how, and other confidential or proprietary information,
and other intellectual property rights (collectively “Intellectual Property Rights”) therein. Consultant agrees that
the Work Product is hereby deemed “work made for hire” as defined in 17 U.S.C. § 101 for the Company and all copyrights
therein automatically and immediately vest in the Company. If, for any reason, any Work Product does not constitute “work
made for hire,” Consultant hereby irrevocably assign to the Company, for no additional consideration, his entire right, title,
and interest throughout the world in and to such Work Product, including all Intellectual Property Rights therein, including the
right to sue for past, present, and future infringement, misappropriation, or dilution thereof.
B.
Copyrights
. To the extent any copyrights are assigned under Section 3.A, consultant hereby irrevocably waives
in favor of the Company, to the extent permitted by applicable law, any and all claims he may now or hereafter have in any jurisdiction
to all rights of paternity or attribution, integrity, disclosure, and withdrawal and any other rights that may be known as “moral
rights” in relation to all Work Product to which the assigned copyrights apply
C.
Further Assurances
. Consultant agrees to assist Company, or its designee, at the Company’s expense, in every
proper way to secure the Company’s rights in and to all Work Product and any copyrights, patents, mask work rights or other
intellectual property rights relating to all Work Product in any and all countries, including the disclosure to the Company of
all pertinent information and data with respect to all Work Product, the execution of all applications, specifications, oaths,
assignments and all other instruments that the Company may deem necessary in order to apply for and obtain such rights and in order
to assign and convey to the Company, its successors, assigns and nominees the sole and exclusive right, title and interest in and
to all Work Product, and any copyrights, patents, mask work rights or other intellectual property rights relating to all Work Product.
Consultant also agrees that Consultant’s obligation to execute or cause to be executed any such instrument or papers shall
continue after the termination of this Agreement.
D.
Company Materials. As between Consultant and the Company, the Company is, and will remain, the sole and exclusive owner
of all right, title, and interest in and to any documents, specifications, data, know-how, methodologies, software, and other materials
provided to Consultant by the Company (“
Company Materials
”), including all Intellectual Property Rights therein.
Consultant will have no right or license to use, publish, reproduce, prepare derivative works based upon, distribute, perform,
or display any Company Materials except solely during the Term to the extent necessary to perform his obligations under this Agreement.
All other rights in and to the Company Materials are expressly reserved by the Company. Consultant has no right or license to use
the Company’s trademarks, service marks, trade names, logos, symbols, or brand names.
E.
Pre-Existing Materials
. Subject to
Section 3.A
, Consultant agrees that if, in the course of performing the
Services, Consultant incorporates into any Work Product developed under this Agreement any pre-existing invention, improvement,
development, concept, discovery or other proprietary information owned by Consultant or in which Consultant has an interest, (i)
Consultant will inform Company, in writing before incorporating such invention, improvement, development, concept, discovery or
other proprietary information into any Work Product, and (ii) the Company is hereby granted a nonexclusive, royalty-free, perpetual,
irrevocable, worldwide license to make, have made, modify, use and sell such item as part of such Work Product. Consultant will
not incorporate any invention, improvement, development, concept, discovery or other proprietary information owned by any third
party into any Work Product without Company’s prior written permission.
F.
Consultant’s Employees and Contractors
. Consultant shall require each of his employees and contractors to execute
written agreements containing obligations of confidentiality and non-use and assignment of inventions and other work product consistent
with the provisions of Section 2 and Section 3 hereof prior to such employee or contractor providing any Services under this Agreement.
G.
Attorney-in-Fact
. Consultant agrees that, if the Company is unable because of Consultant’s unavailability,
mental or physical incapacity, or for any other reason, to secure Consultant’s signature for the purpose of applying for
or pursuing any application for any United States or foreign patents or or copyright registrations covering the Inventions assigned
to the Company in
Section 3.A
, then Consultant hereby irrevocably designates and appoints the Company and its duly authorized
officers and agents as Consultant’s agent and attorney-in-fact, to act for and on Consultant’s behalf to execute and
file any such applications and to do all other lawfully permitted acts to further the prosecution and issuance of patents, copyright
and mask work registrations with the same legal force and effect as if executed by Consultant.
4.
Representations and Warranties
.
A.
Consultant’s Representations and Warranties
. Consultant represents and warrants to the Company that:
(1)
He has the right to enter into this Agreement, to grant the rights granted in this Agreement, and to perform fully all of
his obligations in this Agreement.
(2)
He has the required skill, experience, and qualifications to perform the Services, and shall perform the Services in a professional
and workmanlike manner in accordance with best industry standards for similar services, and shall devote sufficient resources to
ensure that the Services are performed in a timely and reliable manner.
(3)
He shall perform the Services in compliance with all applicable federal, state, and local laws and regulations.
(4)
the Company will receive good and valid title to all Work Product, free and clear of all encumbrances and liens of any kind.
(5)
All Work Product is and shall be Consultant’s original work (except for material in the public domain or provided
by the Company) and, to the best of his knowledge, do not and will not violate or infringe upon the intellectual property right
or any other right whatsoever of any person, firm, corporation, or other entity.
B.
Company’s Representations and Warranties
.
(1)
It has the full right, power, and authority to enter into this Agreement and perform its obligations hereunder.
(2)
The execution of this Agreement by its representative has been duly authorized by all necessary corporate action.
5.
Conflicting Obligations
.
A.
Conflicts
. Consultant certifies that Consultant has no outstanding agreement or obligation that is in conflict with
any of the provisions of this Agreement or that would preclude Consultant from complying with the provisions of this Agreement.
Consultant will not enter into any such conflicting agreement during the term of this Agreement. Consultant’s violation of
this
Section 4.A
will be considered a material breach under
Section 6.B
.
B.
Other Business Activities
. Consultant may be engaged or employed in any other business, trade, profession, or other
activity while providing services to the Company, in which case he agrees to abide by the terms of the Section 2 and Section 3
hereof.
C.
Substantially Similar Designs
. In view of Consultant’s access to the Company’s trade secrets and proprietary
know-how, Consultant agrees that Consultant will not, without Company’s prior written approval, design identical or substantially
similar designs as those developed under this Agreement for any third party during the term of this Agreement and for a period
of 12 months after the termination of this Agreement. Consultant acknowledges that the obligations in this
Section 4
are
ancillary to Consultant’s nondisclosure obligations under
Section 2
.
6.
Reports
. Consultant also agrees that Consultant will, from time to time during the term of this Agreement or any
extension thereof, keep the Company advised as to Consultant’s progress in performing the Services under this Agreement.
Consultant further agrees that Consultant will, as requested by the Company, prepare written reports with respect to such progress.
The Company and Consultant agree that the time required to prepare such written reports will be considered time devoted to the
performance of the Services.
7.
Term and Termination
.
Term
. The term of this Agreement will begin on the date hereof and continue for 12 months
(the “
Term
”).
A.
Termination
. The Consultant or Company may terminate this Agreement with or without cause and with or without notice
at any time. Nothing in this Agreement or in any document statement shall limit the right to terminate this relationship.
No independent contractor, manager, supervisor or employee of the Company has any authority to enter into an agreement for employment
for any specified period of time or to make an agreement for employment for any specified period of time.
B.
Survival
. Upon such termination, all rights and duties of the Company and Consultant toward each other shall cease
except:
(1)
The Company will pay, within 30 days after the effective date of termination, all amounts owing to Consultant for Services
completed and accepted by the Company prior to the termination date and related expenses, if any, submitted in accordance with
the Company’s policies and in accordance with the provisions of Section 1 of this Agreement; and
(2)
Section 2 (Confidentiality), Section 3 (Ownership), Section 4 (Conflicting Obligations), Section 7 (Independent Contractor;
Benefits), Section 8 (Indemnification) and Section 10 (Arbitration and Equitable Relief) will survive termination of this Agreement.
8.
Independent Contractor; Benefits
.
A.
Independent Contractor
. It is the express intention of the Company and Consultant that Consultant perform the Services
as an independent contractor to the Company. Nothing in this Agreement shall in any way be construed to constitute Consultant as
an agent, employee or representative of the Company. Without limiting the generality of the foregoing, Consultant is not authorized
to bind the Company to any liability or obligation or to represent that Consultant has any such authority. Consultant agrees to
furnish (or reimburse the Company for) all tools and materials necessary to accomplish this Agreement and shall incur all expenses
associated with performance, except as expressly provided in
Exhibit A
. Consultant acknowledges and agrees that Consultant
is obligated to report as income all compensation received by Consultant pursuant to this Agreement. Consultant agrees to and acknowledges
the obligation to pay all self-employment and other taxes on such income.
B.
Benefits
. The Company and Consultant agree that Consultant will receive no Company-sponsored benefits from the Company.
If Consultant is reclassified by a state or federal agency or court as Company’s employee, Consultant will become a reclassified
employee and will receive no benefits from the Company, except those mandated by state or federal law, even if by the terms of
the Company’s benefit plans or programs of the Company in effect at the time of such reclassification, Consultant would otherwise
be eligible for such benefits.
9.
Indemnification.
Each party hereto, as the “Indemnifying Party,” agrees to indemnify and hold harmless
the other party and its directors, officers and employees (the “Indemnified Party”) from
and against all taxes, losses, damages, liabilities, costs and expenses, including attorneys’ fees and other legal expenses,
arising directly or indirectly from or in connection with (i) any negligent, reckless or intentionally wrongful act of Indemnifying
Party or the Indemnifying Party’s assistants, employees or agents, (ii) a determination
by a court or agency that the Consultant is not an independent contractor, (iii) any breach by the or the Indemnifying
Party or the Indemnifying Party’s assistants, employees or agents of any of the
covenants contained in this Agreement, (iv) any failure of or the Indemnifying Party’s to
perform its obligations under this Agreement in accordance with all applicable laws, rules and regulations, or (v) any violation
or claimed violation of a third party’s rights resulting in whole or in part from a breach of the Indemnifying
Party’s representations and warranties under this Agreement. –
10.
Non-solicitation
. From the date of this Agreement until 12 months after the termination of this Agreement (the “
Restricted
Period
”), Consultant will not, without the Company’s prior written consent, directly or indirectly, as an owner,
principal, partner, member, shareholder, independent contractor, consultant, joint venturer, investor, licensor, lender, employee
or in any other capacity whatsoever, alone, or in association with any other person solicit or encourage any employee or contractor
of the Company or its affiliates during the term of and the 12 months after termination of this Agreement to terminate employment
with, or cease providing services to, the Company or its affiliates or (iii) solicit, attempt to do any business with, refer
or intentionally interfere with the Company’s relationship with any advertiser, customer, developer, distributor, licensor,
licensee, partner, reseller, or supplier of or to the Company during the term of and the 12 months after the termination of
this Agreement.
11.
Equitable Relief; Waiver of Jury Trial; Voluntary Agreement.
A.
Availability of Injunctive Relief
. Each of the parties hereto acknowledges and agrees that the other parties hereto
would be damaged irreparably in the event any of the provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the parties agrees that the other parties shall be entitled to an injunction
or injunctions to prevent breaches of the provisions of this Agreement and to enforce specifically this Agreement and the terms
and provisions hereof in any action instituted in any court of the United States or any state thereof having jurisdiction over
the parties and the matter, in addition to any other remedy to which they may be entitled, at law or in equity.
B.
Waiver of Jury Trial
. the parties hereby agree to waive any right to trial by jury with regard to any and all controversies,
claims, or disputes with anyone arising out of, relating to, or resulting from this Agreement, including any breach of this agreement,
and any statutory claims under state or federal law.
C.
Voluntary Nature of Agreement
. Consultant acknowledges and agrees that Consultant is executing this Agreement voluntarily
and without any duress or undue influence by the Company or anyone else. Consultant further acknowledges and agrees that Consultant
has carefully read this Agreement and has asked any questions needed to understand the terms, consequences and binding effect of
this Agreement and fully understand it, including that Consultant is waiving its right to a jury trial. Finally, Consultant agrees
that Consultant has been provided an opportunity to seek the advice of an attorney of its choice before signing this Agreement.
12.
Miscellaneous
.
A.
Governing Law
. Any controversy or claim arising out of or relating to this Agreement, or the breach thereof, shall
be governed by the laws of the State of California without regard to the choice or conflict of law provisions thereof. The parties
hereby expressly consent to the personal jurisdiction of the state and federal courts located in the State of California for any
lawsuit filed there against either party arising from or relating to this Agreement.
B.
Assignability
. Except as otherwise provided in this Agreement, Consultant may not sell, assign or delegate any rights
or obligations under this Agreement.
C.
Entire Agreement
. This Agreement constitutes the entire agreement between the parties with respect to the subject
matter of this Agreement and supersedes all prior written and oral agreements between the parties regarding the subject matter
of this Agreement.
D.
Headings
. Headings are used in this Agreement for reference only and shall not be considered when interpreting this
Agreement.
E.
Notices
. Any notice or other communication required or permitted by this Agreement to be given to a party shall be
in writing and shall be deemed given if delivered personally or by commercial messenger or courier service, or mailed by U.S. registered
or certified mail (return receipt requested), or sent via facsimile (with receipt of confirmation of complete transmission) to
the party at the party’s address or facsimile number written below or at such other address or facsimile number as the party
may have previously specified by like notice. If by mail, delivery shall be deemed effective 3 business days after mailing in accordance
with this Section 11(E).
(1)
If to the Company, to:
Focus Universal
2311 East Locust Street
Ontario, CA
(2)
If to Consultant, to the address for notice on the signature page to this Agreement or, if no such address is provided,
to the last address of Consultant provided by Consultant to the Company.
F.
Severability
. If any provision of this Agreement is found to be illegal or unenforceable, the other provisions shall
remain effective and enforceable to the greatest extent permitted by law.
IN WITNESS WHEREOF,
the parties hereto have executed this Consulting Agreement effective as of the date first written above.
|
Consultant
|
Focus Universal
|
|
By: _____________________________
|
By: __________________________
|
|
Name: Patrick Calderone
|
Name: Desheng Wang
|
|
|
Title: President
|
|
Address:
|
Address:
2311 East Locust Street
Ontario, CA
|
EXHIBIT
A
Services and Compensation
1.
Contact
. Consultant’s principal contact at the Company:
Name: Desheng Wang
Title: President
2.
Services
. The Services shall include, but shall not be limited to, the following:
|
|
·
|
Sales and R&D Consulting
|
|
|
·
|
Consultant will provide use of his Contractor’s C7 License for the Company for the term of this agreement. Consultant
will allow Buyer to utilize the existing contractor’s license for the time needed for transfer per the requirements of the
CA state board of contractors. This shall be a separate and additional agreement . Seller shall be paid a fee for the use of such
license $1500 per month.
|
3.
Compensation
.
A.
Consultant shall provide 200 hours in a transition period, following the business transfer to the Company. Additional training
and support shall be available via text, email, skype or telephone.
B.
Additional training or support time will be billed as:
(1)
$150 per hour for remote consult via phone, text or email or for plan review
(2)
$300 per hour for on-site consultation plus any travel related expense
C.
Consultant will also receive a commission on new business brought to the Company, including but not limited, new sales accounts,
consulting projects, licensing projects and other monetization opportunities introduced to the Company. Consultant will receive
a finder’s fee of 5% on each new contract secured by the Company. Consultant will not receive any hourly consulting fees
for any new contracts.
D.
Consultant agrees to submit bi-weekly invoices to the Company. Consultant further agrees that a copy of the relevant written
request for services shall be submitted along with each monthly invoice before such invoice becomes payable. Company shall pay
Consultant in arrears within ten (10) calendar days of receipt of an invoice accompanied by a written request for services from
the Company.
E.
The Company will reimburse Consultant for all reasonable expenses incurred by Consultant in performing the Services pursuant
to this Agreement if Consultant receives written consent from an authorized agent of the Company prior to incurring such expenses
and submits receipts for such expenses to the Company in accordance with Company policy.
Accepted and agreed as of
.
|
Consultant
|
Focus Universal, Inc.
|
|
By: _____________________________
|
By: ____________________________
|
|
Name: Patrick Calderone
|
Name: Desheng Wang
|
|
|
Title: President
|