8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): June 29, 2018

XSPAND PRODUCTS LAB, INC.

(Exact Name of Registrant as Specified in Charter)

Nevada	001-38448	82-2199200
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

909 New Brunswick Avenue Phillipsburg, New Jersey	08865
(Address of principal executive offices)	(Zip Code)

(610) 829-1039

(Registrant’s Telephone Number, Including Area Code)

(Former name or former address, if changed since last report)

Copies to:

Marc J. Adesso

Waller Lansden Dortch & Davis, LLP

511 Union Street, Suite 2700

Nashville, Tennessee 37219

Telephone: (615) 244-6380

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company x

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. x

Item 1.01. Entry into a Material Definitive Agreement.

Membership Interest Purchase Agreement

On June 29, 2018, Xspand Products Lab, Inc. (the “Company”) entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”) with Edison Nation Holdings, LLC (“Edison Nation”) and all of the members of Edison Nation (the “Members”), pursuant to which the Company intends to acquire all of the voting membership interests of Edison Nation. As most recently reported in the Company’s Offering Circular on Form 1-A dated April 25, 2018, the Company and Edison Nation had begun negotiations for the present transaction pursuant to that certain Strategic Partnership Agreement dated February 26, 2018 that had been entered into between the Company and Edison Nation, LLC (a wholly-owned subsidiary of Edison Nation), which included a non-binding provision that allows us to negotiate for the acquisition of substantially all of the membership interests of Edison Nation, LLC.

Edison Nation

Edison Nation operates an open innovation marketplace for consumer and medical product ideas and intellectual property. They have received over 100,000 idea submissions from innovators, including independent inventors, corporate and governmental agencies, universities and hospitals and their respective communities and employees, and their successfully licensed products have sold in excess of $250 million at retail.

Edison Nation provides corporate partners with complete, fully managed, turn-key open innovation solutions to accept, review and acquire ideas on a confidential basis from their employees, customers and our community members. Partners engage Edison Nation to find them new products to acquire and Edison Nation aggregates ideas for them from inventors around the world. Edison Nation has managed over 300 innovation campaigns in their marketplace for clients, who include many of the largest manufacturers and retailers in the world such as Amazon, Bed Bath and Beyond, HSN, Rite Aid, P&G, Jarden and more.

Brief Description of the Purchase Agreement and Related Agreements

The Purchase Agreement contains customary representations, warranties, covenants and indemnities by the parties to the agreement, and is subject to the fulfillment of certain customary closing conditions. Upon closing of the Purchase Agreement, the Company will become the 100% owner of the voting membership interests of Edison Nation (subject to the limited approval rights held by the Members as holders of preferred membership interests of Edison Nation (the “Preferred Members”)) and its wholly-owned subsidiaries, Edison Nation, LLC, SafeTV Shop, LLC and Everyday Edisons, LLC (collectively, the “Acquired Subsidiaries”), including all of the rights and interests in Edison Nation’s inventor platform and marketplace, any related intellectual property and the other properties and assets of Edison Nation and the Acquired Subsidiaries, other than Edison Nation Medical, LLC, a wholly-owned subsidiary of Edison Nation, which is excluded from the transaction.

Pursuant to the Purchase Agreement, the Company agreed to pay aggregate consideration consisting of: (i) $700,000 in cash to Edison Nation ($550,000 of which will be used to purchase the membership interests of Access Innovation, LLC, which membership interests will then be subsequently distributed to the Preferred Members), (ii) $250,000 in cash to be used to pay off indebtedness of Edison Nation owed to holders of certain senior convertible debt and the assumption of the remaining balance of the senior convertible debt through the issuance to the holders of 4%, 5-year senior convertible notes (the “New Convertible Notes”), in the aggregate principal amount of the sum of $1,406,352 plus accrued but unpaid interest arising on the senior convertible debt through the closing date, which as of the date of the Purchase Agreement would be convertible into approximately 281,270 shares of the Company’s common stock, par value $0.001 (the “Common Stock”), at the option of the holder of such New Convertible Notes (subject to certain adjustments as provided in the Purchase Agreement and the terms of the New Convertible Notes), (iii) the reservation of the Put Shares to be issued in exchange for the redemption of certain non-voting membership interests of Edison Nation that will be created specifically in connection with the transaction contemplated by the Purchase Agreement, and (iv) the issuance of approximately 550,346 shares of the Company’s Common Stock in satisfaction of the indebtedness represented by promissory notes payable by Edison Nation to Venture Six, LLC and Wesley Jones with a total principal balance of $4,127,601.94 as of the date of the Purchase Agreement. In addition, the Company agreed to use its best efforts to cause Louis Foreman, a Member, manager, and principal of Edison Nation, to be nominated for election to the Company’s board of directors at the Company’s next annual meeting.

Upon closing of the Purchase Agreement, the Fifth Amended and Restated Operating Agreement (the “LLC Agreement”) of Edison Nation will also be entered into by and among the Company, Edison Nation and the Preferred Members. Pursuant to the LLC Agreement and the corresponding terms of the Purchase Agreement, the Company will own all of the voting membership interests in Edison Nation, while the Preferred Members will retain non-voting, preferred membership interests in Edison Nation, which will entitle them to (i) certain limited approval rights, and (ii) a right to cause the Company to redeem all of the preferred membership interests from the Preferred Members in exchange for the aggregate issuance of 990,000 shares (the “Put Shares”) of the Company’s Common Stock, subject to certain rights of the Company to reduce the number of Put Shares to satisfy certain of the indemnification obligations of the Preferred Members pursuant to the Purchase Agreement.

Also upon closing of the Purchase Agreement, the Company intends to enter into a registration rights agreement (the “Registration Rights Agreement”) with certain Members, which will provide those Members with demand and piggyback registration rights in respect of any registrable shares of the Company’s Common Stock received pursuant to the terms of the Purchase Agreement.

The Members receiving the New Convertible Notes and shares of the Company’s Common Stock pursuant to the terms of the Purchase Agreement are accredited investors within the meaning of the Securities Act of 1933, as amended (the “Securities Act”), and the issuance of the shares will be made without registration in reliance on Rule 506(b) of Regulation D under the Securities Act, as well as corresponding provisions of state securities laws.

The foregoing descriptions of the New Convertible Notes, the Purchase Agreement, and the Registration Rights Agreement do not purport to be complete and are subject to, and qualified in their entirety by, the full text of the form of New Convertible Note, the Purchase Agreement, the form of the LLC Agreement and the form of Registration Rights Agreement, which are filed, respectively, as Exhibit 2.1, 10.1, 10.2 and 10.3 to this Current Report on Form 8-K and incorporated by reference in their entirety.

Item 7.01. Regulation FD Disclosure.

On June 29, 2018, the Company issued a press release announcing its entrance into the Purchase Agreement with Edison Nation. A copy of the press release is furnished herewith as Exhibit 99.1.

The information contained in this Current Report on Form 8-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing. The furnishing of the information in this Current Report on Form 8-K is not intended to, and does not, constitute a representation that such furnishing is required by Regulation FD or that the information contained in this Current Report on Form 8-K constitutes material investor information that is not otherwise publicly available.

The Securities and Exchange Commission encourages registrants to disclose forward-looking information so that investors can better understand the future prospects of a registrant and make informed investment decisions. This Current Report on Form 8-K and exhibits may contain these types of statements, which are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, and which involve risks, uncertainties and reflect the Company’s judgment as of the date of this Current Report on Form 8-K. Forward-looking statements may relate to, among other things, operating results and are indicated by words or phrases such as “expects,” “should,” “will,” and similar words or phrases. These statements are subject to inherent uncertainties and risks that could cause actual results to differ materially from those anticipated at the date of this Current Report on Form 8-K. Investors are cautioned not to rely unduly on forward-looking statements when evaluating the information presented within.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.	Description
2.1	Form of New Convertible Note
10.1	Membership Interest Purchase Agreement dated June 29, 2018
10.2	Form of LLC Agreement
10.3	Form of Registration Rights Agreement
99.1	Press Release dated June 29, 2018

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: July 6, 2018

XSPAND PRODUCTS LAB, INC.
By:	/s/ Christopher B. Ferguson
Name:	Christopher B. Ferguson
Title:	Chief Executive Officer

EX-2.1

Exhibit 2.1

THIS NOTE AND THE SECURITIES ISSUABLE UPON THE CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER ANY STATE SECURITIES LAWS. THESE SECURITIES MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION THEREFROM.

XSPAND PRODUCTS LAB, INC.

SENIOR CONVERTIBLE PROMISSORY NOTE

Principal: $[____________] Effective Date: ____________, 2018

FOR VALUE RECEIVED, Xspand Products Lab, Inc., a Nevada corporation (the “Company”), promises to pay to _____________ (“Holder”) the principal sum of $[___________], together with simple interest accruing from the date hereof (the “Effective Date”) on the unpaid principal balance at a rate equal to four percent (4%) per annum, subject to increase as provided herein. This Senior Convertible Promissory Note (the “Note”) is one of a series of Notes (collectively, the “Notes”) issued by the Company, in substantially the form hereof, pursuant to that certain Membership Interest Purchase Agreement, dated as of June 29, 2018, by and among the Company, Edison Nation Holdings, LLC, Holder and the other persons party thereto.

The following is a statement of the rights of Holder and the conditions to which this Note is subject, and to which Holder, by the acceptance of this Note, agrees:

1. Payments.

(a)   Maturity. Unless converted as provided in Section 4 below or this Note is accelerated in accordance with Section 3(b), principal and any accrued but unpaid interest under this Note shall be due and payable on the five-year anniversary of the Effective Date (the “Maturity Date”). Notwithstanding the foregoing, the entire unpaid principal amount of this Note, together with accrued and unpaid interest thereon, shall, at the option of Holder, become immediately due and payable upon the occurrence of an Event of Default (as defined herein).

(b)   General. Accrued interest on this Note shall be payable semi-annually on June 30^th and December 31^st of each calendar year (or the next business day if such interest payment date is not a business day) and on the Maturity Date or such earlier date if this Note is accelerated in accordance with Section 3(b) of this Note. During the occurrence and continuance of an Event of Default, interest shall accrue on all amounts due under this Note at a rate of twelve percent (12%) per annum. All payments on the Notes shall be (i) in lawful money of the United States of America and in immediately available funds at such place as Holder may from time to time designate in writing to the Company, and (ii) applied first to accrued interest on the Notes and thereafter to outstanding principal on the Notes. All payments by the Company under this Note shall be made without set-off or counterclaim and be free and clear and without any deduction or withholding for any taxes or fees of any nature.

(c)   Prepayments. This Note may not be prepaid, in whole or in part, without the prior written consent of Holder until the second anniversary from Effective Date, at which time this Note may be prepaid without penalty at any time upon sixty (60) days’ written notice to Holder, as long the Company has filed a Registration Statement on Form S-3 with the United States Securities and Exchange Commission pursuant to that certain Registration Rights Agreement, dated as of ____________, 2018, by and among the Company, Holder and the other persons party thereto and which Registration Statement has been declared and remains effective.

2.       Definitions. As used in this Note, the following capitalized terms have the following meanings:

“Common Stock” means (a) the Company’s common stock, $0.001 par value per share, and (b) any capital stock into which such common stock shall have been changed or any share capital resulting from a reclassification of such common stock.

“Conversion Price” means as of any date of determination, $5.00 per share, as adjusted for any stock splits, reverse stock splits, stock dividends, recapitalizations or similar transactions pursuant to Section 7(b) below.

“Change of Control” means the occurrence of any of the following on or prior to the Maturity Date: (a) any reorganization of, merger with or into, acquisition of the equity interests of, consolidation with, or other similar transaction involving, the Company, other than a transaction or series of related transactions in which the holders of the voting securities of the Company outstanding immediately prior to such transaction or series of related transactions retain, immediately after such transaction or series of related transactions, at least a majority of the total voting power represented by the outstanding voting securities of the Company or such other surviving or resulting entity, (b) the sale, transfer, lease, license or other disposition of all or substantially all of the assets of the Company (other than, if applicable, the non-exclusive license of assets by the Company to its customers in the ordinary course of business), or (c) a liquidation, dissolution or winding up of the Company. Notwithstanding the foregoing, in no event shall a Change of Control be deemed to have occurred as a result of the sale and issuance of the Company’s securities with the principal purpose of raising capital.

“Person” means and includes an individual, a partnership, a corporation (including a business trust), a joint stock company, a limited liability company, an unincorporated association, a joint venture or other entity or a governmental authority.

“Trading Day” means any day on which the Common Stock is traded on the OTC Bulletin Board, The NASDAQ Global Market, The NASDAQ Global Select Market, The NASDAQ Capital Market, the New York Stock Exchange, NYSE Arca, the NYSE American, the OTCQX Marketplace or the OTCQB Marketplace operated by OTC Markets Group Inc. (or any successor to any of the foregoing), provided that “Trading Day” shall not include any day on which the Common Stock is scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock is suspended from trading during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York time) unless such day is otherwise designated as a Trading Day in writing by Holder.

3.       Events of Default.

(a)   The occurrence of any of the following shall constitute an “Event of Default” under this Note:

(i)       Failure to Pay Notes. The Company shall fail to pay when due any principal, interest or other payment on the Notes on the due date thereof and such payment shall not have been made within five (5) business days of the Company’s receipt of written notice from Holder to the Company of such failure to pay;

(ii)      Failure to Pay Other Indebtedness. The Company shall fail to pay when due any principal or interest payment on the due date with respect to any other indebtedness (excluding accounts payable) of the Company in an amount greater than $250,000, subject to any applicable cure period, or the Permitted Senior Indebtedness (as defined herein) is accelerated by the applicable lender;

(iii)      Breach of Covenant. The Company shall default in its performance of any covenant under this Note and such failure shall continue for ten (10) business days after the Company’s receipt of written notice to the Company of such failure;

(iv)      Breach of Representation or Warranty. Any representation or warranty of the Company contained in this Note shall have been untrue or incorrect;

(v)      Voluntary Proceeding. The Company files any petition or action for relief under any bankruptcy, reorganization, insolvency or moratorium law or any other law for the relief of, or relating to, debtors, now or hereafter in effect, or makes any assignment for the benefit of creditors, adopts a plan of liquidation or dissolution, or takes any corporate action in furtherance of any of the foregoing;

(vi)      Involuntary Proceeding. An involuntary petition is filed against the Company (unless such petition is dismissed or discharged within ninety (90) days under any bankruptcy statute now or hereafter in effect), or a custodian, receiver, trustee, assignee for the benefit of creditors (or other similar official) is appointed to take possession, custody or control of any property of the Company; or

(vii)    A Change of Control occurs.

(b)   At any time after (1) any Event of Default hereunder, at the option and upon the declaration of Holder and upon written notice to the Company (an “Event of Default Notice”), or unless otherwise agreed to by the parties hereto, or (2) the second (2^nd) anniversary of the Effective Date upon sixty (60) days’ written notice to the Company, Holder may require the Company to redeem all or any outstanding portion of this Note by delivering written notice thereof (the “Redemption Notice”) to the Company, which Redemption Notice shall indicate the portion of the Note Holder is electing to redeem. Each portion of this Note subject to redemption by the Company pursuant to this Section 3(b) shall be redeemed by the Company at a price equal to (i) the amount of principal plus accrued and unpaid interest to be redeemed multiplied by the Conversion Price, or (ii) the number of shares of Common Stock issuable upon conversion of the amount of principal plus accrued and unpaid interest at the Conversion Price (and without giving effect to any limitations on conversion set forth in Section 4(d) below), multiplied by the greatest closing price per share of the Common Stock on any Trading Day during the period commencing on the date of delivery of the Redemption Notice and ending on the date the Company makes payment required to be made under this Section 3(b) (the “Redemption Price”); provided, that, in connection with a Redemption Notice delivered in connection with an Event of Default due to a Change of Control, (i) the Redemption Price shall be one hundred twenty percent (120%) of the Redemption Price calculated hereby, and (ii) the Company shall pay such Redemption Price, in the Company’s sole discretion, either in cash or in the same percentage combination of securities of the surviving or resulting entity related to the Change of Control and cash that the holders of the Company’s Common Stock receive in connection with such Change of Control. For the avoidance of doubt, except as provided in clause (ii) of the immediately preceding sentence, the Redemption Price shall be paid entirely in cash. In addition to the foregoing right of redemption, upon the occurrence and during the continuance of any Event of Default, Holder may exercise any other right, power or remedy granted to it or permitted to it by law, either by suit in equity or by action at law, or both.

4.       Conversion. This Note shall be convertible into validly issued, fully paid and non-assessable shares of Common Stock, on the terms and conditions set forth in this Section 4. Prior to conversion, Holder shall have no voting rights as the holder of this Note, except as required by law (including, without limitation, the Nevada Revised Statutes) and as expressly provided in this Note. The Company shall not issue any fraction of a share of Common Stock upon any conversion. If the issuance would result in the issuance of a fraction of a share of Common Stock, the Company shall round such fraction of a share of Common Stock up to the nearest whole share.

(a)   Conversion by Holder. Subject to the provisions of Section 4(d), at any time after the Effective Date, Holder shall be entitled to convert any portion or all of the outstanding and unpaid principal or interest under this Note into shares of Common Stock at the Conversion Price.

(b)   [reserved].

(c)   Conversion Procedure.

(i)       Optional Conversion. Prior to the date of the conversion described in Section 4(a) above, Holder shall surrender this Note, duly endorsed, and a copy of an executed notice of conversion in the form attached hereto as Exhibit I (the “Conversion Notice”) at the principal executive office of the Company. The date of the conversion elected by Holder on the Conversion Notice shall be referred to herein as the “Conversion Date.” As soon as practicable after the Conversion Date (but in no event later than three (3) business days thereafter), the Company shall transmit by facsimile an acknowledgment of confirmation, in the form attached hereto as Exhibit II, of receipt of such Conversion Notice to Holder and the Company’s transfer agent (the “Transfer Agent”). On or before the second (2^nd) Trading Day following the date of receipt of a Conversion Notice, the Company shall (1) provided that the Transfer Agent is participating in The Depository Trust Company’s (“DTC”) Fast Automated Securities Transfer Program, credit such aggregate number of shares of Common Stock to which Holder shall be entitled to Holder’s or its designee’s balance account with DTC through its Deposit/Withdrawal at Custodian system, or (2) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and deliver (via reputable overnight courier) to the address as specified in the Conversion Notice, a certificate, registered in the name of Holder or its designee, for the number of shares of Common Stock to which Holder shall be entitled. In addition to the foregoing, if on or prior to the third (3^rd) Trading Day after the Conversion Date (the “Share Delivery Deadline”), the Company shall fail to issue and deliver a certificate to Holder and register such shares of Common Stock on the Company’s share register or credit Holder’s or its designee’s balance account with DTC for the number of shares of Common Stock to which Holder is entitled upon Holder’s conversion hereunder (as the case may be), and if on or after such Share Delivery Deadline Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by Holder of all or any portion of the number of shares of Common Stock issuable upon such conversion that Holder so anticipated receiving from the Company, then, in addition to all other remedies available to Holder, the Company shall, within three (3) business days after receipt of Holder’s written request, pay cash to Holder in an amount equal to Holder’s total purchase price (including brokerage commissions and other out-of-pocket expenses, if any) for the shares of Common Stock so purchased (including, without limitation, by any other Person in respect, or on behalf, of Holder), at which point the Company’s obligation to so issue and deliver such certificate or credit Holder’s balance account with DTC for the number of shares of Common Stock to which Holder is entitled upon Holder’s conversion hereunder (as the case may be) (and to issue such shares of Common Stock) shall terminate.

(ii)      Notwithstanding anything to the contrary set forth in this Section 4, following conversion of any portion of this Note in accordance with the terms hereof, Holder shall not be required to physically surrender this Note to the Company unless (A) the full principal amount represented by this Note is being converted (in which event this Note shall be delivered to the Company following conversion thereof as contemplated by Section 4(c)(i) or (B) Holder has provided the Company with prior written notice (which notice may be included in a Conversion Notice) requesting reissuance of this Note upon physical surrender of this Note. Holder and the Company shall maintain records showing the principal and interest converted and/or paid (as the case may be) and the dates of such conversions and/or payments or shall use such other method, reasonably satisfactory to Holder and the Company, so as not to require physical surrender of this Note upon conversion.

(iii)      The issuance of Common Stock upon conversion shall be made without charge to Holder for any issuance tax in respect thereof, provided that the Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than that of Holder.

(iv)     Shares. The Company shall, at all times, have a sufficient number of shares of Common Stock available after the date of this Note in order to permit the conversion of all outstanding principal and interest remaining as a result of any outstanding Notes. The Company will take all such action as may be necessary to ensure that all such Common Stock may be so issued without violation of any applicable law or regulation.

(v)      Effect of Conversion. Upon conversion of this Note in full and/or the full payment of all obligations owed hereunder in cash in accordance with the terms herein, the Company shall be forever released from all its obligations and liabilities under this Note and this Note shall be deemed of no further force or effect, whether or not the original of this Note has been delivered to the Company for cancellation, unless any payments made hereunder are required to be returned by Holder upon the insolvency, bankruptcy or reorganization of the Company.

(d)   Limitations on Conversions. Notwithstanding anything to the contrary contained in this Note, this Note shall not be convertible by Holder, and the Company shall not effect any conversion of this Note or otherwise issue any shares of Common Stock pursuant hereto, to the extent (but only to the extent) that after giving effect to such conversion or other share issuance hereunder Holder (together with its affiliates) would beneficially own in excess of 9.99% (the “Maximum Percentage”) of the Common Stock. To the extent the above limitation applies, the determination of whether this Note shall be convertible (vis-à-vis other convertible, exercisable or exchangeable securities owned by Holder or any of its affiliates) and of which such securities shall be convertible, exercisable or exchangeable (as among all such securities owned by Holder and its affiliates) shall, subject to such Maximum Percentage limitation, be determined on the basis of the first submission to the Company for conversion, exercise or exchange (as the case may be). No prior inability to convert this Note, or to issue shares of Common Stock, pursuant to this paragraph shall have any effect on the applicability of the provisions of this paragraph with respect to any subsequent determination of convertibility. For purposes of this paragraph, beneficial ownership and all determinations and calculations (including, without limitation, with respect to calculations of percentage ownership) shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended and the rules and regulations promulgated thereunder. The provisions of this paragraph shall be implemented in a manner otherwise than in strict conformity with the terms of this paragraph to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Maximum Percentage beneficial ownership limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such Maximum Percentage limitation. The limitations contained in this paragraph shall apply to a successor Holder of this Note solely to the extent of such successor Holder and its affiliates beneficial ownership.

5.       Representations and Warranties of the Company. The Company hereby represents and warrants to Holder that the statements contained in the following paragraphs of this Section 5 are all true and correct as of the date of this Note:

(a)   Organization, Good Standing, Qualification and Power. The Company is a corporation duly formed and in good standing under the laws of the State of Nevada, and has all requisite corporate power to execute and deliver this Note and perform its obligations hereunder.

(b)   Authorization. All corporate action on the part of the Company necessary for the authorization, execution and delivery of this Note, the performance of all its obligations hereunder (including the issuance of the Conversion Securities, as defined below) and the reservation of the securities issuable upon conversion of this Note (collectively, the “Conversion Securities”) has been taken. Upon conversion of this Note, the Conversion Securities shall be validly issued, fully paid and non-assessable and free of pre-emptive rights. This Note constitutes a valid and binding obligation of the Company, enforceable in accordance with its terms, subject to laws of general application relating to bankruptcy, insolvency, the relief of debtors and, with respect to rights to indemnity, subject to federal and state securities laws.

(c)   No Conflicts. Neither the execution and delivery of this Note by the Company nor the consummation of the transactions contemplated hereby will (i) conflict with or violate any provision of the articles of incorporation or bylaws of the Company or (ii) assuming the accuracy of the representations and warranties of Holder set forth in Section 6, (A) violate any law or order applicable to the Company or any of its properties or assets or (B) violate, conflict with, result in the loss of any benefit under, constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, result in the termination of or a right of termination or cancellation under, accelerate the performance required by, or result in the creation of any lien upon any of the properties or assets of the Company under, any of the terms, conditions or provisions of any agreement or other contract to which the Company is a party, or by which any of its properties or assets may be bound or affected.

(d)   No Consent or Approval Required. Except for any notices under applicable exchange, federal and state securities rules or laws required or permitted to be filed (and which will be validly and timely filed) after the date of this Note, no authorization, consent, approval or other order of, or declaration to or filing with, any governmental authority or other person is required for the valid authorization, execution and delivery by the Company of the Notes, or for the consummation of the transactions contemplated hereby (including the issuance of the Conversion Securities upon conversion of the Notes) or, if required, the same has been obtained or effected.

6.       Representations and Warranties of Holder. Holder hereby represents and warrants to the Company that the statements contained in the following paragraphs of this Section 6 are all true and correct as of the date of this Note:

(a)   Securities Law Compliance. Holder has been advised that the Notes and the Conversion Securities (collectively, the “Securities”) have not been registered under the Securities Act or any state securities laws and, therefore, cannot be resold unless they are registered under the Securities Act and applicable state securities laws or (if the Note is deemed to be securities) unless an exemption from such registration requirements is available. Holder is aware that the Company is under no obligation to effect any such registration with respect to the Securities or to file for or comply with any exemption from registration, except as provided in that certain Registration Rights Agreement of even date hereof by and among the Company and certain holders of the Company’s securities, including (as applicable) Holder. To the extent Holder is an entity, Holder has not been formed solely for the purpose of making this investment and is purchasing the Securities for its own account for investment, not as a nominee or agent, and not with a view to, or for resale in connection with, the distribution thereof. Holder has such knowledge and experience in financial and business matters that Holder is capable of evaluating the merits and risks of such investment, is able to incur a complete loss of such investment, and is able to bear the economic risk of such investment for an indefinite period of time. Holder is an “accredited investor” as such term is defined in Rule 501 of Regulation D under the Securities Act.

(b)   Access to Information. Holder acknowledges that the Company has given Holder access to the corporate records and accounts of the Company and to all information requested by Holder relating to the Company, has made its officers and representatives available for interview by Holder, and has furnished Holder with all documents and other information required for Holder to make an informed decision with respect to the receipt of the Securities. The foregoing shall not diminish the right of Holder to rely on the representations and warranties of the Company set forth in Section 5.

7.       Other Covenants and Agreements.

(a)   Rank. All payments due under this Note (i) shall rank pari passu with all other Notes, and (ii) shall be senior to all other indebtedness of the Company except non-convertible indebtedness in an aggregate amount not to exceed Three Million Five Hundred Thousand Dollars ($3,500,000), and which is obtained from a bank or other standard commercial lender (the “Permitted Senior Indebtedness”). Except for the Permitted Senior Indebtedness, the Company shall not incur any indebtedness for borrowed money other than such indebtedness for borrowed money that is expressly subordinate in payment and priority to the Notes pursuant to a subordination agreement acceptable to Holder.

(b)   Stock Dividends, Combination, Stock Split, Recapitalization or Reclassification. Without limiting any provision of Section 4, if the Company at any time on or after the Effective Date subdivides or combines (by any stock split, stock dividend, stock combination, recapitalization or other similar transaction) one or more classes of its outstanding shares of Common Stock into a greater or smaller number of shares, so long as such adjustment does not violate the rules and regulations of The Nasdaq Stock Market, the Conversion Price in effect immediately prior to such subdivision will be proportionately adjusted to reflect such stock split, stock dividend, stock combination, recapitalization or other similar transaction. In the case of a stock dividend or distribution, an adjustment made pursuant to this Section 7(b) shall become effective retroactively to a date immediately following the close of business on the record date for the determination of holders of Common Stock entitled to receive such dividend or distribution. Notwithstanding the foregoing, until the Maturity Date, the Company shall not issue a cash or stock dividend to its stockholders without prior written consent of Holder.

(c)   Confidentiality. Anything in this Note to the contrary notwithstanding, no Holder by reason of this Note shall have access to any trade secrets or classified information of the Company. The Company shall not be required to comply with any information rights in respect of any Holder whom the Company reasonably determines to be a competitor or an officer, employee, director or holder of securities of a competitor. Holder agrees that it will keep confidential and will not disclose, divulge, or use for any purpose (other than to monitor its investment in the Company) any confidential information obtained from the Company pursuant to the terms of this Note other than disclosure to the Holder’s attorneys, accountants and other professionals to the extent necessary to obtain their services in advising the Holder with respect to this Note.

(d)   Reclassifications and Other Changes. In the case of any reclassification of or change with respect to the applicable Conversion Securities (other than a change in par value, adjustment pursuant to Section 7(b) above or from par value to no par value, or from no par value to par value) or merger or conversion of the Company that is not a Change of Control, at the written request of Holder, the Company shall execute a new note, substantially in the form, and with the terms, conditions and provisions, of this Note, and providing that Holder shall have the right to convert such new note and, upon such conversion, to receive, in lieu of the applicable Conversion Securities theretofore issuable upon exercise of this Note, the kind and amount of equity securities receivable upon such reclassification, change or merger by the holder of the applicable Conversion Securities. Such new note shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section. The provisions of this Section shall similarly apply to successive reclassifications, changes, conversions and mergers.

8.       Miscellaneous.

(a)   Assignment and Transfer. The Company may not assign, pledge, or otherwise transfer this Note without the prior written consent of Holder. Holder may assign, pledge or otherwise transfer this Note so long as such compliance is in accordance with applicable securities laws.

(b)   Waiver and Amendment. Any provision of this Note may be amended, waived or modified only upon the written consent of the Company and Holder.

(c)   Notices. All notices, requests, demands, consents, instructions or other communications required or permitted hereunder shall be in writing and faxed, mailed (including electronic mail) or delivered to the Company or Holder at their respective addresses set forth below their signature pages to this Note, or at such other address or facsimile number as the Company or Holder, as applicable, shall have furnished to the other party in writing. All such notices and communications will be deemed effectively given the earlier of (i) when received, (ii) when delivered personally, (iii) one (1) business day after being delivered by facsimile or electronic mail (with receipt of appropriate confirmation), (iv) one (1) business day after being deposited with an overnight courier service of recognized standing or (v) four (4) days after being deposited in the U.S. mail, first class with postage prepaid.

(d)   Usury. In the event any interest is paid on this Note, or a fee that is deemed interest, which is in excess of the then applicable legal maximum rate, then that portion of the interest payment representing an amount in excess of the then applicable legal maximum rate shall be deemed a payment of principal and applied against the principal of this Note.

(e)   No Rights as a Member. Except as otherwise set forth in this Note, nothing contained herein shall entitle Holder to any rights as a stockholder of the Company or to be deemed the holder of any securities that may be construed to confer upon Holder, as such, any right to vote on, give or withhold consent to, or to receive notice of, any meeting or limited liability company or other member action relating to the Company.

(f)   Time of the Essence. Time is of the essence with respect to this Note.

(g)   Expenses. If action is instituted to collect this Note or enforce the rights of Holder hereunder, the Company promises to pay all costs and expenses, including, without limitation, reasonable attorneys’ fees and costs, of Holder incurred in connection with such action.

(h)   Members, Officers and Directors Not Liable. In no event shall any member, owner, officer or director of the Company be liable for any amounts due or payable pursuant to this Note.

(i)   Governing Law. This Note and all actions arising out of or in connection with this Note shall be governed by and construed in accordance with the laws of the State of Nevada, without regard to the conflicts of law provisions of any other state.

(j)   Waiver of Jury Trial. BY ACCEPTANCE OF THIS NOTE, HOLDER HEREBY AGREES AND THE COMPANY HEREBY AGREES TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS NOTE.

(k)   Counterparts. This Note may be executed in one or more counterpart signature pages, each of which will be deemed to be an original copy of this Note and all of which, when taken together, will be deemed to constitute one and the same agreement, which shall be binding upon all of the parties hereto notwithstanding the fact that all parties are not signatory to the same counterpart. The exchange of copies of this Note and of signature pages by facsimile transmission, by electronic mail in “portable document format” (“.pdf”) form, or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, will have the same effect as physical delivery of the paper document bearing an original signature.

(l)   Loss of Note. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Note or any Note exchanged for it, and indemnity satisfactory to the Company (in case of loss, theft or destruction) or surrender and cancellation of such Note (in the case of mutilation), the Company will make and deliver in lieu of such Note a new Note of like tenor.

[Signature Page Follows]

SIGNATURE PAGE

TO

SENIOR CONVERTIBLE PROMISSORY NOTE

IN WITNESS WHEREOF, the undersigned has caused this Senior Convertible Promissory Note to be executed and issued as of the date first written above.

COMPANY:

XSPAND PRODUCTS LAB, INC.

By:

Name:

Title:

Address:

Accepted and agreed as of the date first set forth above:

HOLDER:

By:

Name:

Title:

Address:

EXHIBIT I

XSPAND PRODUCTS LAB, Inc.

CONVERSION NOTICE

Reference is made to the Senior Convertible Note (the “Note”) issued to the undersigned by Xspand Products Lab, Inc. (the “Company”). In accordance with and pursuant to the Note, the undersigned hereby elects to convert the principal and accrued but unpaid interest of the Note indicated below into shares of Common Stock, $0.001 par value per share (the “Common Stock”), of the Company, as of the date specified below Capitalized terms not defined herein shall have the meaning as set forth in the Note.

Date of Conversion:

Aggregate principal to be converted:

Aggregate accrued but unpaid interest with respect to such portion of the aggregate principal and interest to be converted:

AGGREGATE CONVERSION AMOUNT
 TO BE CONVERTED:

Please confirm the following information:

Conversion Price:

Number of shares of Common Stock to be issued:

Please issue the Common Stock into which the Note is being converted in the following name and to the following address:

Issue to:

Facsimile Number:

Holder:

By:

Title:

Dated:

Account Number:

  (if electronic book entry transfer)

Transaction Code Number:

  (if electronic book entry transfer)

EXHIBIT II

ACKNOWLEDGMENT

The Company hereby acknowledges this Conversion Notice and hereby directs _________________ to issue the above indicated number of shares of Common Stock in accordance with the Transfer Agent Instructions dated _____________, 20__ from the Company and acknowledged and agreed to by ________________________.

Xspand Products Lab, Inc.
By:
	Name:
	Title:

EX-10.1

Exhibit 10.1

Execution Version

MEMBERSHIP INTEREST PURCHASE AGREEMENT

By and Among

XSPAND PRODUCTS LAB, INC., as Buyer

and

EDISON NATION HOLDINGS, LLC, as the Company

and

THE EXISTING MEMBERS OF EDISON NATION HOLDINGS, LLC

June 29, 2018

TABLE OF CONTENTS

		Page
Article 1 – ISSUANCE AND SALE OF THE COMMON MEMBERSHIP INTERESTS		2
1.1	Issuance and Sale of the Common Membership Interests	2
1.2	Payment for the Common Membership Interests	2
1.3	Exclusion of Certain Assets and Liabilities	2
Article 2 - CLOSING		2
2.1	Closing	2
2.2	Payment of the Purchase Price	2
2.3	Transactions to occur prior to, at or concurrently with the Closing	3
2.4	Deliveries by the Company	3
2.5	Pre-Closing Covenants	4
Article 3 - REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND EXISTING MEMBERS		5
3.1	Existence and Qualification	5
3.2	Authority, Approval and Enforceability	6
3.3	Capitalization and Company Records	6
3.4	No Company or Existing Member Defaults or Consents	7
3.5	No Company Defaults or Consents	7
3.6	No Proceedings	8
3.7	Employee Benefit Matters	8
3.8	Financial Statements; No Undisclosed Liabilities	11
3.9	Absence of Certain Changes	12
3.10	Compliance with Laws	13
3.11	Litigation	15
3.12	Real Property	15
3.13	Material Contracts	15
3.14	Insurance	17
3.15	Intellectual Property	17
3.16	Equipment and Other Tangible Property	21
3.17	Permits; Environmental Matters	21
3.18	Banks	22
3.19	Customers	22
3.20	Absence of Certain Business Practices	23
3.21	Products, Services and Authorizations	23
3.22	Labor	24
3.23	Transactions With Affiliates	25
3.24	Brokers or Finders’ Fees	25
3.25	Management Continuity	25
3.26	Taxes	25
3.27	Other Information	27

 -i-

TABLE OF CONTENTS
(CONT.)

		Page
3.28	Securities Matters	27
3.29	No Additional Representations	27
Article 4 - REPRESENTATIONS AND WARRANTIES OF THE BUYER		27
4.1	Existence and Qualification	27
4.2	Authority, Approval and Enforceability	28
4.3	No Default or Consents	28
4.4	No Proceedings	28
4.5	No Other Agreements	29
4.6	Independent Investigation; No Other Representations and Warranties	29
4.7	Buyer Shares	29
4.8	Brokers or Finders’ Fees	29
4.9	SEC Reports; Financial Statements	30
Article 5 - CONDITIONS TO THE EXISTING MEMBERS’ AND THE BUYER’S OBLIGATIONS		30
5.1	Conditions to Obligations of the Company	30
5.2	Conditions to Obligations of the Buyer	31
Article 6 - POST-CLOSING OBLIGATIONS		31
6.1	Further Assurances	31
6.2	Publicity; SEC Filings; Listing	32
6.3	Post-Closing Indemnity by the Existing Members and by the Buyer	32
6.4	Non-Disclosure	33
6.5	Director Nomination	33
6.6	Releases	33
6.7	Restrictive Covenants	34
Article 7 - TAX MATTERS		35
7.1	Transfer Taxes	35
7.2	Tax Contests	36
7.3	Additional Agreements	36
Article 8 - MISCELLANEOUS		38
8.1	Limitation on Liability; Claim Procedure	38
8.2	Brokers	40
8.3	Costs and Expenses	40
8.4	Notices	40
8.5	Governing Law	42
8.6	Survival	42
8.7	Binding Effect and Assignment	42
8.8	Exhibits and Schedules	42
8.9	Multiple Counterparts	42

 -ii-

TABLE OF CONTENTS
(CONT.)

		Page
8.10	References and Construction	43
8.11	Attorneys’ Fees	43
8.12	Severability.	43
8.13	Entire Agreement; Amendments and Waivers	43
8.14	Termination	43
8.15	Waiver of Conflicts; Privilege	44
Article 9 - DEFINITIONS		44

 -iii-

LIST OF SCHEDULES

Schedule 1.3	Excluded Liabilities
Schedule 3.1	Foreign Qualifications
Schedule 3.3(a)	Company Capitalization
Schedule 3.3(d)	Acquired Subsidiary Capitalization
Schedule 3.4	Seller Defaults or Consents
Schedule 3.5	Company Defaults or Consents
Schedule 3.6	No Proceedings
Schedule 3.7(a)	Employee Benefit Matters
Schedule 3.7(c)	Benefit Plan Liabilities
Schedule 3.8(b)	Scheduled Contingent Liabilities
Schedule 3.8(d)	Accounts Receivable
Schedule 3.8(e)	Encumbrances
Schedule 3.9(a)	Certain Material Changes
Schedule 3.9(b)	Certain Actions
Schedule 3.10(a)	Compliance with Laws
Schedule 3.10(c)	Approvals, Registrations and Authorizations
Schedule 3.10(i)	Adverse Event Reports
Schedule 3.11	Litigation
Schedule 3.12	Real Property
Schedule 3.13(a)	Material Contracts
Schedule 3.13(b)	Material Contracts Benefits
Schedule 3.14	Insurance
Schedule 3.15(b)	Company Owned Intellectual Property
Schedule 3.15(c)	Encumbrances
Schedule 3.15(f)	Claims
Schedule 3.15(h)	Creators of Company Owned Intellectual Property
Schedule 3.15(i)	Assignments or Licenses
Schedule 3.15(l)	Third-Party Source Code
Schedule 3.15(s)	Exclusivity
Schedule 3.15(u)	Contractual Obligations
Schedule 3.15(v)	Upcoming Filings
Schedule 3.16	Tangible Assets Condition
Schedule 3.17(a)	Permits
Schedule 3.17(c)	Environmental Law Compliance
Schedule 3.18	Banks, Accounts and Authorized Signatories
Schedule 3.19	Customers
Schedule 3.21(b)	Suspensions
Schedule 3.22	Labor
Schedule 3.22(c)	Independent Contractors
Schedule 3.22(f)	Employees
Schedule 3.23	Affiliate Transactions
Schedule 3.24	Brokers or Finders’ Fees
Schedule 3.26(j)	IRS Rulings
Schedule 4.3	Buyer Defaults or Consents
Schedule 4.8	Brokers or Finders’ Fees
Schedule 14C	Preliminary Information Statement

 -iv-

MEMBERSHIP INTEREST PURCHASE AGREEMENT

THIS MEMBERSHIP INTEREST PURCHASE AGREEMENT (this “Agreement”) is made and entered into as of June 29, 2018, by and among, (i) XSPAND PRODUCTS LAB, INC., a Nevada corporation (the “Buyer”); (ii) EDISON NATION HOLDINGS, LLC, a North Carolina limited liability company (the “Company”) and (iii) the members of the Company listed on the signature pages hereto (the “Existing Members” and collectively with the Company and the Buyer, the “Parties” and each, a “Party”).

Recitals

WHEREAS, the Company, through the Acquired Subsidiaries (as defined herein), is primarily engaged in bringing consumer products to market through its inventor community (as currently conducted by the Company’s Acquired Subsidiaries, the “Business”); and

WHEREAS, the Existing Members collectively own all of the issued and outstanding membership interests of the Company (collectively, the “Existing Company Membership Interests”); and

WHEREAS, in accordance with the terms, and subject to the conditions, of this Agreement, at the Closing (as defined herein), the Company desires to issue and sell to Buyer, and Buyer desires to purchase from the Company, membership interests in the Company in consideration for (i) the payment to the Company of the Cash Consideration (as defined herein), (ii) the assumption and/or discharge of the Company’s borrowed money indebtedness on the terms set forth herein and (iii) the guarantee of the Company’s obligations to the Existing Members in respect of the Existing Company Membership Interests as provided in the New Company LLC Agreement (as defined herein); and

WHEREAS, in connection with the issuance and sale of membership interests of the Company to Buyer, at the Closing, the existing limited liability company agreement of the Company shall be amended and restated, in the form attached hereto as Exhibit A (the “New Company LLC Agreement”), to, among other things, (i) provide for two (2) classes of membership interests consisting of (A) preferred membership interests (the “Preferred Membership Interests”) to be owned by the Existing Members, which Preferred Membership Interests shall entitle the Existing Members to the rights set forth in the New Company LLC Agreement; and (B) common membership interests (the “Common Membership Interests”) to be owned by Buyer; and

WHEREAS, the Buyer desires to purchase the Common Membership Interests from the Company and to assume and/or discharge certain borrowed money indebtedness of the Company, and the Company desires to issue and sell the Common Membership Interests to the Buyer, upon the terms and subject to the conditions set forth in this Agreement; and

WHEREAS, capitalized terms used and not otherwise defined herein shall have the meanings given to them in Article 9 hereof.

NOW, THEREFORE, in consideration of the premises and of the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows:

Agreement

Article 1 – ISSUANCE AND SALE OF THE COMMON MEMBERSHIP INTERESTS

1.1           Issuance and Sale of the Common Membership Interests. On the terms and subject to the conditions set forth in this Agreement, at the Closing referred to in Section 2.1 hereof, the Company shall issue to the Buyer, and the Buyer shall purchase from the Company, the Common Membership Interests, free and clear of any and all Encumbrances (other than those arising under applicable securities laws or set forth in the New Company LLC Agreement), for the consideration specified in Sections 1.2 and 2.2.

1.2           Payment for the Common Membership Interests. As payment in full for the Common Membership Interests being acquired by the Buyer hereunder, the Buyer shall pay the Cash Consideration to the Company, assume and/or discharge the indebtedness of the Company set forth in Section 2.2 and guarantee the Put Right (as defined in the New Company LLC Agreement) obligations of the Company in respect of the Preferred Membership Interests as provided in the New Company LLC Agreement.

1.3           Exclusion of Certain Assets and Liabilities. Notwithstanding anything express or implied to the contrary contained in this Section 1.3 or elsewhere herein, the Excluded Subsidiaries are excluded from the assets and liabilities of the Company and the Acquired Subsidiaries being acquired by or transferred to the Buyer at the Closing through the Buyer’s acquisition of the Common Membership Interests. The Existing Members shall cause the Excluded Subsidiaries to be transferred to another Person in accordance with the terms hereof. With respect to the liabilities (the “Excluded Liabilities”) set forth on Schedule 1.3, the Existing Members shall (i) obtain the release of the Company and the Acquired Subsidiaries from any obligations in respect of the AllStar Terminated Agreements and (ii) indemnify the Buyer from the Excluded Liabilities as provided in Section 6.3 of this Agreement (and subject to the limitations set forth in Section 8.1 of this Agreement).

Article 2- CLOSING

2.1           Closing. The closing of the transactions contemplated hereby (the “Closing”) shall be held at 11:30 a.m., Eastern Time, on the second (2^nd) Business Day following the satisfaction or waiver of the conditions to Closing set forth in Article 5 or at such other date as may be agreed to by the Parties, by electronic exchange of signature pages and other documents. The date upon which the Closing occurs is hereinafter referred to as the “Closing Date.”

2.2           Payment of the Purchase Price. At the Closing, subject to Section 1.1, the Buyer shall:

(a)          pay by wire transfer of immediately available funds to the account designated in writing by the Company an amount equal to the Cash Consideration of Seven Hundred Thousand Dollars ($700,000).

(b)          [reserved]

(c)          satisfy the indebtedness represented by the Senior Convertible Debt through (i) the payment, on behalf of the Company, of Two Hundred Fifty Thousand Dollars ($250,000) of the Senior Convertible Debt (by wire transfer of immediately available funds to the accounts designated in writing by the holders of the Senior Convertible Debt) and (ii) the assumption of the remaining balance of the Senior Convertible Debt through the issuance to the holders of the Senior Convertible Debt of new secured convertible notes, in the form attached hereto as Exhibit B (“New Convertible Notes”), in the aggregate principal amount of the sum of $1,406,352 plus accrued but unpaid interest arising on the Senior Convertible Debt from and after the date hereof and through and until the Closing Date.

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(d)         satisfy the indebtedness represented by the promissory notes payable by the Company to Venture Six Note and Wesley Jones Note with a total principal balance of $4,127,601.94 as of the date hereof (collectively “Promissory Notes”) in consideration for the issuance of Buyer Common Stock with a value equal to all outstanding principal and interest of the Promissory Notes, based on a per share price of the Buyer Common Stock of $7.50.

(e)          Buyer shall be entitled to deduct and withhold from any payments made pursuant to this Section 2.2 all Taxes that Buyer is required to deduct and withhold under any applicable Legal Requirements; provided, however, that Buyer shall provide at least five (5) days of advance written notice to the applicable recipient of such payment prior to such withholding and Buyer shall cooperate with such recipient in order to minimize or eliminate such withholding. All such withheld amounts shall be treated as delivered to the applicable recipient hereunder to the extent such amounts are paid over to the appropriate taxing authority.

2.3           Transactions to occur prior to, at or concurrently with the Closing.

(a)          Prior to the Closing, the Company shall distribute all of the outstanding membership interests of Edison Nation Medical, LLC to the Existing Members or an entity designated by the Existing Members.

(b)          Concurrently with the Closing, the Company shall transfer, convey and assign to Allstar Marketing Group, LLC (“AMG”) all of its right, title and interest in and to the Peticare™ product in consideration for the cancellation and discharge of the indebtedness of the Company arising from the promissory note of the Company held by AMG (the “AMG Note”), as provided in the AllStar Agreement.

(c)          Immediately following the Closing, the Company shall use Five Hundred Fifty Thousand Dollars ($550,000) of the Cash Consideration to purchase the membership interests of Access Innovation, LLC held by the AI Selling Members pursuant to that certain Access Innovation Purchase Agreement. Following the Company’s purchase of the membership interests of Access Innovation, LLC from the AI Selling Members pursuant to that certain Access Innovation Purchase Agreement, the Company shall distribute all of the membership interests of Access Innovation, LLC owned by the Company to the Existing Members or an entity designated by the Existing Members.

2.4           Deliveries by the Company. At or prior to the Closing, the Company shall deliver or cause to be delivered to the Buyer:

(a)          A certificate from the appropriate officer(s) of the Company certifying (i) the accuracy of the representations and warranties set forth in Article 3 and the performance of the Company’s and the Existing Member’s covenants and agreements as of the Closing (ii) the Articles of Organization and operating agreement of the Company and each Acquired Subsidiary, (iii) the resolutions of the Board of Managers of the Company approving this Agreement and the Ancillary Agreements to which it is a party and (iv) the resolutions of the members of the Company approving this Agreement and the Ancillary Agreements to which it is a party.

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(b)          An assignment agreement evidencing the assignment, prior to the Closing, of all of the Company’s right, title and interest in and to the membership interests of Edison Nation Medical, LLC to the Existing Members or an entity designated by the Existing Members.

(c)          The AllStar Agreement, duly executed by the Persons party thereto.

(d)          The Access Innovation Purchase Agreement, duly executed by the Persons party thereto.

(e)          Resignations of the officers and managers, or other similar governing body, as applicable, of the Company and the Acquired Subsidiaries requested by Buyer at least two (2) days prior to the Closing Date.

(f)          A good standing certificate of the Company and the Acquired Subsidiaries from the North Carolina Secretary of State.

(g)          Evidence confirming the discharge of the Senior Convertible Debt upon receipt of the consideration specified in Section 2.2(c).

(h)          Evidencing confirming the discharge of the indebtedness represented by the Promissory Notes upon receipt of the shares of Buyer Common Stock specified in Section 2.2(d).

(i)          resignations of the officers and managers, or other similar governing body, as applicable, of the Company and the Acquired Subsidiaries, effective on or before the Closing Date (other than the resignation of Louis Foreman in his capacity as a manager of the Company);

(j)          evidence satisfactory to the Buyer that Buyer’s designees are the only authorized signatories with respect to the Company’s various accounts, credit lines, safe deposit boxes or vaults set forth or required to be set forth in Schedule 3.18 hereto; and

(k)          such other instruments and documents as Buyer may reasonably request in order to effectuate the transactions contemplated hereby.

2.5           Pre-Closing Covenants.

(a)          From the date hereof until the earlier to occur of the Closing or the termination of this Agreement, except as otherwise provided in this Agreement or consented to in writing by Buyer (which consent shall not be unreasonably withheld or delayed), the Company shall (i) conduct the business of the Company in the ordinary course of business consistent with past practice; and (ii) use its commercially reasonable 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 and others having business relationships with the Company.

(b)          From the date hereof until the earlier to occur of the Closing or the termination of this Agreement, the Company shall (i) afford Buyer and its representatives full and free access, during normal business hours of the Company and subject to reasonable advance written notice to the Company, to and the right to inspect all of Properties, assets, premises, books and records, contracts and other documents and data related to the Company; (ii) furnish Buyer and its representatives with such financial, operating and other data and information related to the Company (to the extent then in the Company’s possession) as Buyer or any of its representatives may reasonably request; and (iii) instruct the representatives of the Company to cooperate with Buyer in its investigation of the Company. Any investigation pursuant to this Section 2.4(b) shall be conducted in such manner as not to interfere unreasonably with the conduct of the Business. 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 the Company in this Agreement.

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(c)          The holders of a majority of the outstanding shares of Buyer Common Stock have affirmatively voted to approve the transactions contemplated by this Agreement and any Ancillary Agreement (the “Buyer Shareholder Approval”), and Buyer shall have delivered to the Company a copy of the written consent evidencing the Buyer Shareholder Approval on or prior to the date of this Agreement. As promptly as practicable following the date hereof (and in no event more than four (4) days after the date hereof), Buyer shall prepare and file a preliminary information statement, describing the transactions contemplated herein, on Schedule 14C (such preliminary information statement, together with the definitive information statement, the “Information Statement”) with the U.S. Securities and Exchange Commission (the “SEC”) in accordance with Regulation 14C of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Buyer shall use commercially reasonable efforts to cause the Information Statement to comply with the rules and regulations promulgated by the SEC. Buyer shall provide the Company with a reasonable opportunity to review and comment on the Information Statement, and any amendments thereto, prior to filing with the SEC. Buyer will advise the Company promptly after it receives oral or written notice of any request by the SEC for amendments to the Information Statement or comments thereon and responses thereto or requests by the SEC for additional information, and will promptly provide the Company with copies of any written communication from the SEC or any state securities commission. Buyer shall use reasonable best efforts to resolve any SEC comments with respect to the Information Statement and any other required filings as promptly as practicable after receipt thereof. Buyer will promptly notify the Company if at any time prior to the Closing any event should occur which is required by applicable law to be set forth in an amendment of, or a supplement to, the Information Statement. Buyer shall use reasonable best efforts to cause the Information Statement to be distributed to its stockholders in accordance with Regulation 14C of the Exchange Act as promptly as reasonably practicable after the date on which the Information Statement is cleared by the SEC.

(d)          During the period between execution of this Agreement and the Closing, Buyer shall maintain its existing listing on The Nasdaq Capital Market and file or furnish on a timely basis all forms, notices documents and reports required to be filed or furnished with The Nasdaq Stock Market to promptly secure the listing of all of the Buyer Shares.

Article 3- REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND EXISTING MEMBERS

Except as set forth on the Schedules to this Agreement, the Company and the Existing Members hereby represent and warrant to the Buyer as of the date hereof and the Closing Date as follows:

3.1           Existence and Qualification.

(a)          The Company is a limited liability company duly organized, validly existing and in good standing under the laws of the State of North Carolina, and the Acquired Subsidiaries and each of the Existing Members that are entities are duly organized, validly existing and in good standing in their respective jurisdictions of organization. The Company and each Acquired Subsidiary has the requisite power to own, manage, lease and hold its Properties and to carry on the Business as and where such Properties are presently located and such Business is presently conducted. Neither the character of the Company’s Properties nor the nature of the Business requires the Company to be duly qualified to do business as a foreign company in any jurisdiction outside those identified in Schedule 3.1 attached hereto, except where the failure to be so qualified would not, individually or in the aggregate, have a Material Adverse Effect, and the Company is qualified as a foreign corporation and in good standing in each jurisdiction listed with respect to the Company in Schedule 3.1.

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(b)          If any Existing Member is an entity, then such Existing Member is (i) duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, and (ii) duly qualified to do business and in good standing in each other jurisdiction where such qualification is required, except where the failure to be so qualified would not, individually or in the aggregate, have a Material Adverse Effect.

3.2           Authority, Approval and Enforceability. This Agreement and each Ancillary Agreement to which the Company or any Existing Member is a party has been duly executed and delivered by the Company or such Existing Member, as applicable, and the Company and each Existing Member have all requisite power to execute and deliver this Agreement and all Ancillary Agreements executed and delivered or to be executed and delivered by it in connection with the transactions provided for hereby, to consummate the transactions contemplated hereby and by the Ancillary Agreements to which it is a party, and to perform its obligations hereunder and under the Ancillary Agreements to which it is a party. The execution, delivery and performance of this Agreement and the Ancillary Agreements and the consummation by the Company and the Existing Members of the transactions contemplated hereby and thereby have been duly and validly authorized and, if applicable, approved by all necessary limited liability company or corporate action on the part of the Company and the Existing Members (including approval of the Company’s and the Existing Member’s managers, members and/or managing members, as applicable) and no other proceedings on the part of the Company, any Acquired Subsidiary, or any Existing Member is necessary to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement and each Ancillary Agreement to which the Company or any Existing Member is a party constitutes, or upon execution and delivery will constitute, the legal, valid and binding obligation of the Company or such Existing Member, enforceable against it in accordance with its terms, except as such enforcement may be limited by general equitable principles or by applicable bankruptcy, insolvency, moratorium or similar laws and judicial decisions from time to time in effect which affect creditors’ rights generally. No action by (including any approval), or in respect of, or filing with, any Governmental Authority is required for, or in connection with, the valid and lawful (a) authorization, execution, delivery and performance by the Company and each Existing Member of this Agreement and the Ancillary Agreements to which it is a party or (b) consummation of the transactions contemplated hereby by the Company or each Existing Member.

3.3           Capitalization and Company Records.

(a)          As of the date hereof and immediately prior to the Closing, the Existing Members are the record and beneficial owners of all of the outstanding equity interests of the Company, and, except as set forth on Schedule 3.3(a), there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal or similar rights) or agreements, orally or in writing, to purchase or acquire from the Company any equity, membership, ownership, partnership or similar interest in (or any interest convertible into or exchangeable or exercisable for any equity, membership, ownership, partnership or similar interest in) the Company. None of the outstanding membership interests of the Company were issued in violation of any preemptive rights. Except as set forth in the New Company LLC Agreement, there are no outstanding contractual obligations of the Company to repurchase, redeem or otherwise acquire any membership interests of the Company. There are no voting trusts, inter-member agreements, proxies or other agreements or understandings in effect with respect to the voting or transfer of any of the membership interests of the Company.

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(b)          The Preferred Membership Interests and the Common Membership Interests, when issued, sold and delivered in accordance with the terms and for the consideration set forth in this Agreement, will be validly issued, fully paid and non-assessable (other than for obligations set forth in the New LLC Agreement, if any) and free of restrictions on transfer other than restrictions on transfer under this Agreement, any Ancillary Agreement (including the New LLC Agreement) and applicable state and federal securities laws. The Common Membership Interests and the Preferred Membership Interests will be issued in compliance with all applicable federal and state securities laws. Immediately following the Closing, the Existing Members shall own all of the Preferred Membership Interests and the Buyer shall own all of the Common Membership Interests, in each case, as provided in the New Company LLC Agreement.

(c)          Except for the Acquired Subsidiaries and the Excluded Subsidiaries, the Company does not own, directly or indirectly, any equity, membership, ownership, partnership or similar interest in, or any interest convertible into or exchangeable or exercisable for, any equity, membership, ownership, partnership or similar interest in, any nonprofit corporation, corporation, partnership, limited partnership, limited liability company, joint venture, trust, other business association, entity or other Person.

(d)          All membership interests or equity interests held by the Company in the Acquired Subsidiaries (i) constitute all of the issued and outstanding membership interests of the Acquired Subsidiaries, (ii) have been duly authorized, (iii) are validly issued and outstanding, fully paid and non-assessable, and (iv) have been issued in compliance with all applicable Legal Requirements, including, without limitation, state and federal securities laws, and there are no voting trusts, proxies or other similar agreements outstanding with respect to any of such interests in the Acquired Subsidiaries. Except as set forth on Schedule 3.3(d), there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal or similar rights) or agreements, orally or in writing, to purchase or acquire from any Acquired Subsidiary any equity, membership, ownership, partnership or similar interest in (or any interest convertible into or exchangeable or exercisable for any equity, membership, ownership, partnership or similar interest in) such Acquired Subsidiary.

(e)          The Company has provided the Buyer with true and complete copies of the Organizational Documents of the Company and all Acquired Subsidiaries.

3.4           No Company or Existing Member Defaults or Consents. Except as otherwise set forth in Schedule 3.4 hereto, the execution and delivery of this Agreement and the Ancillary Agreements to which the Company and the Existing Members are a party and the performance by the Company and each Existing Member of their obligations hereunder and thereunder will not violate any applicable Legal Requirements or any judgment, award or decree or any indenture, Contract or other instrument to which the Company or the Existing Members are a party, or by which the properties or assets of the Company or the Existing Members are bound or affected, or conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under, any such indenture, Contract or other instrument, in each case except to the extent that such violation, default or breach could not reasonably be expected to delay or otherwise significantly impair the ability of the parties to consummate the transactions contemplated hereby.

3.5           No Company Defaults or Consents. Except as otherwise set forth in Schedule 3.5 hereto, neither the execution and delivery of this Agreement nor the carrying out of any of the transactions contemplated hereby will:

(a)          violate or conflict with any of the terms, conditions or provisions of the Organizational Documents;

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(b)          violate any Legal Requirements applicable to the Business;

(c)          violate, conflict with, result in a breach of, constitute a default under (whether with or without notice or the lapse of time or both), or accelerate or permit the acceleration of the performance required by, or give any other party the right to terminate, any Contract or Permit binding upon or applicable to the Business, except for any such violation, conflict, breach, default or acceleration which would not result in a Material Adverse Effect;

(d)          result in the termination of any Contract of the Business, or require the payment of any fees, Taxes or assessments, in either case, pursuant to any federal, state or local program or initiative (i) relating to minority-owned or small disadvantaged businesses, or (ii) based upon some other status of business ownership;

(e)          result in the creation of any Encumbrance on any Properties other than any Encumbrance that result from the Buyer’s acquisition of the Common Membership Interests; or

(f)           require the Company or the Existing Members to obtain or make any waiver, consent, action, approval or authorization of, or registration, declaration, notice or filing with, any private non-governmental third-party or any Governmental Authority.

3.6           No Proceedings. Except as otherwise set forth in Schedule 3.6, neither the Company nor the Existing Members have received written notice or are aware that any suit, action, inquiry or other proceeding is pending or, to the Knowledge of the Company, threatened before any Governmental Authority seeking to restrain the Company or the Existing Members or prohibit their entry into this Agreement or prohibit the Closing, or seeking Damages against the Company or any of its Properties as a result of the consummation of this Agreement.

3.7           Employee Benefit Matters.

(a)          Schedule 3.7(a) hereto provides a description of each of the following, if any, which is sponsored, maintained or contributed to by the Company or the Acquired Subsidiaries for the benefit of the employees or agents of the Company or the Acquired Subsidiaries with respect to which the Company has or may have any actual or contingent liability:

(i)          each “employee benefit plan,” as such term is defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) (including, but not limited to, employee benefit plans, such as foreign plans, which are not subject to the provisions of ERISA) (each a “Plan” and collectively referred to herein as “Plans”); and

(ii)         each personnel policy, employee manual or other written statement of rules or policies concerning employment, collective bargaining agreement, equity compensation plan, phantom equity plan or arrangement, bonus plan or arrangement, incentive award plan or arrangement, vacation and sick leave policy, severance pay policy or agreement, change in control plan or arrangement, deferred compensation plan or arrangement, consulting agreement, employment contract and each other employee benefit plan, agreement, arrangement, program, practice or understanding, whether written or unwritten, which is not described in Section 3.7(a)(i), including any compensation arrangement with the Company or its Acquired Subsidiaries, whether relating to the transactions contemplated hereby or otherwise (each a “Benefit Program or Agreement” and collectively referred to herein as “Benefit Programs or Agreements”).

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(b)          True, correct and complete copies of each of the Plans (if any), including all amendments thereto, and related contracts and trusts, to the extent applicable, have been furnished to the Buyer. There has also been furnished to the Buyer, with respect to each Plan, the following: (i) copies of the most recent Internal Revenue Service (the “IRS”) determination letter (including copies of any outstanding requests for determination letters) or opinion letter with respect to each such Plan intended to qualify under Section 401(a) of the Code; (ii) copies of the most recent summary plan descriptions and any summaries of material modifications thereto; (iii) copies of the three most recent Forms 5500 annual report and accompanying schedules, the most recent actuarial report (to the extent applicable) and the non-discrimination testing results for the three most recent plan years; and (iv) copies of all trust documents or funding/insurance documents related to each Plan. True, correct and complete copies or descriptions of all Benefit Programs or Agreements have also been furnished to the Buyer.

(c)          Except as otherwise set forth in Schedule 3.7(c) hereto,

(i)          For purposes of this Agreement, “ERISA Affiliates” shall mean any trade or business, whether or not incorporated, that together with the Company would be deemed to be a “single employer” within the meaning of Section 4001(b)(i) of ERISA or Section 414 of the Code;

(ii)         neither the Company, the Acquired Subsidiaries nor any ERISA Affiliate contributes to or has an obligation to contribute to, and neither the Company, the Acquired Subsidiaries nor any ERISA Affiliate has at any time contributed to or had an obligation to contribute to, and neither the Company, the Acquired Subsidiaries nor any ERISA Affiliate has any actual or contingent liability (including any withdrawal liability as defined in ERISA Section 4201) under (x) a multiemployer plan within the meaning of Section 3(37) of ERISA or a multiple employer plan within the meaning of Section 413(b) and (c) of the Code, (y) a Plan subject to Section 412 of the Code or Title IV of ERISA or (z) any Plan in which stock of the Company is or was held as a plan asset;

(iii)        each Plan and Benefit Program or Agreement has been administered in all material respects in compliance with its terms and all applicable Legal Requirements, including, without limitation, if applicable, ERISA and the Code;

(iv)        the Company and the Acquired Subsidiaries have performed in all material respects all obligations, whether arising under Legal Requirements or Contract, required to be performed by it in connection with the Plans and the Benefit Programs or Agreements, including, without limitation, the notice and continuation coverage requirements of Section 4980B of the Code and Parts 6 and 7 of Title I of ERISA, and, to the Knowledge of the Company, there have been no defaults or violations by any other party to the Plans or Benefit Programs or Agreements;

(v)         all reports and disclosures relating to the Plans required to be filed with or furnished to Governmental Authorities, Plan participants or Plan beneficiaries have been filed or furnished, in all material respects, in accordance with applicable Legal Requirements in a timely manner;

(vi)        each of the Plans that is intended to be qualified under Section 401(a) of the Code has received a favorable determination or may rely on an opinion letter from the IRS regarding such qualified status and has not, since receipt of the most recent favorable determination or opinion letter, been amended or operated in a way which could adversely affect such qualified status;

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(vii)       there are no actions, suits or claims pending (other than routine claims for benefits) or, to the Knowledge of the Company, threatened against, or with respect to, any of the Plans or Benefit Programs or Agreements or their assets;

(viii)      all premiums, contributions or other payments required to be made to the Plans pursuant to their terms and provisions and applicable Legal Requirements as of the Closing Date have been made timely;

(ix)         the Company and the Acquired Subsidiaries have complied in all material respects with (x) the health care continuation requirements of Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), (y) the requirements of the Family Medical Leave Act of 1983, as amended, and (z) the requirements of the Health Insurance Portability and Accountability Act of 1996, as amended, as well as all similar provisions of state law applicable to their respective employees;

(x)          to the Knowledge of the Company, none of the Plans nor any trust created thereunder or with respect thereto has engaged in any “prohibited transaction” or “party-in-interest transaction” as such terms are defined in Section 4975 of the Code and Section 406 of ERISA which could subject any Plan, the Company, the Acquired Subsidiaries or any officer, director, employee or fiduciary thereof to a Tax or penalty on prohibited transactions or party-in-interest transactions pursuant to Section 4975 of the Code or Section 502(i) of ERISA;

(xi)         there is no matter pending (other than routine qualification determination filings) with respect to any of the Plans or Benefit Programs or Agreements before the IRS, the Department of Labor or the Pension Benefit Guaranty Corp.;

(xii)        each trust funding a Plan, which trust is intended to be exempt from federal income taxation pursuant to Section 501(c)(9) of the Code, has received a favorable determination letter from the IRS regarding such exempt status and has not, since receipt of the most recent favorable determination letter, been amended or operated in a way which would adversely affect such exempt status;

(xiii)       the Company and the Acquired Subsidiaries do not maintain or contribute to, nor have they maintained or contributed to, nor as a result of the transactions contemplated by this Agreement will it be required to contribute to, any Plan providing medical, health, or life insurance or other welfare-type benefits for current or future retired or terminated employees, their spouses or their dependents (other than in accordance with COBRA or other applicable Legal Requirements);

(xiv)      none of the Plans is a self-insured group health plan;

(xv)       each Plan or Benefit Program or Agreement that is a “nonqualified deferred compensation plan” (as defined under Section 409A(d)(1) of the Code) has been operated and administered at all times in compliance in all material respects with Section 409A of the Code and the Treasury Regulations promulgated thereunder; and

(xvi)      neither the execution and delivery of this Agreement nor the consummation of any or all of the transactions contemplated hereby will: (A) entitle any current or former employee of the Company or any Acquired Subsidiary to severance pay, unemployment compensation or any similar payment, (B) accelerate the time of payment or vesting or increase the amount of any compensation due to any such employee or former employee, or (C) directly or indirectly result in any payment made to or on behalf of any Person to constitute a “parachute payment” within the meaning of Section 280G of the Code.

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3.8           Financial Statements; No Undisclosed Liabilities.

(a)          The Company has delivered to the Buyer true and complete copies of (i) the unaudited Financial Statements with respect to the Business as of and for the years ended December 31, 2015, 2016 and 2017 (the “Annual Financial Statements”), (ii) any management letters relating to the Annual Financial Statements received by the Company or any Existing Member from the auditors, and any other written correspondence addressing any material deficiencies or weaknesses with respect to the Company and/or such Annual Financial Statements (collectively, the “Management Letters”), and (iii) monthly interim unaudited Financial Statements as of and for the period (the “Interim Period”) ended April 30, 2018 (the “Balance Sheet Date”) and as of and for each month ended during the Interim Period (together with the Annual Financial Statements, collectively, the “Company Financial Statements”). The Company Financial Statements (including the notes thereto, if any) have been prepared in accordance with GAAP, applied on a consistent basis throughout the periods covered thereby (except for the omission of footnotes and subject to year-end adjustments). All of the Company Financial Statements present fairly in all material respects the financial condition, results of operations and cash flows of the Business for the dates or periods indicated thereon applied on a consistent basis throughout the periods indicated (except for the absence of the footnotes and year-end adjustments).

(b)          Except for (i) the liabilities reflected on the Company’s balance sheet as of the Balance Sheet Date included with the Company Financial Statements, (ii) trade payables and accrued expenses incurred since the Balance Sheet Date in the ordinary course of business, none of which are material, (iii) executory contract obligations under (x) Contracts listed in Schedule 3.13(a), and/or (y) Contracts not required to be listed in Schedule 3.13(a) and (iv) the liabilities set forth in Schedule 3.8(b) hereto, the Company does not have any liabilities or obligations (whether accrued, absolute, contingent, known, unknown or otherwise, or required to be reflected or reserved against in a balance sheet) including, but not limited to, liabilities for violation of Legal Requirements, breach of Contract or tort that would be required by GAAP to be reflected in the Balance Sheet. Without limiting the generality of the foregoing, since January 1, 2016, the Company and the Existing Members have not received any written notice with respect to (i) claims existing or to the Knowledge of the Company, threatened under or pursuant to any warranty, whether express or implied, on the Products or Services, (ii) claims existing as a result of the sale of any Product or performance of any Service or based on the nature of the Products or Services, or (iii) claims in tort related to the negligence of the Company and the Acquired Subsidiaries or any employees, representatives or agents thereof.

(c)          Since January 1, 2016, there has not been, to the Knowledge of the Company, any fraud (whether or not material) that involved management or other employees who have or had a significant role in financial reporting. Except as set forth in the Company Financial Statements and the Management Letters, with respect to the periods covered thereby there have not been any significant deficiencies in the financial reporting of the Company which are or were reasonably likely to materially and adversely affect the ability to record, process, summarize and report financial information.

(d)          Except as otherwise set forth in Schedule 3.8(d) hereto, the accounts receivable reflected on the balance sheet as of the Balance Sheet Date included in the Company Financial Statements and all of the Company’s accounts receivable arising since the Balance Sheet Date arose from bona fide transactions in the ordinary course of business and the Company has fully rendered the Services. Except as otherwise set forth in Schedule 3.8(d) hereto, no such account has been assigned or pledged to any Person, and, except only to the extent fully reserved against as set forth in the balance sheet as of the Balance Sheet Date included in the Company Financial Statements, no defense or set-off to any such account has been asserted by the account obligor or, to the Knowledge of the Company, exists. For the avoidance of doubt, the foregoing representation does not constitute a guaranty of the collectability of any Accounts Receivable.

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(e)          Except as provided under the provisions of the agreements described in Schedule 3.8(e) hereto, the Company has legal and beneficial ownership of its Properties, free and clear of any and all Encumbrances.

3.9           Absence of Certain Changes.

(a)          Except as otherwise set forth in Schedule 3.9(a) hereto and excluding any event or circumstance generally affecting the industries in which the Business operates without specifically affecting the Business, since the Balance Sheet Date, there has not been:

(i)          any Material Adverse Effect; or

(ii)         any damage, destruction or loss (whether or not covered by insurance) that had or is reasonably likely to have a Material Adverse Effect.

(b)          Except as otherwise set forth in Schedule 3.9(b) hereto or as otherwise contemplated by this Agreement, since the Balance Sheet Date, the Company and the Acquired Subsidiaries have not done any of the following:

(i)          merged into or with or consolidated with, or acquired the business or assets of, any Person;

(ii)         purchased any securities of any Person;

(iii)        created, incurred, assumed, guaranteed or otherwise become liable or obligated with respect to any indebtedness, or made any loan or advance to, or any investment in, any Person, except in each case in the ordinary course of business;

(iv)        made or changed any Tax election, changed any annual Tax accounting period, adopted or changed any method of Tax accounting, filed any amended Tax Return, entered into any closing agreement, settled any Tax claim or assessment, surrendered any right to claim a Tax refund, offset or other reduction in Tax liability or consented to any extension or waiver of the limitations period applicable to any Tax claim or assessment;

(v)         entered into, amended or terminated any material Contract;

(vi)        sold, transferred, leased, mortgaged, encumbered or otherwise disposed of, or agreed to sell, transfer, lease, mortgage, encumber or otherwise dispose of, any Properties except (A) in the ordinary course of business, or (B) pursuant to any Contract specified in Schedule 3.13(a);

(vii)       settled any claim or litigation, or filed any motions, orders, briefs or settlement agreements in any proceeding before any Governmental Authority or any arbitrator;

(viii)      incurred or approved, or entered into any Contract to make, any expenditures in excess of $50,000 (other than those arising in the ordinary course of business or those required pursuant to any Contract specified in Schedule 3.13(a));

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(ix)         maintained its books of account other than in the usual, regular and ordinary manner and on a basis consistent with prior periods (including with respect to accruals) or made any change in any of its accounting methods or practices that would be required to be disclosed under GAAP (including with respect to accruals);

(x)          made any material change, whether written or oral, to any Contract with any of the suppliers or customers listed or required to be listed in Schedule 3.19;

(xi)         adopted any Plan or Benefit Program or Agreement, or granted any increase in, or made any change to, the compensation payable or to become payable to directors, officers or employees other than in the ordinary course of business;

(xii)        suffered any extraordinary losses or waived any rights of material value;

(xiii)       made any payment to any Affiliate (other than with respect to any employment arrangement with any such Affiliate) or forgiven any indebtedness for borrowed money due or owing from any Affiliate to the Company or the Acquired Subsidiaries;

(xiv)      (A) provided discounts on pricing or receivables other than in the ordinary course, (B) modified the accounting for or funding of reserves or (C) changed in any material respect the Business’s practices in connection with the marketing, performance or pricing of its Services;

(xv)       engaged in any one or more activities or transactions with an Affiliate outside the ordinary course of business;

(xvi)      declared, set aside or paid any dividends, or made any distributions or other payments in respect of its equity securities, or repurchased, redeemed or otherwise acquired any such securities;

(xvii)     amended the Organizational Documents;

(xviii)    issued any shares of capital stock or other securities, or granted, or entered into any agreement to grant, any options, convertible rights, other rights, warrants, calls or agreements relating to its capital stock or other securities; or

(xix)       committed to do any of the foregoing.

3.10         Compliance with Laws.

(a)          Except as otherwise set forth in Schedule 3.10(a) hereto, the Company and the Acquired Subsidiaries are and, since January 1, 2016, have been in compliance in all material respects with any and all Legal Requirements applicable to the Company and the Acquired Subsidiaries. Except as otherwise set forth in Schedule 3.10(a) hereto, and without limiting the generality of the foregoing, (i) since January 1, 2016, the Company and the Acquired Subsidiaries have not received or entered into any written citations, complaints, consent orders, compliance schedules or other similar enforcement orders or received any written notice from any Governmental Authority or any other written notice that would indicate that it is not currently in compliance with all such Legal Requirements, (ii) the Company and the Acquired Subsidiaries are not in default under any Permit applicable to the Business, and (iii) to the Knowledge of the Company, no formal or informal investigation or review related to the Business has been conducted since January 1, 2016 or is being conducted by any commission, board or other Governmental Authority, and, to the Knowledge of the Company, no such investigation or review is scheduled, pending or threatened against the Company or any Acquired Subsidiary.

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(b)          The Company and the Acquired Subsidiaries have not received any written notice of them being subject to any, and, to the Knowledge of the Company, there has been no threatened, adverse inspection, finding of deficiency, finding of non-compliance, investigation, penalty, fine, sanction, assessment, request for corrective or remedial action or other compliance or enforcement action by any Governmental Authority affecting the Business.

(c)          Except as identified on Schedule 3.10(c), the Company and the Acquired Subsidiaries have obtained all approvals, registrations and authorizations from, and has made all appropriate applications and other submissions to, all Government Authorities necessary for operation of the Business relating to the Products and Services in compliance in all material respects with all applicable Legal Requirements. To the Knowledge of the Company, no Other Party has failed to obtain all approvals, registrations and authorizations from, has failed to make all appropriate applications and other submissions to, or has failed to prepare and maintain all records, studies and other documentation needed to satisfy and demonstrate compliance with the requirements of, all applicable requirements of the Government Authorities necessary for the operation of the Services or the Business in compliance in all material respects with all applicable Legal Requirements. As used herein, “Other Party” means any Person employed or retained by the Company to sale or market any of the Services, excluding, for the avoidance of doubt, any Persons involved in a co-marketing or similar relationship with the Company.

(d)          The Company and the Acquired Subsidiaries have not made and, to the Knowledge of the Company, no Other Party has made any false statement in, or omission from, the applications, approvals, reports or other submissions to any Governmental Authorities to comply with the requirements of any Governmental Authorities relating to the Products or Services or the Business.

(e)          [reserved]

(f)          The Company and the Acquired Subsidiaries are, and to the Knowledge of the Company, all Other Parties are in compliance, in all material respects, with all applicable regulations and requirements of Governmental Authorities relating to the Products or Services, including any requirements for investigating customer complaints and inquiries.

(g)          To the Knowledge of the Company, none of the Products or Services, (i) fail to comply in all material respects with the requirements of all Governmental Authorities, or (ii) were handled by the Company not in conformity with the requirements of all Governmental Authorities.

(h)          Neither the Company, the Acquired Subsidiaries nor, to the Knowledge of the Company, any of the Other Parties, have sold any Products or Services into any jurisdictions without first having obtained all requisite approvals, registrations and permissions from all applicable Governmental Authorities. There are no pending or outstanding: (1) warning letters or other regulatory letters or sanctions or (2) field notifications or alerts relating to the Products or Services or the Business that assert ongoing lack of compliance with any such Legal Requirements by the Company or the Acquired Subsidiaries.

(i)           Except as set forth on Schedule 3.10(i), the Company has furnished to the Buyer correct and complete copies, or summaries of, all adverse event reports since January 1, 2016, which reports, among other things, detail material customer complaints or mistakes made by the Company relating to the Products and Services.

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3.11         Litigation. Except as otherwise set forth in Schedule 3.11 hereto, there are no claims, actions, suits, investigations, inquiries or proceedings against the Company or any of the Acquired Subsidiaries pending or, to the Knowledge of the Company, threatened in any court or before or by any Governmental Authority, or before any arbitrator. Schedule 3.11 hereto also includes a true and correct listing of all material actions, suits, investigations, claims or proceedings that were pending, settled or adjudicated with respect to the Company and the Acquired Subsidiaries since January 1, 2016.

3.12         Real Property.

(a)          Other than as identified in Schedule 3.12 hereto, neither the Company nor any Acquired Subsidiary owns (or has never owned) any real property or any ownership interest therein.

(b)          Schedule 3.12 sets forth a list of all leases, licenses or similar agreements to which the Company or any Acquired Subsidiary is a party that are for the use or occupancy of real estate owned by a third-party (“Leases”) (true and complete copies of which have previously been furnished to the Buyer, together with all related documents, e.g., non-disturbance agreements, lease amendments or modifications, notices of renewal or non-renewal, expansion options, purchase options, etc.), in each case, setting forth: (i) the lessor and lessee thereof, (ii) the date of the Lease, and (iii) the street address or legal description of each property covered thereby (the parcels of real property identified on Schedule 3.12 which are referred to herein collectively as the “Leased Premises”). The Leases are in full force and effect and have not been amended except as disclosed in Schedule 3.12, and none of the Company or any Acquired Subsidiary, or to the Knowledge of the Company, the Lessor is in default or material breach under any such Lease. No event has occurred which, with the passage of time or the giving of notice or both would cause a material breach of or material default by the Company or any Acquired Subsidiary under any Lease. Except as set forth on Schedule 3.12, the Company or the Acquired Subsidiaries, as applicable, has a valid leasehold interest in the Leased Premises as indicated on Schedule 3.12.

(c)          The portions of the buildings located on the Leased Premises that are used in the Business are in good repair and condition, normal wear and tear excepted, and are in the aggregate sufficient to satisfy the Company’s and the Acquired Subsidiaries’ current business activities as conducted thereon and, to the Knowledge of the Company, there is no latent material defect in the improvements on any of the Leased Premises, the structural elements thereof, the mechanical systems (including, without limitation, all heating, ventilating, air conditioning, plumbing, electrical, utility and sprinkler systems) therein, the utility system servicing such Leased Premises and the roofs which have not been disclosed to the Buyer in writing prior to the date hereof. Each of the Leased Premises, has direct access to public roads or access to public roads by means of a perpetual access easement, such access being sufficient to satisfy the current and reasonably anticipated future transportation requirements of the business conducted at such Leased Premises. None of the Company, the Acquired Subsidiaries nor any of their Affiliates have received written notice of (x) any condemnation, eminent domain or similar proceeding affecting any portion of any of the Leased Premises or any access thereto, and, to the Knowledge of the Company, no such proceedings are contemplated, (y) any special assessment or pending improvement liens to be made by any Governmental Authority which could materially and adversely affect any of the Leased Premises, or (z) any violations of building codes and/or zoning ordinances or other governmental regulations with respect to any of the Leased Premises.

3.13         Material Contracts.

(a)          Except as otherwise set forth in Schedule 3.13(a) and Schedule 3.19 hereto, the Company and the Acquired Subsidiaries are not a party to or bound by any written Contracts of the following types:

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(i)          any Contract that provides any customer with discounted pricing or the potential right to any such discounts in the future other than in the ordinary course of business;

(ii)         any Contract for capital expenditures by the Business in excess of $20,000 in the aggregate;

(iii)        any Contract pursuant to which the Company or any Acquired Subsidiary licenses or leases from any other Person, any material Properties any Contract (other than customer Contracts) pursuant to which the Company or any Subsidiary licenses or leases any material Properties to any other Person;

(iv)        any Contract relating to (A) the borrowing of money, (B) the guarantee of any payment obligation, (C) the deferred payment of the purchase price of any Properties or (D) any bonding or surety agreement or arrangement;

(v)         any shareholder, partnership, joint venture, limited liability company operating or similar entity governance Contract;

(vi)        any Contract with any Affiliate of the Company or the Acquired Subsidiaries relating to the provision of funds, real property, goods or services by or to the Company or any Acquired Subsidiary;

(vii)       any Contract for the sale of any assets outside the ordinary course of business that in the aggregate have a net book value on the Company’s or an Acquired Subsidiary’s, as applicable, books of greater than $20,000;

(viii)      any Contract that purports to limit the Company’s or any Acquired Subsidiary’s freedom to compete freely in any line of business or in any geographic area;

(ix)         any preferential purchase right, right of first refusal or similar Contract; or

(x)          any other Contract that is material to the Company’s or any Acquired Subsidiary’s business, operations, prospects, Properties, financial condition or cash flows, taken as a whole.

(b)          All of the Contracts listed or required to be listed in Schedule 3.13(a) are valid, binding and in full force and effect with respect to the Company or the Acquired Subsidiaries, as applicable, and, to the Knowledge of the Company, each counter-party thereto, and neither the Company nor any Acquired Subsidiary has been notified or advised in writing by any party thereto of such party’s intention or desire to terminate any such Contract in any respect, except as otherwise set forth in Schedule 3.13(a). Neither the Company, the Acquired Subsidiaries nor, to the Knowledge of the Company, any other party is in breach of any of the material terms or covenants of any Contract listed or required to be listed in Schedule 3.13(a). Except as set forth on Schedule 3.13(b), immediately following the Closing, the Company and the Acquired Subsidiaries, as applicable, will continue to be entitled to all of the benefits currently held by them under each Contract listed or required to be listed in Schedule 3.13(a). The Company has made available to the Buyer true and correct copies of each of the Contracts listed on Schedule 3.13(a), including all amendments thereto.  To the extent any such Contract has not been executed by all parties thereto, the Company or any Acquired Subsidiary, as applicable, and, to the Knowledge of the Company, the counterparty thereto is operating in accordance with the material terms of the form of such Contract that has been made available to the Buyer.

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3.14         Insurance. Schedule 3.14 hereto sets forth a complete and correct list of all insurance policies (including, but not limited to, fire, liability, product liability, workers’ compensation and vehicular) presently in effect that relate to the Company, an Acquired Subsidiary or any of its Properties, including the annual premiums with respect thereto. Such policies are in amounts that constitute compliance by the Company and the Acquired Subsidiaries with all applicable Legal Requirements and all material Contracts. None of the insurance carriers has indicated to the Company or any Acquired Subsidiary in writing an intention to cancel any such policies or to materially increase any insurance premiums (including, but not limited to, workers’ compensation premiums), or that any insurance required to be listed in Schedule 3.14 will not be available in the future on substantially the same terms as currently in effect. The Company and the Acquired Subsidiaries have no claim pending or anticipated against any of its insurance carriers for failure to pay claims under any of such policies and, to the Knowledge of the Company, there has been no actual or alleged occurrence of any kind which could reasonably be expected to give rise to any such claim.

3.15         Intellectual Property.

(a)          Definitions:

(i)          “Intellectual Property” means any or all of the following and all rights in, arising out of, or associated therewith (including all applications or rights to apply for any of the following, and all registrations, renewals, extensions, future equivalents, and restorations thereof, now or hereafter in force and effect): (A) all United States, international, and foreign: (1) patents, utility models, and applications therefor, and all reissues, divisions, re-examinations, provisionals, continuations and continuations-in-part thereof, and equivalent or similar rights anywhere in the world in inventions, discoveries, and designs, including invention disclosures; (2) all Trade Secrets and other rights in know-how and confidential or proprietary information; (3) all mask works and copyrights, and all other rights corresponding thereto (including moral rights), throughout the world; (4) all rights in World Wide Web addresses and domain names and applications and registrations therefor, and contract rights therein; (5) all trade names, logos, trademarks and service marks, trade dress and all goodwill associated therewith throughout the world; (6) rights of publicity and personality; and (7) any similar, corresponding, or equivalent rights to any of the foregoing in items (1) through (6) above, anywhere in the world (items (1) through (7) collectively, “Intellectual Property Rights”); and (B) any and all of the following: computer software and code, including software and firmware listings, assemblers, applets, applications, websites, content (including text, pictures, sounds, music, and video), compilers, source code (whether in a format to be compiled, interpreted, or otherwise), object code, net lists, design tools, user interfaces, application programming interfaces, protocols, formats, documentation, annotations, comments, data, data structures, databases, data collections, system build software and instructions, design documents, schematics, diagrams, product specifications, know-how, show-how, techniques, algorithms, routines, works of authorship, processes, prototypes, test methodologies, supplier and customer lists, materials that document design or design processes, or that document research or testing (including design, processes, and results); and any other tangible embodiments of any of the foregoing or of Intellectual Property Rights (“Technology”).

(ii)         “Company Owned Intellectual Property” means all Intellectual Property owned by the Company or any Acquired Subsidiary.

(iii)        “Company Licensed Intellectual Property” means all Intellectual Property owned by third Persons and licensed to the Company or any Acquired Subsidiary. Unless otherwise noted, all references to “Company Intellectual Property” refer to both Company Owned Intellectual Property and Company Licensed Intellectual Property.

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(b)          Schedule 3.15(b) lists the following:

(i)          all of the Company’s and the Acquired Subsidiaries’ registrations and applications for registration for Company Owned Intellectual Property;

(ii)         all licenses, sublicenses, reseller, distribution, and other agreements or arrangements in accordance with which any other Person is authorized by the Company or any Acquired Subsidiary to have access to, resell, distribute, or use Company Owned Intellectual Property or to exercise any other right with regard thereto, in each case, other than customer contracts entered into in the ordinary course of business;

(iii)        all licenses and other agreements under which the Company or any Acquired Subsidiary has been granted a license or any other right to any Company Licensed Intellectual Property (other than license agreements for standard “shrink wrapped,” “click through,” or other form licensed based “off-the-shelf” third-party Intellectual Property that is otherwise commercially available) where such Company Licensed Intellectual Property is a part of, offered in conjunction with, or used by Company or any Acquired Subsidiary in connection with the development, support, or maintenance of the Products, Services, Technology, or Services (“In-Licenses”);

(iv)        any obligations of exclusivity, covenants not to sue, noncompetition or nonsolicitation obligations, rights of first refusal, rights of parity of treatment, grants of most favored nation status, or rights of first negotiation to which Company or any Acquired Subsidiary is subject and that relate to and/or restrict any Company Intellectual Property or the Products, Business or services that are provided using Company Intellectual Property; and

(v)         any grants by the Company or any Acquired Subsidiary of exclusivity (including license rights granted by Company or any Acquired Subsidiary to any third-party in Company Owned Intellectual Property or other exclusivity grants), covenants not to sue, noncompetition or non-solicitation obligations, rights of first refusal, rights of parity of treatment, grants of most favored nation status, or rights of first negotiation to which the Company or any Acquired Subsidiary is subject and that relate to and/or restrict any Company Intellectual Property.

(c)          Except as set forth on Schedule 3.15(c), the Company owns free and clear of Encumbrances and/or any requirement of any past, present, or future royalty payments, all rights in all Company Owned Intellectual Property.

(d)          The Company and the Acquired Subsidiaries are not in material violation of any license, sublicense, or other agreement relating to Company Intellectual Property, including any In-License.

(e)          To the Company’s Knowledge, neither the (i) use, reproduction, modification, distribution, licensing, sublicensing, sale, offering for sale, or import, of Company Owned Intellectual Property nor (ii) the operation of the Business, including the provision of Products or Services infringes any Intellectual Property Rights, or any other intellectual property, proprietary, or personal right, of any Person, or constitutes unfair competition or unfair trade practice under the laws of the applicable jurisdiction. To the Knowledge of the Company, there is no unauthorized use, infringement, or misappropriation of any of the Company Intellectual Property by any third-party, employee, or former employee.

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(f)           Except as set forth on Schedule 3.15(f), the Company or any Acquired Subsidiary has not received written notice of any claims, (i) challenging the validity, effectiveness or ownership by the Company or any Acquired Subsidiary of any Company Owned Intellectual Property, or (ii) that any of clauses (i) or (ii) in Section 3.15(e) above infringes, or will infringe on, any third-party Intellectual Property Right or constitutes unfair competition or unfair trade practices under the laws of the applicable jurisdiction.

(g)          No parties other than Company or any Acquired Subsidiary possess any current or contingent rights of any kind to any source code included in Company Owned Intellectual Property, nor has the Company or any Acquired Subsidiary granted any current or contingent rights of any kind to any source code that is part of any Company Licensed Intellectual Property.

(h)          Schedule 3.15(h) lists all current Independent Contractors (excluding every day inventors who assign Intellectual Property Rights to the Company or its Subsidiaries in the ordinary course of the Business) and current employees who have created any material portion of Company Owned Intellectual Property other than employees of Company who meet all of the following requirements: (i) their work in any Product, Technology, or Service was created by them entirely within the scope of their engagement or employment by the Company or an Acquired Subsidiary, (ii) their copyrightable work product in any Product, Technology, or Service is owned by the Company or an Acquired Subsidiary, and (iii) any inventions of such Persons that are included or implemented in any Company Product, Technology, or Service have been validly assigned to the Company or an Acquired Subsidiary.

(i)           Except as set forth on Schedule 3.15(i), the Company and the Acquired Subsidiaries have secured from all current and former employees, consultants, and contractors of the Company and the Acquired Subsidiaries who have created any material portion of any Company Owned Intellectual Property or Product, Technology, or Service, valid and enforceable written assignments or licenses to Company or any Acquired Subsidiary of any such employees’, consultants’ and contractors’ contribution or rights therein and Company has provided true and complete copies of all such assignments or licenses to the Buyer.

(j)          The Company and the Acquired Subsidiaries have taken commercially reasonable steps to protect rights in Confidential Information (both of the Company and that of third-Persons that the Company or any Acquired Subsidiary has received under an obligation of confidentiality).

(k)          The Company and the Acquired Subsidiaries are in compliance in all material respects with all applicable laws, rules, regulations, and their contractual obligations governing the collection, interception, storage, receipt, purchase, sale, transfer and use (“Collection and Use”) of personal, consumer, or customer information, including name, address, telephone number, electronic mail address, social security number, bank account number or credit card numbers (collectively, “Customer Information”). The Company’s and the Acquired Subsidiaries’ Collection and Use of such Customer Information are in accordance in all material respects with the Company’s privacy policy (or applicable terms of use) as published on its website or any other privacy policies (or applicable terms of use) presented to consumers or customers (actual or potential) and to which the Company is bound or otherwise subject and any contractual obligations of the Company to its customers regarding privacy. The Company and the Acquired Subsidiaries do not use, collect, or receive, in connection with the provision of its Products or Services, social security numbers or credit card numbers other than (i) social security numbers of its employees collected in connection with employment and (ii) social security numbers and credit card numbers of certain of its customers.

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(l)          Schedule 3.15(l) identifies all licenses entered into by the Company or any Acquired Subsidiary with regard to any third-party source code.

(m)         No Company or Acquired Subsidiary software product or service is governed by an Excluded License. “Excluded License” means any license that requires, as a condition of modification or distribution of software subject to the Excluded License, that (i) such software and other software combined or distributed with such software be disclosed or distributed in source code form, or (ii) such software and other software combined or distributed with such software and any associated intellectual property be licensed on a royalty free basis (including for the purpose of making additional copies or derivative works).

(n)          The Company and the Acquired Subsidiaries have not distributed or published to any third-party any of the Company’s software or software used in any Product, Technology, or Service that is governed by an Excluded License.

(o)          The Company and the Acquired Subsidiaries have not incorporated into any of their software or software used in any Technology, or Service any code, modules, utilities, or libraries that are covered in whole or in part by a license that triggers the discontinuance of some or all license rights if certain patent enforcement suits are brought by the Company or any Acquired Subsidiary.

(p)          The Company and the Acquired Subsidiaries have not incorporated into any of its software or software used in any Technology, or Service any code, modules, utilities, or libraries that are covered in whole or in part by a license that requires that Company give attribution for its use of such code, modules, utilities, or libraries.

(q)          Neither the Company nor any Acquired Subsidiary is a member of any standards-setting organization.

(r)          Neither the Company nor any Acquired Subsidiary has participated in any standards-setting activities that would affect the proprietary nature of any Company Intellectual Property or restrict the ability of the Company to enforce, license or exclude others from using or licensing any Company Intellectual Property.

(s)          Except as set forth on Schedule 3.15(s), neither the Company nor any Acquired Subsidiary is subject to, and the transactions contemplated by this Agreement will not give rise to, any obligations of exclusivity (including exclusive license rights granted by the Company or any Acquired Subsidiary to any third-party in Company Intellectual Property or other exclusivity grants), covenants not to sue, noncompetition or non-solicitation obligations, rights of first refusal, rights of parity of treatment, most favored nation status, rights of first negotiation, or other similar material restrictions on the operation of the Business.

(t)          The transactions contemplated by this Agreement will not give rise to or cause under any agreements relating to Company Intellectual Property, (i) a right of termination under, or a breach of, any such agreement, or any loss or change in the rights or obligations of the Company under any such agreement, (ii) an obligation to pay any royalties or other amounts to any third Person in excess of those that Company or any Acquired Subsidiary is otherwise obligated to pay absent Closing, or (iii) any other change in the rights or obligations or any other party to such agreement specifically with regard to payment, services, assignment, termination, or Company Intellectual Property.

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(u)          Except as set forth on Schedule 3.15(u), the Company or any Acquired Subsidiary is not under any contractual obligation, (i) to include any Company Licensed Intellectual Property in any Product, Technology, or Service, or (ii) to obtain a third-party’s approval of any Product, Technology, or Service at any stage in the development, licensing, distribution, or sale of that Product, Technology, or Service.

(v)          [reserved]

(w)          The Company or any Acquired Subsidiary has not exported or re-exported its Products, Services, or Technology, directly or indirectly, in violation of law either to: (i) any countries that are subject to U.S., Canadian, or European Union export restrictions or export restrictions of any other jurisdiction in which the Business operates or is otherwise subject; or (ii) any end-user who Company or any Acquired Subsidiary knows or has reason to know will utilize them in the design, development, or production of nuclear, chemical, or biological weapons; and the Company and the Acquired Subsidiaries have complied with all end-user, end-use, and destination restrictions issued by the U.S. and any other jurisdiction to which the Business operates or is subject.

(x)          No Person (including the Company or any Acquired Subsidiary but excluding the Buyer), (i) is authorized to license, sublicense, resell, or otherwise distribute any Company Owned Intellectual Property either for itself or on behalf of Company or any Acquired Subsidiary, or (ii) has any obligation to distribute any Company Owned Intellectual Property on behalf of Company or any Acquired Subsidiary, including bug fixes, or updates.

3.16         Equipment and Other Tangible Property.

(a)          The Company and each Acquired Subsidiary has good and marketable title to, or, in the case of property held under a lease or other contractual obligation, a valid leasehold interest in, or right to use and otherwise commercially exploit, all of the Properties, rights, and assets, whether real or personal property and whether tangible or intangible, that are owned or purported to be owned by the Company or such Acquired Subsidiary. This Section 3.16(a) does not apply to Intellectual Property which is governed solely by Section 3.15.

(b)          Except as otherwise set forth in Schedule 3.16 hereto, the Company’s equipment, furniture, machinery, vehicles, structures, fixtures and other tangible property included in its Properties (the “Tangible Company Properties”), are suitable for the purposes for which they are intended and in good operating condition and repair, except for ordinary wear and tear, and except for such Tangible Company Properties as shall have been taken out of service on a temporary basis for repairs or replacement consistent with the Company’s prior practices.

3.17         Permits; Environmental Matters.

(a)          Except as otherwise set forth in Schedule 3.17(a) hereto, the Company and the Acquired Subsidiaries have all material Permits necessary for the Company and the Acquired Subsidiaries to own, operate, use and/or maintain their Properties and to conduct their Business and operations as presently conducted. Except as otherwise set forth in Schedule 3.17(a) hereto, all such material Permits are in effect, no proceeding is pending or, to the Knowledge of the Company, threatened to modify, suspend or revoke, withdraw, terminate or otherwise limit any such Permits, and no administrative or governmental actions have been taken or, to the Knowledge of the Company, threatened in connection with the expiration or renewal of such material Permits which could adversely affect the ability of the Company or any Acquired Subsidiary to own, operate, use or maintain any of their Properties or to conduct their business and operations as presently conducted. Except as otherwise set forth in Schedule 3.17(a) hereto, the Company and the Acquired Subsidiaries are in compliance in all material respects with such material Permits.

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(b)          To the Knowledge of the Company, there are no claims, liabilities, causes of action, inquiries, studies, notices, investigations, litigation, administrative proceedings, whether pending or threatened, or judgments or orders relating to any Hazardous Materials (collectively called “Environmental Claims”) asserted or threatened against the Company or any Acquired Subsidiary or relating to any real property currently or formerly owned, leased or otherwise used by the Company or any Acquired Subsidiary. Neither the Company or any Acquired Subsidiary nor, to the Knowledge of the Company, any current owner, lessee or operator of such real property nor, to the Knowledge of the Company, any prior owner, lessee or operator of such real property, has caused or permitted any Hazardous Material to be used, generated, reclaimed, transported, released, treated, stored or disposed of on such real property in a manner which could reasonably be expected to form the basis for an Environmental Claim against the Company or the Buyer. The Company and the Acquired Subsidiaries have not assumed any liability of any Person for cleanup, compliance or required capital expenditures in connection with any Environmental Claim.

(c)          Except as set forth on Schedule 3.17(c), the Company and the Acquired Subsidiaries have been since January 1, 2015 and are currently in compliance in all material respects with all applicable Environmental Laws, including obtaining and maintaining in effect all Permits required by applicable Environmental Laws.

3.18         Banks. Schedule 3.18 hereto sets forth (a) the name of each bank, trust company or other financial institution and stock or other broker with which the Company or any Acquired Subsidiary has an account, credit line or safe deposit box or vault; (b) the names of all persons authorized to draw thereon or to have access to any safe deposit box or vault; (c) the purpose of each such account, safe deposit box or vault; and (d) the names of all persons authorized by proxies, powers of attorney or other like instrument to act on behalf of the Company or the Acquired Subsidiaries with respect to the accounts, credit lines, safe deposit boxes and vaults. Except as otherwise set forth in Schedule 3.18 hereto, no such proxies, powers of attorney or other like instruments are irrevocable.

3.19         Customers. Schedule 3.19 sets forth a list of (a) the ten (10) largest customers of the Business (measured by aggregate billings for the fiscal year ended December 31, 2017), and (b) the ten (10) largest suppliers of materials, products or services to the Business (measured by the aggregate amount purchased for the Business for the fiscal year ended December 31, 2017). Except as otherwise set forth in Schedule 3.19 hereto, no such party has canceled, terminated or made any written threat to the Company to cancel or otherwise terminate its relationship with the Company or any Acquired Subsidiary or to materially change the quantity, pricing or other terms applicable to its sale of products or services to the Company or any Acquired Subsidiary or its direct or indirect purchase of Products or Services from the Company or any Acquired Subsidiary. The Company and the Acquired Subsidiaries are not qualified or registered under, and since January 1, 2015, have not been qualified or registered under, any federal, state or local program or initiative (i) relating to minority-owned or small disadvantaged businesses or (ii) based upon some other status of business ownership, and has not received from any Governmental Authority any special, preferential or advantageous treatment in connection with any such program or initiative. Since January 1, 2015, the Company and the Acquired Subsidiaries have not provided any Product or Service to any Person, and is under no obligation to provide any Product or Service to any Person, in connection with or pursuant to any federal, state or local program or initiative (i) relating to minority-owned or small disadvantaged businesses or (ii) based upon some other status of business ownership.

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3.20         Absence of Certain Business Practices. None of the Existing Members, the Company or any Acquired Subsidiary nor any other agent of the Company or any Acquired Subsidiary, or, to the Knowledge of the Company, any other Person acting on behalf of or associated with the Company, acting alone or together, has (other than as reimbursement or payment for the Services in the ordinary course of business consistent with past practice) (a) received, directly or indirectly, any rebates, payments, commissions, promotional allowances or any other economic benefits, regardless of their nature or type, from any customer, supplier, employee or agent of any customer or supplier; or (b) directly or indirectly given or agreed to give any illegal money, gift or similar benefit to any customer, supplier, employee or agent of any customer or supplier, any official or employee of any government (domestic or foreign), or any political party or candidate for office (domestic or foreign), or other Person who was, is or may be in a position to help or hinder the Business (or assist the Company or any Acquired Subsidiary in connection with any actual or proposed transaction), in each case which (i) reasonably could be expected to subject the Company or any Acquired Subsidiary to any damage or penalty in any civil, criminal or governmental litigation or proceeding, (ii) if not given in the past, may have had an adverse effect on the assets, business, operations or prospects of the Company, taken as a whole, or (iii) if not continued in the future, may have a Material Adverse Effect. Further, the Company and the Acquired Subsidiaries are not Affiliates of an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

3.21         Products, Services and Authorizations.

(a)          To the Knowledge of the Company, since January 1, 2016, no Product sold or Service rendered by the Company has been sold or rendered other than in accordance in all material respects with the provisions of all applicable Legal Requirements, policies, guidelines and any other requirements and regulations of all Governmental Authorities.

(b)          Schedule 3.21(b) sets forth (i) a list of all Products and Services which at any time since January 1, 2016, have been withdrawn or suspended by the Company or any Acquired Subsidiary, as a result of any governmental or regulatory action, proceeding or order binding on the Company or the Business; (i) a brief description of all completed or pending governmental or regulatory proceedings seeking the withdrawal or suspension of any Product or Service; and (ii) a list of all regulatory letters received by the Company or any Acquired Subsidiary or the Existing Members or any of their agents relating to the Company or any Acquired Subsidiary or any of the Products or Services.

(c)          To the Knowledge of the Company, there is no basis for withdrawal or suspension of any Product registration, Product license or other license, approval or consent of any Governmental Authority with respect to the Company or any Acquired Sub or any of the Products.

(d)          The Company and the Acquired Subsidiaries have not and, to the Knowledge of the Company, their respective employees, representatives or agents, and, to the Knowledge of the Company, the Other Parties, have not, made any marketing or advertising claims, statements or representations that any such Person knows or has reason to believe is or was false.

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3.22         Labor. Except as disclosed in Schedule 3.22 hereto:

(a)          The Company and the Acquired Subsidiaries: (i) are in compliance in all material respects with applicable Legal Requirements with respect to employment, employment practices, terms and conditions of employment and wages and hours, in each case with respect to its employees; (ii) has withheld and reported all amounts required by Legal Requirements or by Contract to be withheld and reported with respect to wages, salaries and other payments to its employees; (iii) is not liable for any arrears of wages or any Taxes or any penalty for failure to comply with the Legal Requirements applicable to the foregoing; (iv) is not liable for any payment to any trust or other fund governed by or maintained by or on behalf of any Governmental Authority with respect to unemployment compensation benefits, social security or other benefits or obligations for its employees (other than routine payments to be made in the normal course of business and consistent with past practice); and (v) has no leased employees.

(b)          To the Knowledge of the Company, the Company and the Acquired Subsidiaries are employing only individuals who are lawfully permitted to work in the United States and the Company and the Acquired Subsidiaries are in compliance with all applicable laws and regulations of the United States regarding immigration and/or employment of non-citizen workers. The Company and the Acquired Subsidiaries have not been notified in writing of any pending or threatened investigation by any branch or department of U.S. Immigration and Customs Enforcement (“ICE”), or other federal agency charged with administration and enforcement of federal immigration laws concerning the Company or any Acquired Subsidiary, and the Company or any Acquired Subsidiary has never received any “no match” notices from ICE, the Social Security Administration or the IRS within the previous 24 months of the Effective Date.

(c)          Schedule 3.22(c) hereto contains a true and complete listing, including location, of each individual paid by the Company or any Acquired Subsidiary as an independent contractor rather than an employee, total compensation for services in excess of Twenty Thousand Dollars ($20,000) during the period from January 1, 2017 through the date hereof (“Independent Contractors”). The Company and the Acquired Subsidiaries have completed IRS Form SS-8 with respect to any Independent Contractor and no Independent Contractor has completed IRS Form SS-8 with respect to the Company or any Acquired Subsidiary. Except as set forth in Schedule 3.22(c), no current employee of the Company or any Acquired Subsidiary was treated at any time in the past as an Independent Contractor of the Company or any Acquired Subsidiary. Except as set forth on Schedule 3.22(c), no current Independent Contractor has canceled, terminated or made any written threat to the Company to cancel or otherwise terminate his, her or its relationship with the Company or any Acquired Subsidiary, or to materially change the pricing or other terms applicable to his, her or its sale or provision of services to the Company or any Acquired Subsidiary, or materially reduce his, her or its business relationship with the Company or any Acquired Subsidiary other than in accordance with the Contract, if any, by which such Independent Contractor is engaged by the Company or any Acquired Subsidiary.

(d)          To the Knowledge of the Company, the Company and the Acquired Subsidiaries have properly classified, for all times prior to the date hereof, Independent Contractors and employees, and has paid all Taxes required to be paid related to said Independent Contractors and employees.

(e)          Since January 1, 2016, there have not been any, (i) work stoppages, labor disputes or other material controversies between the Company and its employees, (ii) labor union grievances or, to the Knowledge of the Company, organizational efforts, or (iii) unfair labor practice or labor arbitration proceedings pending or, to the Knowledge of the Company, threatened.

(f)          Schedule 3.22(f) hereto sets forth by number and employment classification the approximate number of employees employed by the Company or any Acquired Subsidiary in each classification as of the date hereof, and, except as set forth therein, none of the Company’s employees are subject to union or collective bargaining agreements with the Company.

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3.23         Transactions With Affiliates. Except as otherwise set forth in Schedule 3.23 hereto and except for normal advances to employees consistent with past practices, payment of compensation for employment to employees consistent with past practices, and participation in scheduled Plans or Benefit Programs or Agreements by employees, the Company and the Acquired Subsidiaries have not purchased, acquired or leased any property or services from, or sold, transferred or leased any property or services to, or loaned or advanced any money to, or borrowed any money from, or entered into or been subject to any management, consulting or similar agreement with, or engaged in any other transaction with any Existing Member or any other officer, director or shareholder of the Company or any of their respective Affiliates. Except as otherwise set forth in Schedule 3.23 hereto, none of the Existing Members or any other Affiliate of the Company is directly or indirectly indebted to the Company or any Acquired Subsidiary for money borrowed or other loans or advances, and neither the Company nor any Acquired Subsidiary is directly or indirectly indebted to any such Person.

3.24         Brokers or Finders’ Fees. Except as otherwise set forth in Schedule 3.24 hereto, all negotiations relating to this Agreement and the transactions contemplated hereby have been carried out without the intervention of any Person acting on behalf of the Company, any Acquired Subsidiary or the Existing Members in such a manner as to give rise to any valid claim against the Buyer for any brokerage fee, finder’s fee or similar compensation.

3.25         Management Continuity. To the Knowledge of the Company, none of the officers of the Company or any Acquired Subsidiary have any current intention, plan or desire to terminate their respective employment or professional service agreements with the Company or any Acquired Subsidiary or to cease performing their respective duties as employees of the Company or any Acquired Subsidiary providing services to the Company or any Acquired Subsidiary.

3.26         Taxes.

(a)          The Company and the Acquired Subsidiaries have timely filed all income Tax Returns and other material Tax Returns that it has been required to file. All such Tax Returns were true, correct and complete in all material respects. All Taxes owed by the Company (whether or not shown on any Tax Return and whether or not any Tax Return was required) have been timely paid. The Company and the Acquired Subsidiaries are not currently the beneficiary of any extension of time within which to file any Tax Return. No claim has ever been made in writing by a Governmental Authority in a jurisdiction where the Company or any Acquired Subsidiary does not file Tax Returns that it is or may be subject to taxation by that jurisdiction or the requirement to file Tax Returns in that jurisdiction. There are no Encumbrances on any of the Properties that arose in connection with any failure (or alleged failure) to pay any Tax, except for Encumbrances for Taxes not yet due and payable or that are being contested in good faith by the Company.

(b)          The Company and the Acquired Subsidiaries have (i) timely withheld and paid all Taxes required to have been withheld and paid or properly reflected in the reserve referred to in Section 3.26(f)(ii) in connection with amounts paid or owing to any employee, independent contractor, creditor, equityholder, customer or other third-party, (ii) complied with all information reporting and backup withholding provisions of applicable Legal Requirements, and (iii) maintained all required records with respect to the items in clauses (i) and (ii).

(c)          There is no dispute or claim concerning any Tax liability of the Company or any Acquired Subsidiary either, (i) claimed or raised by any Governmental Authority in writing, or (ii) as to which the Company or any Acquired Subsidiary or any of the Existing Members has actual knowledge based upon personal contact with any agent of such Governmental Authority. No issue relating to Taxes has been raised in writing by a Governmental Authority during any pending audit or examination. The Company has delivered to the Buyer correct and complete copies of all U.S. federal, state, local and foreign income, franchise and similar Tax Returns which have been filed, examination reports and statements of deficiencies assessed against, or agreed to by, the Company since January 1, 2016.

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(d)          Neither the Company nor any Acquired Subsidiary has waived any statute of limitations in respect of Taxes or requested or agreed to any extension of time with respect to a Tax assessment or deficiency.

(e)          The Company and the Acquired Subsidiaries are not a party to any Tax allocation or Tax sharing agreement. The Company and the Acquired Subsidiaries (i) have not been a member of an Affiliated Group filing a consolidated federal income Tax Return, and (ii) have no liability for the Taxes of any Person under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign law), as a transferee or successor, by contract or otherwise (other than pursuant to contracts entered into in the ordinary course of business not primarily related to Taxes).

(f)          The unpaid Taxes of the Company and the Acquired Subsidiaries, (i) do not, as of the Balance Sheet Date, exceed the reserve for Tax liability (other than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the face of the Company Financial Statements (rather than in any notes thereto), and (ii) do not exceed that reserve as adjusted for the passage of time through the Closing Date in accordance with the past custom and practice of the Company or any Acquired Subsidiary in filing its Tax Returns.

(g)          Neither the Company nor any Acquired Subsidiary is a party to any joint venture, partnership or other arrangement or contract that could be treated as a partnership for federal income Tax purposes.

(h)          The Company and the Acquired Subsidiaries have not entered into any sale leaseback or leveraged lease transaction that fails to satisfy the requirements of Revenue Procedure 2001-28 (or similar provisions of foreign law) or any safe harbor lease transaction.

(i)           All material elections with respect to Taxes affecting the Company and the Acquired Subsidiaries are disclosed or attached to a Tax Return of the Company or an Acquired Subsidiary, as applicable.

(j)           All private letter rulings or similar rulings, memoranda, or determinations issued by any Governmental Authority to the Company or any Acquired Subsidiary (including without limitation any rulings, memoranda or determinations issued by any state, local or foreign Governmental Authority to the Company) have been disclosed in Schedule 3.26(j), and there are no pending requests for any such rulings, memoranda or determinations.

(k)          Neither the Company nor any Acquired Subsidiary will be required to include any items of income in, or exclude any items of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of (i) any change in method of accounting for a taxable period ending on or prior to the Closing Date under Section 481(a) of the Code (or any corresponding or similar provision of state, local or foreign income Tax law); (ii) any “closing agreement” as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or foreign income Tax law); (iii) any installment sale or open transaction made on or prior to the Closing Date; (iv) any prepaid amount received on or prior to the Closing Date; (v) the cash basis method of accounting or percentage of completion method of accounting; or (vi) an election under Section 108(i) of the Code.

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(l)          There are no Tax-sharing agreements or similar arrangements (including indemnity arrangements) with respect to or involving the Company or any Acquired Subsidiary and, after the Closing Date, neither the Company nor any Acquired Sub will be bound by any such Tax-sharing agreements or similar arrangements entered into prior to the Closing or have any liability thereunder for amounts due in respect of periods prior to the Closing Date.

(m)          The Company and the Acquired Subsidiaries do not have and have not had a permanent establishment in any foreign country and do not engage and have not engaged in a trade or business in any foreign country.

(n)          The Company and the Acquired Subsidiaries have not entered into any transaction identified as a “reportable transaction” or “listed transaction” for purposes of Treasury Regulations Sections 1.6011-4(b). If the Company or any Acquired Subsidiary has entered into any transaction such that, if the treatment claimed by it were to be disallowed, the transaction would constitute a substantial understatement of federal income Tax within the meaning of Section 6662 of the Code, then it believes that it has either (i) substantial authority for the tax treatment of such transaction or (ii) reasonable basis for the tax treatment of such transaction and disclosed on its Tax Returns the relevant facts affecting the tax treatment of such transaction.

3.27         Other Information. The representations, warranties and other statements of the Company and the Existing Members contained in this Agreement and the Ancillary Agreements do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained herein and therein not misleading.

3.28         Securities Matters. Each Existing Member is an “accredited investor” as such term is defined under Rule 501 of Regulation D as promulgated under the Securities Act, and has such knowledge, sophistication and experience in financial and business matters that it is capable of evaluating the merits and risks of the receipt of the Buyer Securities and of protecting its interests in connection therewith. Each Existing Member has the ability to bear the economic risk of this investment, including complete loss of the investment.

3.29         No Additional Representations. Except for the representations and warranties made by the Company and the Existing Members in this Article 3, neither the Company nor any other Person makes any express or implied representation or warranty with respect to either the Company, any Subsidiary or the Business, and the Company hereby disclaims any such other representations or warranties. 

Article 4- REPRESENTATIONS AND WARRANTIES OF THE BUYER

The Buyer hereby represents and warrants to the Company and the Existing Members as of the date hereof and the Closing Date as follows:

4.1           Existence and Qualification. The Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada. The Buyer has the corporate power to own, manage, lease and hold its properties and to carry on its business as and where such properties are presently located and such business is presently conducted. The Buyer (i) qualifies as an accredited investor under Rule 501(a) of Regulation D, promulgated under the Securities Act, (ii) is acquiring the Common Membership Interests for its own account and for the purpose of investment and not with a view to distribution or resale thereof and (iii) acknowledges that (A) the Common Membership Interests have not been registered under the Securities Act or any state securities laws, (B) there is no public market for the Common Membership Interests and there can be no assurance that a public market will develop, and (C) it must bear the economic risk of its investment in the Common Membership Interests for an indefinite period of time and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the Common Membership Interests.

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4.2           Authority, Approval and Enforceability. This Agreement and each Ancillary Agreement to which the Buyer is a party has been duly executed and delivered by the Buyer and the Buyer has all requisite corporate power to execute and deliver this Agreement and all Ancillary Agreements executed and delivered or to be executed and delivered by the Buyer in connection with the transactions provided for hereby, to consummate the transactions contemplated hereby and by the Ancillary Agreements, and to perform its obligations hereunder and under the Ancillary Agreements. The execution, delivery and performance of this Agreement and the Ancillary Agreements and the consummation by the Buyer of the transactions contemplated hereby and thereby (including the issuance and delivery of the New Convertible Notes and the issuance of any Buyer Shares) have been duly and validly authorized and approved by all necessary company action on the part of the Buyer and no other proceeding on the part of the Buyer is necessary to authorize this Agreement, any Ancillary Agreement to which the Buyer is a party or to consummate the transactions contemplated hereby or thereby. Approval by the holders of a majority of the outstanding shares of common stock of Buyer for the potential issuance of 20% of the Buyer’s common stock is the only vote of stockholders of Buyer necessary to approve the transactions contemplated by this Agreement and any Ancillary Agreement, and such approval was obtained prior to the date hereof. This Agreement and each Ancillary Agreement to which the Buyer is a party constitutes, or upon execution and delivery will constitute, the legal, valid and binding obligation of the Buyer, enforceable in accordance with its terms, except as such enforcement may be limited by general equitable principles or by applicable bankruptcy, insolvency, moratorium or similar laws and judicial decisions from time to time in effect which affect creditors’ rights generally.

4.3           No Default or Consents. Except as otherwise set forth in Schedule 4.3 hereto, neither the execution nor delivery of this Agreement nor the carrying out of the transactions contemplated hereby will:

(a)          violate or conflict with any of the terms, conditions or provisions of the articles of incorporation or by-laws of the Buyer;

(b)          violate any Legal Requirements applicable to the Buyer;

(c)          violate, conflict with, result in a breach of, constitute a default under (whether with or without notice or the lapse of time or both), or accelerate or permit the acceleration of the performance required by, or give any other party the right to terminate, any Contract or Permit binding upon or applicable to the Buyer;

(d)          result in the creation of any Encumbrance on any properties of the Buyer; or

(e)          require the Buyer to obtain or make any waiver, consent, action, approval or authorization of, or registration, declaration, notice or filing with, any private non-governmental third-party or any Governmental Authority.

4.4           No Proceedings. No suit, action or other proceeding is pending or, to the Buyer’s knowledge, threatened before any Governmental Authority seeking to restrain the Buyer or prohibit its entry into this Agreement or prohibit the Closing, or seeking Damages against the Buyer or any of its properties as a result of the consummation of this Agreement.

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4.5           No Other Agreements. Except for the agreements expressly contemplated hereby, none of the Buyer or any of its Affiliates has any other agreements, arrangements or understandings with any director, officer, employee, consultant, stockholder or Affiliate of the Company in respect of the transactions contemplated hereby. Without limiting the generality of the foregoing, the Buyer agrees that no representation or warranty, express or implied, is made with respect to any financial projections, budgets or other forward looking statements. The Buyer further covenants, acknowledges and agrees that it (a) has made its own investigation into, and based thereon has formed an independent judgment concerning, the Company, the Acquired Subsidiaries and the Business, (b) has been given adequate access to such information about the Company, the Acquired Subsidiaries and the Business as the Buyer has reasonably requested, and (c) will not assert any claim against the Company, the Existing Members or any of their respective Affiliates, or seek to hold any such Person liable, for any inaccuracies, misstatements or omissions with respect to any information made available, delivered, provided or furnished to the Buyer or any of its Affiliates; provided, that this Section 4.6 shall not preclude the Buyer Indemnified Parties from asserting claims for indemnification in accordance with Section 6.3(a) (subject to the limitations contained in Sections 6.3 and 8.1).

4.6           Independent Investigation; No Other Representations and Warranties. The Buyer agrees that none of the Company, the Existing Members or any of their respective Affiliates have made and shall not be deemed to have made, nor has the Buyer or any of its Affiliates relied on, any representation, warranty, covenant or agreement, express or implied, with respect to the Company, the Acquired Subsidiaries, the Business or the transactions contemplated hereby, other than those representations, warranties, covenants and agreements explicitly set forth in Article 3 of this Agreement.

4.7           Buyer Shares. The New Convertibles and the Buyer Shares have been duly authorized. Upon issuance, the New Convertible Notes and the Buyer Shares will be validly issued, fully paid and nonassessable, and will not be subject to any option, call, preemptive, subscription or similar rights. At the Closing, Buyer will have sufficient authorized but unissued shares or treasury shares of Buyer Common Stock for the Buyer to meet its obligation to deliver the Buyer Shares under this Agreement and the Ancillary Agreements to which it is a party. Upon issuance of the Buyer Shares, the recipient thereof shall acquire good and valid title to the Buyer Shares. Upon issuance, the New Convertibles Notes and the Buyer Shares will be issued in compliance with applicable Legal Requirements. The issuance and sale of the New Convertible Notes and the Buyer Shares contemplated hereby does not conflict with or violate any rules or regulations of the Nasdaq Capital Market.

4.8           Brokers or Finders’ Fees. Except as otherwise set forth in Schedule 4.8 hereto, all negotiations relating to this Agreement and the transactions contemplated hereby have been carried out without the intervention of any Person acting on behalf of the Buyer in such a manner as to give rise to any valid claim against the Company or any Existing Member for any brokerage fee, finder’s fee or similar compensation.

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4.9           SEC Reports; Financial Statements. The Buyer has filed all reports required to be filed by it under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the twelve months preceding the date hereof (or such shorter period as the Buyer was required by law to file such materials) (the foregoing materials being collectively referred to herein as the “SEC Reports”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations of the Securities Exchange Commission promulgated thereunder, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The financial statements of the Buyer included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Securities Exchange Commission with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with GAAP during the periods involved, except as may be otherwise specified in such financial statements or the notes thereto, and fairly present in all material respects the financial position of the Borrower and its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial (individually and in the aggregate), year-end audit adjustments and the absence of footnotes.

Article 5- CONDITIONS TO THE EXISTING MEMBERS’ AND THE BUYER’S OBLIGATIONS

5.1           Conditions to Obligations of the Company. The obligations of the Company and the Members to carry out the transactions contemplated by this Agreement are subject, at the option of the Company, to the satisfaction or waiver of the following conditions:

(a)          As of the Closing Date, no suit, action or other proceeding (excluding any such matter initiated by or on behalf of the Company or any of the Existing Members) shall be pending or threatened before any Governmental Authority seeking to restrain the Company or prohibit the Closing or seeking Damages against the Existing Members as a result of the consummation of this Agreement.

(b)          The Buyer shall have made the payments of the Cash Consideration in accordance with Section 2.2 hereof.

(c)          The Buyer shall have issued and delivered the New Convertible Notes to the holders of the Senior Convertible Debt in accordance with Sections 2.2(c) of this Agreement.

(d)          The Buyer shall have issued the Buyer Shares to Venture Six, LLC and Wesley Jones in satisfaction of the Promissory Notes in accordance with Section 2.2(d) of this Agreement.

(e)          The Buyer shall have executed and delivered to the Company its executed signature page to the New Company LLC Agreement.

(f)          The Company shall have received a certificate of the Secretary of the Buyer certifying (i) the articles of incorporation and by-laws of the Buyer, (ii) the resolutions of the Board of Directors of the Buyer approving this Agreement and the Ancillary Agreements to which it is a party, (iii) the written consent of the stockholders of the Buyer approving this Agreement and the Ancillary Agreements to which it is a party (including the approval of the issuance of any Buyer Shares issuable pursuant to this Agreement or any of the Ancillary Agreements).

(g)          The Buyer shall have executed and delivered its executed signature page to the Registration Rights Agreement.

(h)          The Buyer shall have filed with The Nasdaq Capital Market an additional shares listing application covering all of the Buyer Shares issued or issuable under this Agreement and the Ancillary Agreements, and shall have received no objections from The Nasdaq Capital Market with respect to such listing application that are not resolved prior to the Closing Date.

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(i)          The Buyer shall have delivered the Information Statement pursuant to Section 14(c) of the Exchange Act to the stockholders of the Buyer notifying them of the approval, by written consent, of the stockholders of the Buyer to the issuance of the Buyer Shares issuable pursuant to this Agreement and the Ancillary Agreements and twenty (20) days shall have elapsed since the Information Statement was sent or given to the stockholders of Buyer.

5.2           Conditions to Obligations of the Buyer. The obligations of the Buyer to carry out the transactions contemplated by this Agreement are subject, at the option of the Buyer, to the satisfaction or waiver of the following conditions:

(a)          As of the Closing Date, no suit, action or other proceeding (excluding any such matter initiated by or on behalf of the Buyer) shall be pending or threatened before any Governmental Authority seeking to restrain the Buyer or prohibit the Closing or seeking Damages against the Buyer or the Company or its Properties as a result of the consummation of this Agreement.

(b)          The Company shall have furnished the Buyer with a certified copy of all necessary corporate resolutions and actions on its behalf approving the Company’s execution, delivery and performance of this Agreement.

(c)          No proceeding in which the Company shall be a debtor, defendant or party seeking an order for its own relief or reorganization shall be pending by or against such Person under any United States or state bankruptcy or insolvency law.

(d)          The Buyer shall have received the deliverables contemplated by Section 2.2 hereof.

(e)          The Company and the Existing Members shall have executed and delivered to the Buyer their executed signature pages to the New Company LLC Agreement.

(f)          The holders of the New Convertible Notes, the Existing Members, Wesley Jones and Venture Six, LLC shall have executed and delivered to the Buyer their executed signature pages to the Registration Rights Agreement.

Article 6- POST-CLOSING OBLIGATIONS

6.1           Further Assurances. Following the Closing, the Company, the Existing Members and the Buyer shall execute and deliver such other documents, and take such other action, as shall be reasonably requested by any other Party hereto to carry out the transactions contemplated by this Agreement.

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6.2           Publicity; SEC Filings; Listing. None of the Parties hereto shall issue or make, or cause to have issued or made, any public release or announcement concerning this Agreement or the transactions contemplated hereby, without the advance approval in writing of the form and substance thereof by each of the other Parties, except: (a) as required by any applicable Legal Requirement (in which case, so far as possible, there shall be consultation among the Parties prior to such announcement), including as noted in the next two sentences, and (b) to each Party’s advisors and lenders. The Parties understand and acknowledge that as a publicly held company, the Buyer will be required to file a Current Report on Form 8-K with the U.S. Securities and Exchange Commission to disclose the acquisition contemplated by this Agreement (the “Form 8-K”), and all of the Parties expressly consent to such timely filing. In addition, the Existing Members and the Company understand and acknowledge that in connection with such filing, the Buyer will be required to file the previous two (2) years of audited financial statements of the Company, along with required pro-forma financial statements in accordance with Rule 3-05 of Regulation S-X, no later than seventy-one (71) days after the date that the initial Form 8-K must be filed. Buyer shall use reasonable best efforts to ensure that the Form 8-K, and related financial statements, are timely filed. Buyer shall maintain the listing of the Buyer Shares and shall not take any action which would be reasonably expected to result in the delisting or suspension of the Buyer’s common stock on The Nasdaq Stock Market.

6.3           Post-Closing Indemnity by the Existing Members and by the Buyer.

(a)          Subject to the limitations set forth in Section 8.1, from and after the Closing, the Existing Members shall jointly and severally indemnify and hold harmless the Buyer and its Affiliates (including the Company), directors, officers, employees, agents and representatives (the “Buyer Indemnified Parties”) from and against any and all Damages arising out of or resulting from: (i) a breach of, or material inaccuracy in, any of the representations or warranties made by the Company or the Existing Members in this Agreement (it being agreed that, for purposes of this Section 6.3 and Section 8.1, all qualifications and exceptions relating to materiality, material adverse effect or words of similar import (but not specific dollar thresholds) shall be disregarded for purposes of calculating the amount of Damages resulting from such breach or inaccuracy, but for the avoidance of doubt, such materiality, material adverse effect and words of similar import shall not be disregarded for purposes of determining whether such breach or inaccuracy exists), (ii) a breach or default in performance by the Company of any pre-closing covenant or agreement contained in this Agreement or a breach or default of any Existing Member of any covenant or agreement of such Existing Member contained in this Agreement, (iii) the Excluded Subsidiaries, (iv) Indemnified Taxes and (v) the Excluded Liabilities.

(b)          Subject to the limitations set forth in Section 8.1, from and after the Closing, the Buyer shall indemnify and hold harmless the Existing Members and their Affiliates, directors, officers, employees, agents and representatives (the “Existing Member Indemnified Parties”) from and against any and all Damages arising out of or resulting from: (i) a breach of, or material inaccuracy in, any of the representations or warranties made by the Buyer in this Agreement and (ii) a breach or default in performance by the Buyer or the Company of any covenant or agreement of the Buyer or the Company (in the case of the Company, solely with respect to its post-Closing covenants or agreements) contained in this Agreement.

(c)          All representations and warranties set forth in this Agreement are contractual in nature only and subject to the sole and exclusive remedies set forth herein; provided that the use of any one right or remedy hereunder by any Party hereto shall not preclude or constitute a waiver of its right to use any or all other remedies hereunder. Except for actual fraud, the remedies provided in this Section 6.3 (which are subject to the limitations set forth in Section 8.1) shall be the sole and exclusive remedies of the Buyer Indemnified Parties and Existing Member Indemnified Parties and their heirs, successors and permitted assigns after the Closing with respect to this Agreement, including any breach or non-performance of any representation, warranty, covenant or agreement contained herein. No Buyer Indemnified Party or Existing Member Indemnified Party shall bring any claim with respect to this Agreement, whether in contract, tort or otherwise, other than (i) a claim of actual fraud against the party that committed such actual fraud, (ii) an indemnification claim made by the Buyer on behalf of the Buyer Indemnified Parties in accordance with Section 6.3(a), or (iii) an indemnification claim made by an Existing Member on behalf of the Existing Member Indemnified Parties in accordance with Section 6.3(b); provided, that any party may seek equitable relief, including the remedies of specific performance and injunction, with respect to the breach of any covenant or agreement to be performed after the Closing. For the avoidance of doubt, this Section 6.3 does not preclude any claim arising from any failure of (i) the Buyer to comply with its obligations under the New Convertible Notes or (ii) the Company to comply with its Put Right obligations as provided in the New Company LLC Agreement or the Buyer to comply with its guarantee of such Put Right obligations of the Company.

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6.4           Non-Disclosure.

(a)          General. In consideration of the payment to be made pursuant to Section 2.2 hereof, and in order to induce the Buyer to enter into this Agreement and to consummate the transactions contemplated hereby, each Existing Member hereby covenants and agrees that such Existing Member shall not divulge, communicate, use for any commercial purpose any Confidential Information or Trade Secrets (collectively “Company Information”) pertaining to the Company or any of its Affiliates. Any Company Information now known or hereafter acquired by any Existing Member with respect to the Company or any of its Affiliates shall be deemed a valuable, special and unique asset of the Company that is received by such party in confidence, and such party shall treat such Company Information as such under this Section 6.4(a). In addition, the Existing Members will use commercially reasonable efforts to:

(i)          receive and hold all Company Information in trust and in strictest confidence; and

(ii)         take reasonable steps to protect the Company Information from disclosure.

(b)          Injunction. It is recognized and hereby acknowledged by the parties hereto that a breach or violation by any Existing Member may cause irreparable harm and damage to the Buyer in a monetary amount which may be virtually impossible to ascertain. As a result, each Existing Member recognizes and hereby acknowledges that the Buyer shall be entitled to an injunction from any court of competent jurisdiction enjoining and restraining any breach or violation of any or all of the covenants set forth in Section 6.4(a) by any Existing Member, and that such right to injunction shall be cumulative and in addition to whatever other rights or remedies the Buyer and/or the Company may possess hereunder, at law or in equity. Nothing contained in this Section 6.4(b) shall be construed to prevent the Buyer and/or the Company from seeking and recovering from an Existing Member Damages sustained by it as a result of any breach or violation by such Existing Member of any of the covenants or agreements contained herein, and their respective controlled Affiliates and each of their respective past or present officers, managers, directors, stockholders, members, partners, employees and agents.

6.5           Director Nomination. At the next annual meeting of Buyer, the Buyer shall use best efforts to cause Louis Foreman to be nominated as a director on the Buyer’s Board of Directors.

6.6           Releases. Due to the consideration to be received by each Existing Member under this Agreement and the Ancillary Agreements, effective as of (and subject to) the Closing, each Existing Member, on behalf of himself, herself, or itself and each of his, her, or its respective controlled Affiliates, successors and assigns, hereby releases the Buyer, the Company, the Acquired Subsidiaries and their respective Affiliates, as well as each of their respective past or present officers, managers, directors, stockholders, members, partners, employees and agents (collectively, the “Released Parties”) from any and all actions, causes of action, suits, debts, dues, sums of money, accounts, reckoning, bonds, bills, liabilities, specialties, covenants, contracts, controversies, agreements, promises, variances, trespasses, damages, judgments, extents, executions, claims and demands which such Existing Member may have relating to, arising out of or in connection with any facts or circumstances directly or indirectly relating to the Company and the Acquired Subsidiaries, which existed on or prior to the Closing Date (the “Released Claims”), and agrees not to bring or threaten to bring or otherwise join in, and agrees to cause its, his or her controlled Affiliates and successors and assigns not to bring or threaten, any Released Claim against the Released Parties; provided, that the foregoing shall not (i) preclude such Existing Member from seeking recovery under any directors and officers’ insurance policy maintained by the Existing Members on behalf of the Company or any Acquired Subsidiary for claims made after Closing in respect of events occurring prior to Closing having the effect of converting the Company’s current claims-made policies into “occurrence based” coverage or (ii) apply to any rights of such Existing Member or such Existing Member’s Affiliates arising under this Agreement or any Ancillary Agreement. Furthermore, the release contained in this Section 6.6 specifically includes any claim relating to any unpaid compensation due and owing to Gregg Smith and Louis Foreman for services rendered in their capacities as Independent Contractors.

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6.7           Restrictive Covenants.

(a)          Each Existing Member acknowledges and agrees that: (i) the covenants contained in this Section 6.7 (the “Restrictive Covenants”) are being entered into by such Existing Member in connection with the transactions contemplated by this Agreement; and (ii) the Restrictive Covenants are a material inducement to Buyer to enter into this Agreement and the other Ancillary Agreements. Therefore, during the period commencing on the Closing Date and continuing thereafter for two (2) years after the Closing Date (the “Restricted Period”), each Existing Member shall not, directly or indirectly, for himself, herself or itself, or for, through or in association with any other Person:

(i)          Engage or participate in or be involved in any capacity, own any shares or equity interests in, manage, operate, control, finance, or be employed or engaged by or associated with, serve as a director, officer, manager, consultant, trustee or partner of or provide services or advice or other aid or assistance to, nor lend or permit their name to be used in connection with, any company, business, enterprise or other Person (other than in connection with such Existing Member’s ownership in or management of the Company) engaged in the Restricted Business, nor attempt to do or take, assist any other Person in doing or taking or permit any Affiliate to do or take any such action; provided, that, (i) this Section 6.7(a)(i) shall not preclude the product design, development, prototyping, marketing, crowdfunding, and manufacturing services that are currently being conducted by Enventys Partners, LLC (including the right of Enventys Partners, LLC to continue to perform such services), a subsidiary of Venture Six, LLC, and (ii) this Section 6.7(a)(i) shall not preclude such Existing Member from owning less than five percent (5%) of any class of securities of a publicly traded Person so long as such Existing Member does not participate in any way in the management, operation or control of such Person;

(ii)         (A) Solicit, induce or attempt to induce any employee or independent contractor of the Buyer, Company, any Acquired Subsidiary or their respective Affiliates to leave such employment, or (B) hire any Person who is or was an employee or independent contractor of the Buyer, Company or any Acquired Subsidiary at any time during the twelve-month period immediately prior to the date on which such hiring would take place, nor attempt to do or take, assist any other Person in doing or taking or permit any Affiliate to do or take any such action; provided that the foregoing shall not apply to (y) solicitations through search firms (including, without limitation, any online or other recruiting or employment agencies) or general advertisements (including, without limitation, through newspapers, trade publications, periodicals, radio, or internet sites (i.e., Monster.com or LinkedIn)) not specifically targeted at employees of the Buyer, Company, any Acquired Subsidiary or their respective Affiliates, or (z) solicitations or hiring of any Person who has not been employed by the Company or any Acquired Subsidiary in the twelve (12) months preceding such Existing Member’s solicitation or hiring of such Person;

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(iii)        Solicit, recruit or induce, in any case, for the purpose of enticing away or to ceasing or reducing doing business with the Buyer, the Company, the Acquired Subsidiaries or their respective Affiliates, any Person having a business relationship with the Buyer, the Company, the Acquired Subsidiaries or their respective Affiliates, nor attempt to do or take, assist any other Person in doing or taking or permit any Affiliate to do or take any such action; or

(iv)        Take any action designed to intentionally interfere with or disrupt in any way the business relationship between the Buyer, the Company or any of the Acquired Subsidiaries, on the one hand, and any inventor, customer, supplier, vendor, consultant, employee or independent contractor of the Company or any of the Acquired Subsidiaries.

(b)          Following the Closing, each Existing Member hereby covenants and agrees not to make or publish, orally or in writing or electronically, any derogatory or disparaging statements regarding the Buyer, the Company, the Acquired Subsidiaries or their respective Affiliates, nor attempt to do or take, assist any other Person in doing or taking or permit any Affiliate to do or take any such action; provided, however, that this clause is not intended to prevent (i) any Existing Member from testifying truthfully in response to a valid subpoena or other compulsory legal process or (ii) any Existing Member from enforcing such Existing Member’s rights under this Agreement and any other Ancillary Agreement.

(c)          If, at the time of enforcement of any of the Restrictive Covenants, a court holds that the duration, scope or area restrictions stated herein are unreasonable under circumstances then existing, the Parties agree that the maximum duration, scope or area reasonable under such circumstances shall be substituted for the stated duration, scope or area and that the court shall be allowed and directed to revise the restrictions contained herein to cover the maximum period, scope and area permitted by law.

(d)          Each Existing Member acknowledges that a breach of any of the Restrictive Covenants would cause irreparable harm to the Buyer, the Companies and the Acquired Subsidiaries, for which there is no adequate remedy at law. Each Existing Member agrees that, in the event of any breach or threatened breach of any of the Restrictive Covenants, the Buyer, the Company and the Acquired Subsidiaries may have the right, in addition to any other rights or remedies they may have, to seek a temporary restraining order or orders and preliminary or permanent injunctive relief to prevent breach(es) of the Restrictive Covenants and to specifically enforce the terms and provisions thereof without having to post bond or other security and without having to prove special damages or the inadequacy of the available remedies at law.

Article 7- TAX MATTERS

7.1           Transfer Taxes. All transfer, documentary, sales, use, stamp, registration and other such Taxes and fees (including any penalties, and interest and related expenses) incurred in connection with this Agreement shall be borne fifty percent (50%) by the Existing Members and fifty percent (50%) by the Buyer, and the Existing Members or the Buyer (as required by applicable law) will, at their own expense, file all necessary Tax Returns and other documentation with respect to all such transfer, documentary, sales, use, stamp, registration and other Taxes and fees, and, if required by applicable law, the other party will, and will cause its Affiliates to, join in the execution of any such Tax Returns and other documentation.

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7.2           Tax Contests.

(a)          If a claim relating to Taxes shall be made by any Governmental Authority that, if successful, would result in the Existing Members being required to indemnify a Buyer Indemnified Party (for purposes of this Article 7, an “Indemnified Taxpayer”) pursuant and subject to Sections 6.3 and 8.1, the Indemnified Taxpayer shall promptly notify the Existing Members in writing of such fact; provided, however, that any failure to give such notice will not waive any rights of the Indemnified Taxpayer except to the extent the rights of the indemnifying party are actually materially prejudiced.

(b)          The Existing Members shall have the right to defend the Indemnified Taxpayer against such claim with counsel of their choice satisfactory to the Indemnified Taxpayer so long as (A) the Existing Members notify the Indemnified Taxpayer in writing within fifteen (15) calendar days after the Indemnified Taxpayer has given notice of such claim that the Existing Members desire to defend the Indemnified Taxpayer against such claim and (B) the Existing Members conduct the defense of the claim actively and diligently.

(c)          Subject to the provisions of paragraph (ii) above, the Existing Members shall be entitled to prosecute such contest to a determination in a court of initial jurisdiction, and if the Existing Members shall reasonably request, to a determination in an appellate court.

(d)          The Existing Members shall not be entitled without the Buyer’s consent (such consent not to be unreasonably withheld, conditioned or delayed) to settle or to contest any claim relating to Taxes if the settlement of, or an adverse judgment with respect to, the claim would be likely, in the good faith judgment of the Existing Members, to cause the liability for any Tax of the Indemnified Taxpayer or of any Affiliate of the Indemnified Taxpayer for any taxable period ending after the Closing Date to increase (including, but not limited to, by making any election or taking any action having the effect of making any election, by deferring the inclusion of any amount in income or by accelerating the deduction of any amount or the claiming of any credit).

(e)          If any of the conditions in Section 7.2(b) above are or become unsatisfied, (A) the Indemnified Taxpayer may defend against such claims, and (B) the Existing Members will remain responsible for any Damages the Indemnified Taxpayer may suffer to the fullest extent provided in this Section 7.2, in each case, subject to the limitations set forth in Section 6.3 and 8.1 hereof.

7.3           Additional Agreements.

(a)          The Buyer shall, at all times following the Closing, (i) cause the Company to grant to the Existing Members access at all reasonable times to all of the Company’s books and records (including Tax workpapers, Tax Returns and correspondence with Governmental Authorities), including the right to take extracts therefrom and make copies thereof, to the extent relevant to Tax periods beginning before and ending on or before the Closing Date (“Pre-Closing Tax Periods”) and (ii) otherwise cooperate with the Existing Members in connection with any audit of Taxes with respect to Pre-Closing Tax Periods. The Buyer shall similarly cause the Company to grant to the Existing Members access to the Company’s records for periods on or after the Closing to the extent reasonably required to assess and/or determine the Existing Members’ obligations for indemnification under this Agreement. The Buyer and the Existing Members further agree, upon request, to use their commercially reasonable efforts to obtain any certificate or other document from any Governmental Authorities or any other Person as may be necessary to mitigate, reduce or eliminate any Tax that could be imposed (including with respect to the transactions contemplated by this Agreement).

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(b)          The Existing Members shall be responsible, at their expense, for preparing and filing, or causing the Company to prepare and file, all Tax Returns of the Company required to be filed after the Closing Date to the extent such returns relate to Pre-Closing Tax Periods. The Existing Members shall send the Buyer drafts of such Tax Returns for review and comment at least twenty (20) days prior to the due date for filing such Tax Returns (including any applicable extensions) and shall consider in good faith making such revisions to such Tax Returns as are reasonably requested by the Buyer. All Tax Returns to be prepared pursuant to this Section 7.3(b) shall be prepared in a manner consistent with the past practice of the Company, except as otherwise required by law. The Existing Members shall pay the amount due with respect to such Tax Returns.

(c)          The Company shall prepare, at the Company’s expense, all Tax Returns of the Company with respect to periods beginning before the Closing Date and ending after the Closing Date (“Straddle Periods”) and will send the Existing Members drafts of such Tax Returns for review and comment at least twenty (20) days prior to the due date for filing such Tax Returns (including any applicable extensions) and shall make such revisions to such Tax Returns as are reasonably requested by the Existing Members. At least five (5) days before the date on which Taxes are due with respect to any Tax Return covering a Straddle Period, the Existing Members shall pay to the Company the portion of the Taxes shown as due on such Tax Return related to the portion of the Straddle Period ending on the Closing Date. For purposes of this Agreement, with respect to Straddle Periods, any Tax based directly or indirectly on gross or net income, sales or receipts, imposed in respect of specific transactions, or employment, social security or other similar taxes shall be allocated between the portion of the Straddle Period ending on the Closing Date and the portion of the Straddle Period beginning on the day immediately after the Closing Date by assuming that the taxable period ended on the Closing Date, and any other Tax shall be allocated between the portion of the Straddle Period ending on the Closing Date and the portion of the Straddle Period beginning on the day immediately after the Closing Date based on the number of days in the Straddle Period ending on the Closing Date divided by the total number of days in the Straddle Period.

(d)          The Parties hereto acknowledge and agree that the purchase and sale of the Common Membership Interests by the Buyer shall be treated for U.S. federal and applicable state income tax purposes as a purchase of partnership interests from the Company. The Parties agree that there shall be an interim closing of the books of the Company under Section 706 of the Code effective as of the Closing Date, and accordingly, the income, gain, loss and deduction (and items thereof) for the portion of the taxable year of the Company in which the Closing occurs prior to and including the Closing Date shall be allocated solely to the Existing Members and not the Buyer. The Parties acknowledge that the tax year of the Company shall not terminate as a result of the purchase of Common Membership Interests by Buyer; therefore the U.S. federal income tax return of the Company for the period that includes the Closing Date will be a Tax Return for a Straddle Period.

(e)          The Buyer shall not amend any Tax Return for Pre-Closing Tax Period or extend the statute of limitations period in respect of any such Tax Return without the written consent of the Existing Members, which consent shall not be unreasonably withheld, conditioned or delayed.

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Article 8 - MISCELLANEOUS

8.1           Limitation on Liability; Claim Procedure.

(a)          The representations and warranties of the Company and the Buyer set forth in this Agreement shall survive the Closing until the date that is (i) with respect to the Fundamental Representations, sixty (60) days after the expiration of the longest permitted applicable statute of limitations under applicable Legal Requirements and (ii) with respect to all other representations and warranties set forth in this Agreement, eighteen (18) months after the Closing Date (each such survival date set forth in subclauses (i) and (ii) above, a “Representation and Warranty Survival Date”). All covenants or agreements required to be performed pursuant to this Agreement by any Party shall survive the Closing in accordance with their respective terms (the “Covenant Survival Date” and, together with the Representation and Warranty Survival Date, each, a “Survival Date”). No Party may bring a claim with respect to any representation, warranty, covenant or agreement unless such claim is made by the Indemnified Party to an Indemnifying Party prior to the applicable Survival Date. No Party shall have any liability whatsoever with respect to any such representations, warranties, covenants or agreements unless a claim is made by an Indemnified Party pursuant to Section 6.3 of this Agreement (and in accordance with Section 8.1(b) below) prior to the applicable Survival Date and if written notice of an indemnification claim has been provided in accordance herewith by any Party prior to the expiration of the applicable Survival Date, then such applicable representation, warranty or covenant shall survive solely as to such claim until such claim has been finally resolved.

(b)          For purposes of this Section 8.1, a Party making a claim for indemnity under Section 6.3 is hereinafter referred to as an “Indemnified Party” and the Party against whom such claim is asserted is hereinafter referred to as the “Indemnifying Party.” All claims by any Indemnified Party under Section 6.3 hereof shall be asserted and resolved in accordance with the following provisions. If any claim or demand for which an Indemnifying Party would be liable to an Indemnified Party is asserted against or sought to be collected from such Indemnified Party by such third-party, said Indemnified Party shall with reasonable promptness notify in writing the Indemnifying Party of such claim or demand stating with reasonable specificity the circumstances of the Indemnified Party’s claim for indemnification; provided, however, that any failure to give such notice will not waive any rights of the Indemnified Party except to the extent the rights of the Indemnifying Party are actually prejudiced or to the extent that any applicable Survival Period has expired without such notice being given. After receipt by the Indemnifying Party of such notice, then upon reasonable notice from the Indemnifying Party to the Indemnified Party the Indemnifying Party shall have the right to defend, manage and conduct any proceedings, negotiations or communications involving any claimant whose claim is the subject of the Indemnified Party’s notice to the Indemnifying Party as set forth above, and shall take all actions necessary, including, but not limited to, the posting of such bond or other security as may be required by any Governmental Authority, so as to enable the claim to be defended against without expense or other action by the Indemnified Party.

(c)          Upon request of the Existing Members where they are the Indemnifying Party, the Indemnified Party shall, to the extent it may legally do so and at its own expense (provided that such expenses shall be included in the calculation of Damages in the event and to the extent of an indemnifiable claim):

(i)          take such action as the Existing Members may reasonably request in connection with such action,

(ii)         allow the Existing Members to dispute such action in the name of the Indemnified Party and to conduct a defense to such action on behalf of the Indemnified Party, and

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(iii)        render to the Existing Members all such assistance as the Existing Members may reasonably request in connection with such dispute and defense.

(d)          Determination of Damages. In determining the amount of any Damages for which an Indemnified Party is entitled to assert a claim for indemnification hereunder, the amount of any such Damages shall be determined after deducting therefrom the amount of any insurance proceeds (after giving effect to any applicable deductible or retention) and other third-party recoveries actually received by the Indemnified Party or an Affiliate in respect of such Damages (which proceeds and recoveries the Indemnifying Party agrees to use diligent efforts to obtain) and the amount of any Tax Benefit related thereto; provided that the Buyer’s right to bring a claim hereunder to recover damages shall not be delayed as a result of pending resolutions of any insurance claims. As used herein, “Tax Benefit” shall mean any reduction of Taxes payable by or on behalf of the Indemnifying Party or any of its Affiliates as a result of any Damages. If an indemnification payment is received by an Indemnified Party, and such Indemnified Party or any Affiliate later receives insurance proceeds, other third-party recoveries or Tax Benefits in respect of the related Damages, the Indemnified Party shall immediately pay to the Indemnifying Party a sum equal to the lesser of (i) the actual amount of such insurance proceeds, other third-party recoveries and Tax Benefits or (ii) the actual amount of the indemnification payment previously paid with respect to such Damages. All parties shall use commercially reasonably efforts to mitigate the amount of Damages for which they may be entitled to indemnification hereunder.

(e)          Tax Treatment of Indemnity Payments. To the maximum extent permitted by law, it is the intention of the parties to treat any indemnity payment made under this Agreement as an adjustment to the purchase price for all purposes, and the parties agree to file their Tax Returns accordingly.

(f)          Limitations.

(i)          Notwithstanding anything to the contrary in this Agreement, (i) the Existing Members shall have no liability in respect of their indemnification obligations under Section 6.3(a)(i) of this Agreement (other than with respect to breaches of the Fundamental Representations) unless and until the aggregate amount of Damages exceeds $75,000 (the “Basket”), at which point the Existing Members shall be responsible for the entire amount of such Damages back to the first dollar of Damages (i.e. without giving effect to the Basket) but subject to the other limitations set forth herein, (ii) the Existing Members’ aggregate liability in respect of their indemnification obligations under Section 6.3(a)(i) of this Agreement (other than with respect to breaches of the Fundamental Representations) shall not exceed twenty percent (20%) of the Put Right Shares issuable to the Existing Members under the New Company LLC Agreement in respect of their Preferred Membership Interests and (iii) the Existing Members’ aggregate indemnification obligations under this Agreement (including in respect of breaches of their Fundamental Representations and the other indemnifiable items set forth in Section 6.3(a) of this Agreement) shall not exceed one hundred percent (100%) of the Put Right Shares issuable to the Existing Members under the New Company LLC Agreement in respect of their Preferred Membership Interests.

(ii)         Except for Indemnified Taxes, which shall be payable by Existing Members in cash, neither the Buyer nor any other Buyer Indemnified Party may seek recovery directly against an Existing Member in respect of the Existing Members’ indemnification obligations under this Agreement, and any recovery shall be limited to a right of offset against, and to reduce, the number of Put Right Shares to be paid to the Existing Members in respect of their Preferred Membership Interests. For purposes of the preceding sentence only, the Parties agree to value each Put Right Share using the Valuation Methodology in order to determine the reduction in the number of Put Right Shares and the related Put Right obligation. By way of example, assuming each Put Right Share is valued at $5, if the Existing Members’ were liable for Damages in respect of their indemnification obligations under this Agreement in an amount equal to $500,000, then the number of Put Right Shares underlying the Put Right would be reduced by 100,000 Buyer Shares. Any Indemnified Taxes which are paid in cash shall be applied and credited towards any indemnification cap.

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(iii)        If an Indemnified Party is entitled to indemnification under more than one clause or sub-clause of this Agreement with respect to Damages, then such Indemnified Party shall be entitled to only one indemnification or recovery for such Damages to the extent it arises out of the same set of circumstances and events; it being understood that this Section 8.1(f)(iii) is solely to preclude a duplicate recovery by an Indemnified Party.

8.2           Brokers. Regardless of whether the Closing shall occur, (a) the Existing Members shall jointly and severally indemnify and hold harmless the Buyer from and against any and all liability for any brokers or finders’ fees arising with respect to brokers or finders retained or engaged by the Company or the Existing Members in respect of the transactions contemplated by this Agreement, and (b) the Buyer shall indemnify and hold harmless the Company and the Existing Members from and against any and all liability for any brokers’ or finders’ fees arising with respect to brokers or finders retained or engaged by the Buyer in respect of the transactions contemplated by this Agreement.

8.3           Costs and Expenses. Each of the Parties to this Agreement shall bear its own expenses incurred in connection with the negotiation, preparation, execution and closing of this Agreement and the transactions contemplated hereby (the “Transaction Expenses”); provided, however, that the Existing Members shall be responsible for and shall discharge all Transaction Expenses incurred by or on behalf of the Company or any of the Existing Members (including the costs associated with the negotiation, preparation, delivery, and consummation of the Access Innovation Purchase Agreement and the transactions contemplated thereby and any other continuing obligations of the Company thereunder, other than with respect to the payment of the purchase price by the Company to the AI Selling Members as contemplated in this Agreement) (collectively, “Existing Members’ Expenses”). Following the Closing, the Company shall be responsible for any audit fees and expenses related to the preparation of the Company’s audited financial statements described in the last sentence of Section 6.2 of this Agreement and, for the avoidance of doubt, such audit fees and expenses shall not constitute Existing Members’ Expenses and the Existing Members shall have no obligation or liability in respect of such audit fees and expenses.

8.4           Notices. Any notice, request, instruction, correspondence or other document to be given hereunder by any Party hereto to another (herein collectively called “Notice”) shall be in writing and delivered personally or mailed by registered or certified mail, postage prepaid and return receipt requested, by facsimile or by FedEx, UPS or other reputable overnight courier, as follows:

IF TO THE BUYER:

Xspand Products Lab, Inc.
909 New Brunswick Avenue
Phillipsburg, New Jersey 08865
Attn: CEO
Email: Chris@SRMIdealab.com

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With a copy to (that shall not constitute notice):

Waller Lansden Dortch & Davis, LLP
511 Union Street, Suite 2700
Nashville, TN 37219
Attn: Marc J. Adesso, Esq.
Email: marc.adesso@wallerlaw.com
Facsimile: (615) 244-6804

IF TO THE COMPANY (following the Closing):

Edison Nation Holdings, LLC
c/o Xspand Products Lab, Inc.
909 New Brunswick Avenue
Phillipsburg, New Jersey 08865
Attn: CEO
Email: Chris@SRMIdealab.com

With a copy to (that shall not constitute notice):

Waller Lansden Dortch & Davis, LLP
511 Union Street, Suite 2700
Nashville, TN 37219
Attn: Marc J. Adesso, Esq.
Email: marc.adesso@wallerlaw.com
Facsimile: (615) 244-6804

IF TO THE COMPANY (prior to the Closing)
OR TO THE EXISTING MEMBERS:

c/o Evolution Corporate Advisors LLC
641 Lexington Avenue, Suite 1302

New York, NY 10022
Attn.: Gregg Smith

With a copy to (that shall not constitute notice):

Greenberg Traurig, P.A.
401 E. Las Olas Boulevard, Suite 2000
Fort Lauderdale, FL 33301
Attn: Mathew B. Hoffman, Esq.
Email: hoffmanma@gtlaw.com
Facsimile: (954) 759-5532

Each of the addresses for Notice purposes may be changed by providing appropriate notice hereunder. Notice given by personal delivery or registered or certified mail shall be effective upon actual receipt. Notice given by facsimile shall be effective upon transmission if successfully transmitted during the recipient’s normal business hours, or at the beginning of the recipient’s next normal business day after receipt if not transmitted during the recipient’s normal business hours. All Notices by facsimile shall be confirmed by the sender thereof promptly after transmission in writing by registered or certified mail, personal delivery, email FedEx, UPS or other reputable overnight courier.

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8.5           Governing Law.

(a)          THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF NEVADA WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICTING PROVISION OR RULE (WHETHER OF THE STATE OF NEVADA OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEVADA TO BE APPLIED.

(b)          EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING ARISING HEREUNDER.

8.6           Survival. Any provision of this Agreement which contemplates performance or the existence of obligations after the Closing Date, and any and all representations and warranties set forth in this Agreement, shall not be deemed to be merged into or waived by the execution and delivery of the instruments executed at the Closing, but shall expressly survive the Closing and shall be binding upon the party or parties obligated thereby in accordance with the terms of this Agreement, subject to any limitations expressly set forth in this Agreement.

8.7           Binding Effect and Assignment. This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective permitted successors and assigns; but neither this Agreement nor any of the rights, benefits or obligations hereunder shall be assigned, by operation of law or otherwise, by any Party hereto without the prior written consent of the other Party, provided, however, that nothing herein shall prohibit the assignment of the Buyer’s rights (but not its obligations) to any direct or indirect subsidiary or prohibit the assignment of the Buyer’s rights (but not obligations) to any lender as collateral for any indebtedness for borrowed money from such lender. The Persons referred in Section 6.3(a) and (b) of this Agreement are intended third-party beneficiaries of the covenants, agreements, representations and warranties in such Section. Except as otherwise expressly set forth in this Agreement, nothing in this Agreement, is intended to confer upon any person or entity other than the Parties and their respective permitted successors and assigns, any rights, benefits or obligations hereunder.

8.8           Exhibits and Schedules. The Exhibits and Schedules referred to herein are attached hereto and incorporated herein by this reference. The Schedules to Article 3 shall be arranged in sections and subsections corresponding to the numbered and lettered sections and subsections contained in Article 3. No modifications, qualifications, or exceptions to any representations or warranties disclosed on one Schedule to Article 3 shall constitute a modification, qualification, or exception to any other representations or warranties made in Article 3 of this Agreement unless it is reasonably apparent on its face that the disclosures on such Schedule applies to such other representations and warranties.

8.9           Multiple Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument, and will be effective when counterparts have been signed by the Buyer, the Existing Members and the Company and delivered to the Buyer, the Existing Members and the Company. A manual signature on this Agreement, an image of which shall have been transmitted electronically, will constitute an original signature for all purposes. The delivery of copies of this Agreement, including executed signature pages where required, by electronic transmission will constitute effective delivery of this Agreement.

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8.10         References and Construction.

(a)          Whenever required by the context, and is used in this Agreement, the singular number shall include the plural and pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural, as the identification of the Person may require. References to monetary amounts, specific named statutes and GAAP are intended to be and shall be construed as references to United States dollars, statutes of the United States of the stated name and U.S. GAAP, respectively, unless the context otherwise requires. When appearing in this Agreement, the terms “include”, “includes” and “including” shall be deemed to be followed by the words “without limitation” (whether or not they are in fact followed by such words) or words of like import.

(b)          The provisions of this Agreement shall be construed according to their fair meaning and neither for nor against any Party hereto irrespective of which Party caused such provisions to be drafted, and no rule of strict construction shall be applied against any Party. Each of the Parties acknowledges that it has been represented by an attorney in connection with the preparation and execution of this Agreement.

8.11         Attorneys’ Fees. Subject to Section 6.3 and Section 8.1 hereof, in the event any suit or other legal proceeding is brought for the enforcement of any of the provisions of this Agreement, the Parties hereto agree that the prevailing Party or Parties shall be entitled to recover from the other Party or Parties upon final judgment on the merits reasonable attorneys’ fees, including attorneys’ fees for any appeal, and costs incurred in bringing such suit or proceeding.

8.12         Severability. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction.

8.13         Entire Agreement; Amendments and Waivers. The Recitals to this Agreement are true and correct in all respects and are hereby incorporated by reference herein. This Agreement, together with all Exhibits and Schedules attached hereto, constitutes the entire agreement between and among the parties hereto pertaining to the subject matter hereof and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, of the parties, and there are no warranties, representations or other agreements between the parties in connection with the subject matter hereof except as set forth specifically herein or contemplated hereby. No supplement, modification or waiver of this Agreement shall be binding unless executed in writing by the Party to be bound thereby. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision hereof (regardless of whether similar), nor shall any such waiver constitute a continuing waiver unless otherwise expressly provided.

8.14         Termination. Either Buyer or the Company may terminate this Agreement if the Closing has not occurred by September 30, 2018; provided, however, (i) Buyer may not terminate this Agreement if the failure of the Closing to occur is due to the failure of Buyer to satisfy any of the conditions set forth in Section 5.1 and (ii) the Company may not terminate this Agreement if the failure of the Closing to occur is due to the failure of the Company to satisfy any of the conditions set forth in Section 5.2. If this Agreement is terminated, then all further obligations under this Agreement shall terminate and no Party shall have any liability in respect of the termination of this Agreement; provided that no such termination will relieve any Party of liability for its willful and material breach of any representation, warranty, covenant or agreement set forth in this Agreement prior to such termination.

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8.15         Waiver of Conflicts; Privilege.

(a)          Each of the Parties acknowledges and agrees that Greenberg Traurig, P.A. (“GT”) has acted as counsel to the Existing Members, the Company and its Subsidiaries in connection with the negotiation of this Agreement and consummation of the transactions contemplated hereby.

(b)          Buyer hereby consents and agrees to, and agrees to cause the Company and the Acquired Subsidiaries to consent and agree to, GT representing any of the Existing Members after the Closing, including with respect to disputes in which the interests of any of the Existing Members may be directly adverse to Buyer and its Subsidiaries (including, following the Closing, the Company and the Acquired Subsidiaries), and even though GT may have represented the Company and its Subsidiaries in a matter substantially related to any such dispute prior to the Closing. Buyer further consents and agrees to, and agrees to cause the Company and its Subsidiaries to consent and agree to, the communication by GT to the Existing Members in connection with any such representation of any fact (as opposed to legal analysis, legal strategy or otherwise privileged information for which the Existing Members do not continue to own the privilege pursuant to Section 8.15(d) below) known to GT arising by reason of GT’s prior representation of the Company or any of its Subsidiaries.

(c)          In connection with the foregoing, Buyer hereby irrevocably waives and agrees not to assert, and agrees to cause the Company and the Acquired Subsidiaries to irrevocably waive and not to assert, any conflict of interest arising from or in connection with: (i) GT’s prior representation of the Company or any of the Company’s Subsidiaries prior to the Closing and (ii) GT’s representation of the Existing Members prior to and after the Closing.

(d)          Buyer further agrees, on behalf of itself and, after the Closing, on behalf of the Company and its Subsidiaries, that all communications in any form or format between GT and the Company or its Subsidiaries, or any of their respective managers, directors, officers employees or other representatives, that relate in any way to the negotiation, documentation and consummation of the transactions contemplated by this Agreement or any dispute arising under this Agreement (collectively, the “Deal Communications”) shall be deemed to be retained and owned collectively by the Existing Members, shall be controlled by the Existing Members and shall not pass to or be claimed by Buyer, the Company or any of its Subsidiaries. All Deal Communications that are attorney-client privileged (the “Privileged Deal Communications”) shall remain privileged after the Closing and the privilege and the expectation of client confidence relating thereto shall belong solely to the Existing Members, shall be controlled by the Existing Members and shall not pass to or be claimed by Buyer, the Company or any of its Subsidiaries.

Article 9- DEFINITIONS

Capitalized terms used in this Agreement are used as defined in this Article 9 or as referenced elsewhere in this Agreement.

“Access Innovation Purchase Agreement” shall mean that certain Purchase Agreement, dated as of the date hereof, by and among the Company and certain other members of Access Innovation, LLC (the “AI Selling Members”) pursuant to which, among other things, the Company shall use Five Hundred Fifty Thousand Dollars ($550,000) of the Cash Consideration to purchase the membership interests of Access Innovation, LLC from the AI Selling Members.

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“Acquired Subsidiaries” shall mean Edison Nation, LLC, SafeTV Shop, LLC and Everyday Edisons, LLC.

“Affiliate” shall mean, with respect to any Person, any other Person controlling, controlled by or under common control with such Person. For purposes of this definition, the term “control” (including the terms “controlling,” “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 or policies of a Person, whether through the ownership of voting securities, by contract or otherwise, and such “control” will be presumed if the first Person owns fifty percent (50%) or more of the voting capital stock or other ownership interests, directly or indirectly, of such other Person.

“Agreement” shall have the meaning set forth in the preamble.

“Affiliated Group” shall mean any affiliated group within the meaning of Section 1504(a) of the Code or any similar group defined under a similar provision of state, local or foreign law.

“AI Selling Members” shall have the meaning set forth in the defined term “Access Innovation Purchase Agreement”.

“AllStar Agreement” shall mean that certain agreement, dated as of the date hereof, by and among the Company, the Acquired Subsidiaries and AMG pertaining to, among other things, (i) the cancellation and discharge of the AMG Note in exchange for the transfer, conveyance and assignment to AMG of the Company’s right, title and interest in and to the Peticare™ product and (ii) the termination of the Terminated AllStar Agreements.

“Ancillary Agreements” shall mean any or all of the exhibits to this Agreement and any and all other agreements, instruments or documents required or expressly contemplated by this Agreement to be executed and delivered in connection with the transactions contemplated by this Agreement (including the New Convertible Notes, the Registration Rights Agreement and the New Company LLC Agreement).

“AMG” shall have the meaning set forth in Section 2.3(b).

“AMG Note” shall have the meaning set forth in Section 2.3(b).

“Basket” shall have the meaning set forth in Section 8.1(f)(i)

“Business” shall have the meaning set forth in the first recital.

“Buyer Common Stock” means the common stock, par value $0.001 per share, of the Buyer.

“Buyer Shareholder Approval” shall have the meaning set forth in Section 2.5 (c).

“Buyer Shares” means any shares of Buyer Common Stock issuable by Buyer pursuant to this Agreement or any Ancillary Agreement, including, without limitation, the shares of Buyer Common Stock issuable to Wesley Jones and Venture Six, LLC pursuant to Section 2.2(e) of this Agreement, the shares of Buyer Common Stock issuable upon conversion of the New Convertible Notes and the Put Right Shares.

“Cash Consideration” shall mean Seven Hundred Thousand Dollars ($700,000).

45

“Code” shall mean the Internal Revenue Code of 1986, as amended.

“Common Membership Interests” shall have the meaning set forth in the fourth recital.

“Company” shall have the meaning set forth in the preamble.

“Company Information” shall have the meaning set forth in Section 6.4(a).

“Confidential Information” shall mean confidential data and confidential information (whether or not specifically labeled or identified as “confidential”), in any form or medium, relating to the Business, Products or Services of the Company or the Acquired Subsidiaries (which does not rise to the status of a Trade Secret under applicable law) which is or has been disclosed to any Existing Member or of which any Existing Member became aware as a consequence of or through its ownership of the Company and which has value to the Company and is not generally known to the competitors of the Company. Confidential Information includes, but is not limited to, the following: (a) internal business information (including information relating to strategic and staffing plans and practices, business, training, marketing, promotional and sales plans and practices, cost, rate and pricing structures and accounting and business methods), (b) identities of, individual requirements of, specific contractual arrangements with, and information about, the suppliers, distributors, customers, independent contractors or other business relations of the Company and their confidential information, (c) Trade Secrets, know-how, compilations of data and analyses, techniques, systems, research, records, reports, manuals, documentation, data and data bases relating thereto and (d) inventions, innovations, improvements, developments, methods, designs, analyses, drawings, reports and all similar or related information (whether or not patentable). Notwithstanding the foregoing, Confidential Information shall not include any data or information that (i) is or becomes generally available to the public other than as a result of a disclosure by any of the Existing Members or any of their respective Affiliates, (ii) is or becomes available to the Company, any of the Existing Members or their Affiliates or any of their respective employees, agents, accountants, legal counsel or other representatives or advisers on a nonconfidential basis prior to its disclosure by the Company, the Existing Members or their Affiliates or any of their respective employees, agents, accountants, legal counsel or other representatives or advisers or (iii) is required to be disclosed by the Company, the Existing Members or their Affiliates or any of their respective employees, agents, accountants, legal counsel or other representatives or advisers as a result of any applicable law, rule or regulation of any Governmental Authority or as is necessary to effect the transaction contemplated by this Agreement; and provided, further, that the Existing Members shall promptly notify the Buyer of any disclosure pursuant to this clause (iii).

“Contracts,” when described as being those of or applicable to any Person, shall mean any and all written contracts, agreements, commitments, franchises, understandings, arrangements, leases, licenses, registrations, mortgages, bonds, notes, guaranties or other undertakings to which such Person is a party or to which or by which such Person or the property of such Person is subject or bound, excluding any Permits.

“Covenant Survival Date” shall have the meaning set forth in Section 8.1(a).

“Damages” shall mean any and all damages, liabilities, losses, penalties, fines, judgments, claims, deficiencies, losses, costs and expenses and assessments (including, but not limited to, income and other Taxes, interest, penalties, and attorneys’ and accountants’ fees and disbursements) but excluding all consequential damages, punitive and exemplary damages, special damages or other similar items.

“Deal Communications” shall have the meaning set forth in Section 8.15(d).

46

“Encumbrances” shall mean any charge, claim, community property interest, pledge, condition, equitable interest, liens (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.

“Environmental Law” shall mean all existing and applicable Legal Requirements of federal, state and local Governmental Authorities concerning pollution or protection of the environment, public health and safety or employee health and safety, including Legal Requirements relating to emissions, discharges, releases or threatened releases of Hazardous Materials into ambient air, surface water, ground water or lands or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of, or exposure to Hazardous Materials.

“Exchange Act” shall have the meaning set forth in Section 2.5 (c).

“Excluded Liabilities” shall have the meaning set forth in Section 1.3.

“Excluded Subsidiaries” shall mean Edison Nation Medical, LLC and Access Innovation, LLC.

“Existing Company Membership Interests” shall have the meaning set forth in the second recital.

“Existing Members” shall have the meaning set forth in the preamble.

“Existing Members’ Expenses” shall have the meaning set forth in Section 8.3.

“Fundamental Representations” shall mean the following representations and warranties: Section 3.2; Sections 3.3(a) and (b); Section 3.4; Section 3.24; Section 4.2; Section 4.7; and Section 4.8.

“GAAP” means U.S. generally accepted accounting principles.

“Governmental Authorities” shall mean any nation or country (including, but not limited to, the United States) and any commonwealth, territory or possession thereof and any political subdivision of any of the foregoing, including, but not limited to, courts, departments, commissions, boards, bureaus, agencies, ministries or other instrumentalities.

“GT” shall have the meaning set forth in Section 8.15(a).

“Hazardous Material” shall mean all or any of the following: (a) substances that are defined or listed in, or otherwise classified pursuant to, any applicable laws or regulations as “hazardous substances,” “hazardous materials,” “Hazardous wastes,” “toxic substances” or any other formulation intended to define, list or classify substances by reason of deleterious properties such as ignitability, corrosivity, reactivity, carcinogenicity, reproductive toxicity or “EP toxicity”; (b) oil, petroleum or petroleum derived substances, natural gas, natural gas liquids or synthetic gas and drilling fluids, produced waters and other wastes associated with the exploration, development or production of crude oil, natural gas or geothermal resources; (c) any flammable substances or explosives or any radioactive materials; and (d) asbestos in any form or electrical equipment which contains any oil or dielectric fluid containing levels of polychlorinated biphenyls in excess of fifty parts per million.

47

“Indemnified Taxes” shall mean (i) all Taxes (or the non-payment thereof) of the Company and Acquired Subsidiaries for all Pre-Closing Tax Periods and the portion of all Straddle Periods ending on the Closing Date, (ii) any and all Taxes of any member of an affiliated, consolidated, combined, or unitary group of which the Company or any Acquired Subsidiary (or any predecessor of any of the foregoing) is or was a member on or prior to the Closing Date, and (iii) any and all Taxes of any person (other than the Company and Acquired Subsidiaries) imposed on the Company or the Acquired Subsidiaries as a transferee or successor, by contract (other than contracts entered into in the ordinary course of business not primarily related to Taxes) or pursuant to any law, rule or regulation, which Taxes relate to an event or transaction occurring before the Closing.

“Indemnified Party” shall have the meaning set forth in Section 8.1(b).

“Indemnified Taxpayer” shall have the meaning set forth in Section 7.2(a).

“Indemnifying Party” shall have the meaning set forth in Section 8.1(b).

“Information Statement” shall have the meaning set forth in Section 2.5 (c).

“Knowledge of the Company” shall mean the actual knowledge of the Company and the Existing Members, with respect to the matter in question, and such knowledge as any of them reasonably should have obtained upon commercially reasonable inquiry of employees of the Company and the Subsidiaries into the matter in question.

“Legal Requirements,” when described as being applicable to any Person, shall mean any and all laws (statutory, judicial or otherwise), ordinances, regulations, judgments, orders, directives, injunctions, writs, decrees or awards of any Governmental Authority, in each case as and to the extent applicable to such Person or such Person’s business, operations or properties.

“Material Adverse Effect” shall mean a material adverse effect on the Business, financial condition, Properties or liabilities of the Company or the Acquired Subsidiaries, taken as a whole provided, that in no event shall any of the following be taken into account in the determination of whether an Material Adverse Effect has occurred: (i) any change in any Legal Requirement or GAAP; (ii) any change resulting from conditions affecting any of the industries in which the Company operates or from changes in general business, financial, political, capital market or economic conditions (including any change resulting from any force majeure, hostilities, war or military or terrorist attack); (iii) any change resulting from the announcement or pendency of the transactions contemplated by this Agreement or attributable to the fact that the Buyer or any of its Affiliates is the prospective owner of the Common Membership Interests; (iv) any event, condition or other matter disclosed on a Schedule to this Agreement; (v) any change resulting from any action by the Company contemplated by this Agreement; or (vi) the failure of the Company to achieve any financial projections or budget.

“New Company LLC Agreement” shall have the meaning set forth in the fourth recital.

“New Convertible Notes” shall have the meaning set forth in Section 2.2(c).

“Notice” shall have the meaning set forth in Section 8.4.

“Organizational Documents” shall mean, with respect to the Company or any of its Subsidiaries, the Company’s or its subsidiary’s certificate of formation and operating agreement.

“Party” or “Parties” shall have the meaning set forth in the preamble.

48

“Permits” shall mean any and all permits, rights, approvals, licenses, authorizations, or orders under any Legal Requirement or otherwise granted by any Governmental Authority, including without limiting the foregoing, participation in Government Programs.

“Person” shall mean any individual, corporation, limited liability company, general or limited partnership, association, joint stock company, trust, joint venture, unincorporated organization or governmental entity (or any department, agency or political subdivision thereof).

“Pre-Closing Tax Periods” shall have the meaning set forth in Section 7.3 (c).

“Preferred Membership Interests” shall have the meaning set forth in the fourth recital.

“Privileged Deal Communications” shall have the meaning set forth in Section 8.15(d).

“Product” shall mean each product offered, distributed or sold by the Company or the Acquired Subsidiaries and any other products with respect to which the Company or the Acquired Subsidiaries has any liability, proprietary rights or beneficial interest.

“Promissory Notes” shall have the meaning set forth in Section 2.2(d).

“Properties” shall mean any and all properties and assets (real, personal or mixed, tangible or intangible) owned or used by the Company and the Acquired Subsidiaries.

“Put Right Shares” means the shares of Buyer Common Stock issuable to the Existing Members under the New Company LLC Agreement in satisfaction of the Put Right obligations of the Company guaranteed by the Buyer.

“Registration Rights Agreement” shall mean the Registration Rights Agreement, in substantially the form attached hereto as Exhibit C, by and among the Buyer, the holders of the New Convertible Notes, Wesley Jones, Venture Six, LLC and the Existing Members.

“Released Claims” shall have the meaning set forth in Section 6.6.

“Released Parties” shall have the meaning set forth in Section 6.6.

“Representation and Warranty Survival Date” shall have the meaning set forth in Section 8.1(a).

“Restricted Business” shall mean the business of operating an internet marketplace or other similar exchange or portal that provides a platform for Persons to submit ideas, concepts, technologies or processes intended to be evaluated for the purpose of licensing the idea, concept, technology or process.

“Restricted Period” shall have the meaning set forth in Section 6.7.

“Restrictive Covenants” shall have the meaning set forth in Section 6.7.

“SEC” shall have the meaning set forth in Section 2.5 (c).

“Securities Act” shall mean the Securities Act of 1933, as amended.

49

“Senior Convertible Debt” shall mean the senior convertible indebtedness of the Company in the aggregate principal amount, together with accrued but unpaid interest as of the date hereof, of $1,656,352.02 issued pursuant to that certain Amended and Restated Convertible Note Purchase Agreement, dated as of April 25, 2016, by and among the Company, GS Venture Partners, LLC, Wesley Jones, David Rozinov, Louis Foreman and Todd Stancombe.

“Service” shall mean each service offered or sold by the Company and the Acquired Subsidiaries, or under development, and any other services with respect to which the Company or any Acquired Subsidiary has any liability, proprietary rights or beneficial interest.

“Straddle Periods” shall have the meaning set forth in Section 7.3 (c).

“Subsidiary” shall mean, with respect to any Person, any corporation, association, partnership, limited liability company, trust or other entity of which fifty percent (50%) or more of the total voting power, whether by way of contract or otherwise, of shares of capital stock or other equity interests (including limited liability company or partnership interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly (e.g., through another Subsidiary), by (a) such Person (b) such Person and one or more of its Subsidiaries, or (c) one or more Subsidiaries of such Person. Notwithstanding the foregoing, for purposes of this Agreement, (i) Edison Nation Medical, LLC shall not be deemed to be a Subsidiary of the Company and the membership interests of Edison Nation Medical, LLC shall be distributed to the Existing Members prior to the Closing and (ii) Access Innovation, LLC shall not be deemed to be a Subsidiary of the Company and the membership interests of Access Innovation, LLC owned by the Company (after giving effect to the transactions contemplated by the Access Innovation Purchase Agreement) shall be distributed to the Existing Members in accordance with the New Company LLC Agreement promptly following the Closing.

“Survival Date” shall have the meaning set forth in Section 8.1(a).

“Tax” shall mean any federal, state, local or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Section 59A of the Code), vehicle, customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, unclaimed property, escheat, alternative or add-on minimum, estimated or other tax of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not.

“Tax Return” shall mean any return, declaration, report, claim for refund or information return or statement relating to Taxes, including any schedule or attachment thereto and including any amendment thereof.

“Terminated AllStar Agreements” shall mean (i) that certain Note Purchase Agreement, dated as of March 27, 2017 (as amended), by and among AllStar, the Company and the Acquired Subsidiaries and the Loan Documents (as defined in such Note Purchase Agreement) executed in connection therewith, (ii) that certain Exclusivity Agreement, dated as of March 27, 2014 (as amended), by and among AllStar, the Company, the Acquired Subsidiaries and Todd Stancombe and (iii) that certain Innovation Partner Master Services Agreement, dated as of April 25, 2016, by and among AllStar, the Company, the Acquired Subsidiaries, and Todd Stancombe.

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“Trade Secrets” shall mean information of the Company and the Acquired Subsidiaries including, but not limited to, technical or nontechnical data, formulas, patterns, compilations, programs, financial data, financial plans, product or service plans or lists of actual or potential customers or suppliers which (a) derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other Persons who can obtain economic value from its disclosure or use, and (b) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

“Transaction Expenses” shall have the meaning set forth in Section 8.3.

“Treasury Regulations” shall mean the regulations currently in force as final or temporary that have been issued by the U.S. Department of Treasury under its authority under the Code, and any successor regulations.

“Valuation Methodology” means the arithmetic average of the daily VWAP of a share of Buyer Common Stock for the fifteen (15) consecutive trading days immediately prior to payment of an amount in Buyer Common Stock for the Existing Members’ indemnity obligations hereunder.

“VWAP” shall mean the market value per share of Buyer Common Stock on such trading day as determined, using a volume-weighted average method.

**REMAINDER OF PAGE INTENTIONALLY LEFT BLANK**

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IN WITNESS WHEREOF, each of the undersigned has caused this Agreement to be duly executed on its behalf as of the Effective Date.

THE BUYER:
XSPAND PRODUCTS LAB, INC.
By:	/s/ Chris Ferguson
Name:  Chris Ferguson
Title:  Chief Executive Officer
THE COMPANY:
EDISON NATION HOLDINGS, LLC
By:	/s/ Louis Foreman
Name:  Louis Foreman
Title:  CEO

existing members:

VENTURE SIX, LLC		TWC CAPITAL, LLC
By:	/s/ Louis Foreman	By:	/s/ Chad D. Tillman
Name:  Louis Foreman		Name:  Chad D. Tillman
Title:  CEO		Title:  Manager
EE INVESTORS, LLC		FIVEOAKS CAPITAL, LLC
By:	/s/ Wes Jones	By:	/s/ Wes Jones
Name:  Wes Jones		Name:  Wes Jones
Title:  Managing Member		Title:  Managing Member
GS VENTURE PARTNERS LLC		MATTHEW WYNN
By:	/s/ Gregg Smith	/s/ Matthew Wynn
Name:  Gregg Smith		Matthew Wynn
Title:  Managing Member
LOUIS FOREMAN		TODD STANCOMBE
/s/ Louis Foreman		/s/ Todd Stancombe
Louis Foreman		Todd Stancombe
WES JONES		DAVID ROZINOV
/s/ Wes Jones		/s/ David Rozinov
Wes Jones		David Rozinov

[Signature Page to Membership Interest Purchase Agreement]

EX-10.2

Exhibit 10.2

FIFTH AMENDED AND RESTATED OPERATING agreement

OF

EDISON NATION HOLDINGS, LLC

FIFTH AMENDED AND RESTATED

OPERATING agreEment

OF

EDISON NATION HOLDINGS, llc

This Fifth Amended and Restated Operating Agreement (this “Agreement”) of Edison Nation Holdings, LLC (the “Company”), a limited liability company organized under the laws of the State of North Carolina, is entered into by and among the Preferred Members (as defined herein) and Xspand Products Lab, Inc. (“Xspand”) as of ___________, 2018 (the “Effective Date”).

RECITALS

WHEREAS, immediately prior to the Effective Date, the Company was governed by that certain Fourth Amended and Restated Operating Agreement (the “Prior Operating Agreement”) effective as of April 25, 2016; and

WHEREAS, the Company, the Preferred Members and Xspand have entered into that certain Membership Interest Purchase Agreement, dated as of June __, 2018 (the “Membership Interest Purchase Agreement”), pursuant to which, among other things, Xspand is purchasing common membership interests of the Company in consideration for, among other consideration, (i) the payment to the Company of $700,000, (ii) the assumption and/or discharge of certain of the Company’s borrowed money indebtedness on the terms set forth therein and (iii) the guarantee of the Company’s Put Right obligations to the Preferred Members on the terms and conditions set forth in this Agreement; and

WHEREAS, it is a condition precedent to the closing of the transactions contemplated by the Membership Interest Purchase Agreement (the “MIPA Closing”) that the Prior Operating Agreement be amended and restated on the terms and conditions set forth in this Agreement; and

WHEREAS, the Prior Operating Agreement may be amended in accordance with Section 10.1 of the Prior Operating Agreement, and the Company has obtained the requisite consents necessary to amend the Prior Operating Agreement.

NOW, THEREFORE, in consideration of the mutual premises and agreements herein contained and intending to be legally bound, the parties hereto hereby agree to amend and restate the Prior Operating Agreement as follows:

ARTICLE I

DEFINITIONS

Certain defined terms used in this Agreement are set forth in Exhibit A.

ARTICLE II

ORGANIZATION

2.01.       Formation.

The Company has been organized as a North Carolina (the “State of Formation”) limited liability company by the filing of its Articles of Organization with the North Carolina Secretary of State on February 28, 2007 under the name “Bouncing Brain Holdings Season One, LLC” pursuant to the Act as then in effect. The name of the Company was subsequently changed to “Bouncing Brain Holdings, LLC”, and thereafter, to “Edison Nation Holdings, LLC.”

2.02.       Name.

The name of the Company is “Edison Nation Holdings, LLC” and all Company business shall be conducted under that name or such other names as comply with applicable law that the Board of Managers may select from time to time.

2.03.       Registered Agent; Registered Office.

Chad D. Tillman, Esq. is the registered agent of the Company in the State of Formation, and his address, which shall serve as the registered office of the Company, is c/o Tillman Wright, PLLC, 11325 N. Community House Road, Suite 250, Charlotte, NC 28277.¹ This Section 2.03 may be amended from time to time by the Board of Managers to reflect each change in the identity or address of the Company’s registered agent in the State of Formation.

2.04.       Principal Office; Other Offices.

The principal office of the Company shall be at such place as the Board of Managers may designate from time to time, which need not be in the State of Formation. The location of the principal office of the Company is 520 Elliot Street, Charlotte, NC 28202. The Company may change its principal office or have such other offices as the Board of Managers may designate from time to time.

2.05.       Purposes.

The purposes of the Company are as follows:

(a) To invest in the production, development and marketing of (1) the television show Everyday Edisons, and (2) the Edison Nation web portal and online community, both of which involve the identification and development of inventions and patentable ideas;

¹ NTD: May want to change the agent after closing. {That’s your prerogative. Feel free to do so}

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(b) To invest in the development, marketing, licensing and/or sale of such inventions and such patentable ideas;

(c) To develop, manage, sell or license innovation solutions and service to corporate or institutional customers;

(d) To own equity interests in, among other entities, Edison Nation, LLC, Edison Nation Products, LLC and Safe TV Shop, LLC;

(e) To realize income to the Company to the overall benefit of its Members;

(f) To seek to maximize the income realized under paragraphs (a) through (e) above; and

(g) To conduct such other activities as deemed appropriate by its Board of Managers, which activities are legal for a limited liability company to conduct under the Act.

2.06.       Term.

The Company commenced its existence on February 28, 2007 and shall have perpetual existence, unless sooner terminated in accordance with the provisions of this Agreement.

2.07.       No State Law Partnership.

The Members intend that the Company shall not be a partnership or joint venture, and that no Member shall be a partner or joint venturer of any other Member, for any purpose other than federal, state, and local tax purposes, and the provisions of this Agreement shall not be construed otherwise.

2.08.       Liability to Third Parties.

No Member shall be liable for the debts, obligations, or liabilities of the Company, except to the extent expressly required under the Act or, in the case of Xspand, expressly set forth herein.

ARTICLE III

MEMBERSHIP; CAPITAL ACCOUNTS; REVALUATIONS

3.01.       Classes of Units.

(a)         The authorized Units shall consist of Preferred Units (the “Preferred Units”) and Common Units (the “Common Units”). The Preferred Units and Common Units shall have the terms set forth in this Agreement. All Units outstanding hereunder shall be validly issued, fully paid and non-assessable, to the fullest extent permitted by law.

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(b)         The number of authorized Preferred Units is Nine Hundred Ninety Thousand (990,000). The Preferred Units are held by the Preferred Members listed on Exhibit B hereto, with each Preferred Member holding the number of Preferred Units set forth opposite their respective names. No additional Preferred Units may be issued after the date hereof without the prior written consent of Preferred Members holding at least seventy-five percent (75%) of the then-outstanding Preferred Units.

(c)         The number of authorized Common Units is One Thousand (1,000). As of the date hereof, Xspand is the sole holder of Common Units and holds 1,000 Common Units.

3.02.       Additional Members; Additional Capital Contributions.

(a)       No Person shall be admitted to the Company as an additional Member without the written consent of the Board of Managers, which consent may be granted or withheld in the absolute and unreviewable discretion of the Board of Managers.

(b)       No Member shall be obligated to make any additional Capital Contributions to the Company; provided, however, the foregoing does not diminish Xspand’s guaranty of the Company’s Put Right obligations set forth in Section 7.02 hereof.

3.03.       Return of Capital Contributions; Special Rules.

Except as otherwise expressly provided herein, (i) no Member shall be entitled to the return of any part of its Capital Contribution or to be paid interest in respect of either its Capital Account balance or its Capital Contribution, (ii) no Member shall have any personal liability for the return of the Capital Contribution of any other Member, and (iii) no Member shall have any priority over any other Member with respect to the return of any Capital Contribution.

3.04.       Capital Accounts.

A Capital Account shall be established and maintained for each Member in accordance with the following provisions:

(a)       To each Member’s Capital Account, there shall be credited such Member’s Capital Contributions, such Member’s distributive share of Net Profits, any items in the nature of income or gain that are specially allocated pursuant to this Agreement, and the amount of any liabilities of the Company that are assumed by such Member, or that are secured by any assets of the Company distributed to such Member.

(b)       From each Member’s Capital Account, there shall be debited the amount of cash and the Gross Asset Value of any Company assets distributed to such Member pursuant to any provision of this Agreement, such Member’s distributive share of Net Losses, any items in the nature of expenses or losses that are specially allocated pursuant to this Agreement, and the amount of any liabilities of such Member assumed by the Company or that are secured by any property contributed by such Member to the Company.

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(c)       If ownership of any Membership Interest in the Company is assigned in accordance with the terms of this Agreement, the assignee shall succeed to the Capital Account of the assignor to the extent it relates to the assigned Membership Interest.

(d)       In determining the amount of any liability for purposes of Subsections 3.04(a) and (b) above, there shall be taken into account Code Section 752(c) and any other applicable provisions of the Code and Regulations.

(e)       To each Member's Capital Account, there shall be debited or credited, as the case may be, adjustments which are necessary to reflect a revaluation of Company assets to reflect the Gross Asset Value of all Company assets, as required by Regulations Section 1.704-1(b)(2)(iv)(f) and Section 3.05.

The foregoing provisions and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Code Section 704 and Regulations Section 1.704-1(b) and shall be interpreted and applied in a manner consistent with such Regulations. The Company shall make any adjustments that are necessary or appropriate to maintain equality between the Capital Accounts of the Members and the amount of Company capital reflected on the Company’s balance sheet as computed for book purposes in accordance with Regulations Section 1.704-1(b)(2)(iv)(q).

The initial Capital Account balance of the Common Member as of the date of this Agreement is: $[_____________] and the aggregate initial Capital Account balances of the Preferred Members as of the date of this Agreement is $[_____________].

3.05.       Gross Asset Value.

The Gross Asset Value of any asset of the Company shall be equal to the asset’s adjusted basis for federal income tax purposes, except as follows:

(a)       The initial Gross Asset Value of any asset contributed by a Member to the Company shall be the gross fair market value of such asset, as determined by the contributing Member and the Company.

(b)       The Gross Asset Values of all Company assets shall be adjusted to equal their respective gross fair market values in connection with (and to be effective immediately prior to) the following events: (i) the acquisition of an additional Membership Interest in the Company by any new or existing Member in exchange for more than a de minimis Capital Contribution; (ii) the distribution by the Company to a Member of more than a de minimis amount of property (including cash) as consideration for an interest in the Company; (iii) the grant of an interest in the Company (other than a de minimis interest) as consideration for the provision of services to or for the benefit of the Company by an existing Member acting in the capacity of a Member or by a new Member acting in the capacity of a Member or in anticipation of being a Member; or (iv) the liquidation of the Company within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g); provided, however, that an adjustment pursuant to clauses (i), (ii) or (iii) above shall be made only if the Board reasonably determines such adjustment is necessary or appropriate to reflect the relative economic interests of the Members in the Company.

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(c)       The Gross Asset Value of any Company asset distributed to any Member shall be the gross fair market value of such asset on the date of distribution.

(d)       The Gross Asset Values of Company assets shall be increased (or decreased) to reflect any adjustments to the adjusted bases of such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m) and ARTICLE IV; provided, however, that Gross Asset Values shall not be adjusted pursuant to this Subsection to the extent they were adjusted pursuant to Subsection 3.05(b) above in connection with a transaction that otherwise would result in an adjustment pursuant to this Subsection.

(e)       If the Gross Asset Value of an asset has been determined or adjusted pursuant to this Section 3.05, such Gross Asset Value shall thereafter be adjusted by the Depreciation taken into account with respect to such asset for purposes of computing Net Profits and Net Losses.

ARTICLE IV

ALLOCATION OF PROFITS AND LOSSES

4.01.       Net Income, Gains and Losses.

(a)       Subject to Section 4.01(b) and Section 4.02 of this Agreement, Net Profits and Net Losses of the Company for any Fiscal Year after taking into account all contributions and distributions made during such Fiscal Year shall be allocated among the Members in a manner such that the Capital Account of each Member, immediately after giving effect to such allocation, is, as nearly as possible, equal to the amount of the distributions that would be made to such Member pursuant to Section 5.01(b) if (i) the Company were dissolved and terminated; (ii) its affairs were wound up and the Company’s assets were sold for cash equal to their Gross Asset Value; (iii) all Company liabilities were satisfied (limited with respect to each nonrecourse liability to the Gross Asset Value of the assets securing such liability); and (iv) the net assets of the Company were distributed in accordance with Section 5.01(b) to the Members immediately after giving effect to such allocation.

(b)       Except as otherwise provided elsewhere in this Agreement, if upon the dissolution and termination of the Company pursuant to Article X of this Agreement and after all other allocations provided for in Section 4.01 have been tentatively made as if this Section 4.01(b) were not in this Agreement, a distribution to the Members under Article X of this Agreement would be different from a distribution to the Members in Section 5.01(b) of this Agreement, then Net Profit and Net Loss (or individual items thereof) for the Fiscal Year in which the Company dissolves and terminates pursuant to Article X of this Agreement shall be allocated among the Members in a manner such that the Capital Account of each Member, after taking into account all contributions and distributions made during such Fiscal Year, immediately after giving effect to such allocation, is, as nearly as possible, equal to the amount of the distributions that would be made to such Member pursuant to Section 5.01(b).

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4.02.       Regulatory Allocations.

Notwithstanding any other provision of this Agreement, the following special allocations shall be made in the following order:

(a)         Minimum Gain Chargeback. If there is a net decrease in Company Minimum Gain during any Fiscal Year, each Member shall be specially allocated items of Company income and gain for such year (and, if necessary, for subsequent years) in an amount equal to such Member’s share of the net decrease in Company Minimum Gain, as determined under Regulations Section 1.704-2(g). Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Member pursuant thereto. The items to be so allocated shall be determined in accordance with Regulations Sections 1.704-2(f)(6) and 1.704-2(j)(2). This Section 4.02 is intended to comply with the “minimum gain chargeback” requirements of Regulations Section 1.704-2(f) and shall be interpreted consistently therewith.

(b)         Chargeback Attributable to Member Nonrecourse Debt. If there is a net decrease in Member Minimum Gain during any Fiscal Year, each Member with a share of Member Minimum Gain at the beginning of such Fiscal Year shall be specially allocated items of income and gain for such Fiscal Year (and, if necessary, for subsequent Fiscal Years) in an amount equal to such Member’s share of the net decrease in Member Minimum Gain, determined in accordance with Regulations Section 1.704-2(i)(4) and (5). Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Member pursuant thereto. The items to be so allocated shall be determined in accordance with Regulations Sections 1.704-2(i)(4) and 1.704-2(j)(2)(i). This Section 4.02 is intended to comply with the “partner minimum gain chargeback” requirements of Regulations Section 1.704-2(i)(4) and shall be interpreted consistently therewith.

(c)         Qualified Income Offset. If any Member unexpectedly receives any adjustment, allocation or distribution described in Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6) which results in an Adjusted Capital Account Deficit for the Member, such Member shall be allocated items of income and book gain in an amount and manner sufficient to eliminate such Adjusted Capital Account Deficit as quickly as possible; provided that, an allocation pursuant to this Section 4.02 shall be made if and only to the extent that such Member would have an Adjusted Capital Account Deficit after all other allocations provided for in this Article IV have been tentatively made as if this Section 4.02 were not in the Agreement. This Section 4.02 is intended to constitute a “qualified income offset” as provided by Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.

(d)         Member Nonrecourse Deductions. Member Nonrecourse Deductions shall be allocated among the Members who bear the Economic Risk of Loss for the Member Nonrecourse Debt to which such Member Nonrecourse Deductions are attributable in the ratio in which they share Economic Risk of Loss for such Member Nonrecourse Debt. This provision is to be interpreted in a manner consistent with the requirements of Regulations Section 1.704-2(b)(4) and (i)(1).

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(e)         Nonrecourse Deductions. Any Nonrecourse Deductions (as defined in Regulations Section 1.704-2(b)(1)) for any Fiscal Year or other period shall be specially allocated to the Common Members in proportion to the Units held by such Common Members.

(f)         Regulatory Allocations. The allocations set forth in this Section 4.02 (the “Regulatory Allocations”) are intended to comply with certain requirements of the applicable Regulations promulgated under Code Section 704(b). Notwithstanding any other provision of this Agreement, the Regulatory Allocations shall be taken into account in allocating Net Profits, Net Losses and other items of income, gain, loss and deduction to the Members for Capital Account purposes so that, to the extent possible, the net amount of such allocations of Net Profits, Net Losses and other items shall be equal to the amount that would have been allocated to each Member if the Regulatory Allocations had not occurred.

4.03       Tax Allocations.

(a)         Generally. Except as provided in Section 4.03(b) and Section 4.03(c), allocations of income, gain, loss and deduction for federal and analogous state and local income tax purposes shall be allocated in the same manner that such items are allocated to the Members’ Capital Accounts under this Agreement.

(b)         Contributed Property. In accordance with Code Section 704(c) and the Regulations thereunder, income, gain, loss and deduction with respect to contributed assets shall be, solely for tax purposes, allocated among the Members so as to take account of any variation between the adjusted basis of such asset to the Company for federal income tax purposes and its initial Gross Asset Value.

(c)         Revalued Property. In the event that the Book Value of any Company asset is adjusted pursuant to Regulation Section 1.704-1(b)(2)(iv)(f), subsequent allocations of income, gain, loss, and deduction with respect to such asset shall be made among the Members in a manner that takes account of any variation between the adjusted tax basis of such asset and its Book Value in the same manner as required under Code Section 704(c) and the Regulations thereunder.

(d)         Elections and Decisions. Any elections or other decisions relating to such allocations shall be made by the Manager in any manner that reasonably reflects the purpose and intention of this Agreement; provided that the Board shall elect to apply an allocation method permitted by the Regulations under Code Section 704(c).

(e)         Allocations for Tax Purposes Only. Allocations pursuant to this Section 4.03 are solely for purposes of federal, state and local taxes and shall not affect, or in any way be taken into account in computing, any Member’s Capital Account or share of Profits and Losses, other items, or distributions pursuant to any provision of this Agreement.

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ARTICLE V

DISTRIBUTIONS

5.01.       Distributions.

Except as set forth in Section 5.02, distributions shall be made from the Company to the Members at such time and in such amounts as the Board of Managers shall determine.

(a)         All distributions of Distributable Cash shall be made to the Common Members pro rata based on their respective Common Units.

Notwithstanding the foregoing, to the extent of Distributable Cash, the Company shall, prior to making any distributions under (or by reference to) this Section 5.01(a), advance to each Member an amount equal to (i) that portion of the Company’s net taxable income allocated to such Member (including taxable income allocated to such Member pursuant to Section 704(c) of the Code) for a taxable period multiplied by (ii) the sum of the highest federal and state income tax rates for an individual resident of [New York City], less (iii) the amount of any distributions to such Member previously made by the Company with respect to such taxable period. For the sake of clarification, such earlier advance to a Member shall be deemed an advance of and netted against the next distributions due to such Member under this Agreement.

(b)         All distributions of proceeds from a Realization Event shall be made in the following order of priority:

(i) First, to the Preferred Members pro rata based on their respective Preferred Units, until the aggregate amount distributed to the Preferred Members pursuant to this clause (b) equals the product of (i) the average closing price of the Xspand Common Stock for the five (5) Trading Days immediately preceding the date of such Realization Event (the “Xspand Share Value”) multiplied by (ii) the Fixed Share Amount and multiplied by (iii) the Applicable Percentage; and

(ii) Second, to the Common Members pro rata based on their respective Common Units.

Any distribution made to the Preferred Members of the full amounts to which they are entitled to receive pursuant to Section 5.01(b)(i) shall be in redemption of the outstanding Preferred Units. In the event the Preferred Members have not exercised their Put Right prior to the consummation of a Realization Event, the Company shall have the option, in lieu of distributing the proceeds from the Realization Event to the Preferred Members, to instead have Xspand issue to each Preferred Member shares of Xspand Common Stock equal to the amount distributable to such Preferred Member pursuant to Section 5.01(b)(i) divided by the Xspand Share Value.

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5.02.                      Special Distribution of Access Innovation Membership Interests. On the date of the MIPA Closing, the Company is using Five Hundred Fifty Thousand Dollars ($550,000) of the proceeds received in connection with the Membership Interest Purchase Agreement to purchase certain membership interests in Access Innovation, LLC from certain members of Access Innovation, LLC pursuant to the AI Purchase Agreement. Immediately following the consummation of the transactions contemplated by the AI Purchase Agreement, the Company shall distribute all of the membership interests of Access Innovation, LLC owned by it to the Preferred Members pro rata based on their respective Preferred Units.

ARTICLE VI

MANAGEMENT

6.01.       Management.

(a)         Management and control of the Company shall be vested exclusively in a board of managers (the “Board of Managers”), and the business and affairs of the Company shall be managed under the direction of the Board of Managers. Subject to Section 6.02 hereof, the Board of Managers shall retain always the authority to make management decisions notwithstanding any delegation of duties by the Board of Managers to employees or agents. The Board of Managers may, but shall not be required to, designate one or more officers or other agents who shall have such duties and shall perform such functions as may be delegated to them by the Board of Managers from time to time, and who shall serve at the sole discretion of the Board of Managers. Any officers or other agents who are appointed by the Board of Managers may be removed, at any time and from time to time, by the Board of Managers, with or without cause. The Board of Managers hereby appoints the following officers of the Company: _______, _______, _________ and ________. For the avoidance of doubt, the Company is a manager-managed, as opposed to a member-managed, limited liability company, and as such, the Members do not, in their capacities as Members, have any voting or management rights, except to the extent expressly set forth in this Agreement or pursuant to applicable law.

(b)         The size of the Board of Managers shall initially be fixed at five (5) as specified in this Section 6.01(b). The Managers comprising the Board of Managers shall be appointed as follows:

(i) One (1) of the Managers of the Board of Managers shall be appointed, and may only be removed, with or without cause, by Preferred Members holding a majority of the Preferred Units (the “Preferred Designee”); provided, that, the Preferred Members shall cease to have the right to designate the Preferred Designee from and after the time the Preferred Units have been redeemed, in full, pursuant to Section 7.01 of this Agreement (for the avoidance of doubt, the Preferred Units shall only be deemed to be redeemed, in full, if the Preferred Members have been paid the aggregate redemption price for the redemption of all of the outstanding Preferred Units in accordance with Section 7.01 of this Agreement). [Louis Foreman] shall be appointed as the initial Preferred Designee; and

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(ii) Four (4) of the Managers of the Board of Managers shall be appointed, and may be removed, with or without cause, by Xspand (the “Xspand Designees”). _______, _______, _________ and ________ shall be appointed as the initial Xspand Designees.

(c)         The appointment of any Manager, or the removal of any Manager, shall be effective only upon written notification thereof given by the Persons that appointed or removed such Manager as specified in Section 6.01(b) above. Any Manager may resign at any time by giving written notice to the other Managers (the “Resignation Notice”). The resignation of such Manager shall take effect upon delivery of the Resignation Notice or at such later time as shall be specified in the Resignation Notice and, unless otherwise specified therein, the acceptance of such resignation by the Company or the other Managers shall not be necessary to make it effective. The resignation of a Manager shall not affect the resigning Manager’s rights, if any, as a Member and shall not constitute such resigning Manager’s resignation as a Member, if applicable. The Person or Persons having the right to appoint a Manager shall have the sole right to fill any vacancy as a result of such removal or resignation.

(d)         Unless waived by all of the Managers, each Manager shall be given at least twenty four (24) hours’ notice of any special meeting and of any regularly scheduled meeting (which notice shall state the date, hour and location of the meeting and all actions to be considered at the meeting), and each Manager shall be permitted to participate in any meeting by telephone or similar communications equipment. Any Manager may call a meeting of the Board of Managers. Any action may be taken by the Board of Managers without a meeting if authorized by the written consent of all of the Managers. Notice of a meeting need not be given to any Manager who signs a waiver of notice or a consent to holding the meeting or an approval of the minutes thereof, whether before or after the meeting, or who attends the meeting without protesting, prior thereto or at its commencement, the lack of notice to such Manager. No action may be taken at any meeting of the Board of Managers unless such action was specified in the notice of such meeting that was delivered to the Managers in accordance with this Section 6.01(d).

(e)         A majority of the Managers constituting the Board of Managers shall constitute a quorum for the transaction of business. Each Manager shall be entitled to cast one (1) vote. Except as otherwise provided in this Agreement, the majority vote of the Managers cast at any meeting at which there is a quorum present shall be the act of the Board of Managers. A majority of the Managers present may adjourn any meeting of the Board of Managers to another date, time or place, whether or not a quorum is present. If a meeting is adjourned pursuant to this Section 6.01(e) due to the absence of a quorum, such adjournment shall be for at least 24 hours. No notice need be given of any adjourned meeting, except (i) 24 hours’ notice shall be given to each of the members of the Board of Managers not present at the adjourned meeting, and (ii) if the date, time or place of the adjourned meeting are not announced at the time of adjournment, the notice referred to in clause (i) above shall be given to each member of the Board of Managers, whether or not present at the adjourned meeting.

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(f)          A Person shall cease to serve as a Manager upon (i) his or her death, (ii) a ruling by a court of competent jurisdiction that he or she is incompetent, (iii) his or her resignation in accordance with Section 6.01(c) above or (iv) the removal of such Manager by the Person(s) appointing such Manager.

(g)         Managers shall not receive any fee or other compensation for services rendered (except with respect to employment compensation otherwise payable to Managers that are employees of the Company) on behalf of the Company, but shall promptly be reimbursed for all reasonable out-of-pocket costs, fees and expenses incurred by them in performing their services under this Agreement.

6.02.       Approval of Certain Actions.

Notwithstanding anything to the contrary contained in this Agreement, until such time as the Preferred Units have been redeemed in full, the Company and the Board of Managers shall not take, and the Company shall cause its direct and indirect subsidiaries to not take, any of the following actions without the express written consent of Preferred Members holding seventy-five percent (75%) of the Preferred Units:

(a)         amend, alter, repeal or waive any provision of this Agreement to the extent Preferred Unit approval is required under Section 12.08;

(b)         liquidate, dissolve or wind-up the business and affairs of the Company or any of its subsidiaries;

(c)         effect, or obligate the Company or any subsidiary to effect, any Realization Event, unless the Company or any subsidiary provides the Preferred Members with at least thirty (30) days advance written notice prior to the consummation of such Realization Event, so that the Preferred Members have the opportunity to exercise their Put Right;

(d)         issue any additional Preferred Units or any securities convertible into or exercisable or exchangeable for additional Preferred Units;

(e)         file any petition seeking relief for the Company or any subsidiary under any law for the relief of debtors;

(f)          any split, combination or division of the Preferred Units; or

(g)         agree to do any of the foregoing.

6.03.       Liability of Parties.

No Manager, Member, any Representative of a Manger or Member, nor any officer of the Company shall be liable to the Company or to any other Member for (a) the performance of, or the omission to perform, any act or duty on behalf of the Company if, in good faith, such Person determined that such conduct was in the best interests of the Company, and such conduct did not constitute fraud, gross negligence, reckless or intentional misconduct or a material breach of this Agreement by such Person; (b) the termination of the Company and this Agreement pursuant to the terms hereof; or (c) the performance of, or the omission to perform, any act on behalf of the Company in good-faith reliance on the advice of legal counsel, accountants, or other professional advisors to the Company. The foregoing sentence does not apply to the obligations of Xspand pursuant to Section 7.02 of this Agreement.

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6.04.       Indemnification of Members and Officers.

The Company, its receiver, or its trustee, as the case may be, shall indemnify, defend, and hold the Managers, the Members and their Representatives and each officer of the Company (and his/her/its/their respective heirs, personal representatives, and successors)(collectively, the “Indemnified Parties”) harmless from and against any expense, loss, damage, or liability incurred or connected with any claim, suit, demand, loss, judgment, liability, cost, or expense (including reasonable attorneys’ fees) arising from or related to the Company or any act or omission of the Indemnified Parties on behalf of the Company (exclusive of acts taken as an independent contractor for the Company) and amounts paid in settlement of any of the foregoing; provided that the same were not the result of fraud, gross negligence, reckless or intentional misconduct or a breach of this Agreement on the part of the Indemnified Party against whom a claim is asserted. The Company may advance to any Indemnified Party the costs of defending any claim, suit, or action against such Indemnified Party if the Indemnified Party undertakes to repay the funds advanced, with interest, should it later be determined that the Indemnified Party is not entitled to indemnification under this Section 6.04. For the avoidance of doubt, Xspand shall not be entitled to indemnification in respect of its obligations pursuant to Section 7.02 of this Agreement.

6.05.       Conflicts of Interest.

Subject to the other express provisions of this Agreement and, as applicable, the Membership Interest Purchase Agreement, each Member and Manager of the Company at any time and from time to time may engage in and possess interests in other business ventures of any and every type and description, independently or with others, including ones in competition with the Company, with no obligation to offer to the Company or to any other Member or Manager the right to participate therein.

ARTICLE VII

PUT RIGHT; PUT RIGHT GUARANTY

7.01.       Put Right.

The Preferred Members have a put right, on the terms and conditions set forth in this Section 7.01 (the “Put Right”), to cause the Company to redeem, from time to time, all or any portion of the Preferred Units then held by the Preferred Members. To exercise the Put Right, the Requisite Preferred Holders, on behalf of the Preferred Members, shall notify the Company and Xspand, in writing (a “Put Notice”), that the Preferred Members are electing to sell to the Company that number of Preferred Units specified in such Put Notice for the Put Price. The Company shall be required to consummate the purchase of the Preferred Units specified in such Put Notice for the Put Price. The closing of any purchase and sale of the Preferred Units specified in such Put Notice shall take place at the principal office of the Company (or such other location agreed to by the Company and the Requisite Preferred Holders) on a date determined by the Company, but in any event no later than ten (10) days following receipt of such Put Notice. At such closing, the Company shall deliver to the Preferred Members the Put Price (which shall be allocated to the Preferred Members on a pro rata basis based on the number of Preferred Units being redeemed from each Preferred Member) either (y) in cash by wire transfer of immediately available funds to accounts designated by the Preferred Members or (z) through the issuance and delivery to the Preferred Members of a number of shares of Xspand Common Stock equal to the Applicable Percentage of the Fixed Share Amount with respect to such Put Notice. For the avoidance of doubt, the Requisite Preferred Holders may deliver multiple Put Notices from time to time until such time as all of the Preferred Units have been redeemed from the Preferred Members.

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7.02.       Guaranty of Put Right Obligations. Xspand hereby unconditionally guarantees the punctual payment, when due, of (i) the Put Price in respect of any Put Notices delivered by the Requisite Preferred Holders pursuant to Section 7.01 of this Agreement on or prior to the three (3) year anniversary of the Effective Registration Date and (ii) the Company’s obligations under Section 5.01(b)(i) of this Agreement (collectively, the “Obligations”). Without limiting the generality of the foregoing, Xspand’s liability shall extend to all amounts that constitute part of the Obligations and would be owed by the Company to the Preferred Members but for the fact that they are unenforceable or not allowable due to the existence of an Insolvency Proceeding involving the Company. With respect to any Put Notice or any Obligations arising under Section 5.01(b)(i) of this Agreement, Xspand shall satisfy the Obligations to the Preferred Members in respect thereof, in Xspand’s discretion, either (y) in cash (with such cash payment to be made to the Preferred Members as contemplated by Section 7.01 or 5.01(b)(i), as applicable) or (z) through the issuance and delivery to the Preferred Members of a number of shares of Xspand Common Stock equal to, (i) in the case of Section 7.01, the Applicable Percentage times the Fixed Share Amount with respect to such Put Notice and (ii) in the case of Section 5.01(b)(i), the amount distributable to the Preferred Members pursuant to Section 5.01(b)(i) divided by the Xspand Share Value.

This Section 7.02 is a continuing guaranty and shall (a) remain in full force and effect until such time as all of the Preferred Units have been redeemed from, and the full purchase price in respect thereof, paid to the Preferred Members; (b) be binding upon Xspand and its successors and assigns; and (c) inure to the benefit of and be enforceable by the Preferred Members and their successors, pledgees, transferees and assigns. Any sale by Xspand of its Common Units shall not discharge its obligations under this Section 7.02

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ARTICLE VIII

RESTRICTIONS ON TRANSFERS

8.01.       Restrictions on Transfers.

Except as otherwise expressly permitted in this Article VIII, no Member may directly or indirectly Transfer all or any portion of his or its Membership Interest in the Company without the prior written consent of the Board of Managers, which consent may be granted or withheld in the absolute discretion of the Board of Managers. Notwithstanding the foregoing or anything contained in this Agreement to the contrary, no Transfer by Xspand of its Membership Interests shall relieve Xspand of its obligations set forth in Section 7.02 above.

8.02.       Permitted Transfers.

Subject to compliance with Section 8.03 of this Agreement and subject to the last sentence of Section 8.01 above, a Member shall be free at any time to Transfer all or any portion of his or its Membership Interest to: (a) a Person who already is a Member at the time of Transfer; (b) in the case of a Member that is a natural person, any one or more of an existing Member’s Family Members; and (c) in the case of a Member that is not a natural person, any one or more of an existing Member’s Affiliates. A trust or estate that has received a Membership Interest from a Member may Transfer the Membership Interest to a beneficiary of the trust or estate; provided, that, the beneficiary is a Family Member of the Member who transferred the Membership Interest to the trust or estate. A Member that is a natural person also may Transfer all or any portion of his Membership Interest upon his death or involuntarily by operation of law. For purposes of this Article VIII, a Member’s “Family Members” shall mean the Member’s spouse, ancestors, issue (including adopted children and their issue) and trusts or custodianships for the primary benefit of the Member himself or such spouse, ancestors, or issue (including adopted children and their issue).

8.03.       Conditions to Transfer.

Notwithstanding any other provision of Section 8.01 or 8.02, no Transfer shall be permitted, except in the case of a Transfer on death or involuntarily by operation of law, unless the following additional conditions precedent are satisfied (or waived by the Board of Managers in its sole discretion):

(a)         The transferor and transferee shall execute and deliver to the Company such documents and instruments of conveyance as may be necessary or appropriate in the opinion of counsel to the Company to effect such Transfer and to confirm the agreement of the transferee to be bound by the provisions of this Agreement (including this Article VIII); and

(b)         At the Board of Managers’ request, the transferor shall provide an opinion of counsel satisfactory to the Company to the effect that such Transfer will not violate any applicable securities laws regulating the transfer of securities or any of the provisions of any agreement to which the Company is a party.

8.04.       Admission of Transferee as Member.

Subject to the other provisions of this Article VIII, a transferee of a Membership Interest shall be admitted to the Company as a Member only upon satisfaction of all of the following conditions:

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(a)         The Membership Interest with respect to which the transferee is admitted was acquired by means of a Transfer permitted under Section 8.01 or 8.02;

(b)         The transferee becomes a party to this Agreement as a Member (such transferee to become a party to this Agreement in the same capacity as the transferor with respect to the securities acquired from the transferor) and executes such documents and instruments as the Company reasonably may request as necessary or appropriate to confirm such transferee as a Member in the Company and such transferee’s agreement to be bound by the terms and conditions hereof; and

(c)         The transferee furnishes copies of all instruments effecting the Transfer, opinions of counsel and such other certificates, instruments, and documents as the Company may require.

8.05.       Effect of Disposition.

Following any Transfer of a Member’s entire Membership Interest, the Member shall have no further rights as a Member of the Company. In addition, following any permitted Transfer of a portion of a Member’s Membership Interest, the Member shall have no further rights as a Member of the Company with respect to that portion Transferred.

8.06.       Rights of Unadmitted Transferee.

A transferee of a Membership Interest who is not admitted as a Member pursuant to this Article VIII shall be entitled to allocations and distributions attributable to the Membership Interest Transferred to the same extent as if the transferee were a Member, but shall have no right to participate in the management of the Company, or to vote or give a consent on any matter, if any, calling for the approval or consent of the Members (and notwithstanding anything in this Agreement to the contrary any requisite percentage or majority shall be computed as if the Transferred Membership Interest did not exist), shall have no right to any information or accounting of the affairs of the Company, shall not be entitled to inspect the books or records of the Company, and shall not have any of the other rights of a Member under the Act or this Agreement.

8.07.       Prohibited Transfers.

Any purported Transfer that is not permitted under this Article VIII shall be null and void and of no effect whatsoever. In the case of a Transfer or attempted Transfer that is not such a permitted Transfer, the parties engaging or attempting to engage in such Transfer shall be liable to indemnify and hold harmless the Company and the other Members from all cost, liability, and damage that any of such indemnified persons may incur (including incremental tax liability and attorneys’ fees and expenses) as a result of such Transfer or attempted Transfer and efforts to enforce the indemnity granted hereby.

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ARTICLE IX

WITHDRAWAL

9.01.       Restrictions on Withdrawal.

Subject to the Put Right of the Preferred Members, no Member shall have the right to withdraw from the Company as a Member or to terminate its or his Membership Interest.

ARTICLE X

DISSOLUTION, LIQUIDATION, AND TERMINATION

10.01.     Dissolution.

(a)         The Company shall be dissolved automatically and its affairs shall be wound up upon the first to occur of the following:

(i) at any time upon approval by (i) the Board of Managers, (ii) Xspand and (iii) Preferred Members Holding at least seventy-five percent (75%) of the outstanding Preferred Units, if any, or upon the written consent of the sole remaining Member; or

(ii) ninety (90) days after the date on which the Company no longer has at least one (1) Member, unless a new Member is admitted to the Company during such ninety (90) day period.

10.02.     Liquidation.

(a)         Upon a dissolution of the Company requiring the winding-up of its affairs, the Board of Managers shall wind up its affairs. The assets of the Company shall be sold within a reasonable period of time to the extent necessary to pay or to provide for the payment of all debts and liabilities of the Company, and may be sold to the extent deemed practicable and prudent by the Board of Managers.

(b)         The net assets of the Company remaining after satisfaction of all such debts and liabilities and the creation of any reserves under Section 10.02(d), shall be distributed to the Members in accordance with Section 5.01(b), after giving effect to all contributions, distributions, and allocations for all periods, including the period during which such liquidation occurs. Any property distributed in kind in the liquidation shall be valued at fair market value.

(c)         Distributions to Members pursuant to this Article X shall be made by the end of the taxable year of the liquidation, or, if later, ninety (90) days after the date of such liquidation in accordance with Regulations Section 1.704-1(b)(2)(ii)(g).

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(d)       The Board of Managers may withhold from distribution under this Section 10.02 such reserves as are required by applicable law and such other reserves for subsequent computation adjustments and for contingencies, including contingent liabilities relating to pending or anticipated litigation or to Internal Revenue Service examinations. Any amount withheld as a reserve shall reduce the amount payable under this Section 10.02 and shall be held in a segregated interest-bearing account (which may be commingled with similar accounts). The unused portion of any reserve shall be distributed with interest thereon pursuant to this Section 10.02 after the Board of Managers shall have determined that the need therefor shall have ceased.

(e)       Deficit Capital Accounts. If a Member has a deficit balance in its Capital Account after giving effect to all contributions, distributions, and allocations for all taxable years, including the year in which the liquidation occurs, the Member shall have no obligation to make any contribution to the capital of the Company with respect to such deficit, and such deficit shall not be considered a debt owed by such Member to the Company or to any other Person, for any purpose whatsoever.

ARTICLE XI

BOOKS AND RECORDS, ACCOUNTING, AND TAX ELECTIONS

11.01.     Maintenance of Records.

The Company shall maintain true and correct books and records, in which shall be entered all transactions of the Company, and shall maintain all other records necessary, convenient, or incidental to recording the Company’s business and affairs, which shall be sufficient to record the allocation of Net Profits and Net Losses and distributions as provided for herein. All decisions as to accounting principles, accounting methods, and other accounting matters shall be made by the Board of Managers. The Company shall keep a current list of all Members and their Capital Contributions, adjusted for any withdrawals, which shall be available for inspection by all Members. Each Member or its authorized representative may examine any of the books and records of the Company during normal business hours upon reasonable notice for a proper purpose reasonably related to the Member’s interest in the Company.

11.02.     Reports to Members.

As soon as practicable after the end of each Fiscal Year, the Company shall cause to be prepared and sent to each Member a report setting forth in sufficient detail all such information and data with respect to the Company for such Fiscal Year as shall enable each Member to prepare its income tax returns. Any financial statements, reports and tax returns required pursuant to this Section 11.02 shall be prepared at the expense of the Company.

11.03.     Tax Elections; Determinations Not Provided for in Agreement.

The Board of Managers shall be empowered to make or revoke any elections now or hereafter required or permitted to be made by the Code or any state or local tax law, and to decide in a fair and equitable manner any accounting procedures and other matters arising with respect to the Company or under this Agreement that are not expressly provided for in this Agreement. Notwithstanding the foregoing, absent the consent of (y) Xspand and (z) Preferred Members Holding at least seventy-five percent (75%) of the outstanding Preferred Units, the Company shall not elect to be treated as a subchapter “c” corporation.

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11.04.     Partnership Representative.

Xspand is hereby designated the “partnership representative” (within the meaning of amended Section 6225(a)(1) of the Code) of the Company. In acting as partnership representative, with respect to any item arising in respect of any taxable year beginning on or after the date hereof, Xspand shall be subject to the direction and control of the Board of Managers. The partnership representative shall (i) inform the Members of all administrative and judicial proceedings pertaining to the determination of the Company’s tax items and will provide the Members with copies of all notices received from the Internal Revenue Service (or any other taxing authority) regarding the commencement of a Company-level audit or a proposed adjustment of any of the Company’s tax items and (ii) provide the Members with reasonable notice of material events occurring in the course of Company tax audits and the other proceedings in which it participates in such capacity.

ARTICLE XII

GENERAL PROVISIONS

12.01.     Notices.

Except as expressly provided in this Agreement, all notices, consents, waivers, requests, or other instruments or communications given pursuant to this Agreement shall be in writing, shall be signed by the party giving the same, and shall be delivered by hand; sent by registered or certified United States mail, return receipt requested, postage prepaid; or sent by a recognized overnight delivery service. Such notices, instruments, or communications shall be addressed, in the case of the Company, to the Company at its principal place of business and, in the case of any of the Members, to the address set forth in the Company’s books and records; except that any Member may, by notice to the Company and each other Member, specify any other address for the receipt of such notices, instruments, or communications. Except as expressly provided in this Agreement, any notice, instrument, or other communication shall be deemed properly given when sent in the manner prescribed in this Section 12.01. In computing the period of time for the giving of any notice, the day on which the notice is given shall be excluded and the day on which the matter noticed is to occur shall be included. If notice is given by personal delivery, then it shall be deemed given on the date personally delivered to such Person. If notice is given by mail in the manner permitted above, it shall be deemed given three (3) days after being deposited in the mail addressed to the Person to whom it is directed at the last address of the Person as it appears on the records of the Company, with prepaid postage thereon. If notice is given by nationally recognized overnight courier delivery service, then it shall be deemed given on the date actually delivered to the address of the recipient by such nationally recognized overnight courier delivery service. If notice is given in any other manner authorized herein or by law, it shall be deemed given when actually delivered, unless otherwise specified herein or by law.

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12.02.     Interpretation.

(a)         ARTICLE, Section, and Subsection headings are not to be considered part of this Agreement, are included solely for convenience of reference and are not intended to be full or accurate descriptions of the contents thereof.

(b)         Use of the terms “herein,” “hereunder,” “hereof,” and like terms shall be deemed to refer to this entire Agreement and not merely to the particular provision in which the term is contained, unless the context clearly indicates otherwise.

(c)         Use of the word “including” or a like term shall be construed to mean “including, but not limited to.”

(d)         Exhibits and schedules to this Agreement are an integral part of this Agreement.

(e)         Words importing a particular gender shall include every other gender, and words importing the singular shall include the plural and vice-versa, unless the context clearly indicates otherwise.

(f)         Any reference to a provision of the Code, Regulations, or the Act shall be construed to be a reference to any successor provision thereof.

12.03.     Governing Law; Jurisdiction; Venue.

This Agreement and all matters arising herefrom or with respect hereto, including, without limitation, tort claims (the “Covered Matters”) shall be governed by, and construed in accordance with, the internal laws of State of [New York], without reference to the choice of law principles thereof. Each of the parties hereto irrevocably submits to the co-exclusive jurisdiction of the federal and state courts located in [New York County] in the State of [New York] for the purpose of any suit, action, proceeding or judgment relating to or arising out of the Covered Matters. Service of process in connection with any such suit, action or proceeding may be served on each party hereto anywhere in the world by the same methods as are specified for the giving of notices under this Agreement. Each of the parties hereto irrevocably consents to the jurisdiction of any such court in any such suit, action or proceeding and to the laying of venue in such court. Each party hereto irrevocably waives any objection to the laying of venue of any such suit, action, or proceeding brought in such courts and irrevocably waives any claim that any such suit, action, or proceeding brought in any such court has been brought in an inconvenient forum.

12.04.     Binding Agreement.

This Agreement shall be binding upon and inure to the benefit of the Members and their respective heirs, executors, administrators, personal representatives, and successors.

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12.05.     Severability.

Each item and provision of this Agreement is intended to be severable. If any term or provision of this Agreement is determined by a court of competent jurisdiction to be unenforceable for any reason whatsoever, that term or provision shall be modified only to the extent necessary to be enforced, such term or provision shall be enforced to the maximum extent permitted by law, and the validity of the remainder of this Agreement shall not be adversely affected thereby.

12.06.     Entire Agreement.

This Agreement supersedes any and all other understandings and agreements, either oral or in writing, between the Members with respect to the Membership Interests (including the Prior Operating Agreement) and constitutes the sole agreement between the Members with respect to the Membership Interests.

12.07.     Further Action.

Each Member shall execute and deliver all papers, documents, and instruments and perform all acts that are necessary or appropriate to implement the terms of this Agreement and the intent of the Members.

12.08.     Amendment or Modification.

This Agreement (including the exhibits hereto) may be amended or modified from time to time only by the written consent of (y) Xspand and (z) Preferred Members holding at least seventy-five percent (75%) of the outstanding Preferred Units. Notwithstanding the foregoing, no amendment shall create any personal liability or personal obligation of any Member for the debts, obligations, or liabilities of the Company not otherwise provided under the Act without such Member’s written consent.

12.09.     Membership Certificates.

The Company is hereby authorized to issue certificates representing the Units in the Company in accordance with the Act, but is not required to issue such certificates to evidence ownership of Units.

12.10.     Counterparts.

This Agreement may be executed in original or by facsimile in several counterparts and, as so executed, shall constitute one agreement, binding on all of the parties hereto, notwithstanding that all of the parties are not signatory to the original or to the same counterpart.

[Signature Pages Follow]

 -22-

IN WITNESS WHEREOF, the parties hereto have executed this Fifth Amended and Restated Operating Agreement in multiple counterparts as of the day and in the year first above written, and each of such counterparts, when taken together, shall constitute one and the same instrument.

PREFERRED MEMBERS:
VENTURE SIX, LLC
By:
	Name:
	Title:
FIVEOAKS CAPITALS, LLC
By:
	Name:
	Title:
TWC CAPITAL, LLC
By:
	Name:
	Title:
EE INVESTORS, LLC
By:
	Name:
	Title:
GS VENTURE PARTNERS, LLC
By:
	Name:
	Title:
Matthew Wynn

 -23-

IN WITNESS WHEREOF, the parties hereto have executed this Fifth Amended and Restated Operating Agreement in multiple counterparts as of the day and in the year first above written, and each of such counterparts, when taken together, shall constitute one and the same instrument.

COMMON MEMBER:
XSPAND PRODUCTS LAB, INC.
By:
	Name:
	Title:

 -24-

Exhibit A

For purposes of this Agreement, the following terms shall have the following meanings:

“Act” means the North Carolina Limited Liability Company Act,² as codified in Chapter 57D of the north Carolina General Statutes, as now enacted or hereafter amended.

“Adjusted Capital Account Deficit” means, with respect to any Person, the deficit balance, if any, in such Person’s Capital Account as of the end of the relevant Fiscal Year, after giving effect to the following adjustments:

(a)         credit to such Capital Account any amounts which such Person is obligated to restore pursuant to any provision of this Agreement or is deemed to be obligated to restore pursuant to the next to the last sentence of Sections 1.704-2(g)(1) and 1.704-2(i)(5) of the Regulations after taking into account any changes during such year in Company Minimum Gain and Member Minimum Gain; and

(b)         debit to such Capital Account the items described in Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6) of the Regulations.

The foregoing definition of Adjusted Capital Account Deficit is intended to comply with the provisions of Section 1.704-1(b)(2)(ii)(d) of the Regulations and shall be interpreted consistently therewith.

“Affiliate” means, with respect to a Person, any other Person that, directly or indirectly, controls, is controlled by, or is under common control with, the specified Person. As used in this definition, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of an entity, whether through ownership of voting securities, by contract or otherwise. Ownership of more than fifty percent (50%) of the beneficial interests of an entity shall be conclusive evidence that control exists. For purposes of this definition, “Affiliate” shall include, with respect to any natural Person, the spouse, parents, siblings and children of such Person or trusts for the benefit of any such Person.

“AI Purchase Agreement” means that certain Purchase Agreement, dated as of June __, 2018, by and among the Company, The Scott Boilen Irrevocable Childrens Trust, BGS Capital, LLC, Cayuga, LLC and G.J. Henry Ventures, LLC.

“Applicable Percentage” means, (i) with respect to any Put Notice, a fraction, the numerator of which is the number of Preferred Units subject to the Put Notice and the denominator of which is 990,000 (i.e., the outstanding number of Preferred Units on the date of this Agreement) and (ii) with respect to any distribution to the Preferred Members under Section 5.01(b), a fraction, the numerator of which is the number of Preferred Units then issued and outstanding and the denominator of which is 990,000 (i.e., the outstanding number of Preferred Units as of the date of this Agreement). The foregoing is subject to adjustment as a result of any Preferred Unit split, combination or dividend.

² NTD: Please consider converting to NV or DE as part of this transaction. {Feel free to change it post-closing}

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“Bankruptcy Code” means the United States Bankruptcy Code (11 U.S.C. § 101, et.) as amended and as in effect from time to time, and any successor statute.

“Business Day” means a day, other than a Saturday or Sunday, on which commercial banks in [New York City, New York] are open for the general transaction of business.

“Capital Account” means, with respect to any Member, the Member’s Capital Contribution (if any), increased or decreased as provided in Section 3.04 of this Agreement.

“Capital Contribution” means, with respect to any Member, the amount of money and the initial Gross Asset Value of any property other than money contributed to the Company by that Member.

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

“Common Members” means all Members holding Common Units.

“Company Minimum Gain” has the meaning ascribed to the term “partnership minimum gain” in the Regulations Section 1.704-2(d).

“Depreciation” means an amount equal to the depreciation, amortization or other cost recovery deduction allowable with respect to an asset for the Fiscal Year or other period, except that if the Gross Asset Value of an asset differs from its adjusted tax basis at the beginning of the Fiscal Year or other period, Depreciation will be an amount which bears the same ratio to the beginning Gross Asset Value as the Federal income tax depreciation, amortization or other cost recovery deduction for the Fiscal Year or other period bears to the beginning adjusted tax basis; provided, however, that if the Federal income tax depreciation, amortization or other cost recovery deduction for the Fiscal Year or other period is zero, Depreciation will be determined by reference to the beginning Gross Asset Value using any reasonable method.

“Distributable Cash” means the cash or other property of the Company that the Board of Managers determines is available for distribution to the Members after deducting any amounts which the Board of Managers determines are required to maintain working capital, pay liabilities, expenses and other cash outlays of the Company and maintain reserves for liabilities, expenses and other cash outlays of the Company, but shall not include cash or other property which the Board of Managers determines represent the net proceeds of a Realization Event.

“Economic Risk of Loss” shall have the meaning specified in Regulations Section 1.752-2.

 -26-

“Effective Registration Date” means the date that the registration statement covering the Guaranty Shares is declared effective date by the Securities Exchange Commission.

“Fixed Share Amount” means 990,000 shares of Xspand Common Stock, (as subject to adjustment for any stock split, stock dividend, stock combination or similar adjustment to the Xspand Common Stock), and subject to reduction in the same manner as the Put Right Shares (as defined in the Membership Interest Purchase Agreement) pursuant to Section 8.01(f)(ii) of the Membership Interest Purchase Agreement.

“Fiscal Year” means the calendar year; but, upon the organization of the Company, “Fiscal Year” means the period from the first day of the term of the Company to the next following December 31, and upon dissolution of the Company, shall mean the period from the end of the last preceding Fiscal Year to the date of such dissolution.

“Gross Asset Value” means, with respect to any asset, the asset’s adjusted basis for federal income tax purposes, adjusted as provided in this Agreement.

“Guaranty Shares” means shares of Xspand Common Stock, issuable by Xspand in satisfaction of its guaranty of the Company’s Put Right obligations, which in the aggregate are equal to the Fixed Share Amount.

“Indebtedness” means with respect to any Person, without duplication, any of the following, in each case whether or not then due and payable:

(a)         all indebtedness for borrowed money or indebtedness issued in exchange for borrowed money (including all obligations for principal, interest (including all accrued interest through the date of repayment, premiums, pre-payment and other penalties, fees, expenses and breakage costs);

(b)         all deferred obligations for the payment of the purchase price of property or capital assets purchased;

(c)         all obligations evidenced by any note, bond, debenture or other debt security;

(d)         all obligations of any Person for or on account of capitalized leases;

(e)         all obligations of any Person for the reimbursement of letters of credit, bankers’ acceptance or similar credit transaction; and

(f)         any guarantees of Indebtedness of the type described in the foregoing clauses (a) through (e) of such Person.

“Insolvency Proceeding” means any proceeding commenced by or against any Person under any provision of the Bankruptcy Code or under any other bankruptcy or insolvency law, assignments for the benefit of creditors, formal or informal moratoria, compositions, or extensions generally with creditors, or proceedings seeking reorganization, arrangement or other similar relief.

 -27-

“Liquidation” has the meaning as set forth in Regulations section 1.704-1(b)(2)(ii)(g).

“Member” means each Person executing this Agreement as a Member or hereafter admitted to the Company as a Member as provided in this Agreement, but does not include any Person who has ceased to be a Member of the Company. For purposes of interpreting this Agreement, references to the term “Member” in Article IV and Article V shall be deemed to refer to a transferee of an interest in the Company who is not admitted as a Member under Section 8.04 unless such interpretation is inconsistent with the provisions of Section 8.06.

“Member Minimum Gain” has the meaning ascribed to the term “partner nonrecourse debt minimum gain” in Regulations Section 1.704-2(i)(2).

“Member Nonrecourse Debt” has the meaning ascribed to the term “partner nonrecourse debt” in Regulations Section 1.704-2(b)(4).

“Member Nonrecourse Deductions” means items of Company loss, deduction, or Code Section 705(a)(2)(b) expenditures that are attributable to Member Nonrecourse Debt within the meaning of Regulations Section 1.704-2(i).

“Membership Interest” means the entire interest of a Member in the Company, including, without limitation, rights to distributions (liquidating or otherwise), allocations, information, and the right to participate in the management of the business and affairs of the Company, including the right to vote on, consent to, or otherwise participate in any decision or action of or by the Members granted by this Agreement or the Act.

“Net Profits” and “Net Losses” means, for any period, an amount equal to the Company’s taxable income or loss for such year or period, determined in accordance with Section 703(a) of the Code (for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Section 703(a)(1) of the Code shall be included in taxable income or loss), with the following adjustments:

(a)       Any income of the Company that is exempt from federal income tax and not otherwise taken into account in computing Net Profits or Net Losses shall be added to such taxable income or loss;

(b)       Any expenditures of the Company described in Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to Regulations Section 1.704-1(b)(2)(iv)(i) and not otherwise taken into account in computing Net Profits or Net Losses shall be subtracted from Net Profits or Net Losses;

(c)       Gains or losses resulting from any disposition of Company asset with respect to which gains or losses are recognized for federal income tax purposes shall be computed with reference to the Gross Asset Value of the Company asset disposed of, notwithstanding the fact that the adjusted tax basis of such Company asset differs from its Gross Asset Value;

 -28-

(d)       In lieu of the depreciation, amortization and other cost recovery deductions taken into account in computing the taxable income or loss, there will be taken into account Depreciation; and

(e)       If the Gross Asset Value of any Company asset is adjusted pursuant to the definition of “Gross Asset Value,” the amount of the adjustment will be taken into account as gain or loss from the disposition of the asset for purposes of computing Net Profits or Net Losses.

Notwithstanding any other provision of this subsection, any items of income, gain, loss or deduction that are specially allocated shall not be taken into account in computing Net Profits or Net Losses.

“Person” means an individual, corporation, association, partnership, joint venture, limited liability company, estate, trust, or any other legal entity.

“Preferred Members” means all Members holding Preferred Units.

“Principal Market” means, as of any date of determination, the principal securities exchange or securities market on which the Xspand Common Stock is then traded.

“Put Price” means, with respect to a particular Put Notice, the product of (y) the average closing price of the Xspand Common Stock for the five (5) Trading Days immediately preceding the date of delivery of such particular Put Notice and (z) the Applicable Percentage times the Fixed Share Amount.

“Realization Event” means the date on which the Company receives cash proceeds from third parties that are not Affiliates of any such Common Members as a result of a sale or other disposition, in one or more transactions, of all or substantially all of the assets of the Company and its subsidiaries, taken as a whole, including by merger.

“Regulations” means the Treasury Regulations promulgated under the Code, as such Regulations may be amended from time to time.

“Representative” of a Person means that Person’s directors, officers, general partners, members, managers, employees, and agents.

“Requisite Preferred Holders” means, as of any date of determination, Preferred Members holding at least a majority of the Preferred Units as of such date of determination.

“Trading Day” means any day on which the Xspand Common Stock is traded on the Principal Market, or, if the Principal Market is not the principal trading market for the Xspand Common Stock, then on the principal securities exchange or securities market on which the Xspand Common Stock is then traded, provided that “Trading Day” shall not include any day on which the Xspand Common Stock is scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Xspand Common Stock is suspended from trading during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York time) unless such day is otherwise designated as a Trading Day in writing by the holders of a majority of the outstanding Preferred Units.

 -29-

“Transfer” means, as a noun, any voluntary or involuntary transfer, sale, pledge, hypothecation, gift, or other disposition and, as a verb, voluntarily or involuntarily to transfer, sell, pledge, hypothecate, give, or otherwise dispose of.

“Unit” means a denomination of a Membership Interest consisting of either a Common Unit or a Preferred Unit.

“Xspand Common Stock” means the common stock, $0.001 par value per share, of Xspand.

 -30-

Exhibit B

Name and Address of Preferred Member	Number of Preferred Units
Venture Six, LLC [insert address]
TWC Capital, LLC c/o Tillman Wright, PLLC 11325 N Community House Road, Suite 250 Charlotte, NC 28277
EE Investors, LLC 4201 Congress Street Suite 145 Charlotte, NC 28277
Matthew Wynn 9228 Fairway Ridge Rd Charlotte, NC 28277
Fiveoaks Capital, LLC 4201 Congress Street Suite 145 Charlotte, NC 28209
GS Venture Partners, LLC 641 Lexington Avenue, Suite 1302 New York, NY 10022
Total:	990,000

 -31-

EX-10.3

Exhibit 10.3

REGISTRATION RIGHTS AGREEMENT

This REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of July __, 2018, is entered into by and among Xspand Products Lab, Inc., a Nevada corporation, with headquarters located at 909 New Brunswick Avenue, Phillipsburg, New Jersey 08865 (the “Company”), and the undersigned holders of securities of the Company (each, a “Holder”, and collectively, the “Holders”).

WHEREAS

A.          Pursuant to the terms and subject to the conditions set forth in Membership Interest Purchase Agreement, dated as of June 29, 2018, by and among the Company, Edison Nation Holdings, LLC and the Holders (the “Purchase Agreement”), the Company has agreed to (i) issue and sell to certain of the Holders [_______] shares (the “Common Shares”) of the Company's common stock, par value $0.001 per share (the “Common Stock”), in satisfaction of the indebtedness evidenced by the Promissory Notes (as defined in the Purchase Agreement), (ii) issue and sell to certain of the Holders the New Convertible Notes (as defined in the Purchase Agreement) in partial satisfaction of the Senior Convertible Debt (as defined in the Purchase Agreement) held by such Holders, which New Convertible Notes are convertible into shares of Common Stock of the Company (the shares of Common Stock issuable upon conversion of the New Convertible Notes, the “New Convertible Note Shares”) and (iii) guarantee the Put Right (as defined in the and the Fifth Amended and Restated Limited Liability Company Agreement of Edison Nation Holdings, LLC) obligations of Edison Nation Holdings, LLC and, at the Company’s election, to satisfy such guarantee through the issuance and sale to certain of the Holders of 990,000 shares of Common Stock (the “Put Right Shares”).

B.          In accordance with the terms of the Purchase Agreement, the Company has agreed to provide to the Holders certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute (collectively, the “Securities Act”), and applicable state securities laws.

NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and each of the Holders hereby agree as follows:

1.                          Definitions.          Capitalized terms used herein and not otherwise defined herein shall have the respective meanings set forth in the Purchase Agreement.  As used in this Agreement, the following terms shall have the following meanings:

a.          “Business Day” means any day other than Saturday, Sunday or any other day on which commercial banks in The City of New York are authorized or required by law to remain closed.

b.          “Effective Date” means the date that the Registration Statement is first declared effective by the SEC.

c.          “Effectiveness Deadline” means the date which is the earlier of (i) 120 calendar days after the Filing Date if such Registration Statement is subject to review by the SEC, and (ii) the fifth trading day after the date the Company is notified (orally or in writing) by the SEC that such Registration Statement will not be reviewed or will not be subject to further review and that the SEC is prepared to declare such Registration Statement effective.

d.          “Eligible Market” means the OTC Bulletin Board, The NASDAQ Global Market, The NASDAQ Global Select Market, The NASDAQ Capital Market, the New York Stock Exchange, NYSE Arca, the NYSE MKT, the OTCQX Marketplace or the OTCQB Marketplace operated by OTC Markets Group Inc. (or any successor to any of the foregoing).

e.          “Filing Deadline” means 45 calendar days after the Company becomes eligible to register its securities on a Registration Statement on Form S-3.

f.          “Investor” means a Holder, any transferee or assignee thereof to whom a Holder assigns its rights under this Agreement and who agrees to become bound by the provisions of this Agreement in accordance with Section 9 and any transferee or assignee thereof to whom a transferee or assignee assigns its rights under this Agreement and who agrees to become bound by the provisions of this Agreement in accordance with Section 9.

g.          “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof.

h.          “register,” “registered,” and “registration” refer to a registration effected by preparing and filing one or more Registration Statements (as defined below) in compliance with the Securities Act and pursuant to Rule 415, and the declaration or ordering of effectiveness of such Registration Statement(s) by the SEC.

i.          “Registrable Securities” means (i) the Common Shares, (ii) the New Convertible Note Shares, (iii) the Put Right Shares and (iv) any shares of capital stock of the Company issued or issuable with respect to the Common Shares, the New Convertible Notes, the New Convertible Note Shares or the Put Right Shares (without regard to any limitations on conversion of the New Convertible Notes) as a result of any stock split, stock dividend, recapitalization, exchange or similar event or otherwise; provided, that any Registrable Securities that have been sold pursuant to a Registration Statement or Rule 144 promulgated under the Securities Act shall no longer be Registrable Securities.

j.          “Registration Statement” means a registration statement or registration statements of the Company filed under the Securities Act covering the Registrable Securities.

k.          “Required Holders” means the holders of at least 66 2/3% of the Registrable Securities.

l.          “Rule 415” means Rule 415 under the Securities Act or any successor rule providing for offering securities on a continuous or delayed basis.

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

-2-

2. Registration.

a.          Mandatory Registration.  The Company shall prepare, and, as soon as practicable but in no event later than the Filing Deadline, file with the SEC a Registration Statement on Form S-3 covering the resale of all of the Registrable Securities for an offering to be made on a continuous basis pursuant to Rule 415, or if Rule 415 is not available for offers and sales of the Registrable Securities, by such other means of distribution of the Registrable Securities as the Company may reasonably determine.  In the event that Form S-3 is unavailable for such a registration, the Company shall file a Registration Statement on Form S-1, subject to the provisions of Section 2(d).  The Registration Statement shall contain (except if otherwise directed by the Required Holders) the “Selling Stockholders” and “Plan of Distribution” sections attached hereto as Exhibit B.  The Company shall use its reasonable best efforts to have the Registration Statement declared effective by the SEC as soon as practicable, but in no event later than the Effectiveness Deadline.  By 9:30 a.m. on the Business Day following the Effective Date, the Company shall file with the SEC in accordance with Rule 424 under the Securities Act the final prospectus to be used in connection with sales pursuant to such Registration Statement. Notwithstanding the registration obligations set forth in this Section 2, if the SEC informs the Company that all of the Registrable Securities cannot, as a result of the application of Rule 415, be registered for resale as a secondary offering on a single registration statement, the Company agrees to promptly (i) inform each of the Holders thereof and use its reasonable best efforts to file amendments to such Registration Statement as required by the SEC and/or (ii) withdraw such Registration Statement and file a new Registration Statement, in either case covering the maximum number of Registrable Securities permitted to be registered by the SEC, on Form S-3 or such other form available to the Company to register for resale the Registrable Securities as a secondary offering as set forth in Section 2(e).

b.          Legal Counsel.  Subject to Section 5, the Required Holders shall have the right to select one legal counsel to review and oversee any registration pursuant to this Section 2 (“Legal Counsel”), which shall be Greenberg Traurig, P.A. or such other counsel as thereafter designated by the Required Holders.  The Company and Legal Counsel shall reasonably cooperate with each other in performing the Company’s obligations under this Agreement.

3.           Related Obligations.          At such time as the Company is obligated to file a Registration Statement with the SEC pursuant to Section 2(a), the Company will use commercially reasonable efforts to effect the registration of the Registrable Securities in accordance with the intended method of disposition thereof and, pursuant thereto, the Company shall have the following obligations:

a.          The Company shall promptly prepare and file with the SEC a Registration Statement with respect to the Registrable Securities and use commercially reasonable efforts to cause such Registration Statement relating to the Registrable Securities to become effective as soon as practicable after such filing (but in no event later than the Effectiveness Deadline).  The Company shall keep each Registration Statement effective pursuant to Rule 415 at all times until the earlier of (i) the date as of which Investors may sell all of the Registrable Securities covered by such Registration Statement without restriction pursuant to Rule 144 promulgated under the Securities Act (including, without limitation, volume restrictions) without the need for current public information required by Rule 144(c)(1) (or Rule 144(i)(2), if applicable), or (ii) the date on which Investors shall have sold all of the Registrable Securities covered by such Registration Statement (the “Registration Period”).  The Company shall use best efforts to ensure that each Registration Statement (including any amendments or supplements thereto and prospectuses contained therein) shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary to make the statements therein (in the case of prospectuses, in the light of the circumstances in which they were made) not misleading.  

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b.          The Company shall prepare and file with the SEC such amendments (including post-effective amendments) and supplements to a Registration Statement and the prospectus used in connection with such Registration Statement, which prospectus is to be filed pursuant to Rule 424 promulgated under the Securities Act, as may be necessary to keep such Registration Statement effective at all times during the Registration Period, and, during such period, comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities of the Company covered by such Registration Statement until such time as all of such Registrable Securities shall have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof as set forth in such Registration Statement.  In the case of amendments and supplements to a Registration Statement which are required to be filed pursuant to this Agreement (including pursuant to this Section 3(b)) by reason of the Company filing a report on Form 10-K, Form 10-Q or Form 8-K or any analogous report under the Securities Exchange Act of 1934, as amended (the “1934 Act”), the Company shall have incorporated such report by reference into such Registration Statement, if applicable, or shall file such amendments or supplements with the SEC on the same day on which the 1934 Act report which created the requirement for the Company to amend or supplement such Registration Statement.

c.          The Company shall (i) permit Legal Counsel to review and comment upon (A) a Registration Statement at least five (5) Business Days prior to its filing with the SEC and (B) all amendments and supplements to all Registration Statements (except for Annual Reports on Form 10-K, and Quarterly Reports on Form 10-Q and Current Reports on Form 8-K and any similar or successor reports) within a reasonable number of days prior to their filing with the SEC, and (ii) not file any Registration Statement or amendment or supplement thereto in a form to which Legal Counsel reasonably objects.  The Company shall not submit a request for acceleration of the effectiveness of a Registration Statement or any amendment or supplement thereto without the prior approval of Legal Counsel, which consent shall not be unreasonably withheld or delayed.  The Company shall furnish to Legal Counsel, without charge, (1) copies of any correspondence from the SEC or the staff of the SEC to the Company or its representatives relating to any Registration Statement, (2) promptly after the same is prepared and filed with the SEC, one copy of any Registration Statement and any amendment(s) thereto, including financial statements and schedules, all documents incorporated therein by reference, if requested by an Investor and not otherwise available on the EDGAR system, and all exhibits and (3) upon the effectiveness of any Registration Statement, ten (10) copies of the prospectus included in such Registration Statement and all amendments and supplements thereto.  The Company shall reasonably cooperate with Legal Counsel in performing the Company's obligations pursuant to this Section 3.

d.          The Company shall furnish to each Investor whose Registrable Securities are included in any Registration Statement, without charge, (i) promptly after the same is prepared and filed with the SEC, at least one copy of such Registration Statement and any amendment(s) thereto, including financial statements and schedules, all documents incorporated therein by reference, if requested by an Investor and not otherwise available on the EDGAR system, all exhibits and each preliminary prospectus, (ii) upon the effectiveness of any Registration Statement, ten (10) copies of the prospectus included in such Registration Statement and all amendments and supplements thereto (or such other number of copies as such Investor may reasonably request) and (iii) such other documents, including copies of any preliminary or final prospectus, as such Investor may reasonably request from time to time in order to facilitate the disposition of the Registrable Securities owned by such Investor.

e.          The Company shall use commercially reasonable efforts to (i) register and qualify, unless an exemption from registration and qualification applies, the resale by Investors of the Registrable Securities covered by a Registration Statement under such other securities or “blue sky” laws of all applicable jurisdictions in the United States, (ii) prepare and file in those jurisdictions, such amendments (including post-effective amendments) and supplements to such registrations and qualifications as may be necessary to maintain the effectiveness thereof during the Registration Period, (iii) take such other actions as may be necessary to maintain such registrations and qualifications in effect at all times during the Registration Period, and (iv) take all other actions reasonably necessary or advisable to qualify the Registrable Securities for sale in such jurisdictions; provided, however, that the Company shall not be required in connection therewith or as a condition thereto to (x) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(e), (y) subject itself to general taxation in any such jurisdiction, or (z) file a general consent to service of process in any such jurisdiction.  The Company shall promptly notify Legal Counsel and each Investor who holds Registrable Securities of the receipt by the Company of any notification with respect to the suspension of the registration or qualification of any of the Registrable Securities for sale under the securities or “blue sky” laws of any jurisdiction in the United States or its receipt of notice of the initiation or threatening of any proceeding for such purpose.

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f.          The Company shall notify Legal Counsel and each Investor in writing of the happening of any event, as promptly as practicable after becoming aware of such event, as a result of which the prospectus included in a Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading (provided that in no event shall such notice contain any material, nonpublic information), and, subject to Section 3(r), promptly prepare a supplement or amendment to such Registration Statement to correct such untrue statement or omission, and deliver ten (10) copies of such supplement or amendment to Legal Counsel and each Investor (or such other number of copies as Legal Counsel or such Investor may reasonably request).  The Company shall also promptly notify Legal Counsel and each Investor in writing (i) when a prospectus or any prospectus supplement or post-effective amendment has been filed, and when a Registration Statement or any post-effective amendment has become effective (notification of such effectiveness shall be delivered to Legal Counsel and each Investor by facsimile or e-mail on the same day of such effectiveness and by overnight mail), (ii) of any request by the SEC for amendments or supplements to a Registration Statement or related prospectus or related information, and (iii) of the Company's reasonable determination that a post-effective amendment to a Registration Statement would be appropriate.

g.          The Company shall use commercially reasonable efforts to prevent the issuance of any stop order or other suspension of effectiveness of a Registration Statement, or the suspension of the qualification of any of the Registrable Securities for sale in any jurisdiction and, if such an order or suspension is issued, to obtain the withdrawal of such order or suspension at the earliest possible moment and to notify Legal Counsel and each Investor who holds Registrable Securities being sold of the issuance of such order and the resolution thereof or its receipt of notice of the initiation or threat of any proceeding for such purpose.

h.          If any Investor may be required under applicable securities law to be described in the Registration Statement as an underwriter, the Company shall make available for inspection by (i) any Investor, (ii) Legal Counsel and (iii) one firm of accountants or other agents retained by the Investors (collectively, the “Inspectors”), all pertinent financial and other records, and pertinent corporate documents and properties of the Company (collectively, the “Records”), as shall be reasonably deemed necessary by each Inspector, and cause the Company's officers, directors and employees to supply all information which any Inspector may reasonably request; provided, however, that each Inspector shall agree in writing to hold in strict confidence and shall not make any disclosure (except to an Investor) or use of any Record or other information which the Company determines in good faith to be confidential, and of which determination the Inspectors are so notified, unless (A) the disclosure of such Records is necessary to avoid or correct a misstatement or omission in any Registration Statement or is otherwise required under the Securities Act, (B) the release of such Records is ordered pursuant to a final, non-appealable subpoena or order from a court or government body of competent jurisdiction, or (C) the information in such Records has been made generally available to the public other than by disclosure in violation of this or any other agreement of which the Inspector has knowledge.  Each Investor agrees that it shall, upon learning that disclosure of such Records is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt notice to the Company and allow the Company, at its expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, the Records deemed confidential.  Nothing herein (or in any other confidentiality agreement between the Company and any Investor) shall be deemed to limit the Investors' ability to sell Registrable Securities in a manner which is otherwise consistent with applicable laws and regulations.

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i.          The Company shall hold in confidence and not make any disclosure of information concerning an Investor provided to the Company unless (i) disclosure of such information is necessary to comply with federal or state securities laws or the applicable trading market, (ii) the disclosure of such information is necessary to avoid or correct a misstatement or omission in any Registration Statement, (iii) the release of such information is ordered pursuant to a subpoena or other final, non-appealable order from a court or governmental body of competent jurisdiction, or (iv) such information has been made generally available to the public other than by disclosure in violation of this Agreement or any other agreement.  The Company agrees that it shall, upon learning that disclosure of such information concerning an Investor is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt written notice to such Investor and allow such Investor, at the Investor's expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, such information.

j.          The Company shall use commercially reasonable efforts either to cause all of the Registrable Securities covered by each Registration Statement to be listed on each securities exchange on which securities of the same class or series issued by the Company are then listed, if any, if the listing of such Registrable Securities is then permitted under the rules of such exchange. In addition, the Company shall use commercially reasonable efforts to cooperate with each Investor and any broker or dealer through which any such Investor proposes to sell its Registrable Securities in effecting a filing with the Financial Industry Regulatory Authority (“FINRA”) pursuant to FINRA Rule 5110 as requested by such Investor. The Company shall pay all fees and expenses in connection with satisfying its obligations relating to securities exchange listings under this Section 3(j).

k.          The Company shall use commercially reasonable efforts to cooperate with the Investors who hold Registrable Securities being offered and, to the extent applicable, facilitate the timely preparation and delivery of certificates (not bearing any restrictive legend) representing the Registrable Securities to be offered pursuant to a Registration Statement and enable such certificates to be in such denominations or amounts, as the case may be, as the Investors may reasonably request and registered in such names as the Investors may request.

l.          If requested by an Investor to correct a material error in the information to the Company provided by such Investor pursuant to Section 2(a) above, the Company shall as soon as reasonably practicable make all required filings of such Registration Statement, prospectus supplement or post-effective amendment after being notified of the matters to be incorporated in such prospectus supplement or post-effective amendment.

m.          The Company shall use commercially reasonable efforts to cause the Registrable Securities covered by a Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to consummate the disposition of such Registrable Securities.

n.          The Company shall make generally available to its security holders as soon as practical, but not later than ninety (90) days after the close of the period covered thereby, an earnings statement (in form complying with, and in the manner provided by, the provisions of Rule 158 under the Securities Act) covering a twelve-month period beginning not later than the first day of the Company's fiscal quarter next following the effective date of a Registration Statement.

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o.          The Company shall otherwise use reasonable efforts to comply with all applicable rules and regulations of the SEC in connection with any registration hereunder.

p.          On the date hereof, the Company shall furnish instructions to its transfer agent in the form attached hereto as Exhibit A.

q.          Within two (2) Business Days after a Registration Statement which covers Registrable Securities is ordered effective by the SEC, the Company shall deliver, and shall cause legal counsel for the Company to deliver, to the transfer agent for such Registrable Securities (with copies to the Investors whose Registrable Securities are included in such Registration Statement) confirmation that such Registration Statement has been declared effective by the SEC in the form attached hereto as Exhibit A.

r.          Notwithstanding anything to the contrary herein, at any time after the Effective Date, the Company may delay the disclosure of material, non-public information concerning the Company if the disclosure of such information at the time is not, in the good faith judgment of the Board of Directors of the Company and its counsel, in the best interest of the Company and, in the opinion of counsel to the Company otherwise required (a “Grace Period”); provided, that the Company shall promptly (i) notify the Investors in writing of the existence of material, non-public information giving rise to a Grace Period (provided that in each notice the Company will not disclose the content of such material, non-public information to the Investors) and the date on which the Grace Period will begin, and (ii) notify the Investors in writing of the date on which the Grace Period ends; and, provided further, that no Grace Period shall exceed five (5) consecutive trading days and during any three hundred sixty five (365) day period such Grace Periods shall not exceed an aggregate of thirty (30) trading days, and the first day of any Grace Period must be at least two (2) trading days after the last day of any prior Grace Period.  For purposes of determining the length of a Grace Period above, the Grace Period shall begin on and include the date the Investors receive the notice referred to in clause (i) and shall end on and include the later of the date the Investors receive the notice referred to in clause (ii) and the date referred to in such notice.  Notwithstanding anything to the contrary herein, the Company shall cause its transfer agent to deliver unlegended shares of Common Stock to a transferee of an Investor in connection with any sale of Registrable Securities with respect to which an Investor has entered into a contract for sale and delivered a copy of the prospectus included as part of the applicable Registration Statement (unless an exemption from such prospectus delivery requirement exists) prior to the Investor's receipt of the notice of a Grace Period and for which the Investor has not yet settled.

s.          The Company shall take all other commercially reasonable actions necessary to expedite and facilitate disposition by each Investor of its Registrable Securities pursuant to each Registration Statement.

4. Piggyback Registration.

a.          Whenever the Company proposes to register the offer and sale of any shares of its Common Stock under the Securities Act (other than a registration (i) pursuant to a Registration Statement on Form S-8 (or other registration solely relating to an offering or sale to employees or directors of the Company pursuant to any employee stock plan or other employee benefit arrangement), (ii) pursuant to a Registration Statement on Form S-4 (or similar form that relates to a transaction subject to Rule 145 under the Securities Act or any successor rule thereto), or (iii) in connection with any dividend or distribution reinvestment or similar plan), whether for its own account or for the account of one or more stockholders of the Company and the form of Registration Statement (a “Piggyback Registration Statement”) to be used may be used for any registration of Registrable Securities (a “Piggyback Registration”), the Company shall give prompt written notice (in any event no later than 15 days prior to the filing of such Registration Statement) to the holders of Registrable Securities of its intention to effect such a registration and, subject to Section 4(b), shall include in such registration all Registrable Securities with respect to which the Company has received written requests for inclusion from the holders of Registrable Securities. The Company may postpone or withdraw the filing or the effectiveness of a Piggyback Registration at any time in its sole discretion.

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b.          If a Piggyback Registration is initiated as an underwritten offering and the managing underwriter advises the Company in writing that in its reasonable and good faith opinion the number of shares of Common Stock proposed to be included in such offering, including all Registrable Securities and all other shares of Common Stock proposed to be included in such underwritten offering, exceeds the number of shares of Common Stock which can be sold in such offering and/or that the number of shares of Common Stock proposed to be included in any such offering would adversely affect the price per share of the Common Stock to be sold in such offering, the Company shall include in such registration (i) first, the shares of Common Stock that the Company proposes to sell, (ii) second, the shares of Common Stock requested to be included therein by holders of Registrable Securities, allocated pro rata among all such holders on the basis of the number of Registrable Securities owned by each such holder or in such manner as the Required Holders may otherwise agree, and (iii) third, the shares of Common Stock requested to be included therein by holders of Common Stock other than holders of Registrable Securities, allocated among such holders in such manner as they may agree.

5. Obligations of the Investors.

a.          At least five (5) Business Days prior to the first anticipated filing date of a Registration Statement, the Company shall notify each Investor in writing of the information the Company requires from each such Investor in order to have any of such Investor’s Registrable Securities included in such Registration Statement, including an Accredited Investor Questionnaire and a certified statement as to (i) the number of shares of Common Stock beneficially owned by such Investor and any affiliate thereof, (ii) any FINRA affiliations, (iii) any natural persons who have the power to vote or dispose of any shares of Common Stock beneficially owned by such Investor and any affiliate thereof, and (iv) any other information as may be requested by the SEC, FINRA or any state securities commission.  It shall be a condition precedent to the obligations of the Company to complete the registration pursuant to this Agreement with respect to the Registrable Securities of a particular Investor that such Investor shall complete to the Company’s satisfaction such information regarding itself, the Registrable Securities held by it and the intended method of disposition of the Registrable Securities held by it as shall be reasonably required to effect the effectiveness of the registration of such Registrable Securities and shall execute such documents in connection with such registration as the Company may reasonably request.  

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

c.          Each Investor agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in first sentence of Section 3(f), Section 3(g) or Section 3(r), such Investor will immediately discontinue disposition of Registrable Securities pursuant to any Registration Statement(s) covering such Registrable Securities until such Investor's receipt of the copies of the supplemented or amended prospectus contemplated by Section 3(g) or the first sentence of 3(f) or receipt of notice that no supplement or amendment is required.  Notwithstanding anything to the contrary, the Company shall cause its transfer agent to deliver unlegended shares of Common Stock to a transferee of an Investor in connection with any sale of Registrable Securities with respect to which an Investor has entered into a contract for sale prior to the Investor's receipt of a notice from the Company of the happening of any event of the kind described in the first sentence of Section 3(f), Section 3(g) or Section 3(r) and for which the Investor has not yet settled.

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d.          Each Investor covenants and agrees that it will comply with any applicable prospectus delivery requirements of the Securities Act as applicable to it or an exemption therefrom in connection with sales of Registrable Securities pursuant to a Registration Statement.

6.           Expenses of Registration. All reasonable expenses, other than underwriting discounts and commissions, incurred in connection with registrations, filings or qualifications pursuant to Sections 2 and 3, including, without limitation, all registration, listing and qualifications fees, printers and accounting fees, FINRA filing fees (if any) and fees and disbursements of counsel for the Company shall be paid by the Company. In no event shall the Company be responsible for any underwriting, broker or similar fees or commissions of any Investor or, except to the extent provided for in the Purchase Agreement, any legal fees or other costs of the Investors.

7.           Indemnification.          In the event any Registrable Securities are included in a Registration Statement under this Agreement:

a.          To the fullest extent permitted by law, the Company will, and hereby does, indemnify, hold harmless and defend each Investor, the directors, officers, members, partners, employees, agents, representatives of, and each Person, if any, who controls any Investor within the meaning of the Securities Act or the 1934 Act (each, an “Indemnified Person”), against any losses, claims, damages, liabilities, judgments, fines, penalties, charges, costs, reasonable attorneys' fees, amounts paid in settlement or expenses, joint or several, (collectively, “Claims”) incurred in defending any action, claim, suit, inquiry, proceeding, formal investigation or appeal taken from the foregoing by or before any court or governmental, administrative or other regulatory agency, body or the SEC, whether pending or formally threatened such as through a target letter (“Indemnified Damages”), to which any of them may become subject insofar as such Claims (or actions or proceedings, whether commenced or formally threatened, in respect thereof) arise out of or are based upon:  (i) any untrue statement or alleged untrue statement of a material fact in a Registration Statement or any post-effective amendment thereto or in any filing made in connection with the qualification of the offering under the securities or other “blue sky” laws of any jurisdiction in which Registrable Securities are offered, or the omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) any untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus if used prior to the effective date of such Registration Statement, or contained in the final prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in the light of the circumstances under which the statements therein were made, not misleading, (iii) any violation or alleged violation by the Company of the Securities Act, the 1934 Act, any other law, including, without limitation, any state securities law, or any rule or regulation thereunder relating to the offer or sale of the Registrable Securities pursuant to a Registration Statement or (iv) any material violation of this Agreement (the matters in the foregoing clauses (i) through (iv) being, collectively, “Violations”).  Subject to Section 6(c), the Company shall reimburse the Indemnified Persons, promptly upon receipt of statements for such expenses are incurred, for any legal fees or other reasonable expenses incurred by them in connection with defending any such Claim.  Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6(a):  (i) shall not apply to a Claim by an Indemnified Person arising out of or based upon a Violation which occurs in reliance upon and in conformity with information furnished in writing to the Company by such Indemnified Person for such Indemnified Person expressly for use in connection with the preparation of the Registration Statement or any such amendment thereof or supplement thereto and (ii) shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Company, which consent shall not be unreasonably withheld or delayed.  Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Indemnified Person and shall survive the transfer of the Registrable Securities by the Investors pursuant to Section 9.

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b.          In connection with any Registration Statement in which an Investor is participating, each such Investor agrees to severally and not jointly indemnify, hold harmless and defend, to the same extent and in the same manner as is set forth in Section 6(a), the Company, each of its directors, each of its officers who signs the Registration Statement, employees, agents, representatives and each Person, if any, who controls the Company within the meaning of the Securities Act or the 1934 Act (each, an “Indemnified Party”), against any Claim or Indemnified Damages to which any of them may become subject, under the Securities Act, the 1934 Act or otherwise, insofar as such Claim or Indemnified Damages arise out of or are based upon any Violation, in each case to the extent, and only to the extent, that such Violation occurs in reliance upon and in conformity with written information furnished to the Company by such Investor expressly for use in connection with such Registration Statement; and, subject to Section 6(c), such Investor will reimburse any legal or other expenses reasonably incurred by an Indemnified Party in connection with defending any such Claim; provided, however, that the indemnity agreement contained in this Section 6(b) and the agreement with respect to contribution contained in Section 7 shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of such Investor, which consent shall not be unreasonably withheld or delayed; provided, further, however, that the Investor shall be liable under this Section 6(b) for only that amount of a Claim or Indemnified Damages as does not exceed the net proceeds to such Investor as a result of the sale of Registrable Securities pursuant to such Registration Statement. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Indemnified Party and shall survive the transfer of the Registrable Securities by the Investors pursuant to Section 9.  Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6(b) with respect to any preliminary prospectus shall not inure to the benefit of any Indemnified Party if the untrue statement or omission of material fact contained in the preliminary prospectus was corrected on a timely basis in the prospectus, as then amended or supplemented.

c.          Promptly after receipt by an Indemnified Person or Indemnified Party under this Section 6 of notice of the commencement of any action or proceeding (including any governmental action or proceeding) involving a Claim, such Indemnified Person or Indemnified Party shall, if a Claim in respect thereof is to be made against any indemnifying party under this Section 6, deliver to the indemnifying party a written notice of the commencement thereof, and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying party and the Indemnified Person or the Indemnified Party, as the case may be; provided, however, that an Indemnified Person or Indemnified Party shall have the right to retain its own counsel with the fees and expenses of not more than one counsel for such Indemnified Person or Indemnified Party to be paid by the indemnifying party, if, in the reasonable opinion of Indemnified Person or Indemnified Party, as the case may be, the representation by such counsel of the Indemnified Person or Indemnified Party and the indemnifying party would be inappropriate due to actual or potential differing interests between such Indemnified Person or Indemnified Party and any other party represented by such counsel in such proceeding.  In the case of an Indemnified Person, legal counsel referred to in the immediately preceding sentence shall be selected by the Investors holding at least a majority in interest of the Registrable Securities included in the Registration Statement to which the Claim relates.  The Indemnified Party or Indemnified Person shall cooperate fully with the indemnifying party in connection with any negotiation or defense of any such action or Claim by the indemnifying party and shall furnish to the indemnifying party all information reasonably available to the Indemnified Party or Indemnified Person which relates to such action or Claim.  The indemnifying party shall keep the Indemnified Party or Indemnified Person reasonably apprised at all times as to the status of the defense or any settlement negotiations with respect thereto.  No indemnifying party shall be liable for any settlement of any action, claim or proceeding effected without its prior written consent, provided, however, that the indemnifying party shall not unreasonably withhold, delay or condition its consent.  No indemnifying party shall, without the prior written consent of the Indemnified Party or Indemnified Person, consent to entry of any judgment or enter into any settlement or other compromise which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party or Indemnified Person of a release from all liability in respect to such Claim or litigation, and such settlement shall not include any admission as to fault on the part of the Indemnified Party.  Following indemnification as provided for hereunder, the indemnifying party shall be subrogated to all rights of the Indemnified Party or Indemnified Person with respect to all third parties, firms or corporations relating to the matter for which indemnification has been made.  The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the Indemnified Person or Indemnified Party under this Section 6, except to the extent that the indemnifying party is materially prejudiced in its ability to defend such action.

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d.          No Person involved in the sale of Registrable Securities who is guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) in connection with such sale shall be entitled to indemnification from any Person involved in such sale of Registrable Securities who is not guilty of fraudulent misrepresentation.

e.          The indemnification required by this Section 6 shall be made by periodic payments of the amount thereof during the course of the defense, as and when statements are provided.

f.          The indemnity agreements contained herein shall be in addition to  (i) any cause of action or similar right of the Indemnified Party or Indemnified Person against the indemnifying party or others, and (ii) any liabilities the indemnifying party may be subject to pursuant to the law.

8.           Contribution.          If the indemnification provided for in Section 6 is held by a court of competent jurisdiction to be unavailable to an Indemnified Person with respect to any loss, liability, claim, damage or expense referred to herein, then the indemnifying party, in lieu of indemnifying such Indemnified Person hereunder, shall contribute to the amount paid or payable by such Indemnified Person as a result of such loss, liability, claim, damage or expense in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the Indemnified Person on the other in connection with the statements or omissions (or alleged statements or omissions) which resulted in such loss, liability, claim, damage or expense, as well as any other relevant equitable considerations. The relative fault of the indemnifying party and of the Indemnified Person shall be determined by reference to, among other things, whether the untrue (or alleged untrue) statement of a material fact or the omission (or alleged omission) to state a material fact relates to information supplied by the indemnifying party or by the Indemnified Person and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission; provided, however, that:  (i) no contribution shall be made under circumstances where the maker would not have been liable for indemnification under the fault standards set forth in Section 6 of this Agreement, (ii) no Person involved in the sale of Registrable Securities which Person is guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) in connection with such sale shall be entitled to contribution from any Person involved in such sale of Registrable Securities who was not guilty of fraudulent misrepresentation; and (iii) contribution by any seller of Registrable Securities shall be limited in amount to the net amount of proceeds received by such seller from the sale of such Registrable Securities pursuant to such Registration Statement.

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9.           Reports Under the 1934 Act.          With a view to making available to the Investors the benefits of Rule 144 promulgated under the Securities Act or any other similar rule or regulation of the SEC that may at any time permit the Investors to sell securities of the Company to the public without registration (“Rule 144”), the Company agrees to:

a.          make and keep public information available, as those terms are understood and defined in Rule 144;

b.          file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the 1934 Act so long as the Company remains subject to such requirements and the filing of such reports and other documents is required for the applicable provisions of Rule 144; and

c.          furnish to each Investor so long as such Investor owns Registrable Securities, promptly upon request, (i) if not available on EDGAR, a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (ii) such other information as may be reasonably requested to permit the Investors to sell such securities pursuant to Rule 144 without registration.

10.         Assignment of Registration Rights.          The rights under this Agreement are assignable by the Investors to any transferee of all or any portion of such Investor's Registrable Securities if:  (a) the Investor agrees in writing with the transferee or assignee to assign such rights, and a copy of such agreement is furnished to the Company within 3 Business Days after such assignment; (b) the Company is, within 3 Business Days after such transfer or assignment, furnished with written notice of (i) the name and address of such transferee or assignee, and (ii) the securities with respect to which such registration rights are being transferred or assigned; (c) immediately following such transfer or assignment the further disposition of such securities by the transferee or assignee is restricted under the Securities Act or applicable state securities laws; and (d) at or before the time the Company receives the written notice contemplated by clause (b) of this sentence the transferee or assignee agrees in writing with the Company to be bound by all of the provisions contained herein.

11.         Amendment of Registration Rights.          Provisions of this Agreement may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the Required Holders. Any amendment or waiver effected in accordance with this Section 10 shall be binding upon each Investor and the Company.  No such amendment shall be effective to the extent that it applies to less than all of the holders of the Registrable Securities.  No consideration shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of any of this Agreement unless the same consideration also is offered to all of the parties to this Agreement.

12. Miscellaneous.

a.          A Person is deemed to be a holder of Registrable Securities whenever such Person owns or is deemed to own of record such Registrable Securities.  If the Company receives conflicting instructions, notices or elections from two or more Persons with respect to the same Registrable Securities, the Company shall act upon the basis of instructions, notice or election received from the record owner of such Registrable Securities.

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b.          Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered:  (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one Business Day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same.  The addresses and facsimile numbers for such communications shall be:

If to the Company:

Xspand Products Lab, Inc.

909 New Brunswick Avenue

Phillipsburg, NJ 08865

Telephone:	(610) 829-1039
Facsimile:
Attention:	Christopher B. Ferguson, CEO

With a copy (for informational purposes only) to:

Waller Lansden Dortch & Davis, LLP

551 Union Street, Suite 2700

Nashville, TN 37219

Telephone:	(615) 244-6380
Facsimile:	(615) 244-6804
Attention:	Marc J. Adesso, Esq.

If to Legal Counsel for the Investors:

Greenberg Traurig, P.A.

401 E. Las Olas Blvd., Suite 2000

Fort Lauderdale, FL 33301

Telephone:	(954) 759-5532
Attention:	Mathew B. Hoffman, Esq.

If to an Investor, to its address and facsimile number set forth on its signature page attached hereto, with copies to Legal Counsel for the Investors as set forth above, or to such other address and/or facsimile number and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party five (5) days prior to the effectiveness of such change.  Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender's facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided by a courier or overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from a nationally recognized overnight delivery service in accordance with clause (i), (ii) or (iii) above, respectively.

c.          Failure of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or remedy, shall not operate as a waiver thereof.

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d.          All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York.  Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper.  Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.  If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

e.          This Agreement, the Purchase Agreement, the New Convertible Notes and the Fifth Amended and Restated Limited Liability Company Agreement of Edison Nation Holdings, LLC and the instruments referenced herein and therein constitute the entire agreement among the parties hereto with respect to the subject matter hereof and thereof.  There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein and therein.  This Agreement, the Purchase Agreement, the New Convertible Notes and the Fifth Amended and Restated Limited Liability Company Agreement of Edison Nation Holdings, LLC and the instruments referenced herein and therein supersede all prior agreements and understandings among the parties hereto with respect to the subject matter hereof and thereof.

f.          Subject to the requirements of Section 9, this Agreement shall inure to the benefit of and be binding upon the permitted successors and assigns of each of the parties hereto.

g.          The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

h.          This Agreement may be executed in identical counterparts, each of which shall be deemed an original but all of which shall constitute one and the same agreement.  This Agreement, once executed by a party, may be delivered to the other party hereto by facsimile transmission of a copy of this Agreement bearing the signature of the party so delivering this Agreement.

i.          Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

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j.          All consents and other determinations required to be made by the Investors pursuant to this Agreement shall be made, unless otherwise specified in this Agreement, by the Required Holders.

k.          The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent and no rules of strict construction will be applied against any party.

l.          This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

m.          The obligations of each Investor hereunder are several and not joint with the obligations of any other Investor, and no provision of this Agreement is intended to confer any obligations on any Investor vis-à-vis any other Investor.  Nothing contained herein, and no action taken by any Investor pursuant hereto, shall be deemed to constitute the Investors as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Investors are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated herein.

[Signature Page Follows]

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IN WITNESS WHEREOF, each Holder and the Company have caused their respective signature page to this Registration Rights Agreement to be duly executed as of the date first written above.

COMPANY:

XSPAND PRODUCTS LAB, INC.

By:

Name:

Title:

IN WITNESS WHEREOF, each Holder and the Company have caused their respective signature page to this Registration Rights Agreement to be duly executed as of the date first written above.

HOLDERS:

EXHIBIT A

FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT

______________________
______________________
______________________
Attention: _____________

Re: Xspand Products Lab, Inc.

Ladies and Gentlemen:

We are counsel to Xspand Products Lab, Inc., a Nevada corporation (the "Company"), and have represented the Company in connection with that certain Membership Interest Purchase Agreement (the "Purchase Agreement") entered into by and among the Company, Edison Nation Holdings, LLC and the members of Edison Nation Holdings, LLC pursuant to which the Company issued to certain parties (collectively, the "Holders”) senior convertible notes (the “Notes”) convertible into the Company’s shares of common stock, $0.001 par value per share (the “Common Stock”), 990,000 shares of Common Stock (the “Common Shares”) and guaranteed certain put right obligations of Edison Nation Holdings, LLC to the Holders, which guaranty may be payable at the Company’s election in [________] shares of Common Stock (the “Put Right Shares”). Pursuant to the Purchase Agreement, the Company also has entered into a Registration Rights Agreement with the Holders (the “Registration Rights Agreement”) pursuant to which the Company agreed, among other things, to register the Registrable Securities (as defined in the Registration Rights Agreement), including the shares of Common Stock issuable upon conversion of the Notes, the Common Shares and the Put Right Shares under the Securities Act of 1933, as amended (the “1933 Act”). In connection with the Company’s obligations under the Registration Rights Agreement, on ____________ ___, 20__, the Company filed a Registration Statement on Form S-3 (File No. 333-_____________) (the “Registration Statement”) with the Securities and Exchange Commission (the “SEC”) relating to the Registrable Securities which names each of the Holders as a selling shareholder thereunder.

In connection with the foregoing, we advise you that a member of the SEC's staff has advised us [in writing][by telephone] that the SEC has entered an order declaring the Registration Statement effective under the 1933 Act at [ENTER TIME OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge, after telephonic inquiry of a member of the SEC's staff, that any stop order suspending its effectiveness has been issued or that any proceedings for that purpose are pending before, or threatened by, the SEC and the Registrable Securities are available for resale under the 1933 Act pursuant to the Registration Statement.

This letter shall serve as our standing instruction to you that, provided that a Rule 424(b) prospectus has been filed with the SEC, the shares of Common Stock are freely transferable by the Holders pursuant to the Registration Statement. You need not require further letters from us to effect any future legend-free issuance or reissuance of shares of Common Stock to the Holders as contemplated by the Company's Irrevocable Transfer Agent Instructions dated _________ __, 20__. This letter shall serve as our standing instruction with regard to this matter.

Very truly yours,

[ISSUER'S COUNSEL]

By:

cc: [LIST NAMES OF HOLDERS]

EXHIBIT B

SELLING STOCKHOLDERS

The shares of Common Stock being offered by the selling shareholders are those issued to the selling shareholders under that certain Membership Interest Purchase Agreement and those issuable to the selling shareholders upon conversion of the senior convertible notes and in satisfaction of our guaranty of certain obligations of Edison Nation Holdings, LLC, our subsidiary, to the selling shareholders. For additional information regarding the issuance of those shares, the senior convertible notes and the shares issuable in satisfaction of our guaranty, see “Private Placement of Shares and Senior Convertible Notes and Guaranty Obligations” above. We are registering the shares of Common Stock in order to permit the selling shareholders to offer the shares for resale from time to time. Except for the ownership of the shares and senior convertible notes issued pursuant to the Membership Interest Purchase Agreement, the selling shareholders have not had any material relationship with us within the past three years.

The table below lists the selling shareholders and other information regarding the beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder) of the shares of Common Stock and senior convertible notes held by each of the selling shareholders. The second column lists the principal amount of the senior convertible notes beneficially owned by each selling shareholder as of ________, 20__. The third column lists the number of shares of Common Stock beneficially owned by each selling shareholder, based on its ownership of the senior convertible notes, as of ________, 20__, assuming conversion of all senior convertible notes, without regard to any limitations on conversions set forth therein, and assuming we satisfy our guaranty obligations through the issuance of shares of Common Stock to the selling shareholders. The fourth column lists the shares of Common Stock being offered by this prospectus by each selling shareholder. The fifth column assumes the sale of all of the shares of Common Stock offered by the selling shareholders pursuant to this prospectus.

In accordance with the terms of registration rights agreement with the selling shareholders, this prospectus generally covers the resale of at least the sum of (i) the number of shares of Common Stock issued as of the trading day immediately preceding the date the registration statement is initially filed with the SEC and (ii) the number of shares of Common Stock issuable upon conversion of the senior convertible notes and in satisfaction of our guaranty, in each case, as of the trading day immediately preceding the date the registration statement is initially filed with the SEC. Because the conversion price of the senior convertible notes may be adjusted, the number of shares that will actually be issued may be more or less than the number of shares being offered by this prospectus.

Under the terms of the senior convertible notes, a selling shareholder may not convert the senior convertible notes to the extent such conversion would cause such selling shareholder, together with its affiliates, to beneficially own a number of shares of Common Stock which would exceed 9.99% of our then outstanding shares of Common Stock following such conversion, excluding for purposes of such determination shares of Common Stock issuable upon conversion of the senior convertible notes which have not been converted. The number of shares in the third column does not reflect this limitation. The selling shareholders may sell all, some or none of their shares in this offering. See “Plan of Distribution.”

Name of Selling Shareholder	Principal Amount of Senior Convertible Notes	Number of Shares Owned Prior to Offering	Maximum Number of Shares to be Sold Pursuant to this Prospectus	Number of Shares Owned After Offering
[SELLING SHAREHOLDERS]

PLAN OF DISTRIBUTION

We are registering the shares of Common Stock issued to the selling shareholders and issuable upon conversion of the senior convertible notes and in satisfaction of our guaranty obligations to permit the resale of these shares of Common Stock by the holders of the shares of Common Stock, the senior convertible notes and the beneficiaries of our guaranty from time to time after the date of this prospectus. We will not receive any of the proceeds from the sale by the selling shareholders of the shares of Common Stock. We will bear all fees and expenses incident to our obligation to register the shares of Common Stock.

The selling shareholders may sell all or a portion of the shares of Common Stock beneficially owned by them and offered hereby from time to time directly or through one or more underwriters, broker-dealers or agents. If the shares of Common Stock are sold through underwriters or broker-dealers, the selling shareholders will be responsible for underwriting discounts or commissions or agent's commissions. The shares of Common Stock may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of the sale, at varying prices determined at the time of sale, or at negotiated prices. These sales may be effected in transactions, which may involve crosses or block transactions,

· on any national securities exchange or quotation service on which the securities may be listed or quoted at the time of sale;

· in the over-the-counter market;

· in transactions otherwise than on these exchanges or systems or in the over-the-counter market;

· through the writing of options, whether such options are listed on an options exchange or otherwise;

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

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

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

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

· privately negotiated transactions;

· short sales;

· sales pursuant to Rule 144;

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

· a combination of any such methods of sale; and

· any other method permitted pursuant to applicable law.

If the selling shareholders effect such transactions by selling shares of Common Stock to or through underwriters, broker-dealers or agents, such underwriters, broker-dealers or agents may receive commissions in the form of discounts, concessions or commissions from the selling shareholders or commissions from purchasers of the shares of Common Stock for whom they may act as agent or to whom they may sell as principal (which discounts, concessions or commissions as to particular underwriters, broker-dealers or agents may be in excess of those customary in the types of transactions involved). In connection with sales of the shares of Common Stock or otherwise, the selling shareholders may enter into hedging transactions with broker-dealers, which may in turn engage in short sales of the shares of Common Stock in the course of hedging in positions they assume. The selling shareholders may also sell shares of Common Stock short and deliver shares of Common Stock covered by this prospectus to close out short positions and to return borrowed shares in connection with such short sales. The selling shareholders may also loan or pledge shares of Common Stock to broker-dealers that in turn may sell such shares.

The selling shareholders may pledge or grant a security interest in some or all of the senior convertible notes or shares of Common Stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of Common Stock from time to time pursuant to this prospectus or any amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act of 1933, as amended, amending, if necessary, the list of selling shareholders to include the pledgee, transferee or other successors in interest as selling shareholders under this prospectus. The selling shareholders also may transfer and donate the shares of Common Stock in other circumstances in which case the transferees, donees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.

The selling shareholders and any broker-dealer participating in the distribution of the shares of Common Stock may be deemed to be “underwriters” within the meaning of the Securities Act, and any commission paid, or any discounts or concessions allowed to, any such broker-dealer may be deemed to be underwriting commissions or discounts under the Securities Act. At the time a particular offering of the shares of Common Stock is made, a prospectus supplement, if required, will be distributed which will set forth the aggregate amount of shares of Common Stock being offered and the terms of the offering, including the name or names of any broker-dealers or agents, any discounts, commissions and other terms constituting compensation from the selling shareholders and any discounts, commissions or concessions allowed or reallowed or paid to broker-dealers.

Under the securities laws of some states, the shares of Common Stock may be sold in such states only through registered or licensed brokers or dealers. In addition, in some states the shares of Common Stock may not be sold unless such shares have been registered or qualified for sale in such state or an exemption from registration or qualification is available and is complied with.

There can be no assurance that any selling shareholder will sell any or all of the shares of Common Stock registered pursuant to the shelf registration statement, of which this prospectus forms a part.

The selling shareholders and any other person participating in such distribution will be subject to applicable provisions of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, including, without limitation, Regulation M of the Exchange Act, which may limit the timing of purchases and sales of any of the shares of Common Stock by the selling shareholders and any other participating person. Regulation M may also restrict the ability of any person engaged in the distribution of the shares of Common Stock to engage in market-making activities with respect to the shares of Common Stock. All of the foregoing may affect the marketability of the shares of Common Stock and the ability of any person or entity to engage in market-making activities with respect to the shares of Common Stock.

We will pay all expenses of the registration of the shares of Common Stock pursuant to the registration rights agreement, estimated to be $[     ] in total, including, without limitation, Securities and Exchange Commission filing fees and expenses of compliance with state securities or “blue sky” laws; provided, however, that a selling shareholder will pay all underwriting discounts and selling commissions, if any and any related legal expenses incurred by it. We will indemnify the selling shareholders against liabilities, including some liabilities under the Securities Act, in accordance with the registration rights agreements, or the selling shareholders will be entitled to contribution. We may be indemnified by the selling shareholders against civil liabilities, including liabilities under the Securities Act, that may arise from any written information furnished to us by the selling shareholder specifically for use in this prospectus, in accordance with the related registration rights agreements, or we may be entitled to contribution.

Once sold under the shelf registration statement, of which this prospectus forms a part, the shares of Common Stock will be freely tradable in the hands of persons other than our affiliates.

EX-99.1

Exhibit 99.1

Xspand Products Lab Announces Transformative Acquisition of Strategic Partner, Edison Nation LLC

Accretive Acquisition Provides Runway for Significant Growth Through Open Innovation

Phillipsburg, New Jersey – July 2, 2018 – Xspand Products Lab, Inc. (“Xspand”), a full-service product development company, today announced that it has signed a member purchase agreement to acquire 100% of the common membership interests of their previously announced strategic partner, Edison Nation, LLC (“Edison Nation”), for total consideration of $850,000 and 990,000 shares of common stock and assumption of debt. The acquisition is expected to close by the end of July 2018.

Edison Nation operates an open innovation marketplace for consumer and medical product ideas and intellectual property. They have received over 100,000 idea submissions from innovators, including independent inventors, corporate and governmental agencies, universities and hospitals and their respective communities and employees, and their successfully licensed products have sold in excess of $250 million at retail. 

Edison Nation provides corporate partners with complete, fully managed, turn-key open innovation solutions to accept, review and acquire ideas on a confidential basis from their employees, customers and our community members. Partners engage Edison Nation to find them new products to acquire and Edison Nation aggregates ideas for them from inventors around the world. Edison Nation has managed over 300 innovation campaigns in their marketplace for clients, who include many of the largest manufacturers and retailers in the world such as Amazon, Bed Bath and Beyond, HSN, Rite Aid, P&G, Jarden and more.

In connection with the acquisition, Louis Foreman, the founder, CEO and majority shareholder of Edison Nation, will join Xspand as an Independent Director, effective upon closing.

“Today, innovation is alive and well, but the needs of our community have grown,” said Louis Foreman, CEO of Edison Nation. “With the advent of crowdfunding and e-commerce, the way new products are brought to market has changed. Innovators now need the ability to not only share their ideas but also introduce them to consumers quickly and effectively. Our acquisition by Xspand Products Lab meets these needs by unleashing services and resources to not only develop products, but also to manufacture and distribute them. For 10 years, Edison Nation has been the trusted marketplace for innovators to share their ideas, this is not going to change, it’s only going to get bigger.”

“We are very pleased to welcome the Edison Nation community to the Xspand family,” said Chris Ferguson, Chief Executive Officer of Xspand Products Lab. “The acquisition of Edison Nation provides not only an experienced team and wholesale selection of micro-brands for us to leverage, but more importantly, provides a platform that I believe will drive future growth for years to come. The ability to efficiently aggregate innovation, combined with Xspand’s de-risked product development model, will enable innovators to rapidly address opportunities in the most efficient manner possible.”

“We look forward to working with the Edison Nation community to bring their ideas and inventions to life. Together, I am confident that we will be a driving force behind the next wave of internationally recognized products, which we believe may lead to significant value creation both for innovators and our shareholders,” concluded Ferguson.

About Edison Nation, LLC

Since 2008, Edison Nation has been the go-to resource for independent innovators with great consumer product invention ideas. The company is the only innovation partner with multiple commercialization channels to bring new product ideas – from sketches, to proof of concept prototypes and late-stage inventions – to consumers worldwide. The community platform has generated hundreds of millions at retail. The company is committed to bringing new consumer innovation to market through its secure and proprietary platform found at www.EdisonNation.com.

About Xspand Products Lab, Inc.

Xspand Products Lab, Inc. is a vertically integrated and full-service product development and manufacturing company, including design, sales, fulfillment and shipping. Xspand's model is to provide a risk mitigated platform that connects innovators with companies to bring new products to market. For more information, please visit www.xspandproductslab.com.

Safe Harbor

This press release contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, included in this press release regarding strategy, future operations and plans, including assumptions underlying such statements, are forward-looking statements, and should not be relied upon as representing Xspand’s views as of any subsequent date. Such forward-looking statements are based on information available to Xspand as of the date of this release and involve a number of risks and uncertainties, some beyond Xspand’s control, that could cause actual results to differ materially from those anticipated by these forward-looking statements, including consumer, regulatory and other factors affecting demand for Xspand’s products, any difficulty in marketing Xspand’s products in global markets, competition in the market for consumer products, any inability to raise capital to fund operations and service Xspand’s debt. Additional information that could lead to material changes in Xspand’s performance is contained in its filings with the SEC. Xspand is under no obligation to, and expressly disclaims any responsibility to, update or alter forward-looking statements contained in this release, whether as a result of new information, future events or otherwise.

Investor Relations Contact:

Greg Falesnik
Managing Director
MZ North America
Direct: 949-385-6449
XSPL@mzgroup.us