Execution Version

AGREEMENT AND PLAN OF MERGER

among

EASTSIDE DISTILLING, INC.,

CRAFT ACQUISITION CO LLC,

CRAFT CANNING LLC,

OWEN LINGLEY, AS EQUITYHOLDER REPRESENTATIVE,

and

THE EQUITYHOLDERS NAMED HEREIN

dated as of

January 11, 2019

AGREEMENT AND PLAN OF MERGER

This Agreement and Plan of Merger (this “ Agreement ”), dated as of January 11, 2019, is entered into by and among Eastside Distilling, Inc., a Nevada corporation (the “ Parent ”), Craft Acquisition Co LLC, an Oregon limited liability company and wholly owned subsidiary of Parent (“ Sub ”), Craft Canning LLC, an Oregon limited liability company (the “ Company ”), Owen Lingley, as Equityholder Representative appointed pursuant to Section 11.13 hereof (the “ Equityholder Representative ”), and the holders of the Company Interests party hereto (the “ Equityholders ”). The Parent, Sub, the Company, the Equityholder Representative and the Equityholders are collectively referred to herein as the “ Parties ” and each individually as a “ Party .” Capitalized terms used in this Agreement without definition shall have the meaning given to such terms in ARTICLE I hereof.

RECITALS

WHEREAS, the Equityholders own all of the issued and outstanding membership interests of the Company, consisting of 100 units (collectively, the “ Company Interests ”);

WHEREAS, Company is an Oregon limited liability company taxed as an S-corporation;

WHEREAS, Sub is wholly owned by Parent and is a disregarded entity for tax purposes;

WHEREAS, the Board of Directors of Parent and members and/or managers of Sub and Company believe it is advisable and in the best interests of each Party and their respective owners that Parent acquire the Company through the statutory merger of the Company with and into Sub in a forward merger (the “ Merger ”) and, in furtherance thereof, have approved this Agreement and the Merger;

WHEREAS, pursuant to the Merger, among other things, and subject to the terms and conditions of this Agreement, at the Effective Time (as defined below) all of the issued and outstanding Company Interests of the Company shall be converted into the right to receive the consideration set forth herein;

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

ARTICLE I

Definitions

The following terms have the meanings specified or referred to in this ARTICLE I:

“ 2019 EBITDA Amount ” has the meaning set forth in Section 2.09(a).

“ Acquisition Proposal ” has the meaning set forth in Section 6.10(a).

“ Action ” means any claim, action, cause of action, demand, lawsuit, arbitration, inquiry, audit, notice of violation, proceeding, litigation, citation, summons, subpoena or investigation of any nature, civil, criminal, administrative, regulatory or otherwise, whether at law or in equity.

“ Adjustment Ceiling ” means $5,200,000.

“ Affiliate ” of a Person means any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person. The term “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

“ Agreement ” has the meaning set forth in the preamble.

“ Annual Financial Statements ” has the meaning set forth in Section 3.05.

“ Articles of Merger ” has the meaning set forth in Section 2.02.

“ Balance Sheet ” has the meaning set forth in Section 3.05.

“ Balance Sheet Date ” has the meaning set forth in Section 3.05.

“ Basket ” has the meaning set forth in Section 9.04(a).

“ Benefit Plan ” has the meaning set forth in Section 3.22(a).

“ Business ” means the business of the Company as conducted immediately prior to the Closing.

“ Business Day ” means any day except Saturday, Sunday or any other day on which commercial banks located in Seattle, Washington are authorized or required by Law to be closed for business.

“ Cap ” means $2,987,964.

“ Capital Payment Amount ” means $193,931, which constitutes the capital purchases paid by the Company prior to Closing for purposes of satisfying production goals in the first and second calendar quarters of 2019.

“ Cash ” means the cash of the Company as of Closing.

“ Cash Closing Payment ” has the meaning set forth in Section 2.07.

“ Cash Merger Consideration ” has the meaning set forth in Section 2.05.

“ Cash-out Equityholder ” means any Equityholder who is not an “accredited investor” as such term is defined in Section 501(a) of Regulation D promulgated under the Securities Act.

“ CERCLA ” means the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. §§ 9601 et seq.

“ Closing ” has the meaning set forth in Section 2.02.

“ Closing Date ” has the meaning set forth in Section 2.02.

“ Closing Date Debt ” means the Indebtedness set forth in Annex I attached hereto.

“ Closing Statement ” has the meaning set forth in Section 2.08.

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

“ Company ” has the meaning set forth in the recitals.

“ Company Fundamental Reps ” has the meaning set forth in Section 8.02(a).

“ Company Intellectual Property ” means all Intellectual Property that is owned or held for use by the Company and its Subsidiaries.

“ Company Interests ” has the meaning set forth in the recitals.

“ Company IP Agreements ” means all licenses, sublicenses, consent to use agreements, settlements, coexistence agreements, covenants not to sue, permissions and other Contracts (including any right to receive or obligation to pay royalties or any other consideration), whether written or oral, relating to Intellectual Property to which the Company or any of its Subsidiaries is a party, beneficiary or otherwise bound.

“ Company IP Registrations ” means all Company Intellectual Property that is subject to any issuance registration, application or other filing by, to or with any Governmental Authority or authorized private registrar in any jurisdiction, including registered trademarks, domain names and copyrights, issued and reissued patents and pending applications for any of the foregoing.

“ Company’s Knowledge ” or any other similar knowledge qualification, including, without limitation references to the Company’s awareness, means the actual knowledge of any of the Equityholders or Todd Garrett, in each case after due inquiry.

“ Company Services ” has the meaning set forth in Section 3.11.

“ Company Transaction Expenses ” has the meaning set forth in Section 11.01.

“ Computer Systems ” has the meaning set forth in Section 3.13(b)(i).

“ Consideration Spreadsheet ” has the meaning set forth in Section 2.11.

“ Continuing Employee PIIAs ” has the meaning set forth in Section 6.07.

“ Continuing Employees ” has the meaning set forth in Section 6.07.

“ Contracts ” means all contracts, leases, deeds, mortgages, licenses, instruments, notes, commitments, undertakings, indentures, joint ventures and all other agreements, commitments and legally binding arrangements, whether written or oral.

“ Delinquent Entity ” has the meaning set forth in Section 3.03.

“ Direct Claim ” has the meaning set forth in Section 9.05(c).

“ Disclosure Schedules ” means the Disclosure Schedules delivered by the Company and the Equityholders concurrently with the execution and delivery of this Agreement.

“ Dollars or $ ” means the lawful currency of the United States.

“ Disputed Amounts ” has the meaning set forth in Section 2.08(c).

“ EBITDA ” means net income (loss) of the Company before interest income and expense; income tax expense; depreciation expense and amortization expense; any non-cash long-lived asset impairment charge; non-cash stock-based compensation; acquisition and related expenses; and any other one-time, non-recurring income and expense items of the Company.

“ EBITDA Adjustment ” has the meaning set forth in Section 2.09(d).

“ EBITDA Dispute Notice ” has the meaning set forth in Section 2.09(b).

“ EBITDA Disputed Items ” has the meaning set forth in Section 2.09(c).

“ EBITDA Notice ” has the meaning set forth in Section 2.09(a).

“ EBITDA Resolution Period ” has the meaning set forth in Section 2.09(b).

“ EBITDA Review Period ” has the meaning set forth in Section 2.09(b).

“ EBITDA Target ” means $1,000,000.

“ Effective Time ” has the meaning set forth in Section 2.02.

“ Employment Agreements ” has the meaning set forth in Section 6.07.

“ Encumbrance ” means any charge, claim, community property interest, pledge, condition, equitable interest, lien (statutory or other), option, security interest, mortgage, easement, encroachment, right of way, right of first refusal, or restriction of any kind, including any restriction on use, voting, transfer, receipt of income or exercise of any other attribute of ownership.

“ Environmental Claim ” means any Action, Governmental Order, lien, fine, penalty, or, as to each, any settlement or judgment arising therefrom, by or from any Person alleging liability of whatever kind or nature (including liability or responsibility for the costs of enforcement proceedings, investigations, cleanup, governmental response, removal or remediation, natural resources damages, property damages, personal injuries, medical monitoring, penalties, contribution, indemnification and injunctive relief) arising out of, based on or resulting from: (a) the presence, Release of, or exposure to, any Hazardous Materials; or (b) any actual or alleged non-compliance with any Environmental Law or term or condition of any Environmental Permit.

“ Environmental Law ” means any applicable Law, and any Governmental Order or binding agreement with any Governmental Authority: (a) relating to pollution (or the cleanup thereof) or the protection of natural resources, endangered or threatened species, human health or safety, or the environment (including ambient air, soil, surface water or groundwater, or subsurface strata); or (b) concerning the presence of, exposure to, or the management, manufacture, use, containment, storage, recycling, reclamation, reuse, treatment, generation, discharge, transportation, processing, production, disposal or remediation of any Hazardous Materials. The term “Environmental Law” includes, without limitation, the following (including their implementing regulations and any state analogs): the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. §§ 9601 et seq.; the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976, as amended by the Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. §§ 6901 et seq.; the Federal Water Pollution Control Act of 1972, as amended by the Clean Water Act of 1977, 33 U.S.C. §§ 1251 et seq.; the Toxic Substances Control Act of 1976, as amended, 15 U.S.C. §§ 2601 et seq.; the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. §§ 11001 et seq.; the Clean Air Act of 1966, as amended by the Clean Air Act Amendments of 1990, 42 U.S.C. §§ 7401 et seq.; and the Occupational Safety and Health Act of 1970, as amended, 29 U.S.C. §§ 651 et seq.

“ Environmental Notice ” means any written directive, notice of violation or infraction, or notice respecting any Environmental Claim relating to actual or alleged non-compliance with any Environmental Law or any term or condition of any Environmental Permit.

“ Environmental Permit ” means any Permit, letter, clearance, consent, waiver, closure, exemption, decision or other action required under or issued, granted, given, authorized by or made pursuant to Environmental Law.

“ Equityholder Fundamental Reps ” has the meaning set forth in Section 8.02(a).

“ Equityholder Representative ” has the meaning set forth in the preamble.

“ Equityholder Representative’s Accountants ” means Isler Northwest LLC.

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder.

“ ERISA Affiliate ” means all employers (whether or not incorporated) that would be treated together with the Company, any of its Subsidiaries or any of its Affiliates as a “single employer” within the meaning of Section 414 of the Code.

“ Estimated Closing Amount ” means the difference obtained by subtracting the sum of the Estimated Closing Date Debt and the Estimated Closing Transaction Expenses from the sum of the Estimated Closing Cash and the Capital Payments Amount.

“ Estimated Closing Cash ” has the meaning set forth in Section 2.08(a).

“ Estimated Closing Date Debt ” has the meaning set forth in Section 2.08(a).

“ Estimated Closing Transaction Expenses ” has the meaning set forth in Section 2.08(a).

“ Estimated Closing Statement ” has the meaning set forth in Section 2.08(a).

“ Excluded Claims ” has the meaning set forth in Section 6.13.

“ FAR ” has the meaning set forth in Section 3.14(b).

“ FCPA ” has the meaning set forth in Section 3.20(c).

“ Final Closing Amount ” means the difference obtained by subtracting the sum of the Closing Date Debt and the Company Transaction Expenses from the Cash and the Capital Payments Amount.

“ Financial Statements ” has the meaning set forth in Section 3.05.

“ Fundamental Reps ” has the meaning set forth in Section 8.02(a).

“ GAAP ” means United States generally accepted accounting principles in effect from time to time.

“ Government Contracts ” has the meaning set forth in Section 3.08(a)(viii).

“ Governmental Authority ” means any federal, state, local or foreign government or political subdivision thereof, or any agency or instrumentality of such government or political subdivision, or any self-regulated organization or other non-governmental regulatory authority or quasi-governmental authority (to the extent that the rules, regulations or orders of such organization or authority have the force of Law), or any arbitrator, court or tribunal of competent jurisdiction.

“ Governmental Order ” means any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority.

“ Hazardous Materials ” means: (a) any material, substance, chemical, waste, product, derivative, compound, mixture, solid, liquid, mineral or gas, in each case, whether naturally occurring or manmade, that is hazardous, acutely hazardous, toxic, or words of similar import or regulatory effect under Environmental Laws; and (b) any petroleum or petroleum-derived products, radon, radioactive materials or wastes, asbestos in any form, lead or lead-containing materials, urea formaldehyde foam insulation, and polychlorinated biphenyls.

“ Indebtedness ” means, without duplication and with respect to the Company and its Subsidiaries, all (a) indebtedness for borrowed money; (b) obligations for the deferred purchase price of property or services, (c) long or short-term obligations evidenced by notes, bonds, debentures or other similar instruments; (d) obligations under any interest rate, currency swap or other hedging agreement or arrangement; (e) capital lease obligations; (f) reimbursement obligations under any letter of credit, banker’s acceptance or similar credit transactions; (g) guarantees made by the Company or any of its Subsidiaries on behalf of any third party in respect of obligations of the kind referred to in the foregoing clauses (a) through (f); (h) other long-term Liabilities; and (i) any unpaid interest, prepayment penalties, premiums, costs and fees that would arise or become due as a result of the prepayment of any of the obligations referred to in the foregoing clauses (a) through (h).

“ Indemnified Party ” has the meaning set forth in Section 9.05.

“ Indemnifying Party ” has the meaning set forth in Section 9.05.

“ Indemnity Reduction Amounts ” has the meaning set forth in Section 9.04.

“ Independent Accountant ” has the meaning set forth in Section 2.08(c).

“ Investment Entity ” has the meaning set forth in Section 3.03.

“ Insurance Policies ” has the meaning set forth in Section 3.18.

“ Intellectual Property ” means all intellectual property and industrial property rights and assets, and all rights, interests and protections that are associated with, similar to, or required for the exercise of, any of the foregoing, however arising, pursuant to the Laws of any jurisdiction throughout the world, whether registered or unregistered, including any and all: (a) trademarks, service marks, trade names, brand names, logos, trade dress, design rights and other similar designations of source, sponsorship, association or origin, together with the goodwill connected with the use of and symbolized by, and all registrations, applications and renewals for, any of the foregoing; (b) internet domain names, whether or not trademarks, registered in any top-level domain by any authorized private registrar or Governmental Authority, web addresses, web pages, websites and related content, accounts with Twitter, Facebook and other social media companies and the content found thereon and related thereto, and URLs; (c) works of authorship, expressions, designs and design registrations, whether or not copyrightable, including copyrights, author, performer, moral and neighboring rights, and all registrations, applications for registration and renewals of such copyrights; (d) inventions, discoveries, trade secrets, business and technical information and know-how, databases, data collections and other confidential and proprietary information and all rights therein; (e) patents (including all reissues, divisionals, provisionals, continuations and continuations-in-part, re-examinations, renewals, substitutions and extensions thereof), patent applications, and other patent rights and any other Governmental Authority-issued indicia of invention ownership (including inventor’s certificates, petty patents and patent utility models); (f) software and firmware, including data files, source code, object code, application programming interfaces, architecture, files, records, schematics, computerized databases and other related specifications and documentation; and (g) semiconductor chips and mask works.

“ Interim Balance Sheet ” has the meaning set forth in Section 3.05.

“ Interim Balance Sheet Date ” has the meaning set forth in Section 3.05.

“ Interim Financial Statements ” has the meaning set forth in Section 3.05.

“ Law ” means any statute, law, ordinance, regulation, rule, code, order, constitution, treaty, common law, judgment, decree, other requirement or rule of law of any Governmental Authority.

“ Liabilities ” has the meaning set forth in Section 3.06.

“ Losses ” means losses, damages, liabilities, deficiencies, Actions, judgments, interest, awards, penalties, fines, costs or expenses of whatever kind, including, without limitation, incidental, consequential, special or indirect damages (including loss of revenue, diminution of value or any damages based on any type of multiple), reasonable attorneys’ fees and the cost of enforcing any right to indemnification hereunder and the cost of pursuing any insurance providers; provided, however, that “ Losses ” shall not include punitive damages, except in the case of fraud or to the extent actually awarded to a Governmental Authority or other third party.

“ Malicious Instructions ” has the meaning set forth in Section 3.13(b)(iii).

“ Material Adverse Effect ” means any event, occurrence, fact, condition or change that is, or would reasonably be expected to become, individually or in the aggregate, materially adverse to (a) the business, results of operations, condition (financial or otherwise) or assets of the Company or any of its Subsidiaries, or (b) the ability of the Company, any of its Subsidiaries, or the Equityholders to consummate the transactions contemplated hereby on a timely basis; provided, however, that “Material Adverse Effect” shall not include any event, occurrence, fact, condition or change, directly or indirectly, arising out of or attributable to: (i) general economic or political conditions; (ii) conditions generally affecting the industries in which the Company or any of its Subsidiaries operates; (iii) any changes in financial or securities markets in general; (iv) acts of war (whether or not declared), armed hostilities or terrorism, or the escalation or worsening thereof; (v) any action required or permitted by this Agreement, except pursuant to Section 3.04 and Section 6.03; (vi) any changes in applicable Laws or accounting rules, including GAAP; or (vii) the public announcement, pendency or completion of the transactions contemplated by this Agreement; provided further, however, that any event, occurrence, fact, condition or change referred to in clauses (i) through (iv) immediately above shall be taken into account in determining whether a Material Adverse Effect has occurred or would reasonably be expected to occur to the extent that such event, occurrence, fact, condition or change has a disproportionate effect on the Company or any of its Subsidiaries compared to other participants in the industries in which the Company or any of its Subsidiaries conducts its respective business.

“ Material Contracts ” has the meaning set forth in Section 3.08(a).

“ Material Customers ” has the meaning set forth in Section 3.17(a).

“ Material Suppliers ” has the meaning set forth in Section 3.17(b).

“ Merger ” has the meaning set forth in the preamble.

“ Merger Consideration ” means, subject to the Adjustment Ceiling, an amount equal to (a) Five Million Four Hundred Thousand Dollars ($5,400,000) plus (b) the amount of Estimated Closing Cash, plus (c) the amount of the Capital Payments Amount , minus (c) the amount of Estimated Closing Date Debt, and minus (d) the Estimated Closing Transaction Expenses. A sample calculation of the Merger Consideration is attached as Annex II for illustrative purposes only.

“ Non-U.S. Benefit Plan ” has the meaning set forth in Section 3.22(a).

“ Notes ” has the meaning set forth in Section 2.07.

“ Overpayment Amount ” has the meaning set forth in Section 2.08(d).

“ Parent ” has the meaning set forth in the preamble.

“ Parent Common Stock ” means the shares of common stock of Parent, $0.0001 par value per share.

“ Parent Indemnitees ” has the meaning set forth in Section 9.02.

“ Parent’s Accountants ” means the certified public accountants contracted for, hired, engaged or employed by Parent.

“ Parent SEC Documents ” has the meaning set forth in Section 5.07.

“ Percentage Share ” means, with respect to any Equityholder, (A) the total number of Company Interests held by such Equityholder immediately prior to Closing, divided by (B) the aggregate number of Company Interests held by all Equityholders immediately prior to Closing, as set forth on the Consideration Spreadsheet.

“ Permits ” means all permits, licenses, franchises, approvals, authorizations, registrations, certificates, variances and similar rights obtained, or required to be obtained, from Governmental Authorities.

“ Permitted Encumbrances ” has the meaning set forth in Section 3.09(a).

“ Person ” means an individual, corporation, partnership, joint venture, limited liability company, Governmental Authority, unincorporated organization, trust, association or other entity.

“ PII ” has the meaning set forth in Section 3.13(a).

“ Post-Closing Adjustment ” has the meaning set forth in Section 2.08(b).

“ Post-Closing Tax Period ” means any taxable period beginning after the Closing Date and, with respect to any taxable period beginning before and ending after the Closing Date, the portion of such taxable period beginning after the Closing Date.

“ Post-Closing Taxes ” means Taxes of the Company or its Subsidiaries for any Post-Closing Tax Period.

“ Pre-Closing Tax Period ” means any taxable period ending on or before the Closing Date and, with respect to any taxable period beginning before and ending after the Closing Date, the portion of such taxable period ending on and including the Closing Date.

“ Pre-Closing Taxes ” means Taxes of the Company or its Subsidiaries for any Pre-Closing Tax Period.

“ Real Property ” means the real property owned, leased or subleased by the Company or its Subsidiaries, together with all buildings, structures and facilities located thereon.

“ Release ” means any actual or threatened release, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, abandonment, disposing or allowing to escape or migrate into or through the environment (including, without limitation, ambient air (indoor or outdoor), surface water, groundwater, land surface or subsurface strata or within any building, structure, facility or fixture).

“ Releasees ” has the meaning set forth in Section 6.12.

“ Released Claims ” has the meaning set forth in Section 6.12.

“ Representative ” means, with respect to any Person, any and all directors, officers, employees, consultants, financial advisors, counsel, accountants and other agents of such Person.

“ Required Consents ” has the meaning set forth in Section 6.03(b).

“ Resolution Period ” has the meaning set forth in Section 2.08(c).

“ Restricted Period ” has the meaning set forth in Section 6.02(a).

“ Review Period ” has the meaning set forth in Section 2.08(c).

“ SBA Contract ” has the meaning set forth in Section 3.14(b).

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

“ Seller Indemnitees ” has the meaning set forth in Section 9.03.

“ Sub ” has the meaning set forth in the preamble.

“ Subscription Agreements ” has the meaning set forth in Section 2.05(b).

“ Statement of Objections ” has the meaning set forth in Section 2.08(c).

“ Straddle Period ” has the meaning set forth in Section 7.04.

“ Subsidiary ” means, with respect to any Person, an entity in which such Person directly or indirectly owns 50% or more of the outstanding capital stock (or other similar voting interests), or in which such Person directly or indirectly owns 50% or more of the interests having the power to direct or cause the direction of the management and policies of such entity.

“ Tangible Property ” has the meaning set forth in Section 3.10.

“ Taxes ” means all federal, state, local, foreign and other income, gross receipts, sales, use, production, ad valorem, transfer, franchise, registration, profits, license, lease, service, service use, withholding, payroll, employment, unemployment, estimated, excise, severance, environmental, stamp, occupation, premium, property (real or personal), real property gains, windfall profits, customs, duties or other taxes, fees, assessments or charges of any kind whatsoever, together with any interest, additions or penalties with respect thereto and any interest in respect of such additions or penalties.

“ Tax Claim ” has the meaning set forth in Section 7.05.

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

“ Territory ” means Colorado, Oregon and Washington.

“ Third Party Claim ” has the meaning set forth in Section 9.05(a).

“ Transaction Documents ” means this Agreement, the Notes, the Employment Agreements, the Security Agreement attached hereto as Exhibit A and the Subscription Agreements.

“ Transaction Expenses ” means (a) all fees, costs and expenses (including fees, costs and expenses of legal counsel, investment bankers, brokers, accountants, financial advisers and other Representatives and consultants and appraisal fees, costs and expenses) incurred, directly or indirectly, whether accrued or not, by the Company, any of its Subsidiaries of the Company, and any Affiliate of the Company or any of its Subsidiaries of the Company at or prior to the Closing (or that otherwise arise prior to the Closing) in connection with the preparation, negotiation and execution of this Agreement and the Transaction Documents, and the performance and consummation of the transactions contemplated hereby and thereby, including with respect to any auction or sale process leading up to the execution of this Agreement (including any expense reimbursement or other amount payable to any Person in connection therewith); (b) all management, monitoring, advisory, supervisory or other equityholder or director’s fees or bonuses or payments of a similar nature to or for the benefit of any Equityholder or any of their respective Affiliates payable, directly or indirectly, by the Company or any of its Subsidiaries to any Person resulting from or otherwise paid in connection with the execution of this Agreement and the Transaction Documents or consummation of the transactions contemplated hereby or thereby; and (c) all amounts payable, directly or indirectly, by the Company or any of its Subsidiaries to any Person resulting from or otherwise paid in connection with the execution of this Agreement and the Transaction Documents or consummation of the transactions contemplated hereby or thereby, including any change of control payment, stay bonus, retention bonus, transaction bonus or other similar payment right of any Person, and including any obligation of the Company or any of its Subsidiaries for the employer portion of any employment-related Taxes arising with respect to the payment of the foregoing amounts, in the case of each of the foregoing clauses (a) – (c), to the extent unpaid and outstanding immediately prior to the Closing.

“ Underpayment Amounts ” has the meaning set forth in Section 2.08(d).

“ Undisputed Amounts ” has the meaning set forth in Section 2.08(c).

“ Union ” has the meaning set forth in Section 3.23(b).

“ WARN Act ” means the federal Worker Adjustment and Retraining Notification Act of 1988, and similar state, local and foreign laws related to plant closings, relocations, mass layoffs and employment losses.

ARTICLE II

the merger

Section 2.01 The Merger. At the Effective Time and subject to and upon the terms and conditions of this Agreement and the applicable provisions of the Limited Liability Company Act of the State of Oregon (“ Oregon Law ”), the Company shall be merged with and into Sub, the separate corporate existence of the Company shall cease, and Sub shall continue as the surviving entity and as a wholly owned subsidiary of Parent. The surviving entity after the Merger is sometimes referred to hereinafter as the “ Surviving Entity .”

Section 2.02 Effective Time . Unless this Agreement is earlier terminated pursuant to ARTICLE X hereof, the closing of the Merger (the “ Closing ”) will take place on a Business Day as promptly as practicable after the execution and delivery hereof by the parties hereto, and following satisfaction or waiver of the conditions set forth in ARTICLE VIII hereof, at the offices of Summit Law Group, PLLC, 315 Fifth Avenue South, Suite 1000, Seattle, Washington 98104, unless another time or place is mutually agreed upon in writing by Parent and the Company. The date upon which the Closing actually occurs shall be referred to herein as the “ Closing Date .” On the Closing Date, the parties hereto shall cause the Merger to be consummated by filing an Articles of Merger in the form to be approved by Parent and attached hereto as Exhibit B , with the Secretary of State of the State of Oregon (the “ Articles of Merger ”), in accordance with the applicable provisions of Oregon Law (the time of such filing shall be referred to herein as the “ Effective Time ”).

Section 2.03 Effect of the Merger; Tax Consequences .

(a) At the Effective Time, the effect of the Merger shall be as provided in the applicable provisions of Oregon Law. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, all of the property, rights, privileges, powers and franchises of the Company and Sub shall vest in the Surviving Entity, and all debts, liabilities and duties of the Company and Sub shall become the debts, liabilities and duties of the Surviving Entity.

(b) The Merger is intended to qualify as a forward reorganization within the meaning of the provisions of Section 368(a) of the Code; (ii) the parties hereto hereby adopt this Agreement as a “plan of reorganization” within the meaning of section 1.368-2(g) and 1.368-3(a) of the United States Treasury Regulations; and (iii) each of the Company, Sub and Parent shall report the Merger as a reorganization within the meaning of Section 368(a) of the Code. No Party will make a Code Section 338(h)(10) or similar election in relation to the transactions described herein. Each of Parent, Sub and the Company agrees that it will not engage in any action or fail to take any action, and will cause its respective Affiliates not to engage in any action, or fail to take any action, which action or failure to take action would reasonably be expected to cause the Merger to fail to qualify as a “reorganization” under Section 368(a) of the Code; provided , however , that notwithstanding anything to the contrary in this Agreement, neither the Parent, Sub or the Company shall have any liability to the Equityholders for any Taxes resulting from the failure of the Merger to so qualify as a “reorganization” under Section 368 (a) of the Code.

Section 2.04 Governing Documents; Mangers and Officers .

(a) The articles of organization and other organizational documents of Sub immediately prior to the Effective Time shall be controlling in relation to Sub following the Effective Time.

(b) The managers and officers of Sub immediately prior to the Effective Time shall be the managers officers of the Surviving Entity immediately after the Effective Time, each to hold office in accordance with the provisions of the organizational documents of the Surviving Entity.

Section 2.05 Merger Consideration .

(a) At the Effective Time, by virtue of the Merger and without any action on the part of Sub, the Company or the Equityholders, each share of Company Interests outstanding immediately prior to the Effective Time, upon the terms and subject to the conditions set forth in this Agreement, will be canceled and extinguished and will be converted automatically into the right to receive that portion of the Merger Consideration as set forth below.

(b) The Merger Consideration shall be payable as follows: (a) the amount payable in cash as set forth on the Consideration Spreadsheet (the “ Cash Merger Consideration ”); (b) the issuance by Parent of secured promissory notes in the principal amounts set forth on the Consideration Spreadsheet (subject to adjustment pursuant to Section 2.08, Section 2.09(d) and Section 9.06) in substantially the form attached hereto as Exhibit C (each, a “ Note ” and, collectively, the “ Notes ”); and (c) a number of unregistered shares of Parent Common Stock set forth on the Consideration Spreadsheet (subject to adjustment pursuant to Section 2.08, and Section 9.06) (the “ Consideration Shares ”) pursuant to Restricted Stock Purchase Agreements in substantially the form attached hereto as Exhibit D (the “ Subscription Agreements ”). The Parties acknowledge and agree that, with respect to any Merger Consideration adjustment or otherwise, including, without limitation, pursuant to Section 2.08, Section 2.09, or Section 9.06, any such adjustment shall maintain a ratio such that at no time does the Consideration Shares drop below forty percent (40%) of the aggregate Merger Consideration. The Parties also acknowledge and agree that notwithstanding anything to the contrary herein, no Consideration Shares shall be issued to the Cash-out Equityholders.

Section 2.06 Transactions to be Effected at the Closing.

(a) At the Closing, Parent and/or Sub shall deliver to each Equityholder:

(i) (A) the Cash Closing Payment for such Equityholder as set forth on the Consideration Spreadsheet next to such Equityholder’s name, payable by wire transfer of immediately available funds to an account designated in writing by such Equityholder to Parent no later than two (2) Business Days prior to the Closing Date; (B) a Note in the principal amount set forth on the Consideration Spreadsheet next to such Equityholder’s name; and (C) except for the Cash-out Equityholders, that number of Consideration Shares as set forth on the Consideration Spreadsheet next to such Equityholder’s name;

(ii) the Transaction Documents and all other agreements, documents, instruments or certificates required to be delivered by Parent and/or Sub at or prior to the Closing pursuant to Section 8.03 of this Agreement.

(b) At the Closing, Parent shall deliver payment to third parties, by wire transfer of immediately available funds, that amount of money as is due and owing from the Company or any of its Subsidiaries (as applicable) to such third parties as Transaction Expenses as set forth on the Estimated Closing Statement .

(c) At the Closing, the Company and each Equityholder shall deliver to Parent:

(i) certificate(s) evidencing the Company Interests held by such Equityholder, free and clear of all Encumbrances, duly endorsed in blank or accompanied by membership interest powers or other instruments of transfer duly executed in blank, with all required membership interest transfer tax stamps affixed thereto; and

(ii) the Transaction Documents and all other agreements, documents, instruments or certificates required to be delivered by the Equityholders at or prior to the Closing pursuant to Section 8.02 of this Agreement.

Section 2.07 Closing Payments.

(a) Cash Payments to Equityholders. At the Closing, the Parent shall pay to each Equityholder an amount in cash (such amount for each Equityholder, the “ Cash Closing Payment ”) equal to the amount listed next to such Equityholder’s name on the Consideration Spreadsheet.

(b) Notes Issuable to Equityholders. At the Closing, the Parent shall issue to each Equityholder the Note for such Equityholder, in the principal amounts listed next to such Equityholder’s name on the Consideration Spreadsheet, which shall be based on such Equityholder’s Percentage Share.

(c) Stock-Based Consideration to Equityholders . At the Closing, the Parent shall issue to each Equityholder who is not a Cash-out Equityholder that number of Consideration Shares listed next to such Equityholder’s name on the Consideration Spreadsheet.

Section 2.08 Merger Consideration Adjustment.

(a) Estimated Closing Statement. At least three (3) Business Days prior to the Closing, the Company shall prepare and deliver to Parent a statement (the “ Estimated Closing Statement ”) setting forth its good faith estimates of (i) the Closing Date Debt (the “ Estimated Closing Date Debt ”) and Company Transaction Expenses (including an itemized list of each such Transaction Expense with a description of the nature of such expense and the Person to whom such expense is owed) (the “ Estimated Closing Transaction Expenses ”), (ii) the Cash (the “ Estimated Closing Cash ”), (iii) the Capital Payments Amount and (iv) the Estimated Closing Amount, which statement shall contain an estimated balance sheet of the Company as of the Closing Date (without giving effect to the transactions contemplated hereby), and a certificate of the Chief Executive Officer of the Company that the Estimated Closing Statement was prepared using the same accounting methods, practices, principles, policies and procedures, with consistent classifications, judgments and valuation and estimation methodologies that were used in the preparation of the Annual Financial Statements for the most recent fiscal year end as if such Estimated Closing Statement was being prepared as of a fiscal year end.

(b) Post-Closing Adjustment.

(i) Within sixty (60) days after the Closing Date, Parent shall prepare and deliver to Equityholder Representative a statement setting forth its calculation of Closing Date Debt, Company Transaction Expenses, Cash, and Capital Payments Amount, Final Closing Amount, and the Post-Closing Adjustment (if any), which statement (the “ Closing Statement ”) shall contain a balance sheet of the Surviving Entity as of the Closing Date (after giving effect to the transactions contemplated herein), and a certificate of the Chief Financial Officer of Parent that the Closing Statement was prepared using the same accounting methods, practices, principles, policies and procedures, with consistent classifications, judgments and valuation and estimation methodologies that were used in the preparation of the Annual Financial Statements for the most recent fiscal year end as if such Closing Statement was being prepared as of a fiscal year end.

(ii) The “ Post-Closing Adjustment ” shall be an amount equal to the Underpayment Amount or Overpayment Amount, as determined pursuant to Section 2.08(d).

(c) Examination and Review.

(i) Examination. After receipt of the Closing Statement, Equityholder Representative shall have thirty (30) days (the “ Review Period ”) to review the Closing Statement. During the Review Period, Equityholder Representative and Equityholder Representative’s Accountants shall have full access to the books and records of the Surviving Entity, the personnel of, and work papers prepared by, Parent and/or Parent’s Accountants to the extent that they relate to the Closing Statement and to such historical financial information (to the extent in Parent’s possession) relating to the Closing Statement as Equityholder Representative may reasonably request for the purpose of reviewing the Closing Statement and to prepare a Statement of Objections (defined below), provided, that such access shall be in a manner that does not interfere with the normal business operations of Parent or the Surviving Entity.

(ii) Objection. On or prior to the last day of the Review Period, Equityholder Representative may object to the Closing Statement by delivering to Parent a written statement setting forth Equityholder Representative’s objections in reasonable detail, indicating each disputed item or amount and the basis for Equityholder Representative’s disagreement therewith (the “ Statement of Objections ”). If Equityholder Representative fails to deliver the Statement of Objections before the expiration of the Review Period, the Closing Date Debt, Company Transaction Expenses, Cash, and Capital Payments Amount, Final Closing Amount, and the Post-Closing Adjustment, in each case as reflected in the Closing Statement, shall be deemed to have been accepted by Equityholder Representative. If Equityholder Representative delivers the Statement of Objections before the expiration of the Review Period, Parent and Equityholder Representative shall negotiate in good faith to resolve such objections within thirty (30) days after the delivery of the Statement of Objections (the “ Resolution Period ”), and, if the same are so resolved within the Resolution Period, the Post-Closing Adjustment and the Closing Statement with such changes as may have been previously agreed in writing by Parent and Equityholder Representative, shall be final and binding.

(iii) Resolution of Disputes. If Equityholder Representative and Parent fail to reach an agreement with respect to all of the matters set forth in the Statement of Objections before expiration of the Resolution Period, then any amounts remaining in dispute (“ Disputed Amounts ” and any amounts not so disputed, the “ Undisputed Amounts ”) shall be submitted for resolution to the office of Moss Adams LLP or, if Moss Adams LLP is unable to serve, Parent and Equityholder Representative shall appoint by mutual agreement the office of an impartial nationally recognized firm of independent certified public accountants other than Equityholder Representative’s Accountants or Parent’s Accountants (the “ Independent Accountant ”) who, acting as experts and not arbitrators, shall resolve the Disputed Amounts only and make any adjustments to the Post-Closing Adjustment, as the case may be, and the Closing Statement. The parties hereto agree that all adjustments shall be made without regard to materiality. The Independent Accountant shall only decide the specific items under dispute by the parties and their decision for each Disputed Amount must be within the range of values assigned to each such item in the Closing Statement and the Statement of Objections, respectively.

(iv) Fees of the Independent Accountant. The fees and expenses of the Independent Accountant shall be paid by Equityholder Representative (on behalf of the Equityholders), on the one hand, and by Parent, on the other hand, based upon the percentage that the amount actually contested but not awarded to Equityholder Representative or Parent, respectively, bears to the aggregate amount actually contested by Equityholder Representative and Parent.

(v) Determination by Independent Accountant. The Independent Accountant shall make a determination as soon as practicable within thirty (30) days (or such other time as the parties hereto shall agree in writing) after their engagement, and their resolution of the Disputed Amounts and their adjustments to the Closing Statement and/or the Post-Closing Adjustment shall be conclusive and binding upon the parties hereto.

(d) Payment of Post-Closing Adjustment. Except as otherwise provided herein, any payment of the Post-Closing Adjustment, together with interest calculated as set forth below, shall be due (x) within five (5) Business Days of acceptance of the Closing Statement pursuant to clause (ii) above, or (y) if there are Disputed Amounts, then within five (5) Business Days of the resolution described in clause (v) above.

(i) If the final calculations of Closing Date Debt, Company Transaction Expenses, Cash, Capital Payments Amount, and Final Closing Amount, in each case, pursuant to this Section 2.08, result in a determination of an underpayment by Parent because the Estimated Closing Amount is less than the Final Closing Amount (an “ Underpayment Amount ”), such Underpayment Amount shall be paid by proportionally increasing the Merger Consideration in accordance with each Equityholder’s Percentage Share with respect to the Cash Merger Consideration, Notes, and Consideration Shares to maintain a ratio such that at no time does the Consideration Shares drop below forty percent (40%) of the aggregate Merger Consideration. The Parties acknowledge and agree that the Underpayment Amount will not result in the Merger Consideration exceeding the Adjustment Ceiling. The Parties also acknowledge and agree that notwithstanding anything to the contrary herein, no Consideration Shares shall be issued to any Cash-out Equityholders.

(ii) If the final calculations of Closing Date Debt, Company Transaction Expenses, Cash, Capital Payments Amount, and Final Closing Amount, in each case, pursuant to this Section 2.08, result in a determination of an overpayment by Parent because the Estimated Closing Amount is more than the Final Closing Amount (an “ Overpayment Amount ”), such Overpayment Amount shall be paid by proportionally decreasing Merger Consideration in accordance with each Equityholder’s Percentage Share with respect to the Cash Merger Consideration, Notes, and Consideration Shares to maintain a ratio such that at no time does the Consideration Shares drop below forty percent (40%) of the aggregate Merger Consideration. The Parties acknowledge and agree decreases in Consideration Shares pursuant to the foregoing will be effected by Parent automatically repurchasing an applicable amount of Consideration Shares pursuant to the Subscription Agreements at a repurchase price of $0.0001 per share.

(e) Adjustments for Tax Purposes. Any payments made pursuant to Section 2.08 shall be treated as an adjustment to the Merger Consideration by the Parties for Tax purposes, unless otherwise required by Law.

Section 2.09 EBITDA Adjustment.

(a) On or before February 28, 2020, Parent shall deliver or cause to be delivered to the Equityholder Representative, a copy of its good faith calculation of the Company’s EBITDA for fiscal year 2019 (the “ 2019 EBITDA Amount ”), together with all supporting financial statements and a statement regarding Parent’s good faith determination as to whether the EBITDA Target was met and any resulting EBITDA Adjustment (the “ EBITDA Notice ”).

(b) Equityholder Representative shall have a period of thirty (30) days from the date that Parent delivers the EBITDA Notice (the “ EBITDA Review Period ”) to notify Parent in writing of its good faith belief that the 2019 EBITDA Amount or any components thereof have not been calculated in accordance with this Agreement. During the EBITDA Review Period, Parent shall give Equityholder Representative and its Representatives reasonable access (during regular business hours and upon reasonable notice) to the books, records, files, documents and materials of the Business and all personnel with knowledge of information relevant to the determination of the 2019 EBITDA Amount and any components thereof. If Equityholder Representative disagrees with the amounts set forth in the EBITDA Notice, Equityholder Representative shall deliver to Parent a written notice of disagreement (the “ EBITDA Dispute Notice ”) prior to the expiration of the EBITDA Review Period setting forth in reasonable detail the amount, nature and the basis for such disputed items, including a revised calculation of the 2019 EBITDA Amount. If Equityholder Representative fails to deliver an EBITDA Dispute Notice to Parent prior to the expiration of the EBITDA Review Period, Equityholder Representative will be deemed to have accepted and agreed to the calculation of the 2019 EBITDA Amount. If Equityholder Representative delivers an EBITDA Dispute Notice to Parent during the EBITDA Review Period, Equityholder Representative and Parent shall attempt in good faith to resolve their differences with respect to the disputed items (or calculations) specified in the EBITDA Dispute Notice within thirty (30) days from the date of the EBITDA Dispute Notice (the “ EBITDA Resolution Period ”), and all other items in the EBITDA Notice will be final, binding and conclusive. Any resolution by Equityholder Representative and Parent during the EBITDA Resolution Period as to any such disputed items shall be set forth in writing and will be final, binding and conclusive.

(c) If Parent and Equityholder Representative cannot reach agreement during the EBITDA Resolution Period (or such longer period as the parties may mutually agree), then either party may refer any items that remain in dispute (the “ EBITDA Disputed Items ”) to the Independent Accountant for binding resolution. Equityholder Representative and Parent shall give the Independent Accountant reasonable access to documents, records, work papers, facilities and personnel as reasonably necessary to perform its function as arbitrator. Any documents submitted by either Equityholder Representative or Parent to the Independent Accountant, either unilaterally or at the Independent Accountant’s request, shall be simultaneously submitted to the other party. The Independent Accountant’s jurisdiction shall be limited to the EBITDA Disputed Items, taking into account at face value the items in the EBITDA Notice that were not specifically objected to in the EBITDA Dispute Notice or that were otherwise resolved between Parent and Equityholder Representative in accordance with Section 2.09 (b), and in resolving each EBITDA Disputed Item, the Independent Accountant may not assign a value to any EBITDA Disputed Item greater than the greatest value for such EBITDA Disputed Item claimed by any party or less than the lowest value for such EBITDA Disputed Item claimed by any party. The opinion of the Independent Accountant is to be based solely on presentations or materials provided by Parent or Equityholder Representative or their respective Representatives and not by independent review or with regard to principles of equity. The Independent Accountant shall deliver to Equityholder Representative and Parent concurrently, as promptly as may be reasonably practicable, and in no event later than forty-five (45) days, after the Independent Accountant’s receipt of the EBITDA Disputed Items, a written opinion setting forth a final determination of the EBITDA Disputed Items which determination shall be in accordance with the provisions of this Agreement. The determination of the Independent Accountant shall, absent a showing of fraud or manifest error on its face, be final and binding on the parties, and non-appealable and incontestable by the parties and each of their respective Affiliates, successors and assigns, and not subject to collateral attack for any reason, and effective as of the date the Independent Accountant’s written opinion is received by Parent and Equityholder Representative. All of the costs and expenses of the Independent Accountant shall be paid proportionately by Equityholder Representative, on the one hand, and Parent, on the other hand, based upon the percentage that the amount actually contested but not awarded to Equityholder Representative or Parent, respectively, bears to the aggregate amount actually contested by Equityholder Representative and Parent. Each party shall be responsible for its own legal, accounting and other fees and expenses incurred in connection with participating in such dispute resolution procedure.

(d) Payment of EBITDA Adjustment. The “ EBITDA Adjustment ” shall be equal to the amount that the EBITDA Target exceeds the 2019 EBITDA Amount, as determined pursuant to this Section 2.09(d). Except as otherwise provided herein, any payment of the EBITDA Adjustment, together with interest calculated as set forth below, shall (1) be due (x) within five (5) Business Days of acceptance of the EBITDA Adjustment pursuant to clause (b) above, or (y) if there are EBITDA Disputed Items, then within five (5) Business Days of the resolution described in clause (c) above; and (2) (A) if the final calculations of the 2019 EBITDA Amount result in a determination that the EBITDA Target exceeds the 2019 EBITDA Amount, be paid by proportionally reducing by an aggregate amount equal to the total EBITDA Adjustment the principal amounts of the Notes payable to the Equityholders in accordance with each Equityholder’s Percentage Share, or (B) if the final calculations of the 2019 EBITDA Amount result in a determination that the 2019 EBITDA Amount exceeds the EBITDA Target, there shall be no EBITDA Adjustment.

Section 2.10 Withholding Tax. Parent and the Company shall be entitled to deduct and withhold from the Merger Consideration all Taxes that Parent and the Company may be required to deduct and withhold under any provision of Tax Law. All such withheld amounts shall be treated as delivered to the respective Equityholder hereunder.

Section 2.11 Consideration Spreadsheet.

(a) At least three (3) Business Days before the Closing and concurrently with the delivery of the Estimated Closing Statement, the Company shall prepare and deliver to Parent a spreadsheet (the “ Consideration Spreadsheet ”) in the form attached as Exhibit E , certified by the Chief Executive Officer of the Company, which shall set forth, as of the Closing Date and immediately prior to Closing, the following information:

(i) the names, addresses and email addresses of all Equityholders and the number of Company Interests held by such Equityholders, and their respective taxpayer identification numbers;

(ii) detailed calculations of the Merger Consideration and Cash Closing Payment, taking into account the amounts of Estimated Closing Date Debt, Estimated Closing Transaction Expenses, and Estimated Cash, and the Capital Payments Amount; and

(iii) the amount of the Cash Closing Payment payable at Closing to each Equityholder, the principal amount of the Note to be issued to each Equityholder, the number of Consideration Shares to be issued at Closing to each Equityholder and each Equityholder’s respective Percentage Share.

(b) The Parties acknowledge and agree that the Equityholders shall be solely responsible for the calculation of the consideration payable pursuant to Section 2.07 and that Parent and its respective Affiliates (including, Sub and following the Closing, the Company) shall be entitled to rely on the Consideration Spreadsheet in making payments under Section 2.07 and Parent and its Affiliates (including, Sub and following the Closing, the Company) shall not be responsible or have any liability whatsoever for the calculations, allocations or the determinations (or any other matter whatsoever other than for the payment of the amounts set forth therein in accordance with the terms of this Agreement) regarding the Consideration Spreadsheet.

ARTICLE III

Representations and warranties of THE COMPANY

Except as set forth in the correspondingly numbered Section of the Disclosure Schedules, the Company hereby represents and warrants to Parent and Sub that the statements contained in this ARTICLE III are true and correct as of the date hereof. Any disclosure made in any section or schedule of the Disclosure Schedules shall be deemed disclosed with respect to the section or schedule referenced and with respect to any other section or schedule where it is reasonably apparent from the face of such disclosure and a reading of the corresponding representation and warranty that such disclosure applies to such section or schedule. The inclusion of any cross-references to any sections or schedules of the Disclosure Schedules, or the failure to include such cross-references, shall not be deemed to mean that the relevance of any disclosure is not reasonably apparent for the purposes of the immediately preceding sentence. Any disclosure contained in the Disclosure Schedules that refers to any agreement, document, instrument or report is, except to the extent otherwise noted herein, qualified in its entirety by reference to the text of such agreement, document, instrument or report, including all attachments and amendments thereto. The Disclosure Schedules may include items or information that is not required to be disclosed under the Agreement; disclosure of those items or information is not an indication that those items meet the disclosure threshold applicable to the portion of the Disclosure Schedules on which they are reported. The disclosure of any information herein shall not be construed as an admission that any such information is material. None of the disclosures contained therein shall be construed as constituting representations and warranties except as specifically provided in the Agreement. In disclosing information the Company does not waive any attorney-client privilege associated with such information or any protection afforded by the work-product doctrine with respect to any of the matters disclosed or discussed in the Disclosure Schedules. No disclosure in the Disclosure Schedules relating to any possible breach or violation of any law or contract shall be construed as an admission or indication to any third-party that any such breach or violation exists or has actually occurred.

Section 3.01 Organization, Authority and Qualification of the Company. The Company and each of its Subsidiaries is a corporation or limited liability company, as applicable, duly incorporated or formed, validly existing and in good standing under the Laws of the jurisdiction of its organization and has all necessary corporate or similar power and authority to own, operate or lease the properties and assets now owned, operated or leased by it and to carry on its business as it has been and is currently conducted. Section 3.01 of the Disclosure Schedules sets forth each jurisdiction in which the Company and each Subsidiary is licensed or qualified to do business, and the Company and each Subsidiary is duly licensed or qualified to do business and is in good standing in each jurisdiction in which the properties owned or leased by it or the operation of its business as currently conducted makes such licensing or qualification necessary, except where the failure to be so licensed or qualified would not have a Material Adverse Effect. The Company has all requisite corporate power and authority to enter into, execute, deliver and perform its obligations under this Agreement and the other Transaction Documents to which it is a party and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents to which it is a party and the consummation by the Company of the transactions contemplated hereby and thereby have been (or will have been) duly authorized by all requisite corporate action on the part of the Company and no other corporate proceedings on the part of the Company are necessary to authorize the execution, delivery and performance of this Agreement or to consummate the transactions contemplated hereby and thereby. This Agreement and the other Transaction Documents to which the Company is a party have been duly executed and delivered by an authorized officer of the Company and (assuming due authorization, execution and delivery by the other Parties) constitute the valid and binding agreements of the Company, enforceable in accordance with their respective terms, subject to bankruptcy, insolvency, reorganization, moratorium and similar Laws of general applicability relating to or affecting creditors’ rights and to general principles of equity.

Section 3.02 Capitalization.

(a) The authorized, issued and outstanding capitalization of the Company is as set forth on Section 3.02(a)of the Disclosure Schedules, which constitutes all of the Company Interests. Except as set forth herein or Section 3.02(a) of the Disclosure Schedules, there are no membership interests, units or other equity interests of the Company issued, reserved for issuance or outstanding. Neither the Company nor any of its Subsidiaries is under any obligation to register under the Securities Act any of its respective securities or any securities issuable upon exercise or conversion of such securities nor is the Company nor any of its Subsidiaries obligated to register or qualify any such securities under any applicable state securities or blue sky Laws. All of the Company Interests have been duly authorized, are validly issued, fully paid and non-assessable, and are owned of record and beneficially by the Equityholders in the amounts set forth opposite each Equityholder’s name on Section 3.02(a) of the Disclosure Schedules, free and clear of all Encumbrances and are not subject to any preemptive rights, rights of first refusal, put rights or similar rights created by statute, the Company’s charter documents or any agreement to which the Company or its Subsidiaries is a party.

(b) All of the Company Interests were issued in compliance with applicable Laws. None of the Company Interests were issued in violation of any agreement, arrangement or commitment to which the Equityholders or the Company is a party or is subject to or in violation of any preemptive or similar rights of any Person.

(c) There are no outstanding or authorized options, warrants, convertible securities or other rights, agreements, arrangements or commitments of any character relating to the membership interests, units, voting interest or equity securities of the Company or any of its Subsidiaries, or obligating the Company or any of its Subsidiaries to issue or sell any shares of membership interests of, or any other interest in, the Company or any of its Subsidiaries. None of the Company or any of its Subsidiaries has any outstanding or authorized any profits interests, phantom interests, profit participation or similar rights. Other than as set forth in the Company’s operating agreement, as amended and restated, there are no voting trusts, proxies or other agreements or understandings in effect with respect to the voting or transfer of any of the Company Interests or granting any preemptive or antidilutive right with respect to the Company Interests, or requiring the repurchase, redemption or disposition of, or containing any right of first refusal with respect to the Company Interests. There is no commitment, arrangement or understanding by the Company or any of its Subsidiaries to make any investment (in the form of a loan, capital contribution or otherwise) in any Subsidiary or any other Person. There are no declared or accrued unpaid dividends with respect to any Company membership interests.

Section 3.03 Subsidiaries. Except as disclosed on Section 3.03 of the Disclosure Schedules, neither the Company nor any of its Subsidiaries owns or holds, directly or indirectly, any shares of capital stock, membership interests, units, other equity interest in any other Person. Section 3.03 of the Disclosure Schedules sets forth a complete and correct list of each Subsidiary in which the Company or its Subsidiaries, directly or indirectly, hold an equity interest, including the jurisdiction of organization of such Subsidiary, and the authorized and outstanding capitalization of each Subsidiary as of the date hereof. Correct and complete copies of the organizational documents of each such Subsidiary and all other documents with respect to such Subsidiary that the Company or its Subsidiaries is a party to have been made available to Parent. Section 3.03 of the Disclosure Schedules sets forth a complete and correct list of each Person that is not a Subsidiary in which the Company or any of its Subsidiaries, directly or indirectly, hold an equity interest (each such Person, an “ Investment Entity ”), including the jurisdiction of organization of such Investment Entity, and, to the Company’s Knowledge, the Company’s ownership interest in such Investment Entity as of the date hereof (expressed as a percentage). Correct and complete copies of the organizational document of each Investment Entity and all other documents with respect to such Investment Entity that the Company or any of its Subsidiaries is a party to have been made available to Parent. Craft Canning LLC, a Washington limited liability company, UBI number 603-496-125 (the “ Delinquent Entity ”) has no operations, employees, contracts or other assets as of immediately prior to the Effective Time.

Section 3.04 No Conflicts; Consents. The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents to which each is a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not: (a) conflict with or result in a violation or breach of, or default under, any provision of the certificate of formation, operating agreement or other organizational documents of the Company or any of its Subsidiaries; (b) conflict with or result in a violation or breach of any provision of any Law or Governmental Order applicable to the Company or any of its Subsidiaries; (c) except as set forth in Section 3.04 of the Disclosure Schedules, require the consent, notice or other action by any Person under, conflict with, result in a violation or breach of, constitute a default or an event that, with or without notice or lapse of time or both, would constitute a default under, result in the acceleration of or create in any party the right to accelerate, terminate, modify or cancel any Contract to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound or to which any of its respective properties and assets are subject (including any Material Contract) or any Permit affecting the properties, assets or business of the Company or any of its Subsidiaries; or (d) result in the creation or imposition of any Encumbrance other than Permitted Encumbrances on any properties or assets of the Company or any of its Subsidiaries. No consent, approval, Permit, Governmental Order, declaration or filing with, or notice to, any Governmental Authority is required by or with respect to the Company or any of its Subsidiaries in connection with the execution and delivery of this Agreement and the other Transaction Documents and the consummation of the transactions contemplated hereby and thereby, except for such consents, approvals, Permits, Governmental Orders, declarations, filings or notices which, in the aggregate, would not have a Material Adverse Effect.

Section 3.05 Financial Statements. Complete copies of the Company’s unaudited consolidated financial statements consisting of the consolidated balance sheet of the Company as at December 31 in each of the years 2015, 2016 and 2017 and the related consolidated statements of income and cash flows for the years then ended (the “ Annual Financial Statements ”), and unaudited consolidated financial statements consisting of the consolidated balance sheet of the Company as at December 31, 2018 and the related consolidated statements of income for the twelve-month period then ended (the “ Interim Financial Statements ” and together with the Annual Financial Statements, the “ Financial Statements ”) are included in Section 3.05 of the Disclosure Schedules. Except as set forth in Section 3.05 of the Disclosure Schedules, the Financial Statements have been prepared in accordance with GAAP in all material respects applied on a consistent basis throughout the period involved, subject, in the case of the Interim Financial Statements, to normal and recurring year-end adjustments (the effect of which will not be materially adverse) and the absence of notes (that, if presented, would not differ materially from those presented in the Annual Financial Statements). The Financial Statements are based on the books and records of the Company and its Subsidiaries, and fairly present the financial condition of the Company and its Subsidiaries as of the respective dates they were prepared and the results of the operations of the Company and its Subsidiaries for the periods indicated. The consolidated balance sheet of the Company as of December 31, 2017 is referred to herein as the “ Balance Sheet ” and the date thereof as the “ Balance Sheet Date ” and the consolidated balance sheet of the Company as of December 31, 2018 is referred to herein as the “ Interim Balance Sheet ” and the date thereof as the “ Interim Balance Sheet Date ”. Except as set forth in Section 3.05 of the Disclosure Schedules, each of the Company and its Subsidiaries maintains a standard system of accounting established and administered in accordance with GAAP. The Company has established and maintains the “internal controls over financial reporting” (as defined in Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act, as amended) described in Section 3.05 of the Disclosure Schedules.

Section 3.06 Undisclosed Liabilities. The Company and its Subsidiaries have no liabilities, obligations or commitments of any nature whatsoever, asserted or unasserted, known or, to the Company’s Knowledge, unknown, absolute or contingent, accrued or unaccrued, matured or unmatured or otherwise (“ Liabilities ”), except (a) those which are adequately reflected or reserved against in the Balance Sheet as of the Interim Balance Sheet Date, and (b) those which have been incurred in the ordinary course of business consistent with past practice since the Interim Balance Sheet Date and which do not, individually or in the aggregate, exceed $10,000.

Section 3.07 Absence of Certain Changes, Events and Conditions. Since the Interim Balance Sheet Date, and other than in the ordinary course of business consistent with past practice, there has not been, with respect to the Company or any of its Subsidiaries, any:

(a) event, occurrence or development that has had, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect;

(b) amendment of the certificate of formation, operating agreement or other organizational documents of the Company or any of its Subsidiaries;

(c) split, combination or reclassification of any of its membership interests;

(d) issuance, sale or other disposition of any of its (or its Subsidiary’s) membership interests, or grant of any options, warrants or other rights to purchase or obtain (including upon conversion, exchange or exercise) any of its (or its Subsidiary’s) membership interests;

(e) declaration or payment of any dividends or distributions on or in respect of any of its membership interests or redemption, purchase or acquisition of its (or its Subsidiary’s) membership interests;

(f) material change in any method of accounting or accounting practice of the Company or any of its Subsidiaries, except as required by GAAP or as disclosed in the notes to the Financial Statements or as set forth in Section 3.05 or Section 3.07 of the Disclosure Schedules;

(g) material change in the cash management practices and policies, practices and procedures of the Company or any of its Subsidiaries with respect to collection of accounts receivable, establishment of reserves for uncollectible accounts, accrual of accounts receivable, inventory control, prepayment of expenses, payment of trade accounts payable, accrual of other expenses, deferral of revenue and acceptance of customer deposits;

(h) its or any of its Subsidiaries’ entry into any Contract that would constitute a Material Contract;

(i) incurrence, assumption or guarantee of any indebtedness for borrowed money except unsecured current obligations and Liabilities incurred in the ordinary course of business consistent with past practice;

(j) transfer, assignment, sale or other disposition of any of the assets shown or reflected in the Balance Sheet or cancellation of any debts or entitlements;

(k) transfer, assignment or grant of any license or sublicense of any material rights under or with respect to any Company Intellectual Property or Company IP Agreements;

(l) material damage, destruction or loss (whether or not covered by insurance) to its property (tangible or intangible) or assets, or any loss of, or material reduction in the volume of business from, any Material Customer;

(m) any capital investment in, or any loan to, any other Person;

(n) acceleration, termination, material modification to or cancellation of any material Contract (including, but not limited to, any Material Contract) to which the Company or any of its Subsidiaries is a party or by which they are bound;

(o) any material capital expenditures;

(p) imposition of any Encumbrance upon any of the properties, membership interests or assets, tangible or intangible, of the Company or any of its Subsidiaries;

(q) (i) grant of any bonuses, whether monetary or otherwise, or increase in any wages, salary, severance, pension or other compensation or benefits in respect of its current or former employees, officers, directors, independent contractors or consultants, other than as provided for in any written agreements or required by applicable Law, (ii) change in the terms of employment for any employee or any termination of any employees, or (iii) action to accelerate the vesting or payment of any compensation or benefit for any current or former employee, officer, director, independent contractor or consultant;

(r) hiring or promoting any person as or to (as the case may be) an officer of the Company or any of its Subsidiaries or hiring or promoting any employee below officer except to fill a vacancy in the ordinary course of business, or the loss of any key employee, manager or officer;

(s) adoption, modification or termination of any: (i) employment, severance, retention or other agreement with any current or former employee, officer, director, independent contractor or consultant, (ii) Benefit Plan or (iii) collective bargaining or other agreement with a Union, in each case whether written or oral;

(t) any loan to (or forgiveness of any loan to), or entry into any other transaction with, any of its holders of membership interests or current or former managers, officers and employees;

(u) entry into a new line of business or abandonment or discontinuance of existing lines of business;

(v) adoption of any plan of merger, consolidation, reorganization, liquidation or dissolution or filing of a petition in bankruptcy under any provisions of federal or state bankruptcy Law or consent to the filing of any bankruptcy petition against it under any similar Law;

(w) purchase, lease or other acquisition of the right to own, use or lease any property or assets for an amount in excess of $10,000, individually (in the case of a lease, per annum) or $10,000 in the aggregate (in the case of a lease, for the entire term of the lease, not including any option term), except for purchases of inventory or supplies in the ordinary course of business consistent with past practice;

(x) acquisition by merger or consolidation with, or by purchase of a substantial portion of the assets, membership interests or stock of, or by any other manner, any business or any Person or any division thereof;

(y) other than any elections disclosed in Section 3.07(y) of the Disclosure Schedules, action by the Company or any of its Subsidiaries to make, change or rescind any Tax election, amend any Tax Return or take any position on any Tax Return, take any action, omit to take any action or enter into any other transaction that would have the effect of increasing the Tax liability or reducing any Tax asset of Parent in respect of any Post-Closing Tax Period; or

(z) any Contract to do any of the foregoing, or any action or omission that would result in any of the foregoing.

Section 3.08 Material Contracts.

(a) Section 3.08(a) of the Disclosure Schedules lists each of the following Contracts of the Company or any of its Subsidiaries (such Contracts, together with all Contracts concerning the occupancy, management or operation of any Real Property (including without limitation, brokerage contracts) listed or otherwise disclosed in Section 3.09(b) of the Disclosure Schedules and all Company IP Agreements set forth in Section 3.12(i) of the Disclosure Schedules, being “ Material Contracts ”):

(i) each Contract of the Company or any of its Subsidiaries involving aggregate consideration received by or paid to the Company or any of its Subsidiaries in excess of $10,000;

(ii) all Contracts that require the Company or any of its Subsidiaries to purchase its total requirements of any product or service from a third party or that contain “take or pay” provisions;

(iii) all Contracts that provide for the indemnification by the Company or any of its Subsidiaries of any Person or the assumption of any Tax, environmental or other Liability of any Person;

(iv) all Contracts that relate to the acquisition or disposition of any business, a material amount of stock or assets of any other Person or any real property (whether by merger, sale of stock, sale of assets or otherwise);

(v) all broker, distributor, dealer, manufacturer’s representative, franchise, agency, sales promotion, market research, marketing consulting and advertising Contracts to which the Company or any of its Subsidiaries is a party;

(vi) all employment agreements and Contracts with independent contractors or consultants (or similar arrangements) to which the Company or any of its Subsidiaries is a party and which are not cancellable without material penalty or without more than 90 days’ notice;

(vii) except for Contracts relating to trade receivables, all Contracts relating to indebtedness (including, without limitation, guarantees) of the Company or any of its Subsidiaries;

(viii) all Contracts with any Governmental Authority to which the Company or any of its Subsidiaries is a party (“ Government Contracts ”);

(ix) all Contracts that limit or purport to limit the ability of the Company or any of its Subsidiaries to compete in any line of business or with any Person or in any geographic area or during any period of time;

(x) any Contracts to which the Company or any of its Subsidiaries is a party that provide for any joint venture, partnership or similar arrangement by the Company or any of its Subsidiaries;

(xi) all Contracts between or among the Company or any of its Subsidiaries on the one hand and any Equityholder or any Affiliate of any Equityholder (other than the Company) on the other hand;

(xii) all collective bargaining agreements or Contracts with any Union to which the Company or any of its Subsidiaries is a party; and

(xiii) any other Contract that is material to the Company or any of its Subsidiaries and not previously disclosed pursuant to this Section 3.08.

(b) Each Material Contract is valid and binding on the Company or its Subsidiary, as applicable, in accordance with its terms and is in full force and effect. None of the Company or any of its Subsidiaries or, to the Company’s Knowledge, any other party thereto, is in breach of or default under (or is alleged to be in breach of or default under), or has provided or received any notice of any intention to terminate, any Material Contract. To the Company’s Knowledge, no event or circumstance has occurred that, with notice or lapse of time or both, would constitute an event of default under any Material Contract or result in a termination thereof or would cause or permit the acceleration or other changes of any right or obligation or the loss of any benefit thereunder. Complete and correct copies of each Material Contract (including all modifications, amendments and supplements thereto and waivers thereunder) have been made available to Parent.

Section 3.09 Title to Assets; Real Property.

(a) Each of the Company and its Subsidiaries, as applicable, has good and valid (and, in the case of owned Real Property, good and marketable fee simple) title to, or a valid leasehold interest in, all Real Property and tangible property and other assets used in the Business and/or reflected in the Annual Financial Statements or acquired after the Interim Balance Sheet Date, other than properties and assets sold or otherwise disposed of in the ordinary course of business consistent with past practice since the Interim Balance Sheet Date. All such properties and assets (including leasehold interests) are free and clear of Encumbrances except for the following (collectively referred to as “ Permitted Encumbrances ”):

(i) those items set forth in Section 3.09(a) of the Disclosure Schedules;

(ii) liens for Taxes not yet due and payable;

(iii) mechanics, carriers’, workmen’s, repairmen’s or other like liens arising or incurred in the ordinary course of business consistent with past practice or amounts that are not delinquent and which are not, individually or in the aggregate, material to the business of the Company or any of its Subsidiaries;

(iv) easements, rights of way, zoning ordinances and other similar encumbrances affecting Real Property which are not, individually or in the aggregate, material to the business of the Company or any of its Subsidiaries; or

(v) other than with respect to owned Real Property, liens arising under original purchase price conditional sales contracts and equipment leases with third parties entered into in the ordinary course of business consistent with past practice which are not, individually or in the aggregate, material to the business of the Company or any of its Subsidiaries.

(b) Section 3.09(b) of the Disclosure Schedules lists (i) the street address of each parcel of Real Property; (ii) if such property is leased or subleased by the Company or any of its Subsidiaries, the landlord under the lease, the rental amount currently being paid, and the expiration of the term of such lease or sublease for each leased or subleased property; and (iii) the current use of such property. With respect to owned Real Property, the Company has delivered or made available to Parent true, complete and correct copies of the deeds and other instruments (as recorded) by which the Company or any of its Subsidiaries acquired such Real Property, and copies of all title insurance policies, opinions, abstracts and surveys in the possession of the Company and relating to the Real Property. With respect to leased Real Property, the Company has delivered or made available to Parent true, complete and correct copies of any leases affecting the Real Property. None of the Company or any of its Subsidiaries is a sublessor or grantor under any sublease or other instrument granting to any other Person any right to the possession, lease, occupancy or enjoyment of any leased Real Property. The use and operation of the Real Property in the conduct of the business of the Company and its Subsidiaries do not violate in any material respect any Law, covenant, condition, restriction, easement, license, permit or agreement. No material improvements constituting a part of the Real Property encroach on real property owned or leased by a Person other than the Company or its Subsidiaries. There are no Actions pending nor, to the Company’s Knowledge, threatened against or affecting the Real Property or any portion thereof or interest therein in the nature or in lieu of condemnation or eminent domain proceedings.

Section 3.10 Condition and Sufficiency of Assets. Except as set forth in Section 3.10 of the Disclosure Schedules, the buildings, plants, structures, furniture, fixtures, machinery, equipment, vehicles and other items of tangible personal property of the Company or any of its Subsidiaries (“ Tangible Property ”) as of immediately prior to Closing are structurally sound, are in good operating condition and repair, and are adequate for the uses to which they are being put, and none of such Tangible Property is in need of maintenance or repairs except for ordinary, routine maintenance and repairs that are not material in nature or cost. The Tangible Property currently owned or leased by the Company or any of its Subsidiaries, together with all other properties and assets of the Company or any of its Subsidiaries, are sufficient for the continued conduct of the business of the Company and its Subsidiaries immediately after the Closing in substantially the same manner as conducted immediately prior to the Closing and constitute all of the rights, property and assets necessary to conduct the business of the Company and its Subsidiaries as currently conducted as of the Closing. Except as set forth in Section 3.10 of the Disclosure Schedules, the Company does not expect that it will be required to make any capital expenditures with respect to its existing Tangible Property or to purchase any additional Tangible Property within the twelve (12) month period following the Closing Date in excess of $300,000.

Section 3.11 Company Services.

(a) Section 3.11 (a) of the Disclosure Schedules accurately sets forth each product offering or service currently being marketed, distributed, licensed or sold by the Company or any of its Subsidiaries (the “ Company Services ”).

(b) Section 3.11 (b) of the Disclosure Schedules includes copies of the standard terms and conditions of sale, lease or license (containing applicable guaranty, warranty, and indemnity provisions) for the Company or any of its Subsidiaries. The Company Services are free from material defects, including with respect to the content included in the Company Services.

(c) Except as set forth on Section 3.11 (c) of the Disclosure Schedules: (i) no third party has ever asserted against the Company or any of its Subsidiaries any product liability or warranty claim arising from any express or implied guaranty, warranty or indemnity in connection with the Company Services or any product offering or service ever marketed, distributed, licensed or sold by the Company or any of its Subsidiaries; (ii) there exists no (a) latent defect in the design or manufacture of any product offering or service ever marketed, distributed, licensed or sold by the Company or any of its Subsidiaries, or (b) pending or, to the Knowledge of the Company, threatened action, suit, inquiry, proceeding or investigation by or before any Governmental Authority relating to any product offering or service alleged to have been manufactured, distributed or sold by the Company or any of its Subsidiaries to others, and alleged to have been defective or improperly designed or manufactured or in breach of any express or implied product warranty; (iii) there exists no pending or, to the Knowledge of the Company, threatened product liability claims, except to the extent reserved for on the face of the Interim Balance Sheet; (iv) to the Knowledge of the Company, there is no basis for any such suit, inquiry, action, proceeding, investigation or claim; and (v) in the three (3) year period prior to the Closing Date, there have been no recalls relating to any product offering or service ever marketed, distributed, licensed or sold by the Company or any of its Subsidiaries, and there are no pending, or, to the Company’s Knowledge, threatened recalls relating to any product offering or service ever marketed, distributed, licensed or sold by the Company or any of its Subsidiaries.

Section 3.12 Intellectual Property.

(a) The Company Intellectual Property is owned solely and exclusively by the Company or its Subsidiaries, free and clear of any Encumbrances (other than non-exclusive licenses to the Company Intellectual Property entered into in the ordinary course of the Business). The Company Intellectual Property is subsisting and has not expired, been cancelled, or abandoned, and the Company Intellectual Property and all Intellectual Property licensed to the Company or any of its Subsidiaries pursuant to a Contract constitutes all Intellectual Property necessary for the conduct of the business of the Company and its Subsidiaries as presently conducted or proposed to be conducted.

(b) Neither the execution, delivery and performance by the Company of this Agreement or any of the Transaction Documents, nor the consummation of the transactions contemplated hereby or thereby, will, in accordance with their terms: (i) constitute a breach of or default under any Contract governing any Company Intellectual Property to which the Company or any of its Subsidiaries is a party; (ii) cause the forfeiture or termination of, or give rise to a right of forfeiture or termination of, any Company Intellectual Property right; or (iii) impair the right of the Company, any of its Subsidiaries, or Parent to use, possess, sell, or license, as applicable, any Company Intellectual Property or portion thereof.

(c) There are no unpaid existing or future royalties, honoraria, fees or other payments payable by the Company or any of its Subsidiaries to any third Person with respect to the ownership, use, possession, license, sale, marketing, advertising, or disposition of any Company Intellectual Property in the manner currently or previously used by the Company or any of its Subsidiaries, including any that might become payable as a result of the consummation of the transactions contemplated by this Agreement.

(d) Neither the Company nor any of its Subsidiaries, nor any Company Service, nor the operation of the Business, has infringed upon, has misappropriated or otherwise violated, or infringes, misappropriates or otherwise violates, any right in the Intellectual Property of any other party. None of the Company or any of its Subsidiaries has received any written communications alleging or suggesting any of the foregoing in this Section 3.12 (d) is untrue, including any offers alleging or suggesting that the Company or any of its Subsidiaries may need to license third party Intellectual Property for use in connection with the Business.

(e) No Action against the Company or any of its Subsidiaries is pending or, to the Company’s Knowledge, has been threatened in writing contesting (i) the right of the Company or any of its Subsidiaries to exercise any Company Intellectual Property right, (ii) the validity, scope or enforceability of any registered Company Intellectual Property, Company IP Registrations or any trade secrets, copyrights or trademarks contained in the Company Intellectual Property, or (iii) the ownership of or right to use any Company Intellectual Property. To the Company’s Knowledge, there is no reasonable and legitimate basis for any such Action, nor has the Company or any of its Subsidiaries received any written notice asserting that any Company Intellectual Property or the use, sale, license or disposition thereof, conflicts or will conflict with the rights of any other Person.

(f) To the Company’s Knowledge, no director, officer, employee, consultant or independent contractor of the Company or any of its Subsidiaries: (i) is in material violation of any term or covenant of any employment contract, patent disclosure agreement, invention assignment agreement, non-disclosure agreement, non-solicitation agreement, non-competition agreement, or any other Contract with any other Person by virtue of such director’s, officers’ employee’s, consultant’s, or independent contractor’s employment by, or engagement with, the Company or any of its Subsidiaries, or using trade secrets or proprietary information of any other Person without permission; (ii) is party to any Contract with any prior employer or other Person that prohibits or otherwise restricts such employee in any material respect from performing his prior or current duties at the Company or any of its Subsidiaries; (iii) has developed any technology, software or other copyrightable, patentable, or otherwise proprietary work specifically for the Company or any of its Subsidiaries that is subject to any Contract under which such director, officer, employee, consultant or independent contractor has assigned or otherwise granted (or agreed to assign or otherwise grant) to any third party any rights (including Intellectual Property) in or to such technology, software or other copyrightable, patentable or otherwise proprietary work; or (iv) has any right, license, claim or interest whatsoever in or with respect to any Company Intellectual Property. To the Company’s Knowledge, the employment of any employee of the Company or any of its Subsidiaries and the use by the Company or any of its Subsidiaries of the services of any consultant or independent contractor to the Company or any of its Subsidiaries has not and does not subject the Company or any of its Subsidiaries to any Liability to any third party for improperly soliciting such employee or consultant, or independent contractor to work for the Company or any of its Subsidiaries, whether such Liability is based on contractual or other legal obligations to such third party.

(g) Each of the Company and its Subsidiaries has taken reasonable steps to protect, preserve and maintain the secrecy and confidentiality of the confidential information of the Company and its Subsidiaries, except to the extent that the Company or any of its Subsidiaries has made a determination in its business judgment not to retain such information as confidential.

(h) Section 3.12 (h) of the Disclosure Schedules contains a true and complete list of the Company Intellectual Property, including, without limitation: (i) all trademark applications, trademark registrations and material unregistered trademarks, (ii) all issued patents and patent applications, (iii) all registered copyrights and applications therefor, (iv) all mask works and applications and registrations therefor, and (v) all domain names; in each case listing, as applicable, (A) the name of the applicant/registrant and current owner, (B) the jurisdiction where the item is located, and (C) the application or registration number. All Intellectual Property required to be listed on Section 3.12 (h) of the Disclosure Schedules (1) is valid, enforceable, (other than divisionals, continuations or other applications relating to such Intellectual Property) and subsisting (including to the extent such concepts are applicable for unregistered Intellectual Property), (2) except for material unregistered trademarks, are currently in compliance with all formal legal requirements applicable to the stage of application or registration thereof (including payment of filing, examination and maintenance fees and proofs of use), and (3) are not subject to any unpaid maintenance fees or taxes or actions falling due within 90 days after the date of this Agreement. The Company and its Subsidiaries are the owner of record of all of the Company IP Registrations, and each of the Company and its Subsidiaries has executed and recorded all documents necessary to perfect its title to such Company IP Registrations applicable to the stage of application or registration thereof. The Company has provided Parent with true and complete copies of file histories, documents, certificates, office actions, correspondence and other materials related to all Company IP Registrations.

(i) Section 3.12(i) of the Disclosure Schedules lists all Company IP Agreements. The Company has provided Parent with true and complete copies of all such Company IP Agreements, including all modifications, amendments and supplements thereto and waivers thereunder. Each Company IP Agreement is valid and binding on the Company or its Subsidiary, as applicable, in accordance with its terms and is in full force and effect. None of the Company, any of its Subsidiaries, nor, to the Company’s Knowledge, any other party thereto is in breach of or default under (or is alleged to be in breach of or default under), or has provided or received any notice of breach or default of or any intention to terminate, any Company IP Agreement.

(j) To the Company’s Knowledge, there is no unauthorized use, disclosure, infringement, or misappropriation of any Company Intellectual Property by any third party, including any employee or former employee of the Company or any of its Subsidiaries, and none of the Company nor any of its Subsidiaries has made any allegations to the contrary. Other than commercial contracts in the ordinary course of business, none of the Company or any of its Subsidiaries has agreed to indemnify any Person for any infringement, misappropriation or other violation of any Company Intellectual Property of any third party by any product or service that has been sold, licensed to third parties, leased to third parties, supplied, marketed, distributed, or provided by the Company or any of its Subsidiaries.

Section 3.13 Privacy, Systems, and Security.

(a) Compliance with Laws. Each of the Company and its Subsidiaries has been and is in material compliance with all applicable Laws, contractual requirements, and privacy policies or statements published by the Company or any of its Subsidiaries concerning data security requirements, privacy policy notice requirements, data security breach requirements, and requirements regarding the use, storage, disclosure or transfer of personally identifiable information (collectively, “ PII ”). To the Company’s Knowledge, no investigation relating to the information privacy or data security practices (including collection, transfer, or use) of the Company or any of its Subsidiaries is being conducted by any Governmental Authority. There has been no suspected (by the Company, any of its Subsidiaries or any of the Equityholders) or actual data security breach of any computer systems or networks, or unauthorized use of any PII that is owned, used, stored, received, or controlled by or on behalf of the Company or any of its Subsidiaries. No claims are pending as of the date of this Agreement or, to the Company’s Knowledge, threatened in writing or reasonably likely to be asserted against the Company or any of its Subsidiaries by any Person alleging a violation of any applicable Laws or third party rights relating to privacy or PII.

(b) Computer Systems.

(i) Each of the Company and its Subsidiaries has taken reasonable administrative, contractual, physical, and technical steps to preserve the availability, security and integrity of the software, hardware, databases, computer equipment and other information technology that it uses, including any proprietary software product used or embedded in the Company Services (collectively, “ Computer Systems ”) and the data and information stored on its Computer Systems.

(ii) The Computer Systems operate and perform in all material respects in a manner that permits the Company and its Subsidiaries to conduct their business as currently conducted, or proposed to be conducted.

(iii) Each of the Company and its Subsidiaries has taken reasonable actions to protect against the introduction of (A) any time bombs, drop dead devices or lock out devices which might in any way interrupt, discontinue or otherwise adversely affect the Company’s, any of its Subsidiary’s or its customers’ (to the extent such customers’ are permitted to access and use the Computer Systems) use of those Computer Systems owned by the Company or any of its Subsidiaries; and (B) any so called computer viruses, worms, trap or back doors, Trojan horses or any other instructions, codes, programs, data or materials (collectively, “ Malicious Instructions ”) which are designed to disrupt, disable, harm or otherwise impede in any manner the operation of a computer system or network or other device on which such code is stored or installed, into the those Computer Systems owned by the Company and its Subsidiaries.

(c) Each of the Company and its Subsidiaries has implemented reasonable backup and disaster recovery technology processes substantially consistent with industry practices and has tested such processes for effectiveness.

Section 3.14 Government Relationships.

(a) The Company has made available to Parent true, accurate, and complete copies of all Government Contracts.

(b) Section 3.08(a)(viii) of the Disclosure Schedules includes a list of Government Contracts awarded to the Company or any of its Subsidiaries, including those Contracts that were set aside for award to “small business concerns,” as that term is defined in Federal Acquisition Regulation (“ FAR ”) Part 19 (an “ SBA Contract ”). Except as set forth on Section 3.14 (b) of the Disclosure Schedules, as a result of the consummation of the transactions contemplated by this Agreement, none of the Company or any of its Subsidiaries will be ineligible to continue performing any current SBA Contract due to a change in its size status with respect to such SBA Contract as a consequence of any affiliation with Parent.

(c) None of the Company or any of its Subsidiaries, the Equityholders or, to the Company’s Knowledge, any principal, employee or Affiliate of the Company or any of its Subsidiaries, is currently debarred, suspended, proposed for debarment, or declared ineligible for contracts or doing business with any Governmental Authority.

(d) To the Company’s Knowledge, no principal of the Company or any of its Subsidiaries has obtained credible evidence in writing of: (i) any violation of federal criminal law involving fraud, conflict of interest, bribery, or gratuity violations found in Title 18 of the United States Code; (ii) any violation of the civil False Claims Act (31 U.S.C. 3729 3733); or (iii) any significant overpayment under any Government Contract (other than overpayments resulting from contract financing payments as defined in FAR 32.001) under the requirements of FAR 52.212 4(i)[Contract Terms and Conditions -Commercial Items, Payment], or 52.232-25(d)[Prompt Payment].

(e) None of the Company or any of its Subsidiaries has undergone any audit arising under or relating to any Government Contract (other than routine audits conducted in the ordinary course of business) and none of the Company or any of its Subsidiaries is aware of any such audit currently pending or planned.

(f) To the extent that any Contract listed in Section 3.08(a)(viii) of the Disclosure Schedules requires the Company or any of its Subsidiaries to maintain and use a government approved cost accounting system, the Company maintains and uses a cost accounting system that is in compliance with applicable Law and, to the Company’s Knowledge, has not been determined by any Governmental Authority not to be in compliance with any applicable Law.

Section 3.15 Inventory. All inventory of the Company and its Subsidiaries, whether or not reflected in the Balance Sheet, consists of a quality and quantity usable and salable in the ordinary course of business consistent with past practice, except for obsolete, damaged, defective or slow-moving items that have been written off or written down to fair market value or for which adequate reserves have been established. All such inventory is owned by the Company or its Subsidiaries free and clear of all Encumbrances, and no inventory is held on a consignment basis. The quantities of each item of inventory (whether raw materials, work-in-process or finished goods) are not excessive, but are reasonable in the present circumstances of the Company and its Subsidiaries.

Section 3.16 Accounts Receivable. The accounts receivable reflected on the Interim Balance Sheet and the accounts receivable arising after the date thereof (a) have arisen from bona fide transactions entered into by the Company or any of its Subsidiaries involving the sale of goods or the rendering of services in the ordinary course of business consistent with past practice; (b) constitute only valid, undisputed claims of the Company or any of its Subsidiaries not subject to claims of set-off or other defenses or counterclaims other than normal cash discounts accrued in the ordinary course of business consistent with past practice; and (c) subject to a reserve for bad debts shown on the Interim Balance Sheet or, with respect to accounts receivable arising after the Interim Balance Sheet Date, on the accounting records of the Company or any of its Subsidiaries, are collectible in full within 90 days after billing. The reserve for bad debts shown on the Interim Balance Sheet or, with respect to accounts receivable arising after the Interim Balance Sheet Date, on the accounting records of the Company or any of its Subsidiaries have been determined in accordance with GAAP (except as set forth in Section 3.05 or Section 3.16 of the Disclosure Schedules), consistently applied, subject to normal year-end adjustments and the absence of disclosures normally made in footnotes.

Section 3.17 Customers and Suppliers.

(a) Section 3.17(a) of the Disclosure Schedules sets forth (i) the names of the top fifty (50) customers of the Company or any of its Subsidiaries by aggregate consideration paid to the Company or any of its Subsidiaries for goods or services rendered for each of the two (2) most recent fiscal years (collectively, the “ Material Customers ”); and (ii) the amount of consideration paid by each Material Customer during such periods. Except as set forth in Section 3.17(a) of the Disclosure Schedules, none of the Company or any of its Subsidiaries has received any notice, and, to the Company’s Knowledge, has no reason to believe, that any of its Material Customers has ceased, or intends to cease after the Closing, to use its goods or services or to otherwise terminate or materially reduce its relationship with the Company or any of its Subsidiaries.

(b) Section 3.17(b) of the Disclosure Schedules sets forth (i) the names of the top twenty-five (25) suppliers or vendors of the Company or any of its Subsidiaries by aggregate consideration paid by the Company or any of its Subsidiaries for goods or services rendered for each of the two (2) most recent fiscal years (collectively, the “ Material Suppliers ”); and (ii) the amount of purchases from each Material Supplier during such periods. Except as set forth in Section 3.17(b) of the Disclosure Schedules, none of the Company or any of its Subsidiaries has received any notice, and, to the Company’s Knowledge, has no reason to believe, that any of its Material Suppliers has ceased, or intends to cease, to supply goods or services to the Company or any of its Subsidiaries or to otherwise terminate or materially reduce its relationship with the Company or any of its Subsidiaries.

Section 3.18 Insurance. Section 3.18 of the Disclosure Schedules sets forth a true and complete list of all current policies or binders of fire, liability, product liability, umbrella liability, real and personal property, workers’ compensation, vehicular, directors and officers’ liability, fiduciary liability and other casualty and property insurance maintained by the Company or any of its Subsidiaries and relating to the assets, business, operations, employees, officers and directors of the Company or any of its Subsidiaries (collectively, the “ Insurance Policies ”) and true and complete copies of such Insurance Policies have been made available to Parent. Such Insurance Policies in accordance with their terms are in full force and effect and shall remain in full force and effect following the consummation of the transactions contemplated by this Agreement. Neither the Company, any of its Subsidiaries nor any Equityholder has received any written notice of cancellation of, premium increase with respect to, or alteration of coverage under, any of such Insurance Policies. All premiums due on such Insurance Policies have either been paid or, if due and payable prior to Closing, will be paid prior to Closing in accordance with the payment terms of each Insurance Policy. The Insurance Policies do not provide for any retrospective premium adjustment or other experience-based liability on the part of the Company or any of its Subsidiaries. All such Insurance Policies (a) are valid and binding in accordance with their terms; (b) are provided by carriers who are financially solvent; and (c) have not been subject to any lapse in coverage. Except as set forth on Section 3.18 of the Disclosure Schedules, there are no claims related to the business of the Company or any of its Subsidiaries pending under any such Insurance Policies as to which coverage has been questioned, denied or disputed or in respect of which there is an outstanding reservation of rights. None of the Company or any of its Subsidiaries is in default under, or has otherwise failed to comply with, in any material respect, any provision contained in any such Insurance Policy. The Insurance Policies are of the type and in the amounts customarily carried by Persons conducting a business similar to the Company and its Subsidiaries and are sufficient for compliance with all applicable Laws and Contracts to which the Company or any of its Subsidiaries is a party or by which it is bound.