Exhibit
3.1
CERTIFICATE OF DESIGNATIONS OF PREFERENCES,
RIGHTS AND LIMITATIONS
OF
SERIES E 0% REDEEMABLE CONVERTIBLE PREFERRED STOCK
The
undersigned, Chief Financial Officer of Exactus, Inc., a Nevada
corporation (the “
Corporation
”), DOES HEREBY CERTIFY
that the following resolutions were duly adopted by the Board of
Directors of the Corporation by unanimous written consent on May 9,
2019;
WHEREAS, the Board of Directors is
authorized
within the limitations and
restrictions stated in the Certificate of Incorporation of the
Corporation, as amended, to provide by resolution or resolutions
for the issuance of
Fifty
Million (50,000,000) shares of Preferred Stock,
par value $0.0001 per share, of the Corporation,
in such series and with such designations, preferences and
relative, participating, optional or other special rights and
qualifications, limitations or restrictions as the
Corporation’s Board of Directors shall fix by resolution or
resolutions providing for the issuance thereof duly adopted by the
Board of Directors; and
WHEREAS, it is the desire of the Board of
Directors, pursuant to its authority as aforesaid, to authorize and
fix the terms of a series of Preferred Stock and the number of
shares constituting such series
; and
WHEREAS, all
currency amounts set forth herein shall be stated in United States
Dollars (USD).
NOW, THEREFORE, BE IT
RESOLVED:
1.
Designation
and Authorized Shares
. The
Corporation shall be authorized to issue
ten thousand (10,000) shares of Series E
Convertible Redeemable Preferred Stock,
par value $0.0001 per share (the
“
Series E Preferred
Stock
”).
2.
Stated
Value
. Each share of Series E
Preferred Stock shall have a stated value of $1,000.00 per share
(
the
“
Stated Value
”). The Series E Preferred Stock shall have
no mandatory redemption date.
3.
Liquidation
.
3.1
Upon
the liquidation, dissolution or winding up of the business of the
Corporation, whether voluntary or involuntary, each holder of
Series E Preferred Stock shall be entitled to receive, for each
share thereof, out of assets of the Corporation legally available
therefor, a preferential amount in cash equal to (and not more
than), the par value thereof, plus accrued and unpaid
dividends, distributions and Interest thereon
. All preferential amounts to be paid to the
holders of Series E Preferred Stock in connection with such
liquidation, dissolution or winding up shall be paid before the
payment or setting apart for payment of any amount for, or the
distribution of any assets of the Corporation to the holders of any
other class or series of capital stock of the
Corporation
. If upon any such
distribution the assets of the Corporation shall be insufficient to
pay the holders of the outstanding shares of Series E Preferred
Stock the full amounts to which they shall be entitled, such
holders shall share ratably in any distribution of assets in
accordance with the sums which would be payable on such
distribution if all sums payable thereon were paid in
full.
3.2
Any
distribution in connection with the liquidation, dissolution or
winding up of the Corporation, or any bankruptcy or insolvency
proceeding, shall be made in cash to the extent possible. Whenever
any such distribution shall be paid in property other than cash,
the value of such distribution shall be the fair market value of
such property as determined in good faith by the Board of Directors
of the Corporation.
Except
as otherwise expressly required by law, each holder of Series E
Preferred Stock shall be entitled to vote on all matters submitted
to shareholders of the Corporation and shall be entitled to the
number of votes for each share of Series E Preferred Stock owned at
the record date for the determination of shareholders entitled to
vote on such matter or, if no such record date is established, at
the date such vote is taken or any written consent of shareholders
is solicited, equal to the number of shares of Common Stock (as
defined below) such shares of Series E Preferred Stock are
convertible into at such time, but not in excess of the conversion
limitations set forth in Section 5 herein. Except as otherwise
required by law, the holders of shares of Series E Preferred Stock
shall vote together with the holders of Common Stock on all matters
and shall not vote as a separate class.
5.1
Conversion Right
.
Each share of Series E Preferred
Stock shall be convertible into validly issued, fully paid and
non-assessable shares of common stock, par value $0.0001 per share
of the Corporation (the “Common Stock”) on the terms
and conditions set forth in this Section 5.
(a)
Holder’s
Conversion Right
. Subject to the provisions of Section 5.3
at any time or times on or after the Initial Issuance Date, each
Holder shall be entitled to convert any whole number of Series E
Preferred Stock into validly issued, fully paid and non-assessable
shares of Common Stock in accordance with Section 5.2 at the
Conversion Rate (as defined below).
(b)
Conversion
Rate
. The number of validly issued, fully paid and
non-assessable shares of Common Stock issuable upon conversion of
each Preferred Share pursuant to Section 5.1(a) shall be determined
according to the following formula (the “
Conversion Rate
”):
Base Amount
Conversion
Price
5.2
Conversion
Procedure
.
In order to exercise
the conversion privilege under this Section 5, the holder of any
shares of Series E Preferred Stock to be converted shall give
written notice to the Corporation at its principal office that such
holder elects to convert such shares of Series E Preferred Stock or
a specified portion thereof into shares of Common Stock as set
forth in such notice (the “
Conversion Notice
”, and such date
of delivery of the Conversion Notice to the Corporation, the
“
Conversion Notice Delivery
Date
”). Within three (3) business days following the
Conversion Notice Delivery Date, the Corporation shall issue and
deliver a certificate or certificates representing the number of
shares of Common Stock determined pursuant to this Section 5 (the
“
Share Delivery
Date
”). In case of conversion under this Section 5 of
only a part of the shares of Series E Preferred Stock represented
by a certificate surrendered to the Corporation, the Corporation
shall issue and deliver to the holder or its designee a new
certificate for the number of shares of Series E Preferred Stock
which have not been converted, upon receipt of the original
certificate or certificates representing shares of Series E
Preferred Stock so converted. Until such time as the certificate or
certificates representing shares of Series E Preferred Stock which
have been converted are surrendered to the Corporation and a
certificate or certificates representing the Common Stock into
which such shares of Series E Preferred Stock have been converted
have been issued and delivered, the certificate or certificates
representing the shares of Series E Preferred Stock which have been
converted shall represent the shares of Common Stock into which
such shares of Series E Preferred Stock have been converted. The
Corporation shall pay all documentary, stamp or similar issue or
transfer tax due on the issue of shares of Common Stock issuable
upon conversion of the Series E Preferred Stock. No fractional
shares of Common Stock are to be issued upon the conversion of any
Preferred Shares. If the issuance would result in the issuance of a
fraction of a share of Common Stock, the Company shall round such
fraction of a share of Common Stock up to the nearest whole
share.
5.3
Maximum
Conversion
.
(i)
Notwithstanding
anything to the contrary set forth in this Certificate of
Designations, at no time when the Series E Preferred Stock shall be
convertible into shares of Common Stock hereunder (being any time
after Stockholder Approval is obtained), may all or a portion of
shares of Series E Preferred Stock be converted if the number of
shares of Common Stock to be issued pursuant to such conversion
would exceed, when aggregated with all other shares of Common Stock
or other voting stock owned by such holder at such time, the number
of shares of Common Stock which would result in such holder
beneficially owning (as determined in accordance with Section 13(d)
of the Securities Exchange Act of 1934, as amended (the
“
Exchange Act
”)
and the rules thereunder) more than 4.99% of all of the Common
Stock outstanding at such time (the “
4.99% Beneficial Ownership
Limitation
”), provided, however, that at any time by
not less than sixty-one (61) days prior written request of the
holder, the 4.99% Beneficial Ownership Limitation may be increased
to 9.99% of all of the Common Stock outstanding at such time (the
“
9.99% Beneficial Ownership
Limitation
”)).
(ii)
By written notice
to the Corporation, a holder of Series E Preferred Stock may from
time to time decrease the 4.99% or 9.99% Beneficial Ownership
Limitation, applicable at such time, to any other percentage
specified in such notice.
(iii)
For purposes of
this Section 5, in determining the number of outstanding shares of
Common Stock, a holder of Series E Preferred Stock may rely on the
number of outstanding shares of Common Stock as reflected in (1)
the Corporation’s most recent Form 10-K, Form 10-Q, Current
Report on Form 8-K or other public filing with the Securities and
Exchange Commission, as the case may be, (2) a more recent public
announcement by the Corporation or (3) any other notice by the
Corporation setting forth the number of shares of Common Stock
outstanding. For any reason at any time, upon the written or oral
request of a holder of Series E Preferred Stock, the Corporation
shall within one (1) business day confirm orally and in writing to
such holder the number of shares of Common Stock then outstanding.
In any case, the number of outstanding shares of Common Stock shall
be determined after giving effect to the conversion or exercise of
securities of the Corporation, including shares of Series E
Preferred Stock, held by such holder and its affiliates since the
date as of which such number of outstanding shares of Common Stock
was reported, which in any event are convertible or exercisable, as
the case may be, into shares of the Corporation’s Common
Stock within sixty (60) days’ of such calculation and which
are not subject to a limitation on conversion or exercise analogous
to the limitation contained herein.
The provisions of this paragraph shall be
construed and implemented in a manner otherwise than in strict
conformity with the terms of this Section 5 to correct this
paragraph (or any portion hereof) which may be defective or
inconsistent with the intended beneficial ownership limitation
herein contained or to make changes or supplements necessary or
desirable to properly give effect to such
limitation
.
5.4
Vesting Condition - Market Price for
Conversion
. Notwithstanding anything to the contrary set
forth in this Certificate of Designations, no shares of Series E
Preferred Stock may be converted into Common Stock, and the Series
E Preferred Stock shall not vest, until such time as the closing
share price for the Corporation’s Common Stock shall have
been not less than two dollars ($2.00) per share for a period of at
least five (5) consecutive Trading Days, as reported by OTC Markets
Group, Inc., or, if the OTC Market is not the principal trading
market for the Common Stock, then as reported by the principal
securities exchange or securities market on which the Common Stock
is then traded.
6.1
Reservation
of Common Stock
. The
Corporation shall at all times reserve from its authorized Common
Stock a sufficient number of shares to provide for conversion of
all Series E Preferred Stock from time to time
outstanding.
6.2
Record
Holders.
The Corporation and
its transfer agent, if any, for the Series E Preferred Stock may
deem and treat the record holder of any shares of Series E
Preferred Stock as reflected on the books and records of the
Corporation as the sole true and lawful owner thereof for all
purposes, and neither the Corporation nor any such transfer agent
shall be affected by any notice to the
contrary.
7.
Optional Redemption at Optional
Redemption Dates; Additional Covenants
.
7.1
Interest on Unpaid Redemption
Amounts
. If the Corporation on any Partial Redemption Date
fails to effect a required Optional Redemption, then the
Corporation shall pay
and
each
holder of Series E Preferred Stock shall be entitled to receive,
with respect to each share of Series E
Preferred Stock eligible for Optional Redemption then held by such
holder on such dates,
interest at a rate of six (6%) percent
per annum (“
Interest
”) on the Stated Value of
all shares of Series E Preferred Stock as to which an Optional
Redemption is applicable, calculated for such purpose from such
Partial Redemption Date until paid.
7.2
Payment Procedures
. Redemption
Payments and Interest shall be payable to holders of record, of
Series E Preferred Stock as they appear on the stock books of the
Corporation on such Redemption Dates or Interest payment dates
pursuant to an Optional Redemption Right, if any.
7.3
Additional Covenants;
Notice of a Fundamental
Transaction; Optional Redemption Right
. Until all of the
Series E Preferred Stock has been converted or redeemed, by holder
or otherwise satisfied in accordance with its terms:
No
sooner than twenty (20) Trading Days nor later than ten (10)
Trading Days prior to the consummation of a Fundamental Transaction
(as defined below), but not prior to the public announcement of
such Fundamental Transaction, the Corporation shall deliver written
notice thereof via email and facsimile to the holders of the Series
E Preferred Stock, such notice specifying the terms of the
Fundamental Transaction and the amount of net proceeds to the
Corporation from same. At the closing of each Fundamental
Transaction, but in any event not more than ten (10) Trading Days
after closing of each Fundamental Transaction, upon receipt of
written notice by the Corporation from a holder of Series E
Preferred that such holder desires to elect an Optional Redemption
which shall be payable solely from the net proceeds of such
Fundamental Transaction (unless the holders shall prior to such
closing date convert all of the Series E Preferred Stock to Common
Stock or waive the Corporation’s redemption obligations
and/or future redemption obligations with respect to some or all of
the net proceeds of the Fundamental Transaction):
The
Corporation shall redeem such portion of the Series E Preferred
Stock as is outstanding on the closing date of the Fundamental
Transaction (unless converted into Common Stock or Holder elects
not to request Optional Redemption or such rights are waived) equal
to the sum of:
(A)
zero (0%) percent of the net proceeds of the Fundamental
Transaction, after deduction of the amount of net proceeds to the
Corporation, required to leave the Corporation (together with its
Cash on Hand (as defined below) immediately prior to the completion
of the Fundamental Transaction) with Cash on Hand of Five Million
Dollars ($5,000,000); plus
(B) ten
(10%) percent of the next Five Million Dollars ($5,000,000) of net
proceeds of the Fundamental Transaction; plus
(C)
100% of the net proceeds of the Fundamental Transaction thereafter
(until the Series E Preferred Stock is redeemed in
full).
For
illustrative purposes only, in the event that following notice of a
Fundamental Transaction and the receipt of written notice from the
holder of Series E Preferred Stock to elect an Optional Redemption
payment, and there having been no prior Optional Redemption
payments, if at the time of the occurrence of any Fundamental
Transaction that results in net proceeds of $25,000,000, the
Corporation has Cash on Hand of $3,000,000, then the Corporation
shall receive the first $2,000,000 (100%) from the proceeds of the
Fundamental Transaction to bring its Cash on Hand to $5,000,000,
then the Corporation and the holders may each receive $4,500,000
and $500,000, respectively (90%/10%) from the next $5,000,000 of
the Fundamental Transaction proceeds, then the holder may receive
the remaining $9,500,000 from the next $18,000,000 of the net
proceeds ($10,000,000 of total Optional Redemption
payments).
In the
event of a redemption of less than all of the Series E Preferred
Stock, the Corporation shall promptly cause to be issued and
delivered to the holder a new certificate for Series E Preferred
Stock representing the remaining balance which has not been
redeemed or converted.
In the
event that the Corporation shall (A) pay a dividend or make a
distribution, in shares of Common Stock, on any class of capital
stock of the Corporation or any subsidiary which is not directly or
indirectly wholly owned by the Corporation, (B) split or subdivide
its outstanding Common Stock into a greater number of shares, or
(C) combine its outstanding Common Stock into a smaller number of
shares, then in each such case the Conversion Price in effect
immediately prior thereto shall be adjusted so that the holder of
each share of the Series thereafter surrendered for conversion
shall be entitled to receive the number of shares of Common Stock
that such holder would have owned or have been entitled to receive
after the occurrence of any of the events described above had such
share of the Series been converted immediately prior to the
occurrence of such event. An adjustment made pursuant to this
paragraph 8 shall become effective immediately after the close of
business on the record date in the case of a dividend or
distribution and shall become effective immediately after the close
of business on the effective date in the case of such subdivision,
split or combination, as the case may be.
9.
Certain Defined
Terms
.
9.1
“
Base Amount
” means, with respect
to each share of Series E Preferred Stock, as of the applicable
date of determination, the sum of (1) the Stated Value thereof,
plus (2) the unpaid dividend amount thereon as of such date of
determination.
9.2
“
Cash on Hand
” means (1) currency
on hand (2) demand deposits with banks or financial institutions
(3) other kinds of accounts that have the general characteristics
of demand deposits (4) short-term, highly liquid investments that
are both readily convertible to known amounts of cash and so near
their maturity that they present insignificant risk of changes in
value because of changes in interest rates. Generally, only
investments maturing within three months from the date of
acquisition qualify.
9.3
“
Certificate of Designations
” means
this Certificate of Designations of Preferences, Rights and
Limitations of Series E Convertible Preferred Stock.
9.4
“
Conversion Price
” means, with
respect to each share of Series E Preferred Stock, as of any
Conversion Date or other applicable date of determination, $1.60,
subject to adjustment as provided herein.
9.5
“
Fundamental Transaction
” means
directly or indirectly, in one or more related transactions: (i)
the Corporation or any subsidiary realizes net proceeds from any
equity or equity-linked financing during any fiscal quarter in an
amount which would cause the cash or cash equivalents of the
Corporation to exceed Five Million Dollars ($5,000,000), (ii) the
Corporation consolidates or merges with or into (whether or not the
Corporation or any of its Subsidiaries is the surviving
corporation) any other Person, or (iii) the Corporation or any of
its Subsidiaries sells, leases, licenses, assigns, transfers,
conveys or otherwise disposes of all or substantially all of its
respective properties or assets to any other Person,
provided that
, in
the event of a Fundamental Transaction under clause (ii) or (iii),
neither such Fundamental Transaction will proceed without the
consent of the holders holding a majority of the shares of Series E
Preferred Stock unless all shares of Series E Preferred Stock then
held by the holders are redeemed with Interest upon closing of such
Fundamental Transaction.
9.6
“Partial Redemption
Condition”
means: (i) the occurrence of a Fundamental
Transaction; and (ii) the receipt of written notice from the holder
of Series E Preferred Stock to elect an Optional Redemption
payment
9.7
“
Partial
Redemption Date
” means the date when a Partial
Redemption Condition has been satisfied and an optional redemption
payment is required to be made to a holder as contemplated
herein.
9.8
“
Trading Days
” means, as
applicable, (x) with respect to all price determinations relating
to the Common Stock, any day on which the Common Stock is traded on
the OTC Market, or, if the OTC Market is not the principal trading
market for the Common Stock, then on the principal securities
exchange or securities market on which the Common Stock is then
traded, provided that “Trading Day” shall not include
any day on which the Common Stock is scheduled to trade on such
exchange or market for less than 4.5 hours or any day that the
Common Stock is suspended from trading during the final hour of
trading on such exchange or market (or if such exchange or market
does not designate in advance the closing time of trading on such
exchange or market, then during the hour ending at 4:00:00 p.m.,
New York time) unless such day is otherwise designated as a Trading
Day in writing by the holders or (y) with respect to all
determinations other than price determinations relating to the
Common Stock, any day on which The NASDAQ Venture Market (or any
successor thereto) is open for trading of securities.
IN
WITNESS WHEREOF, the undersigned has executed this Certificate this
__day of July, 2019.
By:____________________
Name:
Kenneth Puzder
Title:
Chief Financial Officer
Exhibit
10.1
ASSET PURCHASE AGREEMENT
This
ASSET PURCHASE AGREEMENT dated July 29, 2019 (this
“Agreement”) between Exactus, Inc.., a Nevada
corporation (the “Purchaser”), and Green Goddess
Extracts, LLC, a Florida limited liability company (the
“Seller”).
RECITALS
WHEREAS,
the Purchaser desires to purchase from the Seller and the Seller
desires to sell to the Purchaser all of Seller’s rights,
title and interest in and to the Assets (as hereinafter defined),
all upon the terms and conditions set forth in this
Agreement.
NOW,
THEREFORE, in consideration of the representations, warranties and
covenants herein contained and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as
follows:
ARTICLE I.
CERTAIN DEFINITIONS
Section
1.01
Certain
Definition
.
(a) The
following terms, when used in this Agreement, shall have the
respective meanings ascribed to them below:
“ACTION”
means any claim, action, suit, inquiry, hearing, investigation or
other proceeding.
“AFFILIATE”
means, with respect to a Person, any other Person that, directly or
indirectly, through one or more intermediaries, Controls, is
controlled by or is under common Control with, such Person. For
purposes of this definition, “CONTROL” (including, with
correlative meanings, 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 or policies of a Person, whether
through the ownership of stock, as trustee or executor, by Contract
or credit arrangement or otherwise.
“AGREEMENT”
has the meaning set forth in the preamble hereto.
“ANCILLARY
AGREEMENTS” means the BILL OF SALE, the EMPLOYMENT AGREEMENT
and the ASSIGNMENT AGREEMENT.
“ASSETS”
has the meaning set forth in Section 2.01.
“ASSIGNMENT
AGREEMENT” has the meaning set forth in Section 3.01
(b).
“ASSIGNED
CONTRACTS” has the meaning set forth in Section 2.02
(i)(1).
“BILL OF
SALE” has the meaning set forth in Section
3.02(a).
“BOOKS AND
RECORDS” means all of the books and records, in all formats
(both tangible and intangible), used or maintained by or on behalf
of the Seller in connection with or otherwise related to the
Business, including (a) executed copies of all of the written
Assigned Contracts, if any, and written descriptions of any oral
Assigned Contracts, if any, (b) copies of all Contracts relating to
the engagement of or the performance of services by the clients and
customers of the Business, (c) all equipment, product and other
warranties pertaining to the Assets, (d) all technical information
and any data, maps, computer files, diagrams, blueprints and
schematics, (e) all filings made with or records required to be
kept by any Governmental Entity (including all backup information
on which such filings are based), (f) all research and development
reports, (g) all equipment and operating logs, (h) all financial
and accounting records, (i) all employment records, and (j) all
creative, promotional or advertising materials.
“BUSINESS”
means the business of producing, marketing, and selling products
consisting of or containing Cannabinoids and other products derived
from industrial hemp.
“CASH”
means, as of any applicable time of determination, Seller’s
actual cash (bank) balances and cash equivalents (including cash on
hand and deposits in transit), in each case, determined in
accordance with GAAP. For the avoidance of doubt, Cash will be
calculated net of issued but uncleared checks and will include
checks, other wire transfers and drafts deposited or available for
deposit for the account of the Seller.
“CLAIM
NOTICE” means written notification pursuant to Section
7.02(a) of a Third-Party Claim as to which indemnity under Section
7.01 is sought by an Indemnified Party, enclosing a copy of all
papers served, if any, and specifying the nature of and basis for
such Third-Party Claim and for the Indemnified Party’s claim
against the Indemnifying Party under Section 7.01, together with
the amount or, if not then reasonably ascertainable, the estimated
amount, determined in good faith, of the Indemnified Party’s
Losses in respect of such Third-Party Claim.
“CLOSING”
has the meaning set forth in Section 3.01.
“CLOSING
DATE” has the meaning set forth in Section 3.01.
“CONTRACT”
means any agreement, lease, debenture, note, bond, evidence of
Indebtedness, mortgage, indenture, security agreement, option or
other contract or commitment (whether written or
oral).
“DISCLOSURE
SCHEDULE” shall have the meaning set forth in Article
IV.
“DISPUTE
NOTICE” means a written notice provided by any party against
which indemnification is sought under this Agreement to the effect
that such party disputes its indemnification obligation under this
Agreement.
“DISPUTE
PERIOD” means the period ending thirty calendar days
following receipt by an Indemnifying Party of either a Claim Notice
or an Indemnity Notice.
“EMPLOYMENT
AGREEMENT” shall have the meaning set forth in Section
3.03(c).
“EMPLOYMENT
PLAN” shall have the meaning set forth in Section
2.01(d).
“EXCLUDED
ASSETS”
shall
have the meaning set forth in Section 2.01(d).
“EXCLUDED
LIABILITIES” shall have the meaning set forth in Section 2.02
(ii).
“GAAP”
means United States generally accepted accounting principles as in
effect from time to time, consistently applied throughout the
specified period and all prior comparable periods.
“GOVERNMENTAL
AUTHORIZATION” means any approval, consent, ratification,
waiver, license, permit, registration or other authorization
issued, granted, given or otherwise made available by or under the
authority of any Governmental Entity or pursuant to any Laws,
including without limitation, any bond, certificate of authority,
accreditation, qualification, license, franchise, permit, order,
registration, variance or privilege.
“GOVERNMENTAL
ENTITY” means any government or political subdivision
thereof, whether foreign or domestic, federal, state, provincial,
county, local, municipal or regional, or any other governmental
entity, any agency, authority, department, division or
instrumentality of any such government, political subdivision or
other governmental entity, any court, arbitral tribunal or
arbitrator, and any nongovernmental regulating body, to the extent
that the rules, regulations or orders of such body have the force
of Law.
“INDEBTEDNESS”
means, as to any Person: (i) all obligations, whether or not
contingent, of such Person for borrowed money (including, without
limitation, reimbursement and all other obligations with respect to
surety bonds, letters of credit and bankers’ acceptances,
whether or not matured), (ii) all obligations of such Person
evidenced by notes, bonds, debentures, capitalized leases or
similar instruments, (iii) all obligations of such Person
representing the balance of deferred purchase price of property or
services, (iv) all interest rate and currency swaps, caps, collars
and similar agreements or hedging devices under which payments are
obligated to be made by such Person, whether periodically or upon
the happening of a contingency, (v) all indebtedness created or
arising under any conditional sale or other title retention
Contract with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such
Contract in the event of default are limited to repossession or
sale of such property), (vi) all indebtedness secured by any Lien
on any property or asset owned or held by such Person regardless of
whether the indebtedness secured thereby shall have been assumed by
such Person or is non-recourse to the credit of such Person, and
(vii) all indebtedness referred to in clauses (i) through (vi)
above of any other Person that is guaranteed, directly or
indirectly, by such Person.
“INDEMNIFIED
PARTY” means any Person claiming indemnification under any
provision of Article VII.
“INDEMNIFYING
PARTY” means any Person against whom a claim for
indemnification is being asserted under any provision of Article
VII.
“INDEMNITY
NOTICE” means written notification pursuant to Section
7.02(b) of a claim for indemnification under Article VII by an
Indemnified Party, specifying the nature of and basis for such
claim, together with the amount or, if not then reasonably
ascertainable, the estimated amount, determined in good faith, of
the Indemnified Party’s Losses in respect of such
claim.
“INSURANCE
POLICY” shall have the meaning set forth in Section
4.14.
“INTELLECTUAL
PROPERTY” shall have the meaning set forth in Section 4.16
(b).
“KNOWLEDGE” means the actual or constructive knowledge
after due inquiry of any current officer or manager of the
Seller.
“LAWS”
means all laws, statutes, rules, regulations, ordinances and other
pronouncements having the effect of law of the United States, any
foreign country or any domestic or foreign state, county, city or
other political subdivision or of any Governmental
Entity.
“LEASED
PREMISES” shall have the meaning set forth in Section
4.12.
“LEASES”
shall have the meaning set forth in Section 4.12.
“LIABILITY”
means all Indebtedness, obligations and other Liabilities of a
Person, whether absolute, accrued, contingent, fixed or otherwise,
and whether due or to become due (including for
Taxes).
“LIEN”
means any mortgage, pledge, assessment, security interest, lease,
lien, adverse claim, levy, charge or other encumbrance of any kind,
whether voluntary or involuntary (including any conditional sale
Contract, title retention Contract or Contract committing to grant
any of the foregoing).
“LOSS”
means any and all damages, fines, fees, penalties, deficiencies,
losses and expenses (including, without limitation, all interest,
court costs, fees and expenses of attorneys, accountants and other
experts or other expenses of litigation or other proceedings or of
any claim, default or assessment).
“MATERIAL
ADVERSE EFFECT” means any material adverse effect on the
condition, operations, business, prospects or results of sales of
the Seller; PROVIDED, HOWEVER, that any adverse effect arising out
of or resulting from the entering into of this Agreement or the
consummation of the transactions contemplated hereby, shall be
excluded in determining whether a Material Adverse Effect has
occurred.
“ORDER”
means any writ, judgment, decree, injunction or similar order of
any Governmental Entity (in each case whether preliminary or
final).
“OWNED
INTELLECTUAL PROPERTY” ” shall have the meaning set
forth in Section 4.16(a).
“ORDINARY
COURSE OF BUSINESS” means an action taken by any Person in
the ordinary course of such Person’s business which is
consistent with the past customs and practices in frequency and
amount of such Person.
“
ORGANIZATIONAL DOCUMENTS
”
means, with respect to any Person (other than an individual), the
certificate or articles of incorporation or organization,
certificate of limited partnership and any joint venture, limited
liability company, operating, voting or partnership agreement,
by-laws, or similar documents, instruments or agreements relating
to the organization or governance of such Person, in each case, as
amended or supplemented.
“PERSON”
means any individual, partnership, limited liability company,
corporation, association, joint stock company, trust, estate, joint
venture, unincorporated organization, Governmental Entity or any
other entity of any kind.
“PROCEEDING”
means any litigation, action, suit, mediation, arbitration,
assessment, investigation, hearing, grievance or similar proceeding
(in each case, whether civil, criminal, administrative or
investigative) initiated, commenced, conducted, heard, or pending
by or before any Governmental Entity, arbitrator or
mediator.
“PURCHASE
PRICE” has the meaning set forth in Section
2.01.
“PURCHASER”
has the meaning set forth in the preamble hereto.
“RESOLUTION
PERIOD” means the period ending thirty days following receipt
by an Indemnified Party of a Dispute Notice.
“SELLER”
has the meaning set forth in the preamble hereto.
“SELLER
PARTIES” shall have the meaning set forth in Section
9.01.
“SOLVENT”
means, with respect to the Seller, that (a) the Seller is able to
pay its Liabilities, as they mature in the normal course of
business, and (b) the fair value of the assets of the Seller is
greater than the total amount of Liabilities of the
Seller.
“
TAX RETURN
” means any
return, declaration, report, claim for refund or information return
or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment or supplement
thereof.
“TAXES”
means all federal, state, local and foreign income, profits,
franchise, license, social security, transfer, registration,
estimated, gross receipts, environmental, customs duty, capital
stock, severance, stamp, payroll, sales, employment, unemployment,
disability, use, property, withholding, excise, production, value
added, occupancy and other taxes, duties or assessments of any
nature whatsoever together with all interest, penalties, fines and
additions to tax imposed with respect to such amounts and any
interest in respect of such penalties and additions to
tax.
“THIRD-PARTY
CLAIM” has the meaning set forth in Section
7.02(a).
“TRANSFER
TAXES” means all sales, use, value added, excise,
registration, documentary, stamps, transfer, real property
transfer, recording, gains, stock transfer and other similar Taxes
and fees.
(b) For
purposes of this Agreement, except as otherwise expressly provided
herein or unless the context otherwise requires: (i) words using
the singular or plural number also include the plural or singular
number, respectively, and the use of any gender herein shall be
deemed to include the other genders; (ii) references herein to
“Articles”, “Sections”,
“subsections” and other subdivisions without reference
to a document are to the specified Articles, Sections, subsections
and other subdivisions of this Agreement; (iii) a reference to a
subsection without further reference to a Section is a reference to
such subsection as contained in the same Section in which the
reference appears, and this rule shall also apply to other
subdivisions within a Section or subsection; (iv) the words
“herein”, “hereof”,
“hereunder”, “hereby” and other words of
similar import refer to this Agreement as a whole and not to any
particular provision; and (v) the words “include”,
“includes” and “including” are deemed to be
followed by the phrase “without limitation”. All
accounting terms used herein and not expressly defined herein shall
have the meanings given to them under GAAP.
ARTICLE II.
PURCHASE AND SALE OF ASSETS
Section
2.01
Purchase
and Sale of Assets.
(a)
Purchase
Price
. In consideration for the purchase of the Assets,
Purchaser shall pay Seller the aggregate purchase price equal to
the sum of the following items (collectively, the “PURCHASE
PRICE”):
(i)
Installment
payments totaling $250,002, to be paid in six installments as
follows, provided the Seller has delivered to the Purchaser a
complete list of Assets pursuant to Section 2.01(d) herein: (x)
$41,667 shall be due and payable within 90 days of Closing, as
hereinafter defined; and (y) five (5) additional installments of
$41,667 shall be paid to the Seller commencing October
12
th
, 2019
and continuing on the first day of each month thereafter;
plus
(ii)
An
additional cash payment, to be paid at the Closing, equal to the
fully-depreciated value of all of the Assets as shown on the
Seller’s balance sheet as of Friday, July 19,
2019.
(iii)
Restricted Stock.
1)
250,000 shares of
restricted common stock, vesting 1/24 on the Closing Date, and an
additional 1/24
th
of the restricted
stock units shall vest on the first day of each month thereafter,
provided neither Purchaser nor Employee under the Employment
Agreement contemplated herein is in breach of this Agreement or the
Employment Agreement.
2)
Subject to the
terms and conditions of the Employment Agreement (as defined
below), when and if Purchaser achieves sales of products utilizing
the Seller’s flavored products in excess of $500,000 monthly
for a three month average, the Purchaser shall issue to the Seller
restricted units of common stock of the Purchaser having a value of
$250,000, to be valued according to the volume-weighted average
price for the Company’s common stock for the 20 trading days
preceding the signature date of the agreement issuing such
restricted units to Seller. 1/24th of the restricted stock units
shall vest on such signature date, and an additional 1/24th of the
restricted stock units shall vest on the first day of each month
thereafter, provided neither Purchaser nor Employee under the
Employment Agreement contemplated herein is in breach of this
Agreement or the Employment Agreement.
(b)
Sale of
Assets
. In consideration of the payment by the Purchaser of
the Purchase Price, the Seller hereby agrees to sell, convey,
transfer, assign, grant and deliver to the Purchaser, free and
clear of all Liens, and the Purchaser hereby agrees to purchase,
acquire and accept from the Seller, at the Closing, all of the
Seller’s right, title and interest in and to all of the
assets and properties (real, personal and mixed, tangible and
intangible, of every kind and description, wherever located), used
or held for use in connection with, or related to, the Business,
(collectively, the “ASSETS”), including without
limitation those assets set forth on
Schedule 1
and the
following:
(i)
all
tangible personal property, including computer hardware, office and
other equipment, accessories, machinery, furniture, fixtures, and
vehicles;
(ii)
all inventory and supplies
maintained by Seller in connection with the
Business;
(iii)
all Governmental Authorizations
necessary for or incident to the operation of the Business, to the
extent assignable;
(iv)
all of Seller’ rights under
the Assigned Contracts (as defined below);
(v)
all Cash of Seller, and all
accounts receivable and notes receivable of Seller arising prior to
the Closing Date;
(vi)
all of Seller’s interest in
and to (i) all patents, applications for patents, copyrights,
license agreements, assumed names, trade names, trademark and/or
service mark registrations, applications for trademark and/or
service mark registrations, trademarks and service marks of Seller,
as more particularly described in Schedule 1, and all variants
thereof, including all of Seller’s rights to use the name
“GREEN GODDESS EXTRACTS” to the exclusion of Seller;
(ii) all of Seller’s interest in and to all of Seller’s
customer base (including sponsors), and the right to do business
with such customers, including and all of Seller’s rights in
and to customer information, customer records, customer lists, and
candidate and prospect lists; (iii) all telephone numbers, fax
numbers, telephone directory advertising, web sites, domain names,
domain leases, social media accounts, and e-mail addresses used or
held for use in the Business, all as identified on Schedule 1; (iv)
all of Seller’s other proprietary information, including
trade secrets, know-how, operating data and other information
pertaining to the Business; and (v) all of Seller’s other
intangible assets related to the Business, including the goodwill
associated with the Business;
(vii)
all Books and
Records;
(viii)
all claims of against third parties
relating exclusively to the Assets, whether choate or inchoate,
known or unknown, contingent or non-contingent;
(ix)
all rights relating to deposits and
prepaid expenses relating to the Business;
(x)
all
warranties (express and implied) that continue in effect with
respect to any Asset, to the extent assignable;
and
(xi)
all
other assets of the Seller, not described above, which are either
(1) reflected on the Financial Statements and not disposed of by
the Seller in the Ordinary Course of Business between the date of
the most recent financial statement provided to the Purchaser and
the Closing Date, or (2) acquired by the Seller in the Ordinary
Course of Business between the date of the Interim Financial
Statement and the Closing Date.
(c)
List of Assets
. No later than 30 days
after the Closing, the Seller shall provide a complete list of
Assets to the Purchaser as an amendment to Schedule 1 hereto, which
shall be reviewed and approved by the Purchaser, at the
Purchaser’s sole discretion. Upon review and written approval
of the Purchaser, Schedule 1 shall be considered amended and part
of the Assets sold pursuant to this Agreement.
(d)
Excluded Assets
.
Notwithstanding the
provisions
of Section 2.01(b),
the Assets shall not include any of the right, title or interest of
the Seller in, to and under the following (herein referred to as
the “EXCLUDED ASSETS”): (a) any Organizational
Documents of the Seller and any company records having to do with
the organization and capitalization of the Seller; (b) any employee
plans as to which the Seller sponsors, maintains, contributes or is
obligated to contribute, or under which the Seller has or may have
any Liability related to the Business (the “EMPLOYMENT
PLAN”); (c) any and all Contracts that are not Assigned
Contracts; (d) the consideration delivered to Seller by Purchaser
pursuant to this Agreement; (e) any Books and Records which Seller
is required by applicable Law to retain; provided, however, that
Seller shall provide Buyer with copies of all such Books and
Records at or prior to the Closing; (f) all rights in and with
respect to insurance policies of the Seller, except for any
proceeds of such insurance and claims therefor relating to the
Assets; (g) all Tax refunds attributable to the operations of the
Seller; and (h) the assets listed on Schedule 2.01(c) attached
hereto.
Section
2.02
Liabilities.
(i)
Subject
to the terms and conditions of this Agreement, at the Closing,
Buyer shall assume and agree to perform, pursuant to the Bill of
Sale and Assignment Agreement, only the following (collectively,
the “ASSUMED LIABILITIES”): and
1)
the
Liabilities of the Seller under the Contracts identified on
Schedule 2.02(i)(1) (collectively, the “ASSIGNED
CONTRACTS”) arising in the Ordinary Course of Business after
the Closing Date and relating to the Assigned Contracts), but
excluding any Liability to the extent arising out of or relating to
a breach, violation, default or failure to perform by the Seller
that occurred prior to the Closing Date; and
(ii)
Except
as contemplated by Section 2.02(i) and as expressly set forth in
the Bill of Sale and Assignment Agreement, Purchaser shall not
assume, nor shall it agree to pay, perform or discharge, any
Liability of the Seller, whether or not arising from or relating to
the conduct of the Business and whether absolute, contingent,
accrued, known or unknown (the “EXCLUDED LIABILITIES”).
Without limiting the generality of the prior sentence, Excluded
Liabilities shall include, without limitation:
1)
any
Liability to pay any Taxes of the Seller, regardless of whether
arising in connection with the consummation of the transactions
contemplated hereby or otherwise;
2)
any
Liability of Seller for performance under the Ancillary
Agreements;
3)
any
Liability under any Assigned Contract to the extent arising and
relating to a period prior to the Closing Date or to the extent
relating to any breach, violation, default or failure to perform by
Seller that occurred prior to the Closing Date;
4)
any
Liability (other than the Assumed Liabilities) otherwise relating
to the Assets or the operation of the Business to the extent
arising and related to a period prior to the Closing Date
including;
5)
any
Liability relating to the Excluded Assets;
6)
any
Liability under any Employee Plan;
7)
any
Liability arising out of or relating to Seller’s termination
of the Seller’s employees, either prior to or following the
Closing Date, including but not limited to any Liability or
obligation under any applicable Law and any contractual claims for
severance or similar obligations;
8)
any
Liability of the Seller for any failure to comply with any
Laws;
9)
any other Liability
of Seller that is not an Assumed Liability.
ARTICLE
III.
THE CLOSING
Section
3.01
Closing.
The closing of the transactions
contemplated hereby (the “CLOSING”) shall take place
upon the Parties’ execution of this Agreement, or on such
other date as the parties hereto may mutually determine in writing
(the “CLOSING DATE”).
Section
3.02
Delivery of Items by the
Seller
.
The Seller shall
deliver to the Purchaser at the Closing the items listed
below:
(a)
a Bill of Sale for
the Assets, duly executed by the Seller, in the form attached
hereto as EXHIBIT A (the “BILL OF SALE”);
(b)
an Assignment and
Assumption Agreement, in the form attached hereto as Exhibit C (the
“ASSIGNMENT AGREEMENT”);
(c)
a certificate of
the secretary or equivalent officer of Seller, in form and
substance reasonably satisfactory to Buyer, certifying that
attached thereto is a true, correct and complete copy of (1) the
Organizational Documents of the Seller, (2) resolutions duly
adopted by the managers and members of the Seller authorizing the
performance of the transactions contemplated by this Agreement and
the execution and delivery of the Ancillary Agreements to which it
is a party, and (3) a certificate of existence or good standing (or
equivalent document), as of a recent date, of such Seller from its
jurisdiction of formation; and
(d)
such other
documents and instruments as the Purchaser may reasonably
request
.
Section
3.03
Delivery of Items by the Purchaser
. The
Purchaser shall deliver to the Seller at the Closing the items
listed below:
(a)
The initial
installment payment called for under Section
2.01(a)(i);
(b)
Funds equal to the
fully-depreciated balance sheet value of the Assets, as called for
under Section 2.01(a)(ii);
(c)
An Employment
Agreement under which Alex (Alevandro) De La Espriella
(“Employee”) shall be employed as an executive of the
Purchaser, in the form attached hereto as EXHIBIT B (the EMPLOYMENT
AGREEMENT”); and
(d)
such other
documents and instruments as the Seller may reasonably
request.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE SELLER
As an
inducement to the Purchaser to enter into this Agreement and to
consummate the transactions contemplated hereunder, the Seller
represents and warrants to the Purchaser as follows, as of the date
hereof and as of the Closing Date (except to the extent made only
as of a specified date, in which case as of such date), which
representations and warranties are supplemented and qualified by
the disclosures contained in the disclosure schedule attached
hereto as Exhibit C (the “DISCLOSURE SCHEDULE”) that
contains references to the representations and warranties to which
the disclosures contained therein relate:
Section
4.01
Authorization and Ownership
. The Seller
has full power and authority to execute and deliver this Agreement
and the Ancillary Agreements, as applicable, and to perform its
obligations hereunder and thereunder. This Agreement and the
Ancillary Agreements have been duly executed and delivered by the
Seller and, assuming the due authorization, execution and delivery
hereof and thereof by the Purchaser, constitute the valid and
legally binding obligations of the Seller enforceable in accordance
with their respective terms. Seller is a limited liability company
organized under the laws of the State of Florida, in good standing,
and has obtained all consents and other approvals necessary under
Florida law, its Articles of Organization, and its Operating
Agreement (if any) necessary for the execution, delivery and
performance of this Agreement and the Ancillary Agreements. Seller
has the full right, power and authority to own, lease and operate
all of its properties and assets and carry out the Business as it
is presently conducted.
Section
4.02
Brokers Fees.
No agent, broker, finder,
investment banker, financial advisor or other similar Person will
be entitled to any fee, commission or other compensation in
connection with any of the transactions contemplated by this
Agreement on the basis of any act or statement made or alleged to
have been made by the Seller, any of its Affiliates, or any
investment banker, financial advisor, attorney, accountant or other
Person retained by or acting for or on behalf of the Seller or any
such Affiliate.
Section
4.03
Noncontravention.
(a)
Neither the
execution, delivery or performance of this Agreement or the
Ancillary Agreements, as applicable, nor the consummation of the
transactions contemplated hereby or thereby will, with or without
the giving of notice or the lapse of time or both, (i) violate any
Law or Order or other restriction of any Governmental Entity to
which the Seller may be subject or (ii) conflict with, result in a
breach of, constitute a default under, result in the acceleration
of any right or obligation under, create in any party the right to
accelerate, terminate, modify, cancel, require any notice under or
result in the creation of a Lien on any of the Assets under, any
Contract to which the Seller is a party or by which it is bound and
to which any of its Assets is subject.
(b)
The execution and delivery of this
Agreement and the Ancillary Agreements, as applicable, by the
Seller do not, and the performance of this Agreement and the
Ancillary Agreements by the Seller and the consummation of the
transactions contemplated hereby and thereby will not, require any
consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Entity.
Section
4.04
Litigation.
There is no pending or, to
the Knowledge of the Seller, threatened Action against or affecting
the Assets. Neither the Seller nor the Assets are subject to any
Order restraining, enjoining or otherwise prohibiting or making
illegal any action by the Seller, this Agreement or any of the
transactions contemplated hereby.
Section
4.05
Contracts.
There are no
executory Contracts (whether license agreements, development
agreements or otherwise), to which any of the Assets are bound or
subject (other than this Agreement).
Section
4.06
Compliance With Laws.
The Seller is not
in violation of, has not violated and, to the Knowledge of the
Seller, is not under investigation with respect to any possible
violation of, and has not been threatened to be charged with any
violation of, any Order of Law applicable to the Business or the
Assets.
Section
4.07
Title to Assets.
(i) the Seller has good
and marketable title to all of the Assets free and clear of all
Liens; (ii) this Agreement and the instruments of transfer to be
executed and delivered pursuant hereto will effectively vest in the
Purchaser good and marketable title to all of the Assets free and
clear of all Liens; (iii) and no Person other than the Seller has
any ownership interest in any of the Assets. The tangible assets
included in the Assets are in good working order, condition and
repair, reasonable wear and tear excepted, and are not in need of
maintenance or repairs except for maintenance or repairs which are
routine, ordinary and are not material in costs or nature. Except
as set forth in Section 4.07 of the Disclosure Schedule, all of the
Assets are located at the Leased Premises.
Section
4.08
Solvency.
The Seller is and, after
consummation of the transactions contemplated by this Agreement,
will be Solvent.
Section
4.09
Materiality
. The representations and
warranties on the part of the Seller contained in this Agreement,
and the statements contained in any of the Schedules or in any
certificates furnished to the Purchaser pursuant to any provisions
of this Agreement, including pursuant to Article VI hereof, do not
contain any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements herein or
therein, in light of the circumstances under which they were made,
not misleading.
Section
4.10
Financial Statements
. Set forth in
Section 4.10 of the Disclosure Schedule are the following financial
statements of Seller (collectively, the “FINANCIAL
STATEMENTS”): (i) the unaudited consolidated balance sheet
the Seller as of December 31, 2018 and December 31, 2017 and the
related unaudited consolidated statements of income, cash flow and
changes in owners’ equity for the fiscal years then ended;
and (iii) the unaudited consolidated balance sheet of Seller as of
June 30, 2019 (the “Interim Balance Sheet”) and the
related internally-prepared unaudited consolidated statements of
income, cash flow and changes in owners’ equity for the
six-month period then ended (together with the Interim Balance
Sheet, the “INTERIM FINANCIAL STATEMENTS”), all in
accordance with GAAP.
Section
4.11
No Undisclosed Liabilities
. Except as
set forth in the Disclosure Letter, the Company has no liabilities
or obligations of any nature (whether known or unknown and whether
absolute, accrued, contingent, or otherwise) except for liabilities
or obligations reflected or reserved against in the Interim
Financial Statements and current liabilities incurred in the
Ordinary Course of Business since the respective dates
thereof.
Section
4.12
Real Property
. Except for its interest
in the Leased Premises, Seller does not own any right, title or
interest in any real property nor has the Seller ever owned any
real property. Section 4.12 of the Disclosure Schedule contains a
list of all of the real property leased by the Seller in connection
with the Business (collectively, the “LEASED
PREMISES”), and identifies each Contract under which such
property is leased (the “LEASES”). There are no
subleases, licenses, concessions, occupancy agreements or other
Contracts granting to any other Person the right of use or
occupancy of the Leased Premises and there is no Person (other than
Seller) in possession of the Leased Premises. There is no pending
or threatened eminent domain taking affecting any portion of the
Leased Premises which shall interfere with Seller’s conduct
of the Business. Seller has delivered to Buyer true, correct and
complete copies of the Leases, including all amendments,
modifications, notices or memoranda of lease thereto and all
estoppel certificates or subordinations, non-disturbance and
attornment agreements, if any, related thereto. The Leased Premises
are in good working order, condition and repair. Seller’s
operation and use of the Leased Premises fully comply with all
applicable Laws and the terms and conditions of the applicable
Leases.
Section
4.13
Taxes
. Seller has filed all Tax Returns
which are required to be filed prior to the date of this Agreement
and has paid or has reserved for the payment all Taxes which have
become due and payable. No event has occurred which could impose on
Purchaser any successor or transferee liability for any Taxes in
respect of the Seller. All such Tax Returns are complete and
accurate and disclose all Taxes required to be paid. All monies
required to be withheld by the Seller (including from employees for
income Taxes and social security and other payroll Taxes) have been
collected or withheld, and either paid to the respective taxing
authorities, set aside in accounts for such purpose, or accrued,
reserved against and entered upon the books of such Seller. No
examination or audit of any Tax Return is currently in progress and
no Governmental Entity is asserting, or has threatened in writing
to assert, against the Seller any deficiency, proposed deficiency
or claim for additional Taxes or any adjustment thereof with
respect to any period for which a Tax Return has been filed, for
which Tax Returns have not yet been filed or for which Taxes are
not yet due and payable. No claim has ever been made by an
authority in a jurisdiction where the Seller does not file Tax
Returns that such Seller is or may be subject to taxation by that
jurisdiction.
Section
4.14
Insurance
. Section 4.14 of the
Disclosure Schedule sets forth a description of the current
insurance policies pertaining to the Business maintained by Seller
(each, an “INSURANCE POLICY”), including policies by
which the Seller, or any of the Assets, or the Seller’s
employees, officers or directors or the Business are insured. The
Seller is not in default with respect to its obligations under any
Insurance Policy and has not failed to give any notice or present
any claim thereunder in a due and timely manner. No Seller has been
denied insurance coverage or been subject to any gaps in insurance
coverage in the two year period immediately preceding the date of
this Agreement.
Section
4.15
Governmental Authorizations
. Seller
owns, holds or possesses all Governmental Authorizations
(including, without limitation, Governmental Authorizations
required by the FDA) which are necessary to entitle such Seller to
own or lease, operate and use the Assets and to carry on and
conduct the Business as currently conducted, all of which are set
forth on Section 4.16 of the Disclosure Schedule (the “SELLER
GOVERNMENTAL AUTHORIZATIONS”). None of the Seller or any of
its respective its officers, managers, members or employees has
been a party to or subject to any Proceeding seeking to revoke,
suspend or otherwise limit the Seller Governmental Authorization,
and the Seller has not received any written notice of any such
Proceeding. Section 4.15 of the Disclosure Schedule indicates which
of the Seller Governmental Authorizations shall be assigned to
Purchaser at the Closing. Each of the Seller Governmental
Authorizations is valid and in full force and effect, and Seller is
in compliance in all respects with the terms of all of its Seller
Governmental Authorizations.
Section
4.16
Intellectual Property
.
(a)
Schedule
4.16 sets forth a list of all patents, patent applications
(including any provisional applications, divisions, continuations
or continuations in part), material unregistered trademarks,
registered trademarks and applications for registration for
trademarks, copyright registrations and applications for
registration of copyrights, domain name registrations, and social
media accounts in each case owned by or held in the name of the
Seller, specifying as to each such item, as applicable, (i) the
item (with respect to trademarks), or title (with respect to all
other items), (ii) the owner of the item, (iii) the jurisdiction in
which the item is issued or registered or in which any application
for issuance or registration has been filed, (iv) the issuance,
registration or application number, and (v) the date of application
and issuance or registration of the item (the “OWNED
INTELLECTUAL PROPERTY”). Except as set forth on Schedule 4.17
of the Disclosure Schedule, (A) each item of Intellectual Property
owned by the Seller including the Owned Intellectual Property is
valid and in full force and effect and is owned by the Seller, free
and clear of all Liens and other claims, including any claims of
joint ownership or inventorship, (B) the registrations and
applications for registration of the Owned Intellectual Property
are held of record in the Seller’s name, and (C) none of the
Owned Intellectual Property is, or has been, the subject of any
proceeding contesting its validity, enforceability or the
Seller’s ownership thereof. All issuance, renewal,
maintenance and other payments that are or have become due as of
the date hereof with respect to the Owned Intellectual Property
have been timely paid by or on behalf of the Seller.
(b)
The Seller (i) owns
or possess adequate licenses or other valid rights to use all
patents, patent applications, trademarks, trademark applications,
copyrights, industrial designs, software, databases, data
compilations, domain names, social media accounts, know-how, trade
secrets, product formulas, inventions, rights-to-use and other
industrial and intellectual property rights (collectively,
“INTELLECTUAL PROPERTY”) used in the conduct of the
Business, (ii) the conduct of the Business by Seller does not
infringe, misappropriate, dilute or conflict with, and has not
conflicted with any Intellectual Property of any other Person,
(iii) Seller has not received any notices alleging that the conduct
of the Business, including the marketing, sale and performance of
the services of the Business, infringes, dilutes, misappropriates
or otherwise violates any Person’s Intellectual Property
(including, for the avoidance of doubt, any cease and desist letter
or offer of license), (iv) no current or former employee of the
Seller and no other Person owns or has any proprietary, financial
or other interest, direct or indirect, in whole or in part, and
including any rights to royalties or other compensation, in any of
Intellectual Property owned or purported to be owned by the Seller,
(v) there is no agreement or other contractual restriction
affecting the use by the Seller of any of the Intellectual Property
owned or purported to be owned by the Seller, and (vi) to the
Knowledge of Seller, there has been no infringement, dilution,
misappropriation or other violation of any of the Intellectual
Property owned or purported to be owned by the Seller by any
Person, and the Seller has not asserted or threatened any claim or
objection against any Person for any such infringement or
misappropriation nor is there any basis in fact for any such
objection or claim.
(c)
All employees,
agents, consultants or contractors who have contributed to or
participated in the creation or development of any patentable or
trade secret material, or copyrightable material, in each case
relating to the Business on behalf of the Seller or any predecessor
in interest thereto either: (i) is a party to a
“work-for-hire” agreement under which Seller is deemed
to be the original owner/author of all property rights therein; or
(ii) has executed an assignment or an agreement to assign in favor
of Seller all right, title and interest in such material. The
Seller has not received notice that, or otherwise has knowledge
that, any employee, consultant or agent of the Seller in default or
breach of any employment agreement, non-disclosure agreement,
assignment of invention agreement or similar agreement relating to
the protection, ownership, development, use or transfer of
Intellectual Property owned by the Seller.
(d)
The information
technology systems owned, leased, licensed or otherwise used in the
conduct of the Business, including all computer software, hardware,
firmware, process automation systems and telecommunications systems
used by Selles in the Business (the “IT Systems”)
perform reliably and in material conformance with the documentation
and specifications for such systems. The Seller has taken
commercially reasonable steps to ensure that the IT Systems do not
contain any viruses, “worms,” disabling or malicious
code, or other anomalies that would materially impair the
functionality of the IT Systems. The Seller has taken commercially
reasonable steps to provide for the backup, archival and recovery
of the critical business data of the Seller. The Seller has taken
commercially reasonable measures to maintain the confidentiality
and value of all of its trade secrets. None of the Seller’s
trade secrets nor any other confidential information of the Seller
has been disclosed by the Seller to, or, to the knowledge of
Seller, discovered by, any other Person except pursuant to
non-disclosure agreements or to Persons entitled to receive such
trade secrets or other confidential information that are legally
obligated to maintain their confidentiality.
(e)
The Intellectual
Property (including the Owned Intellectual Property) owned and
licensed by Seller and included in the Assets is sufficient to
enable Purchaser to conduct the Business after the Closing in the
manner in which the Business has been conducted by Seller prior to
the Closing.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
As an
inducement to the Seller to enter into this Agreement, the
Purchaser represents and warrants to the Seller as
follows:
Section
5.01
Authorization.
The Purchaser has full
power and authority to execute and deliver this Agreement and the
Ancillary Agreements, as applicable, and to perform its obligations
hereunder and thereunder. This Agreement and the Ancillary
Agreements have been duly executed and delivered by the Purchaser
and, assuming the due authorization, execution and delivery hereof
and thereof by the Seller, constitute the valid and legally binding
obligations of the Purchaser enforceable in accordance with their
respective terms. Purchaser is a corporation organized under the
laws of the State of Nevada, in good standing, and has obtained all
consents and other approvals necessary under Nevada law, its
Articles of Incorporation, and its Bylaws necessary for the
execution, delivery and performance of this Agreement and the
Ancillary Agreements.
Section
5.02
Noncontravention.
(a)
Neither the
execution, delivery or performance of this Agreement or the
Ancillary Agreements, as applicable, nor the consummation of the
transactions contemplated hereby or thereby will, with or without
the giving of notice or the lapse of time or both, (i) violate any
Law or Order or other restriction of any Governmental Entity to
which the Purchaser may be subject.
(b)
The execution and
delivery of this Agreement and the Ancillary Agreements, as
applicable, by the Purchaser does not, and the performance of this
Agreement and the Ancillary Agreements by the Purchaser and the
consummation of the transactions contemplated hereby and thereby
will not, require any consent, approval, authorization or permit
of, or filing with or notification to, any Governmental
Entity.
Section
5.03
Brokers’ Fees
. No agent, broker,
finder, investment banker, financial advisor or other similar
Person will be entitled to any fee, commission or other
compensation in connection with any of the transactions
contemplated by this Agreement on the basis of any act or statement
made or alleged to have been made by the Purchaser, any of its
Affiliates, or any investment banker, financial advisor, attorney,
accountant or other Person retained by or acting for or on behalf
of the Purchaser or any such Affiliate.
ARTICLE VI.
CONDITIONS TO OBLIGATION TO CLOSE
Section
6.01
Conditions to Closing by the Purchaser.
The obligation of the Purchaser to effect the transactions
contemplated hereby is subject to the satisfaction or waiver by the
Purchaser of the following conditions:
(a)
The
representations and warranties of the Seller set forth in this
Agreement shall be true and correct in all material respects, with
respect to representations and warranties not qualified by
materiality, or in all respects, with respect to representations
and warranties qualified by materiality, as of the date of this
Agreement and as of the Closing Date as though made on and as of
the Closing Date.
(b)
The Seller shall
have performed in all material respects the covenants required to
be performed by it under this Agreement at or prior to the Closing
Date.
(c)
The Seller shall
have executed and delivered each of the Ancillary Agreements, as
applicable.
(d)
There shall be no
effective or pending Law or Order that would prohibit the Closing,
and the Seller shall have obtained all necessary approvals of any
Governmental Entities in connection with the transactions
contemplated hereby and by the Ancillary Agreements.
(e)
The Seller shall
have delivered each of the items described in Section
3.02.
Section
6.02
Conditions to Closing by the Seller.
The
obligation of the Seller to effect the transactions contemplated
hereby is subject to the satisfaction or waiver by the Seller of
the following conditions:
(a) The
representations and warranties of the Purchaser set forth in this
Agreement shall be true and correct in all material respects, with
respect to representations and warranties not qualified by
materiality, and in all respects, with respect to representations
and warranties qualified by materiality, in each case as of the
date of this Agreement and as of the Closing Date as though made on
and as of the Closing Date.
(b) The
Purchaser shall have performed in all material respects the
covenants required to be performed by it under this Agreement at or
prior to the Closing Date.
(c) The
Purchaser shall have executed and delivered each of the Ancillary
Agreements, as applicable.
(d)
There shall be no effective or pending Law or Order that would
prohibit the Closing, and the Purchaser shall have obtained all
necessary approvals of any Governmental Entities in connection with
the transactions contemplated hereby and by the Ancillary
Agreements.
(e) The
Purchaser shall have delivered each of the items described in
Section 3.03.
ARTICLE VII.
INDEMNIFICATION
Section
7.01
Indemnification
Obligations.
(a)
Purchaser
shall indemnify the Seller and its officers, directors, employees,
agents and Affiliates (each, an “INDEMNIFIED PARTY”) in
respect of, and hold each harmless from and against, any and all
Losses suffered, incurred or sustained by it or to which it becomes
subject, resulting from, arising out of or relating to (i) any
misrepresentation or breach of representation or warranty on the
part of the Purchaser contained in this Agreement, (ii) any
nonfulfillment of or failure to perform any covenant or agreement
on the part of the Purchaser contained in this Agreement, and (iii)
the Assumed Liabilities.
(b)
Seller shall
indemnify the Purchaser and its officers, directors, employees,
agents and Affiliates (each, an “INDEMNIFIED PARTY”) in
respect of, and hold each harmless from and against, any and all
Losses suffered, incurred or sustained by it or to which it becomes
subject, resulting from, arising out of or relating to (i) any
misrepresentation or breach of representation or warranty on the
part of the Seller contained in this Agreement, (ii) any
nonfulfillment of or failure to perform any covenant or agreement
on the part of the Seller contained in this Agreement, and (iii)
any Liabilities related to the Assets or the Business and arising
from or related to facts, circumstances, or events occurring prior
to the Closing.
(c)
For purposes of
indemnification under this Article VII only, all qualifications as
to materiality and/or Material Adverse Effect contained in any
representation or warranty shall be disregarded.
Section
7.02
Method of Asserting Claims.
Claims for
indemnification by an Indemnified Party under Section 7.01 will be
asserted and resolved as follows:
(a)
Third-Party
Claims.
In the event that any claim or demand in respect of
which an Indemnified Party might seek indemnification under Section
7.01 in respect of, arising out of or involving a claim or demand
made by any Person not a party to this Agreement against an
Indemnified Party (a “THIRD-PARTY CLAIM”), the
Indemnified Party shall deliver a Claim Notice to the either the
Purchaser or the Seller, as appropriate, as the “Indemnifying
Party” within thirty (30) days after receipt by such
Indemnified Party of written notice of the Third Party Claim. If
the Indemnified Party fails to provide the Claim Notice within such
time period, the Indemnifying Party will not be obligated to
indemnify the Indemnified Party with respect to such Third-Party
Claim to the extent that the Indemnifying Party’s ability to
defend is actually prejudiced by such failure of the Indemnified
Party. The Indemnifying Party will notify the Indemnified Party as
soon as practicable within the Dispute Period whether the
Indemnifying Party accepts or disputes its liability to the
Indemnified Party under Section 7.01 and whether the Indemnifying
Party desires, at its sole cost and expense, to defend the
Indemnified Party against such Third-Party Claim.
(i)
Defense by Indemnifying Party.
If the
Indemnifying Party notifies the Indemnified Party within the
Dispute Period that the Indemnifying Party desires to defend the
Indemnified Party with respect to the Third-Party Claim pursuant to
this Section 7.02, then the Indemnifying Party will have the right
to defend, with counsel reasonably satisfactory to the Indemnified
Party, at the sole cost and expense of the Indemnifying Party, such
Third-Party Claim by all appropriate proceedings, which proceedings
will be vigorously and diligently prosecuted or defended by the
Indemnifying Party to a final conclusion or will be settled at the
discretion of the Indemnifying Party (but only with the consent of
the Indemnified Party in its sole discretion in the case of any
settlement that provides for any relief other than the payment of
monetary damages or that provides for the payment of monetary
damages as to which the Indemnified Party will not be indemnified
in full pursuant to Section 7.01). Subject to the immediately
preceding sentence, the Indemnifying Party will have full control
of such defense and proceedings, including any compromise or
settlement thereof; PROVIDED, HOWEVER, that the Indemnified Party
may, at the cost and expense of the Indemnifying Party, at any time
prior to the Indemnifying Party’s delivery of notice to
assume the defense of such Third Party Claim, file any motion,
answer or other pleadings or take any other action that the
Indemnified Party reasonably believes to be necessary or
appropriate to protect its interests. The Indemnifying Party shall
not be liable to the Indemnified Party for legal expenses incurred
by the Indemnified Party in connection with the defense of such
Third Party Claim after the Indemnifying Party’s delivery of
notice to assume the defense. In addition, if requested by the
Indemnifying Party, the Indemnified Party will, at the sole cost
and expense of the Indemnifying Party, provide reasonable
cooperation to the Indemnifying Party in contesting any Third-Party
Claim that the Indemnifying Party elects to contest.
(ii)
Defense
by Indemnified Party.
If the Indemnifying Party fails to
notify the Indemnified Party within the Dispute Period that the
Indemnifying Party desires to assume the defense of the Third-Party
Claim, or if the Indemnifying Party fails to give any notice
whatsoever within the Dispute Period, then the Indemnified Party
will have the right to defend, at the sole cost and expense of the
Indemnifying Party, the Third-Party Claim by all appropriate
proceedings, which proceedings will be prosecuted by the
Indemnified Party in good faith or will be settled at the
discretion of the Indemnified Party. The Indemnified Party will
have full control of such defense and proceedings, including any
compromise or settlement thereof; PROVIDED, HOWEVER, that if
requested by the Indemnified Party, the Indemnifying Party will, at
the sole cost and expense of the Indemnifying Party, provide
reasonable cooperation to the Indemnified Party and its counsel in
contesting any Third-Party Claim which the Indemnified Party is
contesting. Notwithstanding the foregoing provisions of this
Section 7.02, if the Indemnifying Party has notified the
Indemnified Party within the Dispute Period that the Indemnifying
Party disputes its liability hereunder to the Indemnified Party
with respect to such Third-Party Claim and if such dispute is
resolved in all respects in favor of the Indemnifying Party in the
manner provided in clause (iii) below, the Indemnifying Party will
not be required to bear the costs and expenses of the Indemnified
Party’s defense pursuant to this Section 7.02 or of the
Indemnifying Party’s participation therein at the Indemnified
Party’s request. The Indemnifying Party may participate in,
but not control, any defense or settlement controlled by the
Indemnified Party pursuant to this Section 7.02, and the
Indemnifying Party will bear its own costs and expenses with
respect to such participation.
(iii)
Acceptance
by Indemnifying Party.
If the Indemnifying Party notifies
the Indemnified Party that it accepts its indemnification liability
to the Indemnified Party with respect to the Third-Party Claim
under Section 7.01, the Loss identified in the Claim Notice, as
finally determined, will be conclusively deemed a liability of the
Indemnifying Party under Section 7.01 and the Indemnifying Party
shall pay the amount of such Loss to the Indemnified Party on
demand. If the Indemnifying Party timely disputes its liability
with respect to such Third-Party Claim, the Indemnifying Party and
the Indemnified Party will proceed in good faith to negotiate a
resolution of such dispute, and if not resolved through
negotiations with the Resolution Period, such dispute shall be
resolved by litigation in a court of competent
jurisdiction.
(b)
Non-Third Party Claims.
In the event any
Indemnified Party should have a claim under Section 7.01 against
any Indemnifying Party that does not involve a Third-Party Claim,
the Indemnified Party shall deliver an Indemnity Notice with
reasonable promptness to the Indemnifying Party. The failure or
delay by any Indemnified Party to give the Indemnity Notice shall
not impair such party’s rights hereunder except to the extent
that the Indemnifying Party is actually prejudiced by such failure
or delay. If the Indemnifying Party notifies the Indemnified Party
that it does not dispute the claim described in such Indemnity
Notice within the Dispute Period, the Loss indemnified in the
Indemnity Notice will be conclusively deemed a Liability of the
Indemnified Party under Section 7.01 and the Indemnifying Party
shall pay the amount of such Loss to the Indemnified Party on
demand. If the Indemnifying Party has timely disputed its liability
with respect to such claim, the Indemnifying Party and the
Indemnified Party will proceed in good faith to negotiate a
resolution of such dispute and, if not resolved through
negotiations within the Resolution Period, such dispute shall be
resolved by litigation in a court of competent
jurisdiction.
ARTICLE VIII.
POST-CLOSING COVENANTS
Section
8.01
Transfer Taxes.
Notwithstanding anything
herein to the contrary, Seller shall be liable for and shall pay
any Transfer Taxes or other similar tax imposed in connection with
the transfer of the Assets pursuant to this Agreement. The party
responsible under applicable Law for remitting any such tax shall
pay and remit such tax on a timely basis and, if such party is the
Purchaser, the Purchaser shall notify the Seller of the amount of
such tax, and the Seller shall promptly pay to the Purchaser the
amount of such tax.
Section
8.02
Further Action
. From and after the
Closing each of the parties hereto shall execute and deliver such
documents and take such further actions as may reasonably be
required to carry out the provisions of this Agreement and the
Ancillary Agreements and to give effect to the transactions
contemplated hereby and thereby, including to give the Purchaser
effective ownership and control of the Assets.
ARTICLE
IX.
MISCELLANEOUS
Section
9.01
Non-Competition and
Non-solicitation.
The Seller and
its managers, members, officers, and employees (collectively, the
“SELLER PARTIES”) agree and acknowledge that protection
and maintenance of the competitive and other advantages represented
by the Assets constitutes a legitimate business interest of the
Purchaser, to be protected by the non-competition restrictions set
forth herein. The Seller Parties agree and acknowledge that the
non-competition restrictions set forth herein are reasonable and
necessary and do not impose undue hardship or burdens on the Seller
Parties. The Seller Parties also acknowledge that the
Purchaser’s Business (as defined below) is conducted
worldwide (the “Territory”), and that the Territory,
scope of prohibited competition, and time duration set forth in the
non-competition restrictions set forth below are reasonable and
necessary to maintain the value of the Assets, and to protect the
goodwill and other legitimate business interests of the Purchaser,
its affiliates and/or its clients or customers.
The Seller
Parties hereby agree and covenant that they shall not without the
prior written consent of the Purchaser, directly or indirectly, in
any capacity whatsoever, including, without limitation, as an
employee, employer, consultant, principal, partner, shareholder,
officer, director or any other individual or representative
capacity (other than (i) as a holder of less than two (2%) percent
of the outstanding securities of a company whose shares are traded
on any national securities exchange or (ii) as a limited partner,
passive minority interest holder in a venture capital fund, private
equity fund or similar investment entity which holds or may hold an
equity or debt position in portfolio companies that are competitive
with the Purchaser; provided however, that the Seller Parties shall
be precluded from serving as an operating partner, general partner,
manager or governing board designee with respect to such portfolio
companies), or whether on the Seller Parties’ own behalf or
on behalf of any other person or entity or otherwise howsoever,
during the Term and thereafter to the extent described below,
within the Territory:
(1) Engage,
own, manage, operate, control, be employed by, consult for,
participate in, or be connected in any manner with the ownership,
management, operation or control of any business in competition
with the Business of the Purchaser, as defined in the next
sentence. For purposes hereof, the Purchaser’s Business shall
mean the business of producing, marketing, and selling products
consisting of or containing CBD derived from industrial hemp, as
well as any future related or unrelated industries or segments in
which the Purchaser may engage or operate in the
future.
(2) Recruit,
solicit or hire, or attempt to recruit, solicit or hire, any
employee, or independent contractor of the Purchaser to leave the
employment (or independent contractor relationship) thereof,
whether or not any such employee or independent contractor is party
to an employment agreement, for the purpose of competing with the
Business of the Purchaser;
(3) Attempt
in any manner to solicit or accept, from any customer of the
Purchaser, business of the kind or competitive with the business
done by the Purchaser with such customer or to persuade or attempt
to persuade any such customer to cease to do business or to reduce
the amount of business which such customer has customarily done or
might do with the Purchaser, or if any such customer elects to move
its business to a person other than the Purchaser, provide any
services of the kind or competitive with the business of the
Purchaser for such customer, or have any discussions regarding any
such service with such customer, on behalf of such other person for
the purpose of competing with the Business of the Purchaser;
or
(4) Interfere
with any relationship, contractual or otherwise, between the
Purchaser and any other party, including, without limitation, any
supplier, distributor, co-venturer or joint venturer of the
Purchaser, for the purpose of soliciting such other party to
discontinue or reduce its business with the Purchaser for the
purpose of competing with the Business of the
Purchaser.
With
respect to the activities described in Paragraphs (1), (2), (3) and
(4) above, the restrictions of this Section 9.01 shall continue for
a period of three (3) years after the Closing Date.
Section
9.02
Survival.
Notwithstanding any right of
the Purchaser (whether or not exercised) to investigate the affairs
of the Seller or any right of any party (whether or not exercised)
to investigate the accuracy of the representations and warranties
of the other party contained in this Agreement or the waiver of any
condition to Closing, each of the parties hereto has the right to
rely fully upon the representations, warranties, covenants and
agreements of the other contained in this Agreement. The
representations, warranties, covenants and agreements of the
parties hereto contained in this Agreement and any certificate or
other document provided hereunder or thereunder will survive the
Closing.
Section
9.03
No Third-Party Beneficiaries
.
The terms and
provisions of this Agreement are intended solely for the benefit of
the parties hereto and their respective successors and permitted
assigns, and it is not the intention of the parties to confer
third-party beneficiary rights, and this Agreement does not confer
any such rights, upon any other Person, except for any Person
entitled to indemnity under Article VII.
Section
9.04
Entire Agreement.
This Agreement
(including the Exhibits and the Schedules hereto) constitute the
entire agreement between the parties hereto with respect to the
subject matter hereof and thereof and supersede any prior
understandings, agreements or representations by or between the
parties hereto, written or oral, with respect to such subject
matter.
Section
9.05
Succession and Assignment.
This
Agreement shall be binding upon and inure to the benefit of the
parties named herein and their respective successors and permitted
assigns. No party hereto may assign either this Agreement or any of
its rights, interests or obligations hereunder without the prior
written approval of the other parties hereto.
Section
9.06
Drafting.
The parties have participated
jointly in the negotiation and drafting of this Agreement and, in
the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by
the parties and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of
any of the provisions of this Agreement.
Section
9.07
Notices
.
All notices,
requests and other communications hereunder must be in writing and
will be deemed to have been duly given only if delivered personally
against written receipt or by electronic e-mail or mailed (by
registered or certified mail, postage prepaid, return receipt
requested) or delivered by reputable overnight courier, fee
prepaid, to the parties hereto at the following
addresses:
|
IF TO
PURCHASER, TO:
|
Exactus,
Inc.
80 NE
4th Avenue, Suite 28
Delray
Beach, FL 33483
Attn:
Emiliano Aloi, President
E-mail:emi@exactusinc.comf
|
|
IF TO
SELLER, TO:
|
Green
Goddess Extracts, LLC
________________________
________________________
Attn: Alejandro De La Esprilla, Manager
E-mail:
|
Any
party hereto may change the address to which notices, requests,
demands, claims and other communications hereunder are to be
delivered by giving the other parties hereto notice in the manner
set forth herein.
Section
9.08
Governing Law.
This Agreement shall be
governed by, and construed in accordance with, the laws of the
State of Florida, without giving effect to any choice of law or
conflict of law provision or rule that would cause the application
of the Laws of any jurisdiction other than the State of
Florida.
WAIVER
OF JURY TRIAL: EACH PARTY HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL
OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT, THE OTHER ANCILLARY AGREEMENTS, AND THE SECURITIES OR
THE SUBJECT MATTER HEREOF OR THEREOF. THE SCOPE OF THIS WAIVER IS
INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE
FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS
TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT
CLAIMS (INCLUDING NEGLIGENCE), BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW AND STATUTORY CLAIMS. THIS SECTION HAS BEEN FULLY
DISCUSSED BY EACH OF THE PARTIES HERETO AND THESE PROVISIONS WILL
NOT BE SUBJECT TO ANY EXCEPTIONS. EACH PARTY HERETO HEREBY FURTHER
WARRANTS AND REPRESENTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER
WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL.
Section
9.09
Amendments and Waivers
.
No amendment of
any provision of this Agreement shall be valid unless such
amendment is in writing and signed by each of the parties hereto.
No waiver by any party hereto of any default, misrepresentation or
breach of warranty or covenant hereunder, whether intentional or
not, shall be deemed to extend to any prior or subsequent default,
misrepresentation or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or
subsequent such occurrence. No waiver shall be valid unless such
waiver is in writing and signed by the party against whom such
waiver is sought to be enforced.
Section
9.10
Severability.
If any provision of this
Agreement is held to be illegal, invalid or unenforceable under any
present or future Law, and if the rights or obligations of any
party hereto under this Agreement will not be materially and
adversely affected thereby, (a) such provision will be fully
severable, (b) this Agreement will be construed and enforced as if
such illegal, invalid or unenforceable provision had never
comprised a part hereof, (c) the remaining provisions of this
Agreement will remain in full force and effect and will not be
affected by the illegal, invalid or unenforceable provision or by
its severance herefrom and (d) in lieu of such illegal, invalid or
unenforceable provision, there will be added automatically as a
part of this Agreement a legal, valid and enforceable provision as
similar in terms of such illegal, invalid or unenforceable
provision as may be possible.
Section
9.11
Expenses.
Except as
otherwise expressly set forth herein or therein, each of the
parties hereto will bear its own costs and expenses (including
legal fees and expenses) incurred in connection with this
Agreement, the Ancillary Agreements and the transactions
contemplated hereby or thereby, whether or not the transactions
contemplated hereby or thereby are consummated.
Section
9.12
Incorporation of Exhibits and Schedules.
The Exhibits, Annexes and Schedules identified in this Agreement
are incorporated herein by reference and made a part hereof. Unless
otherwise specified, no information contained in any particular
numbered Schedule shall be deemed to be contained in any other
numbered Schedule unless explicitly included therein (by cross
reference or otherwise).
Section
9.13
Specific Performance.
The parties hereto
agree that irreparable damage would occur in the event that any
provision of this Agreement was not performed in accordance with
the terms hereof and that the parties shall be entitled to specific
performance of the terms hereof in addition to any other remedy
available to them at law or equity.
Section
9.14
Headings.
The
descriptive headings contained in this Agreement are included for
convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
Section
9.15
Counterparts.
This Agreement may be
executed in one or more counterparts, and by the different parties
hereto in separate counterparts, each of which when executed shall
be deemed to be an original but all of which taken together shall
constitute one and the same agreement.
IN
WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first written above.
|
EXACTUS,
INC. (“Purchaser”)
By:
___________________________
Emiliano
Aloi, President
|
|
GREEN
GODDESS EXTRACTS, LLC (“Seller”)
By:___________________________
Alejandro
De La Esprilla, as Manager of the Seller,
and
personally as to Section 9.01 of this Agreement
|
SCHEDULE 1
(a) All
of Seller’s right, title, and interest in and to the
following items of equipment:
|
Description
|
Quantity
|
|
All CBD
related business
|
|
|
Existing
Inventory
|
|
|
Existing
Equipment
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
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(b) All
of Seller’s right, title, and interest in and to the
following web domain(s):
(c)
(d)
EXHIBIT A – BILL OF SALE
EXHIBIT B – EMPLOYMENT AGREEMENT
EXHIBIT C – DISCLOSURE SCHEDULE
Exhibit
10.2
MANAGEMENT
AND SERVICES AGREEMENT
This
MANAGEMENT AND SERVICES AGREEMENT (this "Agreement") is made as of
July __, 2019, effective as of March 1, 2019, by and between
Exactus, Inc. (the "Company"), a Nevada corporation, Ceed2Med, LLC
(“C2M”), a Florida limited liability company, Vladislav
Yampolsky (“Yampolsky”), Jamie Goldstein
(“Goldstein”) and Emiliano Aloi
(“Aloi”).
RECITALS
WHEREAS,
C2M was founded in 2018 by Goldstein and Yampolsky (the
“Founders”) who together with Aloi, have developed and
own valuable intellectual property, know-how, knowledge and
experience that the Company desires to access, and has established
strong relationships, expertise, contacts, opportunities, sources
of seed, agricultural expertise, raw materials, products,
extraction, production, manufacturing, testing and related
capabilities, for the growing, manufacture and sale of hemp-derived
CBD products, and are recognized experts in the field of
hemp-derived CBD in which they have participated at least 2014
around the world;
WHEREAS,
during November 2018 the Company became engaged in the business of
hemp-derived CBD following passage of the Agriculture Improvement
Act of 2018 (the “2018 Farm Bill”) and entered into
discussions for a relationship with C2M in order to prepare for
broad participation in the hemp-derived CBD market (the
“Company Purpose”);
WHEREAS,
in order to pursue the Company Purpose, the Company and C2M
determined that the Company would be required to initially obtain
sources of supply and/or distribution rights, products and
inventory in order to develop and offer retail products and
thereafter to seek to expand into additional businesses engaged in
CBD through the assistance of C2M;
WHEREAS,
C2M and the Company have cooperated in good faith in order to
pursue the Company Purpose and in furtherance thereof (A) on
January 8, 2019 entered into a Master Product Development and
Supply Agreement (the “Supply Agreement”) which
provides, among other things, that C2M shall provide ongoing
assistance, training, education, manufacturing, distribution,
support and supply of various finished products and (B) agreed, for
Consideration as described herein, to (i) assign to the Company
C2M’s rights (the “EOW Assets”) to subscribe for
and purchase a 50.1% interest in Exactus One World, LLC
(“EOW”)(formerly known as Burros and Pirates, LLC), an
Oregon limited liability company which possessed agricultural
assets, rights, including leases, permits and relationships, to
permit C2M to become engaged in farming of approximately 200 acres
for the production of industrial hemp located in Southwest Oregon,
and (ii) highly valuable relationships with seed suppliers and farm
operators;
WHEREAS,
the Company has determined the C2M relationship provides additional
opportunities to expand and desires to secure additional services,
assistance and opportunities and Company desires to issue to C2M,
the Founders and Aloi, the Consideration set forth herein (the
“EOW Consideration”) for assignment (the
“Assignment”) of the EOW Assets, and to confirm C2M
will, on the terms and subject to the conditions herein and any
other agreements providing for additional assistance, the further
Consideration referenced herein;
WHEREAS,
the Company has engaged Scalar, LLC, an independent valuation
concern, to issue a fairness opinion (the “Fairness
Opinion”) and perform a valuation regarding the EOW Assets
and the EOW Consideration to be paid as provided herein, such
Fairness Opinion was presented to the Board of Directors of the
Company on May 9, 2019, and the Board of Directors has approved and
accepted such Fairness Opinion and has authorized the Company to
pay $10 million of its preferred stock, as Consideration for the
Assignment and in consideration of the EOW Assets to the persons
related to C2M set forth on
Schedule A
annexed hereto);
and
WHEREAS,
the additional services, assistance and opportunities the Company
desires to secure from C2M, include the following:
●
right of
participation for further investment and business opportunities in
order to rapidly expand the Company’s business and operations
in hemp-derived CBD;
●
executive,
sourcing, vendor, product, production and other expertise and
resources;
●
appointment of Aloi
to the position of President of the Company;
●
introductions to
farming and other financing;
●
designs for
international “Hemp-Café” store design and
franchise opportunities including plans, drawings, approvals and
authorizations, leads and contacts;
●
access to leasing
of prime real estate in Delray Beach Florida at a location owned by
Yampolsky with an option to purchase, and the continuing assistance
of Yampolsky in connection with management, design, and promotion
of the project;
●
drawings, designs
and specifications for extraction, production and manufacturing
facilities and resources;
●
brand development
and support services.
NOW,
THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained herein, and intending to
be legally bound hereby, the parties hereto hereby agree as
follows:
1.
Appointment of President;
Relationship of Company and the President
.
Company
agrees to appoint Aloi as President and Aloi agrees to accept such
appointment as President. C2M and Company hereby agree and do
hereby waive any and all conflicts of interest and duties to C2M
and the Company incumbent upon Aloi in connection with his
appointment hereunder and his continuing assistance to C2M. Aloi
shall have such rights and authority as normally accustom such
position, and shall report directly to the Chief Executive Officer
and the Board of Directors of the Company.
Aloi
shall provide management and operational support services to the
Company, as President, and as hereinafter provided until his
resignation or removal in accordance with the Bylaws of the
Company. Until such time as a separate employment agreement is
entered into with Aloi and the Company, Aloi shall be entitled to
participate in all benefit, incentive, reimbursement and equity
plans available to the senior executives of the Company, and shall
be entitled to receive such salary and other benefits, paid by the
Company.
On and
following the date of his appointment as President, Aloi shall be
entitled to continue and complete any and all work in process and
proposals accepted by C2M, and receive Consideration and benefits
from C2M during and after appointment as President hereunder, if
any, and distribution or assignment of property (including shares
of common stock of the Company owned by C2M) which shall not be
deemed a conflict of interest (“In-Process Projects”).
Following completion of the In-Process Projects with the parties
thereto (including any renewals or extensions thereof), Aloi shall
enter into negotiations for customary employment agreement terms
under which Aloi will agree to devote his full time efforts and
activities to the Company.
Nothing
contained herein shall be deemed to make or render the Company a
partner, co-venturer or other participant in the business or
operations of Aloi, the Founders, or C2M, or in any manner to
render Company liable, as principal, surety, guarantor, agent or
otherwise for any of the debts, obligations or liabilities of Aloi,
the Founders or C2M. Similarly, nothing contained herein shall be
deemed to make or render the Founders, Aloi or C2M a partner,
co-venturer or other participant in the business or operations of
the Company, or in any manner to render the Founders, Aloi or C2M
liable, as principal, surety, guarantor, agent or otherwise for any
of the debts, obligations or liabilities of Company. The
relationship of C2M and the Company is that of shareholder and
issuer.
C2M
agrees to indemnify and hold harmless the Company, its officers and
directors, employees and its affiliates and their respective
successors and assigns and each other person, if any, who controls
any thereof, against any loss, liability, claim, damage and expense
whatsoever (including, but not limited to, any and all expenses
whatsoever reasonably incurred in investigating, preparing or
defending against any litigation commenced or threatened or any
claim whatsoever) arising out of or based upon any matter or
circumstance arising under or in connection with this Agreement,
the business or affairs of C2M, its founders, members or managers,
this Agreement or the appointment of Aloi as an executive of the
Company, or the inaccuracy or falsity of any representation or
warranty or breach or failure by C2M to comply with any covenant or
agreement made herein or in any other document furnished by C2M to
any of the foregoing in connection with this
transaction.
2.
Project Management
Services
.
Commencing
on the date of this Agreement, C2M and the Founders will provide,
supply and render such additional project management and
operational support services as are from time to time requested in
order to assist Aloi, as President, and to provide service to the
Company, as more specifically described below:
Administer and
supervise EOW and agricultural opportunities and farm ventures,
initially consisting of 200 acres located in southwest Oregon
majority-owned and jointly controlled by the Company.
Administer and
supervise the personnel of C2M deployed to service the
Company’s business, such as white label/private label sales
and support, sales and marketing, sourcing, customer service,
project finance and reporting.
Source
raw material, extraction, production and manufacturing vendors and
acquisition opportunities which shall be presented to the Company
for participation or acquisition.
Prepare
and oversee financial reports regarding the Company’s assets,
inventory and accounts and coordinate such reporting, budgets and
forecasts with the Company’s chief financial
officer.
Oversee
EOW and the agricultural operations of the Company and shall
endeavor to timely and accurately report such information to the
Company’s chief financial officer and otherwise render
assistance with the preparation of the Company’s financial
statements and audit thereof.
Provide
the Company with such periodic operating reports and statements
including but not limited to cash flow statements, income
statements, accounts payable and accounts receivable reports and
such other reports and information as may be requested by Company
from time to time in such form and in such detail as shall be
required by the Company according to generally accepted accounting
principles consistently applied in the United States.
Supervise the
purchase of materials and supplies at the Company’s
locations, and assist the Company to acquire, lease, dispose of and
repair equipment and facilities necessary to provide extraction,
production, end product design, testing, labelling, warehousing and
storage for the Company.
Manage
design, development, zoning, improvement, construction, architects,
engineers, legal and similar services and costs associated with
developing the Hemp Café concept and location venue on the
premises of the property owned by Yampolsky in Delray Beach,
Florida, provided the Company and C2M shall determine a fair lease
rental to be paid by Company to Yampolsky and cost allocation
methodology, as to which project Yampolsky shall transfer and
convey all rights and hereby assigns all right, title and interest
in and to such project, including, without limitation, any and all
drawings, designs, plans, blueprints, models, contracts, agreements
and understandings and Yampolsky and C2M on their own behalf and on
behalf of their owners, officers, directors, employees, agents and
assigns, agree that they shall not compete with the business by
entering into or financing, supporting or supplying any hemp
café or similar business for a period of five (5) years
following the date hereof anywhere in the world.
Notwithstanding the
foregoing, neither C2M or the Founders, or any of their agents or
employees, shall have the authority, without the express written
consent of the Company, to purchase in the name of the Company, or
for use by the Company, any assets, or incur any indebtedness on
behalf of the Company.
3.
Additional Agreements of
C2M
.
C2M,
the Founders and Aloi agree that at all times during the term of
this Agreement it shall:
(a)
Do nothing, and
permit nothing to be done (which is within the control of C2M),
which will or might cause the Company to operate in an improper or
illegal manner or disparage the Company or its
business.
(b)
Not cause a default
in any of the terms, conditions and obligations of any of the
contracts and other agreements of the Company.
(c)
To the extent
permissible by law, assist the Company and obtain and maintain in
full force all licenses and permits in the State of Florida and
Oregon (and other locations where operating) and comply fully with
all laws respecting its formation, existence, activities and
operations.
(d)
Allow the Company
and the employees, attorneys, accountants and other representatives
of the Company, full and free access to its books and records, and
all of the facilities of C2M, related to the Company and
EOW.
4.
Consideration
“Vesting Conditions”
.
“Vesting
Conditions” shall mean, unless waived by the
Company:
1)
The EOW Valuation
shall provide that the value of the Company’s 50.1% interest
in EOW is not less than $25,000,000, the stated value of the shares
of Preferred Stock shall be $10,000,000 representing the face
amount of the shares of Preferred Stock issued hereunder, and
Scaler, LLC shall confirm in writing and render is opinion as to
the fairness of the EOW transaction (Assignment of EOW Assets) from
a financial point of view and the Board of Directors of the Company
shall have accepted such valuation and fairness opinion prior to
the issuance of the Preferred Stock;
2)
C2M shall have
taken steps to prepare for manufacture and delivery of product
against Purchase Order No. 001 (not less than 25% of which will be
delivered on or prior to June 30, 2019).
5.
Consideration
(A) C2M
has previously transferred and recorded on the transfer agent
records of the Company the issuance to C2M shares of common stock,
par value $0.0001 per share, of Company (the “Common
Stock”) previously issued to C2M pursuant to the Supply
Agreement (and shall assist C2M to transfer or assign to the
Founders and Aloi, upon request, or such other designees of C2M as
shall be requested in writing accompanied by appropriate transfer
agent instructions), such amount as C2M shall designate in writing
and authorize the transfer agent for the Common Stock to effectuate
such transfers, provided, such assignees shall agree to be bound by
the terms of transfer documents required by the Company and its
transfer agent.
(B)
Company shall authorize and issue $10 million of its Series E
Convertible Redeemable Preferred Stock, par value $0.0001 per share
(the “Preferred Stock”) to such persons in such amounts
as set forth on
Schedule
A
annexed hereto (the
“Consideration”).
The
Consideration set forth in this Paragraph 5(B) shall constitute all
amounts due and owing to C2M, the Founders and Aloi from any and
all agreements, understandings or contracts related to the
Assignment of the Assets effectuated pursuant to that certain
Assignment Agreement and Membership Interest Purchase Agreement
dated March 11, 2019 for the right and opportunity for the
Company’s subscription for thirty (30%) percent of the
membership interests of EOW from C2M and the assignment from C2M to
the Company of the option and right to purchase from the members of
EOW an additional twenty and one-tenth (20.1%) percent interest of
EOW. The Consideration shall satisfy, and C2M, the Founders and
Aloi shall accept, such consideration, and neither Company nor EOW
shall be required to pay or provide for any additional payments to
C2M, the Founders, or Aloi for any matters or things that exist or
could exist prior to the date hereof or hereafter including,
without limitation, those set forth and contemplated in the
preliminary paragraphs hereto, without the express written
agreement of the Company.
Upon
delivery of certificates representing the Preferred Stock as set
forth on
Schedule A
pursuant to the terms hereof, each of C2M, Founders and Aloi do
hereby release and discharge Company from all actions, cause of
action, suits, debts, dues, sums of money, accounts, reckonings,
bonds, bills, specialties, covenants, contracts, controversies,
agreements, promises, variances, trespasses, damages, judgments,
extents, executions, claims, and demands whatsoever, in law,
admiralty or equity, against Company (including, without
limitation, arising in connection with the Supply Agreement and
EOW), that C2M, Founders or Aloi, or its or their successors,
officers, directors, principals, control persons, past and present
officers, directors, employees, advisors, accountants, auditors,
attorneys, and assigns ever had, now have or hereafter can, shall
or may, have for, upon, or by reason of any matter, cause or thing
whatsoever, whether or not known or unknown, from the beginning of
the world to the day of the date of this Agreement.
6.
Term of Agreement;
Termination of Rights
.
(a) The
term of this Agreement shall commence on its execution, and expire,
unless terminated or extended in writing, on December 31, 2019.
Upon termination of this Agreement, all books and records relating
to the operation of the Company Business shall be immediately
returned to the Company. Notwithstanding the foregoing, the Company
may terminate this Agreement prior to the expiration of its term
upon thirty (30) days advance notice and the payment in full of the
Consideration.
7.
Miscellaneous
.
(a)
This Agreement sets forth the entire understanding and agreement
among the parties hereto with reference to the subject matter
hereof and may not be modified, amended, discharged or terminated
except by a written instrument signed by the parties
hereto.
(b)
This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Nevada, without reference to
principles of conflicts of laws.
(c)
This Agreement may not be assigned by Company or Aloi, except that
Company may in its sole discretion assign this Agreement to any of
its parents or subsidiaries.
(d) All
of the terms and provisions of this Agreement shall be binding
upon, inure to the benefit of, and be enforceable by each of the
parties hereto and their respective successors and assigns. Except
for affiliates of the Company and C2M and their respective
shareholders, officers, directors, employees and agents, no person
other than the parties hereto shall be a third party beneficiary of
this Agreement or have any rights hereunder.
(e) No
failure on the part of any party hereto to exercise, and no delay
in exercising, any right, power or remedy hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of
any right, power or remedy hereunder preclude any other or further
exercise thereof or the exercise of any other rights, power or
remedy.
(f) No
publicity release or announcement concerning this Agreement or the
transactions contemplated hereby shall be issued without advance
approval of the form and substance thereof by Company.
(g) Any
legal action, suit or proceeding arising out of or relating to this
Agreement or the transactions contemplated hereby may be instituted
in any state or Federal court located in the State of Nevada,
County of Cook, and each party waives any objection which such
party may now or hereafter have to the laying of the venue of any
such action, suit or proceeding, and irrevocably submits to the
jurisdiction of any such court in any such action, suit or
proceeding. Any and all service of process and any other notice in
any such action, suit or proceeding shall be effective against any
party if given by registered or certified mail, return receipt
requested, or by any other means of mail which requires a signed
receipt, postage prepaid, mailed to such party as herein provided.
Nothing herein contained shall be deemed to affect the right to any
party to service of process in any other manner permitted by
law.
(h) If
any provision of this Agreement shall be determined by a court of
competent jurisdiction to be invalid or unenforceable, such
determination shall not affect the remaining provisions of this
Agreement, all of which shall remain in full force and
effect.
(i)
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original but all of which shall constitute
one and the same instrument.
(j) The
headings in this Agreement are for reference purposes only and
shall not in any way affect the meaning or interpretation of this
Agreement.
IN
WITNESS WHEREOF, the parties have executed this Management
Agreement as of the date first above written.
Signed
this ____ day of July, 2019.
EXACTUS,
INC.
By:
___________________________
Name:
Kenneth Puzder
Title:
Chief Financial Officer
CEED2MED,
LLC
By:
___________________________
Name:
Title:
JAMIE
GOLDSTEIN
By:
___________________________
VADISLAV
YAMPOLSKY
By:
___________________________
EMILIANO
ALOI
By:
___________________________
SCHEDULE A
CEED2MED,
LLC – $10,000,000 Series E Convertible Preferred
Stock
Exhibit
10.4
SURRENDER AND MUTUAL RELEASE AGREEMENT
This
Surrender and Mutual Release (“Agreement”) is made this
31stday of July, 2019, by and between PoC Capital, LLC, a
California limited liability company (“POC”) and
Exactus, Inc., a Nevada corporation (the “Company”)
(collectively the “Parties”).
WHEREAS, on or
about June 30, 2016, the Parties entered into a Stock and Warrant
Subscription Agreement (the “Subscription Agreement”),
under which POC subscribed for and received the following
securities issued to POC by the Company (collectively, the
“Securities”):
(A)
200,000 shares of restricted common stock, par value $0.0001 per
share [1,600,000 shares prior to the Company’s 1 for 8
reverse split effected March 11, 2019] (the “Common
Stock”);
(B)
warrants to purchase 208,333 shares of Common Stock exercisable at
$4.80 per share [1,666,667 warrants exercisable at $0.60 per share
prior to the Company’s 1 for 8 reverse split effected March
11, 2019] (the “Warrants”);
(C)
1,733,334 shares of Series C Convertible Preferred Stock, par value
$0.0001 per share (the “Series C Preferred Stock”),
and;
WHEREAS, as
consideration for the Securities acquired under the Subscription
Agreement, POC entered into a Master Services Agreement dated June
30, 2016 (the “Master Services Agreement”) with the
Company and Integrium, LLC, under which, among other things, POC
became obligated to fund up to the first $1,000,000 in certain
research study costs and fees which may become due to Integrium,
LLC under the Master Services Agreement; and
WHEREAS, POC and
the Company have agreed that some portion of the Securities shall
be surrendered for cancellation, and that the Parties shall release
and settle all obligations and potential claims and causes of
action whatsoever which may exist between them with regard to the
Subscription Agreement and the Master Services
Agreement,
THEREFORE, for and
in consideration of the promises and covenants herein contained,
and for other valuable consideration received, the sufficiency of
which is hereby expressly acknowledged, it is hereby mutually
agreed by and between the Parties hereto, and each of them, as
follows:
1.
Surrender of Securities.
Effective upon the date of this Agreement, POC hereby agrees that
the Warrants, and the Series C Preferred Stock shall be null and
void and that POC shall have no further rights relating thereto.
Additionally, upon the date of this Agreement, POC hereby
surrenders 180,000 shares of Common Stock to the Company. The
Company will take all action necessary with regard to its transfer
agent and its books of account to cancel each of the Securities
listed above and will perform the necessary actions to remove the
restrictions on the remaining Common Stock. In addition, the
Company will use its best efforts to arrange and provide for, at
the Company’s expense, all proper and valid legal opinions
necessary for the deposit and trading of the remaining Common Stock
and any other Common Stock held by POC.
2.
Definitions used in Sections 3 and
4
. For purpose of Sections 3 and 4 of this Agreement, the
terms the “Company” and “POC” shall include
the following persons and/or entities: the named persons and/or
entities individually, jointly, severally and on behalf of their
respective affiliated and/or subsidiary companies and partnerships,
together with any and all past and present trustees, receivers,
board members, employees, officers, directors, shareholders,
partners, agents, representatives, subsidiaries, unincorporated
divisions, insurance carriers, sureties, consultants, attorneys,
successors, assigns, heirs, executors, administrators, tenants,
licensees, invitees, joint venturers, members and related persons,
predecessors, entities or companies.
3.
POC’s Release of the
Company
. With the exception of the obligations set forth in
this Agreement, POC hereby fully releases and discharges the
Company of and from all claims, actions, causes of action, demands,
rights, agreements, promises, liabilities, losses, damages, costs
and expenses, of every nature and character, description and
amount, either known or unknown, without limitation or exceptions,
whether based on theories of tort, fraud, misrepresentation,
contract, breach of contract, breach of the covenant of good faith
and fair dealing, violation of statute, ordinance, or any other
theory of liability or declaration of rights whatsoever, which POC
may now have or may hereinafter acquire against the Company,
whether asserted or not, arising from or related to, directly or
indirectly, the Master Services Agreement or the Subscription
Agreement.
4.
Company’s Release of POC
.
With the exception of the obligations set forth in this Agreement,
the Company hereby fully release and discharge POC of and from all
claims, actions, causes of action, demands, rights, agreements,
promises, liabilities, losses, damages, costs and expenses, of
every nature and character, description and amount, either known or
unknown, without limitation or exceptions, whether based on
theories of tort, fraud, misrepresentation, contract, breach of
contract, breach of the covenant of good faith and fair dealing,
violation of statute, ordinance, or any other theory of liability
or declaration of rights whatsoever, which the Company may now have
or may hereinafter acquire against POC, whether asserted or not,
arising from or related to, directly or indirectly, the Master
Services Agreement or the Subscription Agreement.
5.
Scope of Release.
Subject to the terms and
conditions stated herein, the Parties acknowledge and agree that
the release given above constitutes a full, complete, fair and
final release, including any and all disputes, claims or causes of
action, known or unknown, contingent or accrued which may now exist
between them. The Parties acknowledge that they are aware that
they, or their attorneys, may hereafter discover facts different
from or in addition to those which they or their attorney now know
or believe to be true with respect to the claims, demands, debts,
liabilities, accounts, obligations, and causes of action of every
kind so released, and each agrees that the general release so given
shall be and remain in effect as a full and complete release of the
Parties released thereby notwithstanding any such different or
additional facts.
6.
Miscellaneous
.
a.
No Admission of Liability
. Each
of the Parties agrees that this Agreement is a compromise and shall
never be treated as an admission of liability of any Party hereto
for any purpose, and that liability therefor is expressly denied by
each of the Parties.
b.
Entire Agreement
. This
Agreement constitutes the entire agreement between the Parties. All
negotiations, proposals, modifications and agreements prior to the
date hereof between the Parties are merged into this Agreement and
superseded hereby. There are no other terms, conditions, promises,
understandings, statements, or representations, express or implied,
concerning this Agreement unless set forth in writing and signed by
all of the Parties.
c.
Amendments
. This Agreement may
only be modified by an instrument in writing executed by the
Parties.
d.
Attorneys' Fees
. Should any
action (at law or in equity, including but not limited to an action
for declaratory relief) or proceeding be brought arising out of,
relating to or seeking the interpretation or enforcement of the
terms of this Agreement, or because of an alleged dispute, breach,
default or misrepresentation in connection with the terms of this
Agreement, the prevailing party, as decided by the Court, shall be
entitled to reasonable attorneys' fees and costs incurred in
addition to any other relief or damages which may be awarded. This
entitlement to fees shall include fees incurred in connection with
any appeal or bankruptcy proceeding.
e.
Severance
. Should any term,
part, portion or provision of this Agreement be decided or declared
by the Courts to be, or otherwise found to be, illegal or in
conflict with the applicable law of any State or of the United
States, or otherwise be rendered unenforceable or ineffectual, the
validity of the remaining parts, terms, portions and provision
shall be deemed severable and shall not be affected thereby,
providing such remaining parts, terms, portions or provisions can
be construed in substance to constitute the agreement that the
Parties intended to enter into in the first instance.
f.
Successors and Assigns
. This
Agreement shall be binding and inure to the benefit of the Parties,
their respective predecessors, parents, subsidiaries and affiliated
corporations, all officers, directors, shareholders, agents,
employees, attorneys, assigns, successors, heirs, executors,
administrators, and legal representatives of whatsoever kind or
character in privity therewith.
g.
Counterparts
. This Agreement
may be executed in multiple counterparts and by facsimile each of
which shall be an original, but all of which shall be deemed to
constitute one instrument. The delivery of an executed counterpart
of this Agreement by electronic means, including by facsimile or by
".pdf" attachment to email, shall be deemed to be valid delivery
thereof binding upon all the parties and shall be accepted by the
parties to this Agreement as valid and binding in lieu of original
signatures.
h.
Governing Law
. This Agreement
shall be governed by and construed exclusively in accordance with
the internal laws of the State of Nevada without regard to the
conflicts of laws principles thereof.
i.
Understanding of Agreement
. The
Parties each acknowledge that they have fully read the contents of
this Agreement and that they have had the opportunity to obtain the
advice of counsel of their choice, and that they have full,
complete and total comprehension of the provisions hereof and are
in full agreement with each and every one of the terms, conditions
and provisions of this Agreement. As such, the Parties agree to
waive any and all rights to apply an interpretation of any and all
terms, conditions or provisions hereof, including the rule of
construction that such ambiguities are to be resolved against the
drafter of this Agreement. For the purpose of this instrument, the
Parties agree that ambiguities, if any, are to be resolved in the
same manner as would have been the case had this instrument been
jointly conceived and drafted.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date set forth above their respective signatures
below.
PoC
Capital, LLC
By:
___________________________
Daron
Evans, Managing Director
Exactus,
Inc.
By:
___________________________
Kenneth
Puzder, CFO