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Hempfusion Wellness Inc. M&A Activity 2020

Oct 21, 2020

47972_rns_2020-10-21_c96f2857-8525-42c2-b4fb-b06208e68ecf.PDF

M&A Activity

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EXECUTION VERSION

ASSET PURCHASE AGREEMENT

By and Among

CHALLA ENTERPRISES, L.L.C. (.'SELLER"),

PROBULIN ACQUISITION LLC ("PURCHASER"), AND

HEMPFUSION, INC. ("PARENT")

Dated as of July 31,2019

TABLE OF CONTENTS

ARTICLE I 1DEFINITIONS
Section 1.01 1Certain Defined Terms
Section 1.02 Definitions.8
ARTICLE II PLIRCHASE AND SALE9
Section 2.01 Purchase and Sale of Assets9
Section 2.02 1 IAssumption and Exclusion of Liabilities''
Section 2.03 t2Purchase Price; Allocation of Purchase Price
Section 2.04 ,,,,12Working Capital Price Adjustment
Section 2.05 t2Closing
Section 2.05 l3Closing Deliveries by the Seller
Section 2.06 Closing Deliveries by the Purchaser13
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLER 13
Section 3.01 Organization, Authority and Qualification of the Seller 13
Section 3.02 14No Conflict.
Section 3.03 14Govemmental Consents and Approvals
Section 3.04 ' 14Subsidiaries
Section 3.05 15Financial Information; Books and Records
Section 3.06 15Receivables
Section 3.07 15Inventory
Section 3.08 16Acquired Assets
Section 3.09 l6Sales and Purchase Order Backlog
Section 3.10 Conduct in the Ordinary Course; Absence of Certain Changes,.,,16Events and Conditions
Section 3.11 18Litigation
Section 3.12 19Compliance with Laws
Section 3.13 Environmental and Other Permits and Licenses; Related.t9Matters
Section 3.14 .20Material Contracts
Section3.l5 IntellectualProperty..20
Section 3.16 .24Real ProPertY
Section3.17 TangiblePersonalProperty'.25

TABLE OF CONTENTS (continued)

Section3.18 25Assets
3.19Section .',.,,'.25Customers
Section3.20 26Suppliers
Section3.21 26Employee Benefit Matters.
3.22Section ,,,27Employment Laws
Section3.23 27Certain Interests
3.24Section ,,.28Taxes
3.25Section 29Insurance.
3.26Section .'.,,.29Disclosure
3.27Section '',,29Brokers
ARTICLE TV REPRESENTATIONS AND WARRANTIES OF THE PURCHASER29
4.OlSection Organization, Authorization and Qualification of the Purchaser29
4.02Section 30No Conflict.
Section4.03 30Governmental Consents and Approvals.
4.04Section 30Litigation
4.O5Section 30Brokers
ARTICLE V 30ADDITIONAL AGREEMENTS
5.01Section 30Conduct of Business Prior to the Closing
5.02Section Accesstolnformation; Confrdentiality 31
5.03Section Regulatory and Other Authorizations; Notices and Consents ". 32
5.04Section Notice of Developments''.33
5.05Section No Solicitation or Negotiation 33
5.06Section Use of Intellectual ProPertY 34
Section5.07 Excluded Liabilities; Repayment of Indebtedness; Terminationof Encumbrances 35
Section5.08 Tax Matters 35
Section5.09 Further Action 36
5.10Section Best Efforts 36
ARTICLE VI CONDITIONS TO CLOSING ,.,37
Section6.01 Conditions to Obligations of the Seller 37

TABLE OF CONTENTS (continued)

Section 6.02 Conditions to Obligations of the Purchaser37
ARTICLE VII SURVIVAL OF REPRESENTATIONS AND WARRANTIES,,,.'.39
Section 7.01 ',,39Survival of Representations and Wa:ranties".'''
ARTICLE VIII TERMINATION, AMENDMENT AND WATVER,,.'39
Section 8.01 39Termination
Section 8.02 40Effect of Termination
Section 8.03 40Amendment
Section 8.04 40Waiver
ARTICLE Ix ,.,.,'41'GENERAL PROVISIONS.
Section 9.01 4lExpenses
Section 9.02 Notices',,41
Section 9.03 42Public Announcements
Section 9.04 42Severability
Section 9.05 42Entire Agreement
Section 9.06 42Assignment
Section 9.07 42No Third-Party Beneficianes
Section9.08 GovemingLaw43
Section 9.09 Waiver of Jury Trial".43
Section 9.10 43Specific Performance
Section 9.11 43Headings
Section 9.12 43Construction
Section9.13 Counterparts44
Section 9.14 44Currency

EXHIBITS

  • 1.01(a) Form of Assigument of Intellectual Property
  • 1.01(b) Form of Assignment of Leases
  • 1.01(c) Form of Assignment and Assumption Agreement
  • 1.or(d) Form of Bill of Sale
  • 1.01(e) Form of Shared Services Agreement
  • 2.03(c) Allocation of Purchase Price and Assumed Liabilities
  • 7.03 Agreement to Arbitrate

This ASSET PURCHASE AGREEMENT (this "Asreement") dated as of July 31,2019, is made by and among Challa Enterprises,LLC, a Kansas limited liability company (the "Seller"), Probulin Acquisition LLC, aWashington limited liability company (the "Purchaser") that is 100% owned by HempFusion, Inc., a Nevada corporation ("Parenf'), and Parent.

WHEREAS, the Seller is engaged in the business of developing and selling probiotic supplement and consumable products (the "Bugt4ess"); and

WHEREAS, the Seller wishes to sell to the Purchaser, and the Purchaser wishes to purchase from the Seller, the Assets (as hereinafter defined) of the Business, including all right, title and interest of the Seller in and to certain property and assets used in the conduct of the Business, and in connection therewith the Purchaser is willing to assume certain specified liabilities of the Seller relating thereto, all upon the terms and subject to the conditions set forth herein (the "Acquisition").

NOW, THEREFORE, in consideration of the premises and the mutual agreements and covenants hereinafter set forth, the parties hereto hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01 Certain Defined Terms. For purposes of this Agreement:

5(Action'r means any claim, action, suit, arbitration, inquiry, proceeding or investigation by or before any Govemmental Authority.

66Affiliate" means, with respect to any specified Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such specified Person.

..@,,meanstheBil1ofSale,theAssignmentofLease,the Assignment of Intellectual Property, the Operations Agreement and the Assumption Agreement.

"Assignment of Intellectual Property" means the contract by which Seller assigns Intellectual Property Rights to the Purchaser, which is to be executed by the Seller and the Purchaser on the Closing Date, substantially in the form of Exhibit l.0l(a).

"Assignment of Lease" means the contract by which Seller assigns all of the Seller's right, title and interest in and to the Property to the Purchaser, which is to be executed by the Seller and the Purchaser on the Closing Date, substantially in the form of Exhibit 1.01(b).

"Assignment and Assumption Agreement" means the contract by which Purchaser assumes the Assumed Liabilities and Contractual Agreements of Seller identified therein, which is to be executed by the Purchaser and the Seller on the Closing Date, substantially in the form of ). (c Exhibit 1.01

o'&lance Sheet Date" means December 31,2018

"Bill_of Sale" means the Bill of Sale and Assignment by which Seller assigns, transfers and conveys all of the Seller's right, title and interest in and to the Assets to the Purchaser and by which Purchaser assumes the Assumed Liabilities to be executed by the purchaser and the Seller on the Closing Date, substantially in the form of Exhibit 1.01(d).

oobiqgqg !Ay" means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by Law to be closed in the State of Colorado.

oo@BCiLA" means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended through the Closing Date.

"el4igg," means any and all administrative, regulatory or judicial actions, suits, arbitrations, mediations, demands, demand letters, claims, stunmons, liens, notices of noncompliance or violation, citations, investigations, proceedings, consent orders or consent agreements.

66@e" means the Internal Revenue Code of 1986, as amended through the Closing Date.

"@'means all information relating to trade secrets, processes, patent applications, product development, price, customer and supplier lists, pricing and marketing plans, policies and strategies, details of client and consultant Contracts, operations methods, product development techniques, business acquisition plans, new personnel acquisition plans and all other confidential or proprietary information with respect to the Business.

"Conttact!' means any agreement, joint venture agreement, partnership agreement, assignment, lease, sublease or other occupancy agreement, license, sublicense, settlement agreement, consent decree, stipulation, promissory note, evidence of indebtedness, loan agreement, indenture, security agreement, loan document, insurance policy, purchase or sales oidrt, permit, or other contract, arrangement, understanding, instrument or commitment (whether written or oral), including any amendments, supplements or modifications thereto.

669@!" (including the terms "contrqlled-by'and "under common control with"), with respect to the relationship between or among two or more Persons, means the possession, directly or indirectly or as trustee, personal representative or executor, of the power io direct or cause the direction of the affairs or management of a Person, whether through the ownership ofvoting securities, as trustee, personal representative or executor, by contract, credit arrangement or otherwise.

'oeqpJ4lgh1g" mears, with respect to a Person, all of such Person's copyrights, copyright registrations and applications therefor with respect to its works, and all other rights corresponding thereto throughout the world'

"Current Assetso'means Seller's cash, Receivables, Inventory, prepaid deposits and advances, prepaid expenses and other assets that are expected to be liquidated or turned into cash in less than one year.

"Current Liabilitigg" means accounts payable and liabilities due on demand or to become due within one year to unaffrliated persons and entities, specifically excluding Excluded Liabilities.

"Disglosurg_Schedule" means the Disclosure Schedule attached hereto, dated as of the date hereof, delivered by the Seller to the Purchaser in connection with this Agreement.

o'Encumbrance" means any security interest, pledge, hypothecation, mortgage, lien (including environmental and Tax liens), violation, charge, lease, license, encumbrance, servient easement, adverse claim, reversion, reverter, preferential arrangement, restrictive covenant, condition or restriction of any kind, including any restriction on the use, voting, transfer, receipt of income or other exercise of any attributes of ownership.

"Environment" means surface waters, groundwaters, sediment, soil, subsurface strata and outdoor or indoor ambient air.

"Environmental Claims" means any Claims relating in any way to any Environmental Law or any Environmental Permit, including (a) any and all Claims by Governmental Authorities for enforcement, cleanup, removal, response, remedial or other actions or damages pursuant to any applicable Environmental Law and (b) any and all Claims by any Person seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief resulting from Hazardous Materials or arising from alleged injury or threat of rnj.r.y to health, safety or the Environment.

'ofui1:onrne@L-LAryg," means all Laws, now or hereafter in effect and as amended, and any judicial or administrative interpretation thereof, including any judicial or administrative order, consent decree or judgment, relating to the Environment, health, safety, natural resources or Hazardous Materials, including CERCLA; the Resource Conservation and Recovery Act,42U.S.C. $ 6901 et seq.; theRazardous Materials Transportation Act, 49 U.S.C. g6901 et seq.; the Clean Water Act, 33 U.S.C. $ 1251 et seq.; the Toxic Substances Control Act, 15U.S.C. g 2601 et seq.; the Clean Air Act, 42 U.S.C. $ 7401 et seq.; the Safe Drinking Water Act,42U.S.C. $ 300f et seq.; the Atomic Energy Act,42 U.S.C. $ 2011 et seq.; the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. $ 136 et seq.; and the Federal Food, Drug and Cosmetic Act, 21 U.S.C. $ 301 et gtq.

"Environmental Permits" means all permits, approvals, identification numbers, licenses and other authorizations required under or issued pursuant to any applicable Environmental Law.

"Food and Supplement R " means all federal and state Laws, rules and regulations governing the development, manufacture and sale by the Business of dietary supplements and food, including but not limited to the US Federal Food, Drug and Cosmetic Act and regulations promulgated by the FDA under the authority thereof.

.o@''meansanyUnitedStatesornon-UnitedStatesfederal, national, supranational, state, provincial, local, or similar government, governmental, regulatory or administrative authority, agency or commission or any court, tribunal, or judicial or arbitral body.

"@' means any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority.

"Hazardous Materials" means (a) petroleum and petroleum products, radioactive materials, asbestos-containing materials, urea formaldehyde foam insulation, transfonners or other equipment that contain polychlorinated biphenyls and radon gas, (b) any other chemicals, materials or substances defined as or included in the definition of o'hazardous substances," "hazardous wastes,'o "hazardous materials," 'oextremely hazardous wastesr" "restricted hazardous wastes," ootoxig SubStanCeS," "tOXiC pOllUtantS," "COntaminantso' Or "pollutants," Or words of similar import, under any applicable Environmental Law, and (c) any other chemical, material or substance which is regulated by any Environmental Law.

"Indebtedness" means, with respect to any Person, (a) all indebtedness of such Person, whether or not contingent, for borrowed money, (b) all obligations of such Person for the deferred purchase price ofproperty or services, (c) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (d) all obligations of such Person as lessee under leases that have been recorded as capital leases consistent with past practice, (e) all obligations, contingent or otherwise, of such Person under acceptance, leffer of credit or similar facilities, (f) all obligations of such Person to purchase, redeem, retire, defease or otherwise acquire for value any capital stock of such Person or any warrants, rights or options to acquire such capital stock, valued, in the case of redeemable preferred stock, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends, (g) all Indebtedness ofothers referred to in clauses (a) through (f) above guaranteed directly or indirectly in any manner by such Person, or in effect guaranteed directly or indirectly by such Person through an agreement (i) to pay or purchase such Indebtedness or to advance or supply funds for the payment or purchase of such Indebtedness, (ii) to purchase, sell or lease (as lessee or lessor) property, or to purchase or sell services, primarily for the purpose of enabling the debtor to make payment of such Indebtedness or to assure the holder of such Indebtedness against loss, (iii) to supply funds to or in any other manner invest in the debtor (including any agreement to pay for property or services irrespective of whether such property is received or such services are rendered), primarily for the pu{pose of enabling the debtor to make payment of such Indebtedness or to assure the holder of such Indebtedness against loss or (iv) otherwise to assure a creditor against loss, and (h) all Lrdebtedness referred to in clauses (a) through (f) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Encumbrance on property (including accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness.

o'@" means any or all of the following and all rights in, arising out of, or associated therewith (i) Patents, (ii) Trade Secrets, (iii) Copyrights, (iv) industrial designs and any registrations and applications therefor throughout the world, (v) Trademarks, (vi) all rights in databases and data collections throughout the world, (vii) all rights in Software, (viii) worldwide web addresses, Uniform Resource Locators, and domain ,ru111"r, (ix) advertising and promotional rights and rights to privacy and publicity, and (x) any similar, corresponding or equivalent rights to any of the foregoing anywhere in the world.

"@ry" means all inventory, merchandise, goods and other personal property (including. without limitation, raw materials, work in process and finished goods) maintained, held or stored by or for the Seller at the Closing, and any prepaid deposits for any of the same.

..@omeanstheactualknowledge,afterdueinquiry,ofJason Mitchell.

$LawD means any United States or non-United States federal, national, supranational, state, provincial, local or similar statute, law, ordinance, regulation, rule, code, order, requirement or rule of law (including common law). "Laws" is the plural of Law.

"@iliIies" means any and all debts, liabilities and obligations, whether accrued or fixed, absolute or contingent, asserted or unasserted, matured or unmatured or determined or determinable, including those arising under any Law (including any Environmental Law), Action or Governmental Order and those arising under any Contract.

"Material Adverse Effect" means any circumstance, change in or effect on the Business or the Seller that, individually or in the aggregate with all other circumstances (collectively, "Change"), changes in or effects on the Business or the Seller: (a) is materially adverse to the business, operations, assets or liabilities (including contingent liabilities), employee relationships, customer or supplier relationships, results of operations, the condition (financial or otherwise) of the Business or (b) is reasonably likely to materially adversely affect the ability of the Purchaser to operate or conduct the Business in the manner in which it is currently or currently contemplated to be operated or conducted by the Seller; ryglgd, however, that in no event shall any of the following, alone or in combination, be deemed to constitute, nor shall any of the following be taken into account in determining whether there has been or will be, a Material Adverse Effect: (i) any Change resulting from compliance with the terms and conditions of this Agreement or any Ancillary Agreement; (ii) any Change or effect that results or arises from changes affecting the dietary supplements industry, or any industries in which Company operates generally or the United States economy generally (which Changes in each case do not disproportionately affect Company in any material respect); (iii) any Change resulting from the arulouncement of the proposed transaction or any other transactions contemplated hereby (including, without limitation, any cancellation or deferral of product or service orders or renewals by customers); or (iv) any Change that results or arises from changes affecting general worldwide economic or capital market conditions (which Changes in each case do not disproportionately affect Company in any material respect).

"Paten1s" means all United States and foreign patents and utility models, invention registrations, and applications therefor and all reissues, divisions, renewals, extensions, provisionals, continuations and continuations-in-part thereof, and equivalent or similar rights anywhere in the world in inventions and discoveries.

"Permitted Encumbrances" means such of the following as to which no enforcement, collection, execution, levy or foreclosure proceeding shall have been commenced and as to which the Seller is not otherwise subject to civil or criminal liability due to its existence: (a) statutory liens for Taxes, assessments and govemmental charges or levies not yet due and payable; (b) Encumbrances imposed by Law, such as materialmenos, mechanics',

carriers', workmen's and repairmen's liens and other similar liens arising in the ordinary course of business securing obligations that (i) are not overdue for a period of more than "information relating to overdue period redacted" and (ii) are not in excess of "information relating to overdue payment redacted" inthe case of a single property or "information reloting to overdue payment redacted" in the aggregate atany time; and (c) pledges or deposits to secure obligations under workers' compensation laws or similar legislation or to secure public or statutory obligations.

"Person" means any individual, partnership, firm, corporation, limited liability company, association, trust, unincorporated organization or other entity, as well as any syndicate or group that would be deemed to be a person under Section 13(dX3) of the Securities Exchange Act of 1934, as amended.

"Propertly'" means that certain leased premises located at3820 and 3840 N.W 14th Street, Suites A&B in each building, Topeka, Kansas 66618.

"Receivables" means any and all accounts receivable, notes and other amounts receivable from third parties, including, without limitation, customers and employees, arising from the conduct of the Business before the Closing Date, whether or not in the ordinary course of business, together with any unpaid financing charges accrued thereon.

"Registered Intellectual Propefi" means all United States, international and foreign (i) registered Trademarks, applications to register Trademarks, intent-to-use applications, or other registrations or applications related to Trademarks, (ii) registered Copyrights and applications for Copyright registration, (iii) Uniform Resource Locators, worldwide website uddr"rr"r and domain names, (iv) Patents, and Patent applications, and (v) any other Intellectual Property Right that is the subject of an application, certificate, filing, registration or other document issued by, filed with, or recorded by, any Governmental Authority.

"Release" means disposing, discharging, injecting, spilling, leaking, leaching, dumping, emitting, escaping, emptying, seeping, placing and the like into or upon any land or water or air or otherwise entering into the Environment.

'oRemedial Action" means all action to (a) clean up, remove, treat or handle in any other way Hazardous Materials in the Materials so that they do not migrate, Environment; or (c) perform remedial Environment; (b) prevent the Release of Hazardous endanger or threaten to endanger public health or the investigations, feasibility studies, corrective actions, closures and post-remedial or post-closure studies, investigations, operations, maintenance and monitoring.

"seller Bank Account'o means the Seller's bank account at US Bank.

"shared Services Agreement" means the agreed terms for operation the Business by the Purchaser during the Contingency Period, substantially in the form of Exhibit I .0 1(e).

"&fi|*al"" means all computer program instruction code, whether in humanreadable source code form, machine-readable binary form, firmware, scripts, interpretive text, or otherwise, along with any technical, user, or other documentation related thereto, and including any related data files or data objects, and all media on which any of the foregoing is recorded.

'(Tax'r or'obsg" means any and all taxes, fees, levies, duties, tariffs, imposts and other charges of any kind (together with any and all interest, penalties, additions to tax and additional amounts imposed with respect thereto) imposed by any Governmental Authority or taxing authority, including: taxes or other charges on or with respect to income, franchises, winOfaU or other profits, gross receipts, property, sales, use, capital stock, payroll, employment, social security, workers' compensation, unemployment compensation, or net worth; taxes or other charges in the nature of excise, withholding, ad valorem, stamp, transfer, value added, or gains taxes; license, registration and documentation fees; and customs' duties, tariffs and similar charges.

"Tax Rgturns" means all returns, computations, reports and statements required to be filed with any Govemmental Authority with respect to Taxes.

"L@lgy" means all technology, including all techniques, know-how, design rules, algorithms, routines, Software, files, databases, works of authorship, processes, devices, prototypis, schematics, test methodologies, hardware development tools, any media on which any of the foregoing is recorded, and any other tangible embodiments of any of the foregoing.

"T-hj4!lBArt}l!ic.Wg'o means the Contracts pursuant to which any third-party Intellectual Property Rights or Technology is licensed to the Seller for use in, or related to, the Business.

"Trade Secrets'o means all inventions (whether patentable or not), invention disclosures, improvements, trade secrets, proprietary information, know how, technology, technical data and,customer lists, and all documentation embodying or evidencing any of the foregoing.

"Trademarks" means all trade names, logos, common law trademarks and service marks, trademark and service mark registrations and applications therefor and all goodwill associated therewith throughout the world.

"Transfened Intellectu " means all (a) patents and patent applications, (b) trademarks, service marks, domain names, trade dress, logos, trade names, corporate names, slogans and other identifiers of source or goodwill, together with the goodwill associated therewith, (c) copynghts, (d) computer software, data, data rights and Internet websites, (e) confidential and proprietary information, including trade secrets and know-how, (f) advertising and promotional rights and rights to privacy and publicity, (g) registrations and applications for registration of the foregoing, including reissues, divisions, continuations, continuations-in-part, extensions, renewals and reexaminations thereof, and (h) all common law rights thereto, together with all rights to sue for and collect damages for, and to obtain injunctive oiequitable relief for, any past, present and future infringement, misappropriation, dilution, violation, or unlawful imitation, whether presently known or unknown, of the foregoing, in each case, owned by Seller and used or held for use in connection with the Business.

"Transferred Intellectual Prc " means the Intellectual Property Rights owned or transferable by the Seller that are used in, necessary to or otherwise related to the

Business, including the manufacture, testing, assembly, packaging and sale of products and the provision of services, or the Transferred Technology'

o'@'means the Technology, including all design, manufacturing, assembly, formulas, packaging and Technology, owned or transferable by the Seller, that is used in, necessary to or otherwise related to the Business.

"@" means the Treasury Regulations (including Temporary Treasury Regulations) promulgated by the United States Departrnent of Treasury with respect to the Code or other federal tax statutes.

Section 1.02 Definitions. The following terms have the meanings set forth in the Sections set forth below:

Definition Location

"Acquisition" Recitals
"Aggregate Purchase Price" Exhibit $2.03(c)$
"Agreement" Preamble
"Allocation Method" 2.03(c)
"Assets" 2.01(a)
"Assumed Liabilities" 2.02(a)
"Balance of the Purchase Price" 2.03(b)(ii)
"Balance Sheet Date" 3.05(a)
"Benefit Plans" 3.21(a)
"Business" Recitals
"Closing" 2.04
"Closing Date" 2.04
"Contingency Periods" 2.03(a)(i)
"Contingent Payments" 2.03(a)(i)
"ERISA" 3.21(a)
"ERISA Plans" 3.21(a)
"Excluded Assets" 2.01(b)
"Excluded Liabilities" 2.02(b)
'Historical Financial Statements'' 3.05(a)
"Initial Payment" 2.03(a)
"lease" 3.14(a)
"Loss" 7.02
"Material Contracts" 3.14(a)
"NLRB" 3.22(b)
"Options" 3.16(b)
"Parent" Preamble
"PTO" 3.15(a)
"Purchase Price" 2.03(a)
"Purchaser" Preamble
"Second Payment" 2.03(a)
"Seller" Preamble

Definition

Location

o'S.sllgl\4aik!" s.06(a)
'oSeller Reqistered lntello' 3.15(a)
"Taneible Personal Property", 3.r7(a)
"Third Partv Claims" 7.04
'oThirdfgJmrg$" 2.03(a)
"Total Maximum Conside 2.03(a)
"WARN Acf' 3.2r(e)

ARTICLE II

PURCHASE AND SALE

Section 2.01 Purchase and Sale of Assets.

(a) Upon the terms and subject to the conditions of this Agreement, at the Closing, the Seller shall sell, assign, transfer, convey and deliver to the Purchaser and the Purchaier shall purchase from the Seller, free and clear of all Encumbrances except Permitted Encumbrances, all of the Seller's right, title and interest in and to all of the assets, properties, goodwill and business of every kind and description and wherever located, whether tangible or intangible, real, personal or mixed, directly or indirectly owned by the Seller or to which the Seller is directly or indirectly entitled and, in any case, belonging to or used or intended to be used in the Business, other than the Excluded Assets (the assets to be purchased by the Purchaser being referred to as the "Assets" and detailed in the Bill of Sale), such Assets to include, without limitation, the following:

(i) the Business as a going concern;

(ii) all rights in respect of the Property, including any leasehold improvements thereon;

(iii) all fumiture, fixtures, equipment, machinery and other tangible personal property owned or held by the Seller at the Closing Date for use in the conduct of the Business;

(iv) all trade accounts, Receivables , and any amounts paid by Seller to third party vendors, suppliers, lessors, utilities and service providers and that as of the Closing are designated as prepayments, advances or deposits for the benefit of Seller;

(v) copies of all books of account, general, financial, Business and personnel records, invoices, correspondence and other documents, records and files and any rights thereto owned, associated with or employed by the Seller in connection with the Business other than organizational documents, minute and stock record books and the corporate seal of the Seller;

(vi) all Inventory of the Business;

(vii) the goodwill of the Seller;

(viii) all the Seller's and its Affiliates' right, title and interest in, to and under the Transferred Intellectual Property that relate to the Business, copies and tangible embodiments thereof in whatever form or medium, and all rights to sue and recover damages for past, present and future infringement, misappropriation or breach thereof;

(ix) all claims, causes of action, choses in action, rights of recovery and rights of setoff of any kind (including rights to insurance proceeds and rights under and pursuant to all warranties, representations and guarantees made by suppliers of products, materials, or equipment, or components thereof), pertaining to, arising out of and inuring to the benefit of the Seller or its Affiliates relating to the Business;

(x) all sales and promotional literature, customer lists and other salesrelated and promotion-related materials owned, used, associated with or employed by the Seller at the Closing Date;

(xi) except as set forth in Section 2.01(a)(xi) of the Disclosure Schedule, all rights of the Seller under Contracts to which Seller is subject (including Contracts governing relationships with exhibitors) and under all bids, offers and Contracts under negotiation by Seller at the Closing Date (to the extent such offers are transferable), all of which shall be assigned to Purchaser at Closing by virtue of the Assumption Agreement or one or more written assignments;

(xii) all rights in pending and future projects of the Seller;

(xiii) all municipal, state and federal franchises, permits, licenses, agreements, waivers and authorizations held or used by the Seller in connection with, or required for, the Business, to the extent transferable; and

(xiv) all the Seller's and its Affiliates' right, title and interest on the Closing Date in, to and under all other assets, rights and claims of every kind and nature used or intended to be used in the operation of, or residing with, the Business.

(b) Notwithstanding anything in Section 2.01(a) to the contrary, the Assets shall exclude the following assets and properties owned by the Seller (the ooExcluded Assets"):

(i) the Seller Bank Account and all funds therein;

(ii) all rights of the Seller under this Agreement and the Ancillary Agreements to which the Seller is a party;

(iii) all cash and cash equivalents of the Seller and Business;

(iv) all claims, causes of action, choses in action, rights of recovery and rights of setoff of any kind (including rights to insurance proceeds and rights under and pursuant toall warranties, representations and guarantees made by suppliers of products, materials, or equipment, or components thereof), with respect to directors and shareholders of the Business in

connection with or in any way related to Seller securities and rights to Seller tax refunds for the taxable period, or portion thereof, prior to the Closing Date;

(v) policies of insurance covering directors or officers of the Seller in their actions and capacities as fiduciaries of the company and otherwise, at all times, and policies of insurance covering erors and omissions of the Seller, and in each case corresponding prepaid premiums paid to brokers and insurance vendors with respect to any such policies of insurance;

(vi) the Seller's organizational, financial, and employee-related documents (other than the employee-related documents of those employees employed by the Purchaser at the Closing, except to the extent prohibited by Law, in which case the Seller shall deliver a copy of such documents to the Purchaser; provided, that nothing herein shall preclude the Seller from retaining copies of any such documents except to the extent prohibited by Law), minute and stock record books and the corporate seal of the Seller; and

(vii) Seller's attomey client privilege with respect to communications

with its counsel.

Section 2.02 Assumption and Exclusion of Liabilities.

(a) Upon the terms and subject to the conditions of this Agreement, at the Closing, the Purchaser shall assume and shall agree to pay, perform and discharge only the following Liabilities of the Seller (the "Assulqed-Liabilitleq"):

(i) the obligations under those Contracts listed in Section 3.14(a) of the Disclosure Schedule and assumed pursuant to the Assumption Agreement; and

(ii) the Liabilities set forth in Section 2.02(a)(11) of the Disclosure Schedule and assumed pursuant to the Assumption Agreement.

(b) Notwithstanding subsection (a) above, the Seller shall retain, and shall be responsible for paying, performing and discharging when due, and the Purchaser shall not assgme or have any responsibility for, all Liabilities of the Seller or the Business as of the Closing Date other than the Assumed Liabilities (the "Excluded-Ijabilities"), including, without limitation, the following:

(D all outstanding Indebtedness of the Seller as of the Closing Date other than any Assumed Liability described in Section 2.02(a);

(ii) except as set forth in this Agreement, all Taxes now or hereafter owed by the Seller or attributable to the Assets or the Business, relating to any period, or any portion of any period, ending on or prior to the Closing Date;

(iii) all Liabilities of the Seller relating to or arising out of the Excluded

Assets;

(iv) all Liabilities of the Seller pursuant to Environmental Laws arising from or related to any action, event, circumstance or condition (including, without limitation,

relating to the Property), in each case occurring or existing on or before the Closing Date, including: (A) any Release of any Hazardous Material into the Environment on or before the Closing Date at, to or from the Property or any property formerly owned, leased, used or occupiid by the Business (and any additional migration of such Hazardous Material after the Closing Date); (B) any transportation, disposal or discharge, or the arangement for such activities, on or before the Closing Date, of any Hazardous Material originating at the Property or any property formerly owned, leased, used or occupied by the Business to or at any location (and any additional transportation, disposal or discharge of such Hazardous Material after the Closing Date); and (C) any noncompliance with or violation of any applicable Environmental Law oiEnvironmental Permit relating in any way to the Business on or before the Closing Date (and any continuation of such noncompliance or violation after the Closing Date); and

(v) the Liabilities set forth in Section 2.02(bXv) of the Disclosure

Schedule.

Section 2.03 Purchase Price: Allocation of Purchase Price.

(a) the purchase price for the Assets shall be:

(i) "Total Maximum Consideration": Payments totaling up to US$10,000,000 made in cash or, as provided below, in stock of Parent, paid in three tranches, subject to satisfaction of all Conditions Precedent, in exchange for 100% of the Assets and Assumed Liabilities of Target, payable as follows:

    1. "Initial Pa;rment": cash payment of $4,000,000 made at Closing in cash via wire transfer;
    1. o'second Payment": cash payment to be made on the l2 month anniversary of the Closing Date, with the value determined by using a base payment of $3,000,000 and adjusting the payment by multiplying this base payment by the percentage of the actual 12 month trailing revenues as of the then most recent previous month end, as compared to the target trailng 12 month revenues of $5,000,000 (e.g., $4,000,000 actual revenue would equate to 80Yo of $5,000,000, which in turn equates to 80% of $3,000,000, or $2,400,000); payment to be capped at $3,000,000;
    1. "Third Paymenf': cash payment to be made on the 24 month anniversary of the Closing Date, with the value determined by using a base payment of $3,000,000 and adjusting the payment by multiplying this base payment by the percentage of the actual 12 month trailing revenues as of the then most recent previous month end, as compared to the target ttallng 12 month revenues of $7,000,000 (e.g., S6,000,000 actual revenue would equate to 85.7Yo of $7,000,000 which in turn equates to

85.7% of $3,000,000, or $2,571,428); payment to be capped at $3,000,000;

provided that the second and third payments described in (b) and (c) above shall be the ;'Contingent Pa5rments" and the periods of time from Closing until24 months following Closing shall be the "Contingency Periods"; and if the parties mutually agree, any payment may be advanced as stock ofthe Parent, issuable at the 30-day average closing stock price for the period ending one day prior to the payment date, provided that this provision shall only apply if the Parent at such time publicly listed its shares for trading;

collectively, (the "Purchase-Erice").

(b) The Purchaser shall pay the Purchase Price as follows:

(D At the Closing, the Purchaser shall pay to the Seller, by wire transfer of immediately available funds or by certified check to the Seller Bank Account, and such other accounts as directed by the Seller, an amount equal to the Initial Payment;

(ii) On the date that is 12 months following the Closing Date, the Purchaser shall pay to the Seller, by wire transfer of immediately available funds, by certifred check to the Seller Bank Account, and such other accounts as directed by the Seller, or by issuance of common stock if mutually agreed by Seller (including by Jason Mitchell, individually), Purchaser and Parent, as the case may be, an amount equal to the Second Payment;

(iii) On the date that is 24 months following the Closing Date, the Purchaser shall pay to the Seller, by wire transfer of immediately available funds, by certified check to the Seller Bank Account, and such other accounts as directed by the Seller, or by issuance of common stock if mutually agreed by Seller, Purchaser and Parent, as the case may be, an amount equal to the Third Payment.

(c) The sum of the Total Maximum Consideration (even though it may be received over a 2- year period) and the Assumed Liabilities shall be allocated among the Assets as of the Closing Date in accordance with Exhibit 2.03(c) (the "Allocation Method") even though only the Initial Payment will have been paid at the Closing.

Section 2.04 Working Capital Price Adjustment.

(a) Target Working Capital. At Closing, the Seller shall retain all Excluded Liabilities, and shall use all commercially reasonable efforts to obtain a working capital of "information relating to working capital redacted", meaning that the Current Assets acquired by Purchaser (excluding cash on hand at the Closing) shall exceed the Current Liabilities assumed byPurchaserbythea@apital(theooTargetWorkingCapitaL").within thrce (3) days after the execution of this Agreement, the Seller shall deliver to the Purchaser a detailed list (including a reasonable identification of the asset or liability and value thereof), in writing, of all of the then-existing (i) Current Assets of the Business (the "Current Asset List"); and(ii)Curren@ess(the..CurrentLiabilitiesList,,).Atleastthree(3) Business Days prior to Closing, the Seller shall deliver to the Purchaser, in writing, an updated Current Asset List and an updated Current Liabilities List which shall reflect the Current Assets and Current Liabilities of the

Business as of such date and the removal of any Current Asset and/or Current Liability previously rejected by the Purchaser. Within two (2) Business Days of the receipt thereof, the Purchaser may reject, in writing, and in its sole discretion, any of the Current Assets or Current Liabilities shown on the respective updated list, and the Purchaser shall not be obligated to acquire or assume such Current Asset or Current Liability. If the Purchaser fails to affrmatively reject any item on the updated Current Asset List and/or the updated Current Liability List within the time frames set forth above, then such updated list or lists shall be deemed approved for purposes of the Closing Adjustment described in Section 2.05(b), and the Current Assets and Current Liabilities set forth therein shall be deemed acquired or assumed for purposes of this Agreement.

(b) Closing Adjustment. In the event that the aggregate value of the Current Assets set forth in the Current Asset List, as updated in accordance with Section 2.05(a), exceeds the aggregate value of the Current Liabilities set forth in the Current Liabilities List by more than the Target Working Capital, as updated in accordance with Section 2.05(a), the Cash Consideration payable to Seller hereunder shall be increased by the amount of such excess and paid as part of the Initial Payment. In the event that the Current Assets acquired are less than the Current Liabilities by an amount less than the Target Working Capital (or if the Current Liabilities assumed by Purchaser exceed the Current Assets at Closing), then Purchaser shall assume such Current Liabilities and reduce the Cash Consideration and the amount of the Initial Payment by an equivalent amount (such increase or decrease in Cash Consideration, the "Clqging Adjustment"). For the avoidance of doubt, as an example, if the Target Working Capital is $100,000, Current Assets are $500,000 and Current Liabilities are $400,000, then no price adjustment is necessary; and if in such example Current Assets are $600,000 and Current Liabilities are unchanged, the Cash Consideration will be increased by $100,000; and if in such example Current Liabilities are $500,000 and Current Assets are unchanged, the Cash Consideration and the lnitial Payment will be reduced by $100,000.

(c) Post-Closing Adjustment. Immediately upon Closing, the Purchaser shall have the right to review the Current Assets and Current Liabilities acquired and assumed hereunder to verify and substantiate the information contained in the Current Asset List and the Current Liabilities List, and the accuracy of the Closing Adjustrnent, if any. The Purchaser shall notify the Seller in a written statement within thirty (30) Days after Closing of any discrepancy between the information contained in the Current Asset List or Current Liabilities List, and the actual Current Assets and Current Liabilities existing as of the Closing Date, and any necessary corresponding post-Closing adjustment to the Purchase Price with reference to Section 2.04(b) above, if any. Purchaser shall provide the Seller reasonable access to the relevant books and records to the extent necessary to, and for the purpose of, the Seller's review of the written statement. In either case, such payment shall be made within fifteen (15) Business Days of the Purchaser's notification of such discrepancy. If Seller disputes the conclusions in the written statement, Seller shall deliver a Notice of Disagreement with such fifteen (15) Business Day period and the parties shall attempt to resolve the dispute in good faith. If the Seller and Purchaser have not resolved all disputed matters by the end of the fifteen (15) Business Day Period, the Seller and Purchaser shall submit, in writing, such remaining disputed matters (and only such disputed matters) to the office of the Accounting Expert. The "Accounting Expert" shall be a Neutral Accounting Firm selected by mutual agreement of Seller and Purchaser. A "Neutral Accounting Firm'o means an independent accounting firm of nationally recognized

standing that is not at the time it is to be engaged hereunder rendering services to any party, or any Affiliate of either, and has not done so within the two (2) year-period prior thereto. The Accounting Expert shall be engaged by the parties and shall render an opinion within 30 days of its appointment. Both Seller and Purchaser shall each have the right to raise issues in the dispute resolution process not initially addressed in the written statement or in the Notice of Disagreemint to the extent such issues relate to an account that a party is seeking to adjust in its favoi. The Accounting Expert shall make a written determination within thirty (30) days of its appointment as to each such disputed items, which determination shall be final and binding on the parties for all purposes hereunder absent manifest error. The fees and expenses of the Accounting Expert shall be borne equally by the Seller and the Purchaser.

Section 2.05 Closing. Subject to the terms and conditions of this Agfeement, the sale and purchase of the Assets, the assumption of the Assumed Liabilities and the related transactions contemplated by this Agreement shall take place at a closing (the "eb.!ing") to be held at the offices oiFarPoint Venture Law PC, 2604 3'd Ave, Suite 100, Seattle WA 98121 on the third Business Day after the date on which the satisfaction or waiver of the conditions to the obligations of the parties set forth in Article VI has occurred, or at such other time or on such othei date as the Seller and the Purchaser may mutually agree upon in writing (the day on which the Closing takes place being the "Closins Date").

Section 2.06 Closing Deliveries by the Seller. At the Closing, the Seller shall deliver or cause to be delivered to the Purchaser:

(a) the Assignment of Lease duly executed by the Seller;

(b) counterparts of the Bill of Sale, the Assignment and Assumption Agreement, the Shared Services Agreement and the Assignment of Intellectual Property, duly exicuted by the Seller, and such other duly executed instruments, in form and substance satisfactory to the Purchaser, as may be requested by the Purchaser to transfer the Assets to the Purchaser or evidence such transfer on the public records, and sufficient to vest in the Purchaser all of the Seller's right, title and interest in and to the Assets in accordance with the terms of this Agreement free and clear of all Encumbrances except Permitted Encumbrances;

(c) a receipt for the Initial Payment of the Purchase Price; and

(d) the certificates and other documents required to be delivered by the Seller pursuant to Section 6.02.

Section 2.07 Closing Deliveries by the Purchaser. At the Closing, the Purchaser shall deliver or cause to be delivered to the Seller:

(a) the Initial Payment of the Purchase Price by wire transfer in immediately available funds or by certified check to the Seller Bank Account, and such other accounts as directed by the Seller;

(b) counterparts of the Assumption Agreement, the Assignment of Lease, the Operations Agreement, and the Assignment of Intellectual Property, duly executed by the Purchaser; and

(c) the certificates and other documents required to be delivered by the Purchaser pursuant to Section 6.01.

A,RTICLE III

REPRESENTATIONS AND WARRANTIES OF THE SELLER

As an inducement to the Purchaser to enter into this Agreement, subject to such exceptions as are specifically disclosed in writing in the Disclosure Schedule, dated as of the date hereof, the Seller represents and warrants to the Purchaser as follows:

Section 3.01 Organization. Authority and Oualification of the Seller. The Seller is a limited liability company duly organizedandvalidly existing under the laws of the State of Kansas and has all necessary limited liability company power and authority to enter into this Agreement, the Ancillary Agreements and all other agreements contemplated hereby and thereby to which the Seller is a party, to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The Seller is duly licensed or qualified to do business and is in good standing in each jurisdiction in which the properties owned or leased by it or the operation of the Business makes such licensing or qualification necessary or where failure to so qualifu will not have a Material Adverse Effect. The Seller's Members and Managers have approved this Agreement, the Ancillary Agreements and all other agreements contemplated hereby and thereby and determined that it is advisable and fair to and in the best interest of the Seller and its members, to execute this Agreement, the Ancillary Agreements and all other agreements to which it is a party in accordance with the laws of the State of Kansas. Assuming the due authorizatiort, execution and delivery by the other parties hereto and thereto and the validity and binding effect hereof and thereof on the other parties hereto and thereto, when executed by the Seller, and subject to approval by the requisite voting percentage of Seller's Members with respect to the sale of the Assets, this Agreement, the Ancillary Agreements and all other agreements to which it is a party shall constitute valid and binding obligations of the Seller enforceable against it in accordance with their respective terms, except to the extent that enforceability may be limited by applicable bankruptcy, insolvency, reorgarization, moratorium or similar laws affecting the enforcement of creditors' rights generally and by the effect of general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law).

Section 3.02 No Conflict. Except as set forth in Section 3.02 of the Disclosure Schedule, the execution, delivery and performance by the Seller of this Agreement, the Ancillary Agreements and all other agreements contemplated hereby and thereby to which the Seller is a party do not and will not (a) violate, conflict with or result in the breach of any provision of the Operating Agreement (or similar organizational documents) of the Seller, (b) conflict with or violate (or cause an event that could have a Material Adverse Effect as a result of) any Law or Governmental Order applicable to the Seller or any of the Assets, or (c) conflict with, result in any breach of, constitute a default (or event which that the giving of notice or lapse of time, or both, would become a default) under, require any consent under, or give to others any rights of termination, amendment, acceleration, suspension, revocation or cancellation of, or result in the creation of any Encumbrance on any of the Assets pursuant to, any note, bond, mortgage or

indenture, Contract, franchise or other instrument or alrangement to which the Seller is a party or by which any of the Assets is bound or affected.

Section 3.03 Govemmental Consents and Approvals. Except as set forth in Section 3.03 of the Disclosure Schedule, the execution, delivery and performance by the Seller of this Agreement, each Ancillary Agreement and all other agreements contemplated hereby and thereby to which the Seller is a party do not and will not require any consent, approval, authorization or other order of, action by, frling with or notification to, any Governmental Authority.

Section 3.04 Subsidiaries. Seller has no subsidiaries and is not a parbrer or joint venturer with another entity.

Section 3.05 Financial Information: Books and Records.

(a) True and complete copies of the balance sheets of the Seller for the fiscal years ended December 3 l, 201 8 (the "Balance Sheet Date") and December 3 l, 2017 , ard the ielated statements of income, retained earnings, stockholders' equity, cash flows and changes in financial position of the Seller, are set forth in Section 3.05(a) of the Disclosure Schedule (collectively, the "Historical Financial Statements"). The Historical Financial Statements: (i) are true and correct in all material respects, (ii) present fairly the financial condition of the Seller as of the statement dates and for the periods indicated, and (iii) were prepared in accordance with the books of account and other financial records of the Seller and consistently applied with past practice throughout and among the periods indicated.

(b) The books ofaccount and other financial records ofthe Seller reflect all items of income and expense and all assets and Liabilities in all material respects required to be reflected therein in accordance with past practice.

(c) There are no Liabilities of the Seller, other than Liabilities (i) arising in the ordinary course of business consistent with past practice from the Balance Sheet Date until the closing or (ii) set forth in Section 3.05(c) of the Disclosure schedule.

Section 3.06 Receivables. Section 3.06 of the Disclosure Schedule is an accurate aging of the Receivables as of the Balance Sheet Date. All Receivables reflected in Section 3.06 of the Disclosure Schedule, or arising between the Balance Sheet Date until the Closing have or will have arisen in the ordinary course of business consistent with past practice from bona fide transactions and constitute or will constitute only valid, undisputed claims of the Seller not subject to valid claims of setoff or other defenses or counterclaims other than normal cash discounts accrued in the ordinary course of business consistent with past practice. All Receivables existing as of the Closing will be good and have been collected or a.re or will be collectible, without resort to litigation or extraordinary collection activity, within 90 days after the Closing except for any immaterial Receivables not exceeding 5Yo of all Receivable.

Section 3.07 Inventory. The values at which all Inventory is carried on the Historical Financial Statements reflect the historical inventory valuation policy of the Seller of stating such Inventory at cost. The Seller has good and marketable title to the Inventory free and clear of all Encumbrances, except Permitted Encumbrances. The Inventory does not consist of, in any

material amount, items that are obsolete, damaged or slow-moving. The Inventory does not consist of any items held on consignment. The Seller is not under any obligation or liability with respect to accepting returns of items of Inventory or merchandise in the possession of its ",rrto-".r other than in the ordinary course of business consistent with past practice. No clearance or extraordinary sale ofthe Inventory has been conducted since the Balance Sheet Date. The Seller has not acquired or committed to acquire or manufacture Inventory for sale which is not of a quality and quantity usable in the ordinary course of business within a reasonable period of time and consistent with past practice, nor has the Seller changed the price of any Invurtory except for (a) price reductions to reflect any reduction in the cost thereof to the Se1lei, (b) reductions and increases responsive to normal competitive conditions and consistent with the Seller's past sales practices and (c) increases to reflect any increase in the cost thereof to the Seller. The Inventory is in good and merchantable condition in all material respects, is suitable and usable for the pu{poses for which it is intended and is in a condition such that it can be sold in the ordinary course of the Business consistent with past practice.

Section 3.08 Reserved

Section 3.09 Sales and Purchase Order Backlos'

(a) Section 3.09(a) of the Disclosure Schedule lists as of the date hereof all open sales orders exceeding "information relating to sales orders redacted" which have been accepted by the Seller and relating to the Business.

(b) Section 3.09(b) of the Disclosure Schedule lists as of the date hereof all purchase orders exceeding "information relating to purchase orders redacted" per order which have been issued by the Seller and relating to the Business.

Section 3.10 Conduct in the Ordinary Course: Absence of Certain Chanees. Events and Conditions. Since the Balance Sheet Date, the Business has been conducted in the ordinary course of business consistent with past practice. As amplification and not limitation of the foregoing, since the Balance Sheet Date, the Seller has not, except as set forth in Section 3.10 of the Disclosure Schedule:

(a) permitted or allowed any of the Assets to be subjected to any Encumbrance, other than Permitted Encumbrances and Encumbrances that will be released at or prior to the Closing;

(b) except in the ordinary course of business consistent with past practice, discharged or otherwise obtained the release of any Encumbrance, or paid or otherwise discharged any Liability, other than Current Liabilities (and the current portion of any long -term Liabilities) incurred in the ordinary course of business consistent with past practice;

(c) written down or written up (or failed to write down or write up consistent with past practice) the value of any Receivables or revalued any of the Assets other than in the ordinary course of business consistent with past practice;

(d) made any change in any method of accounting or accounting practice or policy used by the Seller;

(e) amended, terminated, cancelled or compromised any material claims of the Seller or waived any other rights of substantial value to the Seller;

(0 sold, transferred, leased, subleased, licensed, abandoned or otherwise disposed of any properties or assets, real, personal or mixed (including leasehold interests and intangible property), other than the license of software and the sale of Inventory in the ordinary course of business consistent with past practice;

(g) redeemed any of the capital stock or declared, made or paid any special bonuses or dividends or distributions (whether in cash, securities or other property) to the holder of capital stock of the Seller;

(h) merged with, entered into a consolidation with or acquired an interest in any Person or acquired a substantial portion of the assets or business of any Person or any division or line of business thereof engaged in a business relating to the Business, or otherwise acquired any material assets other than in the ordinary course of business consistent with past practice;

(i) made any capital expenditure or commitment for any capital expenditure in excess of "information relating to capital expenditure redacted" individually or $"information relating to capital expenditure redacted" in the aggregate;

  1. issued any sales orders or otherwise agreed to make any purchases involving exchanges in value in excess of "information relating to sales orders redacted" individually or "information relating to sales orders redacted" in the aggregate;

(k) made any material changes in the customary methods of operations of the Business, including practices and policies relating to development, purchasing, Inventory, marketing, selling and pricing;

  1. made, changed or revoked any express or deemed Tax election or method of Tax accounting, or settled or compromised any Tax Liability with respect to the Assets or the Business; (m) incurred any Indebtedness;

(n) made any loan, guaranteed any Indebtedness of or otherwise incurred any Indebtedness to or on behalf of any Person or increased the amount of any existing loans to any Affiliate of the Seller;

due;

(o) failed to pay any creditor any material amount owed to such creditor when

(p) (i) granted or announced any increase in the wages, salaries, compensation, bonuses, incentives, pension or other benefits payable by the Seller to any of its employees in connection with the operation of the Business, including any increase or change pursuant to any Benefit Plan, or (ii) established or increased or promised to increase any benefits under any Plan, in either case except as required by Law or any collective bargaining agreement;

(q) entered into any agreement, arrangement or transaction with any directors, officers, employees or stockholders of the Seller (or with any relative, beneficiary, spouse or Affrliate of such Persons);

G) terminated, discontinued, closed or disposed of any facility or other business operation, or laid off any employees or implemented any early retirement, separation or program providing early retirement window benefits within the meaning of Section 1.a01(a)(a)- :fOi+l ofthe Treasury Regulations or announced or planned any such action or program for the future;

(s) disclosed any secret or confidential Intellectual Property relating to the Business (except by way of issuance of a patent) or permitted to lapse or become abandoned any Intellectual Property relating to the Business (or any registration or grant thereof or any application relating thereto) to which, or under which, the Seller has any right, title, interest or lftnse other than any Intellectual Property that has no further value to Seller or its Business;

(t) allowed any permit or Environmental Permit that was issued or relates to the Seller or otherwise relates to the Business to lapse or terminate or failed to renew any insurance policy, permit or Environmental Permit that is scheduled to terminate or expire within 45 calendar days of the Closing Date;

(u) failed to maintain the Seller's plant, property and equipment in good repair and operating condition, ordinary wear and tear excepted;

(v) suffered any casualty loss or damage with respect to any of the Assets which in the aggregatehave a replacement cost of more than $50,000, whether or not such loss or damage shall have been covered by insurance;

(w) amended, modified or consented to the termination of any Material Contract or the Seller's or its Affiliates' rights thereunder;

(x) made any charitable contribution;

(V) (i) abandoned, sold, assigned, or granted any security interest in or to any item of the Transferred Intellectual Property, including failing to perform or cause to be performed all applicable filings, recordings and other acts, and pay or caused to be paid all iequired fees and taxes, to maintain and protect its interest in such Intellectual Property, (iij ganted to any third party any license with respect to any Transferred Intellectual Property othei than in the ordinary course of business (iii) developed, created or invented any Technology or Intellectual Property Rights jointly with any third party (other than such joint development, creation or invention with a third party that is in progress prior to Balance Sheet Date) or (iv) disclosed, or allow to be disclosed, any confidential Technology or any Intellectual Property Rights therein;

(z) suffered any Material Adverse Effect;

(aa) agreed, whether in writing or otherwise, to take any of the actions specified in this Section 3.10 or granted any options to purchase, rights of first refusal, rights of first offer or any other similar rights or commitments with respect to any of the actions specified in this Section 3.10, except as expressly contemplated by this Agreement and the Ancillary Agreements to which the Seller is a party; or

(bb) made any distributions of cash from the Seller Bank Accounts except in the ordinary course and consistent with past practice.

Section 3.11 Litigation. There are no Actions or Claims by or against the Seller or any Affrliate thereof or affecting any of the Assets or the Business pending before any Governmental Authority (or to the knowledge of the Seller, threatened to be brought by or before any Govemmental Authority). None of the Seller, its Affiliates or any of their respective assets or properties, including the Assets, is subject to any Governmental Order (nor, to the knowledge of the Seller, are there any such Governmental Orders threatened to be imposed by any Governmental Authority) that has or has had a Material Adverse Effect or could affect the legality, validity or enforceability of this Agreement, any Ancillary Agreement or the consummation of the transactions contemplated hereby or thereby'

Section 3.12 Compliance with Laws. The Seller has conducted and continues to conduct in all material respects the Business in accordance with all Laws and Governmental Orders applicable to the Seller or any of its properties or assets, including the Assets, or the Business, and the Seller is not in violation in any material respect of any such Law or Govemmental Order. The Seller has not, in the last three years, received any written communication from any Governmental Authority alleging that the Seller is not in compliance in any material respect with any Law or Govemmental Order that has not been resolved.

Section 3.13 Environmental and Other Permits and Licenses: Related Matters. Except as listed in Section 3.13 of the Disclosure Schedule:

(a) The Seller and its Affiliates are, and for the past six years have been, in compliance with all applicable Environmental Laws and all Environmental Permits. All past noncompliance with Environmental Laws or Environmental Permits has been resolved without any pending, ongoing or future obligation, cost or liability, and there is no requirement proposed for adoption or implementation under any Environmental Law or Environmental Permit.

(b) There has been no Release of any Hazardous Material on the Property or, during the period of the Seller's or any of their Affiliates' ownership lease, use or occupancy thereof, on any property formerly owned, leased, used or occupied by the Seller or any of their Affiliates.

(c) There are no Environmental Claims pending or, to the knowledge of the Sel|er, threatened against the Seller or any of their Affiliates or the Property and there are no circumstances to Seller's knowledge that can reasonably be expected to form the basis of any such Environmental Claim.

(d) To Seller's knowledge, there are no underground storage tanks, surface impoundments, septic tanks, pits, sumps or lagoons in which Hazardous Materials are being or have been treated, stored or disposed of on the Property or, during the period of the Seller's or any of its Affiliates' ownership, lease, use or occupancy thereof, on any property formerly

owned, leased, used or occupied by the Seller or any of its Affiliates, and there is no asbestos or asbestos-containing material that requires abatement or encapsulation under Environmental Law at the Property or, during the period of the Seller's or any of its Affiliates' ownership, lease, use or occupancy thereof, on any property formerly owned, leased, used or occupied by the Seller or any of its Affiliates.

(e) Neither the Seller nor any of its Affiliates has any actual or, to Seller's knowledge, alleged Liability under any Environmental Law'

(0 The Seller has provided the Purchaser with copies of any environmental assessment or audit reports or other similar studies or analyses relating to the Property.

(g) Neither the execution of this Agreement or the Ancillary Agreements nor the consummation of the transactions contemplated hereby or thereby will require any Remedial Action or notice to or consent of any Governmental Authority or third party pursuant to any applicable Environment al Law or Environmental Permit.

Section 3.14 Material Contracts.

(a) Section 3.Ia@) of the Disclosure Schedule contains a true and complete list of all material Contracts ('oMaterial Contracts") which relate to the Business and to which either the Seller or its Affiliates is aparty or by which the Seller, its Affiliates, the Business or the Assets are bound or affected. For purposes of this Section 3.14 my Contract shall be deemed aMaterial Contract if it (i) involves performance by any party more than 12 months after the date hereof, (ii) involves payments to third parties or receipts by the Seller in excess of $25,000 during the 12 month period after the date hereof, (iii) relates to any sales representative or similar relationship between the Seller or its Affiliates (relating to the Business) and any third party, (iv) restricts the Seller or its Affiliates from carrying on the Business or engaging any activity, or (v) otherwise materially affects the Business or the Assets. For purposes of this Section 3.14 and Section 3.16,3.17 and 3.18, the term e6!94g9" shall include any and all leases, subleases, sale/leaseback agreements or similar arrangements.

(b) Each Material Contract: (i) is valid and binding on the parties thereto and is in full force and effect, (ii) except as set forth in Section 3.14(b) of the Disclosure Schedule, is freely and fully assignable to the Purchaser without penalty or other adverse consequences and (iii) upon consummation of the transactions contemplated by this Agreement and the Ancillary Agreements, except to the extent that any consents set forth in Section 3.02 of the Disclosure Schedule are not obtained, shall continue in full force and effect without penalty or other adverse consequence. Neither the Seller nor its Affiliates has an uncured breach of, or default under, any Material Contract.

(c) To Seller's knowledge, no other party to any Material Contract is in breach thereof or default thereunder, and neither the Seller nor its Affrliates has received any notice of termination, cancellation, breach or default under any Material Contract.

(d) The Seller has made available to the Purchaser true and complete copies of all Material Contracts.

(e) There is no Contract or other arrangement granting any Person any preferential right to purchase any of the Assets'

Section 3.15 Intellectual Property.

(a) Section 3.15(a) of the Disclosure Schedule lists all Registered Intellectual property Rights owned by, filed in the name of, or applied for, by the Seller that is Transferred Intellectual Property (the "seller Reeistered Intellectual Property'') and lists any proceedings or actions before any court, tribunal (including the United States Patent and Trademark Office (the ,.ro,') or equivalent authority anywhere in the world) related to any of the Seller Registered Intellectual Property.

(b) Each item of the Seller Registered Intellectual Property is currently in compliance with all formal legal requirements (including payment of filing, examination and maintenance fees and proofs of use) and is valid and subsisting. All necessary documents and certificates in connection with such Seller Registered Intellectual Property have been filed with the relevant patent, copyright, trademark or other authorities in the United States or foreign jurisdictions, as the case may be, for the purposes of perfecting, prosecuting and maintaining such Seller Registered Intellectual Property. Except as set forth in Section 3.15(b) of the Disclosure Schedule, there are no actions that must be taken by the Seller within one hundred twenty (120) days of the Closing Date, including the payment of any registration, maintenance or renewal fees or the filing of any responses to PTO office actions, documents, applications or certificates for the purposes of obtaining, maintaining, perfecting or preserving or renewing any Seller Registered Intellectual Property.

(c) In each case in which the Seller has acquired from any Person any Technology or Intellectual Property Rights that are included in Transferred Intellectual Property, the Seller lias obtained a valid and enforceable assignment sufficient to irrevocably transfer all rights in and to such Technology and Intellectual Property Rights to the Seller. Seller has recorded each assignment of Seller Registered Intellectual Property assigned to the Seller with the relevant governmental entity.

(d) All Transferred Intellectual Property following the transfer thereof to the Purchaser in accordance with the terms hereof will be fully transferable, alienable or licensable by the Purchaser without restriction and without payment of any kind to any third Pafr, except that any Transferred lntellectual Property that is licensed by the Company from third parties is subject to the terms of the applicable license agreements.

(e) To the Knowledge of the Seller, each item of Transferred Intellectual property is free and clear of any Encumbrances, other than Permitted Encumbrances. The Seller is the exclusive owner or valid licensee of all Transferred Intellectual Property' Without limiting the generality of the foregoing, (i) the Seller is the exclusive owner of all trademarks and trade ttu-i. used in connection with the operation or conduct of the Business, including the sale, distribution or provision of any dietary digestive or probiotic supplement Products by the Seller or any of its Affihates, and (ii) the Seller owns exclusively, and has good title to, all copyrighted works that are included or incorporated into, or form the basis for dietary digestive or probiotic supplement Products or which the Seller or any of its Affiliates otherwise purports to own.

(0 Except as set forth in Section 3.15(0 of the Disclosure Schedule, the Seller has not (i) transfened ownership of, or gtanted any exclusive license of or right to use, or authorized the retention of any exclusive rights to use or joint ownership of, any lntellectual Property Rights or Technology that constitutes Transferred Intellectual Property, to any other person, or (ii) permitted the Seller's rights in such Transferred Intellectual Property to lapse or enter the public domain.

(g) To the extent that any Technology or Intellectual Property fughts have been developed or created by a third party for the Seller for use in connection with any of the dietary digestive or probiotic supplement Products or the Business, the Seller has a written agreement with such third party with respect thereto and the Seller thereby either (i) obtained ownership of, and is the exclusive owner of, or (ii) has obtained a perpetual, non-terminable license (sufficient for the conduct of the Business as currently conducted in the ordinary course, consistent with past practice) to all such third party Technology and Intellectual Property Rights.

(h) Except as set forth in Section 3.15(h) of the Disclosure Schedule, the Transferred Intellectual Property and Intellectual Property Rights under the Third Party Licenses constitute all the Technology and Intellectual Property Rights necessary to the conduct of the Business as it currently is conducted in the ordinary course, consistent with past practice, including, without limitation, the design, development, manufacture, use and sale of dietary supplement Products.

(i) Except as set forth in Section 3.15(i) of the Disclosure Schedule, no Person has licensed any Transferred Intellectual Property or has a license or rights to improvements made by or for the Seller in Transferred Intellectual Property.

  1. The Seller has the right to use, pursuant to valid licenses, all Software development tools, library functions, compilers and all other third-party Softwarethatare necessary for the Business as currently conducted in the ordinary course, consistent with past practice.

(k) No government funding, facilities of a university, college, other educational institution or research center or funding from third parties was used in the development of any Transferred Intellectual Property or any dietary digestive or probiotic supplement Products. No current or former employee, consultant or independent contractor of the Seller, who was involved in, or who contributed to, the creation or development of any Transferred Intellectual Property or dietary digestive or probiotic supplement Products; has performed services for a government, university, college, or other educational institution or research center during a period of time during which such employee, consultant or independent contractor was also performing services for the Seller.

  1. The Seller has not received notice from any Person claiming that the Business as currently conducted in the ordinary course, and consistent with past practice, including, without limitation, the design, development, use, import, branding, advertising, promotion, marketing, sale and distribution of dietary digestive or probiotic supplement Products, infringes or misappropriates lntellectual Property Rights of any person, violates any right of any Person or entity, or constitutes unfair competition or trade practices under the laws of any jurisdiction.

(m) Other than inbound "shrink-wrap." and similar publicly-available commercial binary code end-user licenses, the Contracts listed in Section 3.15(m) of the Disclosure Schedule lists all Contracts, including Third Party Licenses, to which the Seller is a party with respect to any Technology or Intellectual Property Rights related to the Business. All such Contracts are in full force and effect. The Seller is not in breach of, nor has the Seller failed to perform under, any of the foregoing Contracts and, to the Seller's knowledge, no other party to any such Contract is in breach thereof or has failed to perform thereunder. The consummation of the transactions contemplated by this Agreement will neither violate nor result in the breach, modification, cancellation, termination or suspension of such Contracts. Following the Closing Date, the Purchaser will be permitted to exercise all rights exercisable under such Contracts to the same extent the Seller and its Affiliates would have been able to had the transactions contemplated by this Agreement not occurred and without the payment of any additional amounts or consideration other than ongoing fees, royalties or payments which the Seller would otherwise be required to pay.

(n) Section 3.15(n) of the Disclosure Schedule lists all Material Contracts between the Seller and any other Person wherein or whereby the Seller has agreed to, or assumed, any obligation or duty to warrant, indemnify, reimburse, hold harmless, guaranty or otherwise assume or incur any obligation or liability or provide a right of rescission with respect to the infringement or misappropriation by the Seller or such other Person of the Lrtellectual Property Rights of any Person related to either the Business or the dietary digestive or probiotic supplement Products.

(o) To the knowledge of the Seller, there are no Contracts between the Seller and any other Person with respect to Transferred Intellectual Property or related to the Business under which there is any dispute regarding the scope of such agreement, or performance under such agteement, including with respect to any payments to be made or received by the Seller thereunder.

(p) To the knowledge of the Seller, no Person is infringing or misappropriating any Transferred Intellectual Property.

(q) The Seller has taken steps that are reasonably required to protect the Seller's rights in Confrdential Information and trade secrets of the Seller. Without limiting the foregoing, all current and former employees and consultants of the Seller who have created or modified any of the Transferred Intellectual Property have executed such an agreement assigning all of such employees' and consultants' rights in and to the Transferred Intellectual Property to the Seller.

(r) Neither this Agreement nor the transactions contemplated by this Agreement, including the assignment to the Purchaser directly, by operation of law, or otherwise, of*y Contract to which the Seller is a party will result in (i) the Purchaser granting to any third party any right to or with respect to any Intellectual Property Rights developed by, owned by, or iicensed to, the Purchaser prior to the Closing, (ii) the Purchaser being bound by, or subject to,

any non-compete or other restriction on the operation or scope of its businesses, or (iii) the Purchaser being obligated to pay any royalties or other amounts to any third party in excess of those payable by the Seller prior to the Closing'

(s) Except as set forth in Section 3.15(s) of the Disclosure Schedule, to the knowledge of the Seller, the Transferred Intellectual Property is not subject to any pending Claim or other outstanding judicial or administrative decree, order, judgment or stipulation that restricts or encumbers the transfer thereof by the Seller to the Purchaser or that affects the validity, use or enforceability of the Transferred Intellectual Property.

(t) Except as disclosed on Section 3.15(t) of the Disclosure Schedule, to the knowledge of the Seller, no Person other than the Seller has ownership rights to improvements made by the Seller to Transferred Intellectual Property.

Section 3.16 Real ProPertv.

(a) The Seller does not own any real property'

(b) The Seller's sole leased property is located at N.W 14th Street, Suites A & B on both buildings, Topeka, Kansas (the "Propg{y'). With respect to the lease for the Property, the Seller has not exercised or given any notice ofexercise, nor has the landlord exercised or given any notice of exercise of, any option, right of first offer or right of fnst refusal contained in the lease for the Property, including any such option or right pertaining to purchase, expansion, renewal, extension or relocation (collectively, "Qp!iqns"). The Seller has the full right to exercise any Options contained in the lease pertaining to the Property on the terms and conditions contained therein and upon due exercise would be entitled to enjoy the full benefit of such Options with respect thereto.

(c) There is no material violation of any Law (including any building, planning or zoning law) relating to the Property. The Seller has made available to the Purchaser atrue, legible and complete copy of the lease for the Property, the operations of the Seller or any other uses thereof. The Seller has a valid leasehold interest in the Property for a term ending on Apnll,2022.

(d) To the knowledge of the Seller, there are no facts that would prevent the Property from being occupied by the Purchaser after the Closing in the same manner as occupied by the Seller immediately prior to the Closing.

(e) To the actual knowledge of the Seller without inquiry, all improvements on the Property constructed by or on behalf of the Seller or constructed by or on behalf of any other Person, were constructed in compliance with all applicable Laws (including any building, planning or zoning Laws). The rent set forth in the lease of the Property is the actual rental being paid, and there are no separate agreements or understandings with respect to the same other than the agreements or understandings set forth in the Lease.

Section 3.17 Taneible Personal Property.

(a) Section 3.17(a) of the Disclosure Schedule lists each item or distinct group of machinery, equipment, tools, supplies, furniture, fixtures, personalty, vehicles, books, computer equipment and other tangible personal property (the "Tangible Personal Prc ') used in the Business.

(b) Section 3.17(b) of the Disclosure Schedule sets forth a true and complete list of all leases for Tangible Personal Property and any and all material ancillary documents pertaining thereto (including all amendments, consents and evidence of commencement dates and expiration dates).

(c) The Seller has the full right to exercise any renewal options contained in the leases pertaining to the Tangible Personal Property on the terms and conditions contained therein and upon due exercise would be entitled to enjoy the use of each item of leased Tangible Personal Property for the fuIl term of such renewal options.

Section 3.18 Assets.

(a) The Seller owns, leases or has the legal right to use all the Assets used or intended to be used in the conduct of the Business, and, with respect to contract rights, is a party to and enjoys the right to the benefit of all Contracts and other arrangements used or intended be used by the Seller or in or relating to the conduct of the Business. The Seller has good and marketable title to, or, in the case of leased Assets, valid and subsisting leasehold interests in, all the Assets being transferred by the Seller to the Purchaser, free and clear of all Encumbrances other than Permitted Encumbrances.

(b) The Assets constitute all the properties, assets and rights forming apartof, used, held or currently intended to be used in, and all such properties, assets and rights as are necessary in the conduct of, the Business. At all times since the Balance Sheet Date, the Seller has caused the Assets to be maintained in accordance with good business practice, and all the Assets are in good operating condition and repair and are suitable for the purposes for which they are used and intended, ordinary wear and tear excepted.

(c) The Seller has the complete and unrestricted power and unqualified right to sell, assign, transfer, convey and deliver the Assets to the Purchaser without penalty or other adverse consequences. Following the consummation of the transactions contemplated by this Agreement and the execution of the instruments of transfer contemplated by this Agreement, the Purchaser will own, with good, valid and marketable title, or lease, under valid and subsisting leases, or otherwise acquire the interests of the Seller in the Assets, free and clear of any Encumbrances, other than Permitted Encumbrances'

Section 3.19 Customers. Set forth in Section 3.19 of the Disclosure Schedule are the rulmes of each of the top ten (10) customers of the Business for the twelve-month period ended December 31 , 201 8 and the amount for which each such customer was invoiced during such period. The Seller has not received any notice that any significant customer of the Business has Leased, or will cease, to use the products, equipment, goods or services of the Business, or has substantially reduced, or will substantially reduce, the use of such products, equipment, goods or services at any time.

Section 3.20 Suopliers. Set forth in Section 3.20 of the Disclosure Schedule are the names of each of the seven (7) most significant suppliers of raw materials, supplies, merchandise and other goods for the Business for the twelve-month period ended December 31,2018 and the amount for which each such supplier invoiced the Seller during such period. The Seller has not received any notice that any such supplier will not sell raw materials, supplies, merchandise and other goods to the Purchaser at any time after the Closing on terms and conditions substantially similar to those used in its current sales to the Business, subject only to general and customary price increases.

Section 3.21 Employee Benefit Matters.

(a) Section 3.21 of the Disclosure Schedule hereto contains a true and complete list of each employment, bonus, deferred compensation, incentive compensation, stock putchase, stock option, stock appreciation right or other stock-based incentive, severance, change-in-control, or termination pay, hospitalization or other medical, disability, life or other insurance, supplemental unemployment benefits, profit-sharing, pension, or retirement plan, program, agreement or arrangement, and each other employee benefit plan, program, agreement or iurangement, sponsored, maintained or contributed to or required to be contributed to for the employees of the Business by the Seller that would be deemed a o'single employer" within the meaning of Section 4001(bxl) of the Employee Retirement lncome Security Act of 1974, as amended ("ER[SA") (the "Benefit Plans"). Section 3.21 of the Disclosure Schedule identifies each of the Benefit Plans that is an'oemployee welfare benefit plan," or "employee pension benefit plan" as such terms are defined in Sections 3(1) and 3(2) of ERISA (such plans being hereinafter referred to collectively as the "ER[.SA P.lg4g").

(b) None of the Benefit Plans is subject to Title IV of ERISA and no fact or event exists that could give rise to any liability under Title IV of ERISA. None of the Benefit Plans provides for the payment of separation, severance, termination or similar-type benefits to any Person or obligates the Seller to pay separation, severance, termination or similar-type benefits solely as a result of any transaction contemplated by this Agleement or as a result of a "change in control," within the meaning of such term under Section 280G of the Code' None of the Benefit Plans provides for or promises retiree medical, disability or life insurance benefits to any current or former employee, officer or director of the Seller, except as may be required under the Consolidated Omnibus Budget Reconciliation Act of 1986 ("COBRA"). Each of the Benefit Plans is subject only to the laws of the United States or a political subdivision thereof.

(c) Each of the Benefit Plans and the ERISA Plans has been operated and administered in all material respects in accordance with applicable laws, rules and regulations, including but not limited to ERISA and the Code. The Seller has performed all material obligations required to be performed by it under, is not in any respect in default under or in violation of, and has no knowledge of any default or violation by any party to, any Benefit Plan. No Action is pending or, to the knowledge of the Seller, threatened with respect to any Benefit Plan (other than claims for benefits in the ordinary course) and no fact or event exists that could give rise to any such Action or claim.

(d) Each Benefit Plan that is intended to be qualified under Section 401(a) of the Code has received a favorable determination letter from the IRS that it is so qualified, and

each trust established in connection with any Benefit Plan that is intended to be exempt from federal income taxation under Section 501(a) of the Code has received a determination letter from the IRS that it is so exempt, and no fact or event has occurred since the date of such determination letter from the IRS to affect adversely the qualifred status of any such Benefit Plan or the exempt status of any such trust.

(e) The Seller is in compliance with the requirements of the Workers Adjustment and Retraining Notification Act (the "WARN-A{") and has no Liabilities pursuant to the WARN Act. Seller understands Purchaser intends to extend employment offers to all of Seller's employees on or before the Closing Date'

(0 No benefit under any Benefit Plan is or will be an Assumed Liability.

Section 3.22 Employment Laws. Except to the extent expressly provided in Section 3.22 of the Disclosure Schedule:

(a) The Seller is in compliance with all federal, state or other applicable laws respecting employment and employment practices, terms and conditions of employment, wages and hours and occupational safety with respect to the Business (except for violations or failures to comply which are not reasonably likely to result in a Material Adverse Effect), and has not received notice of, and, to the knowledge of the Seller, is not engaged in, any unfair labor practice with respect to the Business.

(b) There is no unfair labor practice complaint against the Seller pending before the National Labor Relations Board ("NLRB")'

(c) There is no labor strike, dispute, slowdown or stoppage pending or, to knowledge of the Seller, threatened against or affecting the Business.

(d) There are no claims, grievances or arbitration proceedings, workers' compensation proceedings, labor disputes (including charges of violations of any federal, state or local laws or regulations relating to current or former employees (including retirees) or current or former applicants for employment), governmental investigations or administrative proceedings of any kind pending or, to the knowledge of Seller, threatened against or relating to the Business, its employees or employment practices, or operations as they pertain to conditions of employment; nor is the Seller subject to any order, judgment, decree, award or administrative ruling arising from any such matter.

Section 3.23 Certain Interests.

(a) Except as set forth in Section 3.23(a) of the Disclosure Schedule, no stockholder, officer or director of the Seller or any relative or spouse (or relative of such spouse) who resides with, or is a dependent of, any such stockholder, officer or director:

(i) has any direct or indirect financial interest in any competitor, supplier or customer of the Seller or the Business; plqyided, however, that the ownership of securities representing no more than three percent of the outstanding voting power of any competitor, supplier or customer, and which are also listed on any national securities exchange, shall not be deemed to be a o'financial interest" so long as the Person owning such securities has no other connection or relationship with such competitor, supplier or customer;

(ii) owns, directly or indirectly, in whole or in part, or has any other interest in any tangible or intangible property which the Seller uses or has used in the conduct of the Business or otherwise;

(iii) has outstanding any Indebtedness to the Seller; or

(iv) has entered into any transactions with the Seller or its Affiliates (relating to the Business) which are currently in effect or which occurred or were in effect at any time on or after January 1,2016.

(b) The Seller does not have any Liability or any other obligation of any nature whatsoever to any officer, director or stockholder of the Seller or to any relative or spouse (or relative of such spouse) who resides with, or is a dependent of, any such officer, director or stockholder.

Section 3.24 Taxes.

(a) All Tax Returns required to be filed with respect to the Seller, the Assets or the Business have been timely filed.

(b) All Taxes required to be shown on such Tax Returns or otherwise due by or with respect to the Seller, the Assets or the Business have been timely paid.

(c) All such Tax Returns are true, correct and complete in all material

respects.

(d) No adjustment relating to such Tax Returns has been proposed formally or informally by any Governmental Authority and no basis exists for any such adjustrnent.

(e) The Seller has properly and timely withheld, collected and paid all Taxes required to have been withheld, collected and paid in connection with amounts owing with respect to the Business to any employee, independent contractor, creditor, stockholder or other third party.

(0 There are no pending or to Seller's knowledge threatened Actions for the assessment or collection of Taxes against the Seller (insofar as either relates to the activities or income of the Seller or the Business or could result in liability of the Seller on the basis ofjoint and/or several liability) or any corporation that was included in the filing of a Tax Return with the Seller on a consolidated or combined basis.

(g) There are no Tax liens on any properties or assets of the Seller, including the Assets and the Business.

Section 3.25 Insurance. Section 3.25 of the Disclosure Schedule lists all insurance policies of the Seller covering the Assets, products, employees, and operations of the Seller as of the date hereof. Each such policy is in full force and effect, all premiums due thereon have been paid by the Seller, and the Seller has complied in all material respects with the provisions of such policy and has not received notice from any of its insurance brokers or carriers that such broker or carrier will not be willing or able to renew its existing coverage. All material assets, properties and risks ofthe Seller are, and for the past five years have been, covered by valid and, except for insurance policies that have expired under their terms in the ordinary course, currently effective insurance policies or binders of insurance (including general liability insurance, property insurance and workers' compensation insurance) issued in favor of the Seller with iosurance companies, in such types and amounts and covering such risks as are consistent with customary practices and standards of companies engaged in businesses and operations similar to those of the Seller.

Section 3.26 Reeulatory Compliance. The Company is and at all times has been in material compliance with all Food and Supplement Regulations. With respect to all Products covered under the US Federal Food, Drug and Cosmetic Act ("Act"), if any, sold by the Company, Seller represents and warrants the following as of the dates and times of shipment and as of the dates and times of delivery: (i) no Products and no portion of any Products were adulterated, misbranded, mislabeled or unsafe, as those terms are used in the Act; (ii) no such Products and no portion of any such Products constituted an article which may not, under the provisions of the Act, be introduced into interstate commerce; and (iii) all such Products were produced and furnished in accordance with the terms and requirements of the Act or at least within the terms and requirements of an applicable substantially similar federal, state or local law or ordinance.

Section 3.27 Brokers. No broker, finder or investment banker is entitled to any brokerage, finder's or other fee or commission in connection with the transactions contemplated by this Agreement or the Ancillary Agreements based upon anangements made by or on behalf of the Seller.

ARTICLE IV

R"EPRESENTATIONS AND WARRANTIES OF'THE PURCHASER

As an inducement to the Seller to enter into this Agreement, the Purchaser and Parent hereby represent and warrant to the Seller as follows:

Section 4.01 Orsanization" Authorization and Oualification of the Purchaser. The Parent is a corporation incorporated in the State of Nevada duly organized, validly existing and in good standing under the laws of the State of Nevada. The Purchaser is a limited liability company formed under the laws of the State of Washington as a single members LLC owned and managed by the Parent. Each of the Purchaser and the Parent has all necessary corporate power and authority to consummate the transactions contemplated by this Agreement and the Ancillary Agreements to which it is a party. All necessary corporate actions taken by the Purchaser and the Parent have been duly authorized, and neither the Purchaser nor the Parent has taken any action that in any respect conflicts with, constitutes a default under or results in a violation of any provision of its certificate of incorporation or orgarizational documents. Assuming the due authorization, execution and delivery by the other parties hereto and thereto and the validity and binding effect hereof and thereof on the other parties hereto and thereto, when executed by the purchaser and the Parent, and subject to approval by the requisite voting percentage of Purchaser's and the Parent's shareholders with respect to the purchase of the Assets, this Agreement, the Ancillary Agreements and all other agreements to which it is a party shall constitute valid and binding obligations of the Purchaser and the Parent, enforceable against it in accordance with their respective terms, except to the extent that enforceability may be limited by applicable bankruptcy, insolvency,reorganization, moratorium or similar laws affecting the enlorcement of creditors' rights generally and by the effect of general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law).

Section 4.02 No Conflict. Assuming the making and obtaining of all filings, notifications, consents, approvals, authorizations and other actions referred to in Section 4.03, except as may result from any facts or circumstances relating solely to the Seller, the execution, delivery and performance by the Purchaser and Parent of this Agreement and the Ancillary Agreements to which the Purchaser is a party do not and will not (a) violate, conflict with or reiult in the breach of any provision of the certificate of incorporation or by-laws of the Parent or orgarizationagreement of Purchaser, (b) conflict with or violate any Law or Governmental Order applicable to the Purchaser or Parent or (c) conflict with, or result in any breach of, constitute a default (or event that with the giving of notice or lapse of time, or both, would become a default) under, require any consent under, or give to others any rights of termination, amendment, acceleration, suspension, revocation or cancellation of, any note, bond, mortgage or indenture, Contract, franchise or other instrument or arrangement to which the Purchaser or Parent is a party, which would adversely affect the ability of the Purchaser or Parent to carry out its obligations under, and to consummate the transactions contemplated by, this Agreement or the Ancillary Agreements.

Section 4.03 Govemmental Consents and Approvals. Except as set forth in Section 4.03 of the Disclosure Schedule, the execution, delivery and performance by the Purchaser and Parent of this Agreement and each Ancillary Agreement to which the Purchaser and/or Parent is a party do not and will not require any consent, approval, authorization or other order of, action by, filing with, or notification to any Governmental Authority, except as may be necessary as a result of any specific facts or circumstance relating solely to the Seller.

Section 4.04 Litieation. No Action by or against the Purchaser or Parent is pending or, to the knowledge of the Purchaser or Parent, threatened, that could affect the legality, validity or enforceability of this Agreement, any Ancillary Agreement or the consummation of the transactions contemplated hereby or thereby.

Section 4.05 Brokers. No broker, finder or investment banker is entitled to any brokerage, furder's or other fee or commission in connection with the transactions contemplated by this Agreement or the Ancillary Agreements based upon arangements made by or on behalf ofthe Purchaser or Parent.

ARTICLE V

ADDITIONAL AGREEMENTS

Section 5.01 Conduct of Business Prior to the Closinq.

(a) The Seller covenants and agrees that, between the date hereof and the Closing Date, it shall conduct its business in the ordinary course and consistent with past practice. Without limiting the generality of the foregoing, the Seller shall: (i) continue its advertising and promotional activities, and pricing and purchasing policies, consistent with past practice; (ii) not take any action with respect to the Property that would impair or affect the Seller's continued ability to use the Property; (iii) not shorten or lengthen the customary payment cycles for any of its payables or Receivables; (iv) use its commercially reasonable efforts to (A) preserve intact the business organization of the Business, (B) keep available to the Purchaser the services of its employees, (C) continue in full force and effect without material modification all existing policies or binders of insurance currently maintained in respect of the Seller and the Business and (D) preserve its current relationships with customers, suppliers and other Persons with which it has had significant business relationships; (v) exercise, but only after notice to the Purchaser and receipt of the Purchaser's prior written approval, any rights of renewal pursuant to the terms of the lease for the Property which by its terms would otherwise expire; and (vi) use commercially reasonable efforts to not engage in any practice, take any action, fail to take any action or enter into any transaction that could cause any representation or warranty of the Seller to be untrue in any material respect or result in a breach of any covenant made by the Seller in this Agreement that would result in or constitute a Material Adverse Effect.

(b) Except as described in Section 5.01(b) of the Disclosure Schedule, the Seller covenants and aglees that, between the date hereof and the Closing Date, without the prior written consent of the Purchaser, the Seller shall refrain from doing any of the things enumerated in the second sentence of Section 3. 10 (including clauses (a) through (bb) thereof).

Section 5.02 Access to Information: Confidentiality'

(a) From the date hereof until the Closing, upon reasonable notice, the Seller shall cause its officers, directors, employees, agents, representatives, accountants and counsel to, upon reasonable notice and subject to reasonable restrictions: (i) afford the officers, employees, agents, accountants, counsel, financing sources and representatives ofthe Purchaser reasonable access, during normal business hours, to the offices, properties, plants, other facilities, books and records of the Seller, and to those officers, directors, employees, agents, accountants, managers, personnel and counsel of the Seller who have any knowledge, including access to conduct an environmental assessment (such assessment to include the collection of air, surface water, groundwater and/or soil samples), and (ii) furnish to the officers, employees, agents, accountants, counsel, financing sources and representatives ofthe Purchaser such additional financial and operating data and other information regarding the assets, properties, liabilities and goodwill of the Seller and the Business (or legible copies thereof) as the Purchaser may from time to time reasonably request.

(b) Except to the extent the Purchaser receives any of the following items in connection with the Closing, for a period of three years after the date hereof or until the expiration of the record retention period under relevant federal or state requirements, if longer, the Seller shall not destroy or otherwise dispose of any of the books, records, files or documents that relate to the Business without giving the Purchaser at least 90 days' prior written notice and an opportunity, at such other party's cost and expense, to take possession or make extracts or copiis thereof. "Books, records, files or documents" shall include copies of any insurance policies, testing logs, application records, personnel files, financial statements, operational reports, policies and procedures, correspondence, all reports prepared for or provided to any Governmental Authority, all records retained pursuant to relevant Governmental Authority requirements. After the Closing Date, for a period of up to 180 days, the Seller hereto shall permit the Purchaser, its officers, counsel, accountants and other authorized representatives during normal business hours and on reasonable written notice, to have access to and examine and make copies of any books, records, files or documents, in its possession that relate to or concern the Business or its operations, provided that the Purchaser will bear any costs, other than wages and salaries and employee benefits of relevant personnel, of obtaining such access.

(c) The Seller agrees for a period of "information relating to confidentiality redacted" months after the Closing to, and shall cause its agents, representatives, Affiliates, employees, officers and directors to: (i) treat and hold as confidential (and not disclose or provide access to any Person to) the Confrdential Information, (ii) in the event that the Seller or any such agent,representative, Affiliate, employee, officer or director becomes legally compelled to disclose any such information, provide the Purchaser with prompt written notice of such requirement so that the Purchaser may seek a protective order or other remedy or waive compliance with this Section 5.02, (iii) in the event that such protective order or other remedy is not obtained, or the Purchaser waives compliance with this Section 5.02, furnish only that portion of such confidential information which is legally required to be provided and exercise its commercially reasonable efforts to obtain assurances that confidential treatment will be accorded such information, and (iv) promptly furnish (prior to, at, or as soon as practicable following, the Closing) to the Purchaser any and all copies (in whatever form or medium) of all such confidential information then in the possession of the Seller or any of its agents, representatives, Affiliates, employees, officers and directors and destroy any and all additional copies then in the possession of the Seller or any of its agents, representatives, Affiliates, employees, officers and directors of such information and of any analyses, compilations, studies or other documents prepared, in whole or in part, on the basis thereof; provided, however, that this sentence shall not apply to any information that, at the time of disclosure, is available publicly and was not disclosed in breach of this Agreement by the Seller, its agents, representatives, Affiliates, employees, officers or directors; and provided further that, with respect to Technology and Intillectual Property Rights, specific information shall not be deemed to be within the foregoing exception merely because it is embraced in general disclosures in the public domain. In addition, with respect to Technology (or the Intellectual Property Rights therein), any combination of features shall not be deemed to be within the foregoing exception merely because the individual features are in the public domain unless the combination itself and its principle of operation are in the public domain. The Seller agrees and acknowledges that remedies at law for any breach of its obligations under this Section 5.02 arc inadequate and that in addition thereto the Purchaser shall be entitled to seek equitable relief, including injunction and specific performance, in the event of any such breach.

(d) Notwithstanding anything herein to the contrary, eachparty (and its representatives, agents and employees) may consult any tax advisor regarding the tax treatment and tax structure of the transactions contemplated hereby and may disclose to any Person the tax treatment and tax structure of the transactions contemplated hereby and all materials (including opinions or other tax analyses) that are provided relating to such treatment or structure.

Section 5.03 Regulatorv and Other Authorizationsl Notices and Consents.

(a) The parties hereto shall cooperate in good faith and each party hereto shall use commercially reasonable efforts to obtain all certifications, other authorizations, consents, orders and approvals of all Governmental Authorities and offrcials that may be or become necessary for such party's execution and delivery of, and the performance of its obligations pursuanf to, this Agreement and the Ancillary Agreements and will cooperate fully with the other purti.r in promptly seeking to obtain all such authorizations, consents, orders and approvals, including by filing any application in connection therewith on a timely basis.

(b) The Seller shall give promptly such notices to third parties and use all reasonable efforts to obtain such third-party consents and estoppel certificates as the Purchaser may in its sole discretion deem necessary or desirable in connection with the transactions contemplated by this Agreement and the Ancillary Agreements.

(c) The Purchaser shall cooperate and use all reasonable efforts to assist the Seller in giving such notices and obtaining such consents and estoppel certificates; ry(19d, however, that the Purchaser shall have no obligation to give any guarantee or other consideration of any nature in connection with any such notice, consent or estoppel certificate or to consent to *y "huttg. in the terms of any agreement or affangement that the Purchaser in its sole discretion may deem adverse to the interests of the Purchaser or the Business.

(d) The Seller and the Purchaser agree that, in the event that any certification or other consent, approval or authorization necessary or desirable to preserve for the Business any right or benefit under any Contract or other arrangement to which the Seller is a party is not obtained prior to the Closing, the Seller will, subsequent to the Closing, cooperate with the Purchasei in attempting to obtain such consent, approval or authorization as promptly thereafter as practicable at Purchaser's cost. If such certification or other consent, approval or authorization cannot be obtained, the Seller shall use its commercially reasonable efforts to provide the Purchaser with the rights and benefits of the affected Contract or other arrangement for the term of such Contract or other arrangement, and, if the Seller provides such rights and benefits, the Purchaser shall assume the obligations and burdens thereunder.

Section 5.04 Notice of Developments. Prior to the Closing, the Seller shall promptly notiff the Purchaser in writing of (i) all events, circumstances, facts and occurrences arising subsequent to the date of this Agreement that could result in any breach of a representation or warranty or covenant of the Seller in this Agreement or that could have the effect of making any representation or warranty of the Seller in this Agreement untrue or incorrect in any respect and (ii) aU other material developments affecting the Assets, Liabilities, business, financial condition, operations, results of operations, customer or supplier relations, employee relations, regulation, piojections or prospects of the Business. Any notification made by the Seller pursuant to this

Section 5.04 shall not cure a breach of any representation that was untrue when made nor shall any such notification affect any rights of the other party or parties, as the case may be, pursuant to this Agreement.

Section 5.05 No Solicitation or Negotiation: Exclusivity. The Seller agrees that between the date of this Agreement and the earlier of (a) the Closing and (b) the termination of this Agreement, neither the Seller nor any of its respective Affiliates, officers, directors, employees, partners, representatives or agents will, without the prior written consent of the Purchaser, directly or indirectly, (i) solicit, initiate, consider, encourage, or accept any other bids, proposals or offers from any Person (A) relating to any acquisition or purchase of all or any portion of the capital stock of the Seller or assets of the Seller, (B) to enter into any merger, consolidation or other business combination with the Seller or the Business or (C) to enter into a recapitalization, reorganizationor any other extraordinary business transaction involving or otherwise relating to the Seller or the Business or (ii) participate in any discussions, conversations, negotiations or other communications regarding, or furnish to any other Person any information with respect to, or otherwise cooperate in any way, assist or participate in, facilitate or encourage any effort or attempt by any other Person to seek to do any of the foregoing. The Seller immediately shall cease and cause to be terminated all existing discussions, conversations, negotiations and other communications with any Persons conducted heretofore with respect to any of the foregoing. The Seller shall notify the Purchaser promptly if any such proposal or offer, or any inqurry or other contact with any Person with respect thereto, is made. The Seller agrees not to release, without the prior written consent of the Purchaser, any Person from, or waive any provision of, any confidentiality or standstill agreement to which the Seller is a party.

Section 5.06 Use of Intellectual Property.

(a) The Seller acknowledges that from and after the Closing, the name Probulin and all similar or related names, marks and logos relating to the Business, including the sale, distribution or provision of any dietary digestive or probiotic supplement Products by the Seller or any of its Affiliates (all of such names, marks and logos being the "SellelMarks") shall be owned by the Purchaser, that neither the Seller nor any of its Affiliates shall have any rights in the Seller Marks and that neither the Seller nor any of its Affiliates will contest the ownership or validity of any rights of the Purchaser in or to the Seller Marks.

(b) From and after the Closing, neither the Seller nor any of its Affiliates shall use any of the Transferred Intellectual Property.

(c) From the date hereof to the Closing, the Seller shall not, without the prior written consent of the Purchaser, (i) sell, assign, abandon or grant any security interest in or to any item of the Transferred Intellectual Property (including the Seller Marks) or Third-Party Licenses, (ii) except in the ordinary course of business consistent with past practice, grant to any third party any license with respect to any Transferred Intellectual Property, or (iii) disclose, or allow to be disclosed, any confidential Transferred Intellectual Property, unless such Transferred Intellectual Property is subject to a confidentiality or non-disclosure covenant protecting against disclosure thereof.

(d) From the date hereof to the Closing, the Seller shall perform all applicable filings, recordings and other acts, and pay all required fees, to maintain and protect its interest in each and every item of Registered Intellectual Property comprising the Transferred Intellectual Property Rights.

Section 5.07 Excluded Liabilities: Repayment of Indebtedness: Termination of Encumbrances.

(a) The Seller shall pay and discharge the Excluded Liabilities as and when the same become due and PaYable.

(b) As soon as possible, but in any event no later than the next Business Day after the Closing Date and prior to taking any other action with respect to any funds wired to the Seller Bank Account by the Purchaser, the Seller shall apply any applicable portion of the Purchase Price to paylng any transaction fees or expenses for which the Seller is responsible under this Agreement.

(c) The Seller shall cause all lien holders with respect to any Encumbrances, other than Permitted Encumbrances, on the Assets to release such Encumbrances on or prior to the Closing Date.

Section 5.08 Tax Matters.

(a) All applicable real and personal property taxes due after the Closing Date in respect of a taxable year beginning before and ending after the Closing Date shall be prorated and shall be the responsibility of the Seller up to and including the Closing Date. The balance of any such Taxes shall be borne by the Purchaser, and, ifthe Seller shall have paid any ofthe same, the Purchaser shall promptly reimburse the Seller therefor. In determining the amount of such Taxes accruing up to and including the Closing Date with respect to taxable years beginning before and ending after the Closing Date, the amount of such Taxes for the entire year shall be multiplied by a fraction the numerator of which is the number of calendar days in the year ending on the Closing Date and the denominator of which is the number of calendar days in ihe entire year. Notwithstanding any other provision in this Agreement, the Seller's obligation for such Taxes accruing up to and including the Closing Date shall survive the statute of limitations for assessing or reassessing such Taxes, and if there is a subsequent assessment or reassessment of such Taxes, the Seller shall prompt|y pay the Purchaser the amount of its allocable share of such Taxes, which shall then be paid to the taxing authorities. If the Purchaser receives a refund of Taxes applicable to an assessment or reassessment for the period that the Seller owned the property, then the Purchaser shall promptly pay the Seller such amount'

(b) The Seller and the Purchaser agree that all payments made under this Section 5.08, and under other indemnity provisions of this Agreement shall be treated as adjustments to the Purchase Price for Tax purposes and that such treatment shall govern for purposes hereof except to the extent that the laws of a particular jurisdiction provide otherwise, in wtrictr case such payments shall be made in an amount sufficient to indemniff the relevant party on an after-Tax basis.

(c) The Seller and the Purchaser shall provide each other with such cooperation and information as either of them reasonably may request in filing any Tax Return, amended Tax Retum or claim for refund, determining a liability for Taxes or a right to a refund of Taxes, participating in or conducting any audit or other proceeding in respect of Taxes or making representations to or furnishing information to parties subsequently desiring to purchase all or a part of the Assets or the Business from the Purchaser. Such cooperation and information shall include providing copies of relevant Tax Returns or portions thereof, together with accompanying schedules, related work papers and documents relating to rulings or other determinaiiottr Uy Tax authorities. The Seller shall make its employees available on a basis mutually convenient to the parties to provide explanations of any documents or information provided hereunder. Notwithstanding anything to the contrary herein, the Seller and the iurchaser shall retain all Tax Returns, schedules and work papers, records and other documents in its possession relating to Tax matters of the Seller and the Business for each taxable period first ending after the Closing Date and for all prior taxable periods until the later of (i) the expiration of the statute of limitations of the taxable periods to which such Tax Returns and other documents relate, without regard to extensions except to the extent notifred by the other party in writing of such extensions for the respective Tax periods, or (ii) six years following the due date (without extension) for such Tax Returns. Any information obtained under this Section 5.08(c) shall be kept confidential in accordance with Section 5.02 except as may be otherwise necessary in connection with the filing of Tax Returns or claims for refund or in conducting an audit or other proceeding.

(d) Notwithstanding anything to the contrary contained herein, payment by the indemnitor of any amount due under this Section 5.08 shall be made within ten days following written notice by the indemnitee that payment of such amounts to the appropriate Tax authority is due. If the Purchaser receives an assessment or other notice of Taxes due for which the Purihaser is not responsible under this Section 5.08, then the Purchaser shall promptly forward such assessment or other notice to the Seller for payment, and the Seller shall promptly pay such Taxes (unless such Taxes are in dispute and such dispute is being or will be conducted io iesol1,e the tax claim, in which case the taxes will then be paid to the taxing authorities at the conclusion of the dispute assuming such taxes are then owed), or if the Purchaser pays such Taxes, then the Seller shall pay to the Purchaser, in accordance with the first sentence of this Section 5.08(d), the amount of such Taxes for which the Purchaser is not responsible.

(e) Notwithstanding anything to the contrary contained herein, all transfer, fransfer gains, documentary, sales, use, stamp and registration Taxes (collectively, the o'@S! Taxes") incuned in connection with the consummation of the transactions contemplated by this Agreement shall be borne by the Purchaser.

Section 5.09 Further Action. Each of the parties hereto shall use all reasonable efforts to take, or cause to be taken, all appropriate action, do or cause to be done all things necessary' proper or advisable under applicable Law, and to execute and deliver such documents and other pupor, as may be required to carry out the provisions of this Agreement, the Ancillary Agreements and all oth"r ugr."-ents contemplated hereby and thereby to which it is a party and consummate and make effective the transactions contemplated hereby and thereby,

Section 5.10 Conduct and of Business Durins Period. In order to preserve the ability of the Seller to achieve maximum Contingency Payments, Parent and Purchaser will maintain separation of the Business from the other business of Parent, not interfere in the management and decision making of Seller in operation of the Business, and provide the support and funding required under the Operations Agreement in form annexed hereto as Exhibit 1.01(e).

Section 5.1I Best Efforts. The Seller, Purchaser and Parent hereby agree to use their best efforts to bring about the satisfaction of the conditions set forth in Sections 6.01 and 6.02 of this Agreement.

Section 5.12 Disclosure Schedule. The Seller shall adjust Section 2.02(a)(11) of the Disclosure Schedule so that it is accurate at and as of the Closing Date.

ARTICLE VI

CONDITIONS TO CLOSING

Section 6.01 Conditions to of the Seller. The obligations of the Seller to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment, at or prior to the Closing, of each of the following conditions:

(a) Representations, Warranties and Covenants. The representations and warranties of the Purchaser contained in this Agreement shall have been true and correct in all material respects when made and shall be true and correct in all material respects as of the Closing, in each case, with the same force and effect as if made as of the Closing Date, other than such representations and warranties as are made as of another date which shall be true and correct in all material respects as of such date; the covenants and agreements contained in this Agreement to be complied with by the Purchaser on or before the Closing Date shall have been complied with in all material respects, and the Seller shall have received a certificate from the Purchaser to such effect signed by a duly authorized officer thereof;

(b) No Order. No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Law or Governmental Order that is in effect and has the effect of making the transactions contemplated by this Agreement illegal or otherwise restraining or prohibiting consunmation of such transactions;

(c) Ancillarv Agreements. The Purchaser shall have executed and delivered to the Seller each of the Ancillary Agreements to which it is a party;

(d) Funding Commitment. The Parent shall have specifically allocated a minimum budget of "information reloting to budget redacted" to support the marketing, trade spend, product development and sales of the Business as operated after the Closing and during the period when the Contingent Payments are measured and payable, pursuant to a budget mutually agreed prior to Closing by Seller and Parent and in accordance with the requirements of the Operations Agreement; and

(e) Delivery of Funds. The Purchaser shall deliver at Closing the Initial Payment pursuant to Section 2.03 hereof.

Section 6.02 Conditions to Oblieations of the Purchaser and Parent. The obligations of the Purchaser and Parent to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment, at or prior to the Closing, of each of the following conditions:

(a) Closine of Financing. The Parent shall by August 31,20t9 have completed the sale and issuance of a minimum of US$20 million of common stock in two financing rounds;

(b) Representations. Warranties and Covenants. The representations and warranties of the Seller contained in this Agreement (i) that are not qualified by "materiality'' or "Material Adverse Effect" shall have been true and correct in all material respects when made and shall be true and correct in all material respects as of the Closing Date, with the same force and effect as if made as of the Closing Date and (ii) that are qualified by "materiality" or Material Adverse Effect" shall have been true and correct when made and shall be true and correct as of the Closing Date with the same force and effect as if made as of the Closing Date, other than, in each case, such representations and warranties as are made as of another date, which shall be true and correct as set forth in clause (i) or (ii), as applicable, as of such date; the covenants and agreements contained in this Agreement to be complied with by the Seller on or before the Closing Date shall have been complied with in all material respects, and the Purchaser shall have received a certificate of the Seller to such effect signed by a duly authorized officer thereof;

(c) No Action. No Action shall have been commenced or threatened by or before any Governmental Authority or by any other third party against the Seller or the Purchaser, seeking to prevent, delay, restrain or materially and adversely alter the fransactions contemplated by this Agreement that, in the reasonable judgment of the Purchaser, is likely to render it impossible or unlawful to consummate such transactions or that could have a Material Adverse Effect or otherwise render inadvisable, in the sole discretion of the Purchaser, the consummation of the transactions contemplated by this Agreement; ryldgd, however, that the provisions of this Section 6.02(b) shall not apply if the Purchaser has solicited or encouraged any such Action;

(d) No Order. No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Law or Governmental Order which is in effect and has the effect oimaking the transactions contemplated by this Agreement illegal or otherwise restraining or prohibiting consummation of such transactions;

(e) Resolutions of the Seller. The Purchaser shall have received a true and complete copy, certified by a duly authorized officer of the Seller, of the resolutions duly and validly adopted by the members and manager of the Seller evidencing its authorization of the execution and delivery of this Agreement, the Ancillary Agreements and all other agreements contemplated hereby and thereby to which the Seller is a party and the consummation of the transactions contemplated hereby and thereby;

(D Consents and Approvals. The Purchaser and the Seller shall have received those consents, if any, as set forth in Section 3.03 of the Disclosure Schedule, to assign and transfer to the Purchaser all agreements that are currently in effect;

(g) Lien Searches: Termination of Encumbrances. The Purchaser shall have received from Seller or otherwise conducted its own UCC lien, litigation and tax searches showing all Encumbrances on the Assets of record, accompanied by fully executed UCC-3 Termination Statements or other releases or conveyances relating to all Encumbrances that are not Permitted Encumbrances;

(h) Ordinary Course of Business. The Purchaser shall have received a certificate of the Seller signed by a duly authorized officer thereof that the Seller's Business shall have been conducted only in the ordinary course of business consistent with past practice from Balance Sheet Date;

(i) No Material Adverse Effect. No event or events shall have occurred which individually or in the aggregate have a Material Adverse Effect; and

(; Ancillary Asreements. The Seller shall have executed and delivered to the Purchaser each of the Ancillary Agreements to which each is aparty.

ARTICLE VII

SURVIVAL OF' REPRESENTATIONS AND WARRANTIES

Section 7.01 Survival of Representations and Warranties.

(a) The representations and warranties of the Seller contained in this Agreement and the Ancillary Agreements to which the Seller is a party shall survive until the time of payment of the Third Payment of the Purchase Price. If the Purchaser shall have provided notice of a claim for breach of the representations and warranties hereof by such time, any unpaid Contingent Payments shall be retained until final settlement or resolution of such claims, and any available balance of the Contingent Payments shall at such time be used to offset amounts owed to Purchaser as a result of such claims or release to the Seller. Neither the period of survival nor the liability of the Seller with respect to the Seller's representations and warranties shall be reduced by any investigation made at any time by or on behalf of the Purchaser. Except in the case of fraud, willful misconduct or intentional misrepresentation, the Purchaser shall have no other recourse in the event of such claim for breach ofrepresentations and warranties, other than seeking an offset against Contingent Payments due to the Seller.

(b) The representations and warranties of the Purchaser contained in this Agreement and the Ancillary Agreements to which the Purchaser is a party shall survive until the Closing. Neither the period of survival nor the liability of the Purchaser with respect to the Purchaser's representations and warranties shall be reduced by any investigation made at any time by or on behalf of the Seller.

Section 7.02 Limitations. Except in the case of fraud, willful misconduct or intentional misrepresentation, the Seller shall not be liable for any losses, damages, claims, obligations, liabilities, costs and expenses (including, without limitation, reasonable and documented attorneys' fees of outside legal counsel and costs and expenses incurred in investigating, preparing, defending against or prosecuting any litigation, claim, proceeding or demand), of any kitrd o. character (each, a "bs") arising out of or in connection with any breach of the

representations and wananties hereof, unless the amount of Losses claimed in any individual claim or any group of related claims exceeds $50,000, at which point the Seller will be obligated to pay the Purchaser such Losses to the extent they exceed $50,000. The aggregate liability of Seiler for all Losses for which payment is claimed pursuant to Section 7.01(a) shall not exceed $400,000. The undisputed amounts of any Losses, if any, may be offset against the Contingent Payments immediately, and the disputed amounts of such Losses, if any, shall be offset against the Contingent Payments upon resolution of such disputes pursuant to Section 7.03. All Loss(es) shall be determined after application of any insurance proceeds realized in connection with such Loss(es).

Section 7.03 Agreement to Arbitrate. Notwithstanding Section 9.08 of this Agreement, in the event of any dispute, claim or controversy (each, aooDisp1rts'o) arising out of or relating to Section 7 .01, the parties agree to resolve any such Dispute in accordance with Exhibit 7.03.

ARTICLE VIII

TERMINATIONO AMENDMENT AND WAIVER

Section 8.01 Closing: Termination. This Agreement may be terminated at any time prior to the

(a) by either the Seller or the Purchaser after September 30, 2019 if the Closing shall not have occurred by August3l,2}l9; @ldgd, however, that the right to terminate this Agreement under this Section 8.01(a) shall not be available to any party whose failure to fulfrll any obligation under this Agreement shall have been the cause of, or shall have resulted in, the failure of the closing to occur on or prior to such date;

(b) by the Purchaser, upon a material breach of any representation, warranty, covenant or agreement of the Seller set forth in this Agreement, or if any representation or warranty of the Seller shall have become untrue, in either case such that the conditions set forth in Section 6.02 would not be satisfied; plqviidgd, however, that if such breach is curable by the Seller through the exercise of its commercially reasonable best efforts within thirty(30) days of its receipt of the Purchaser's written notice of such breach, then the Purchaser may not terminate this Agreement pursuant to this Section 8.01(b) prior to the expiration of such ten day period;

(c) by the Seller, upon a material breach of any representation, walranty, covenant or agreement of the Purchaser set forth in this Agreement, or if any representation or warranty of the Purchaser shall have become untrue, in either case such that the conditions set forth in Section 6.01 would not be satisfied; providgd, however, that if such breach is curable by the Purchaser through the exercise of its commercially reasonable best efforts within thirty (30) days of its receipt of the Seller's written notice of such breach, then the Seller may not terminate this Agreement pursuant to this Section 8.01(c) prior to the expiration of such thirty day period;

(d) by either the Purchaser or the Seller in the event that any Governmental Authority shall have issued a Governmental Order or taken any other action restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement and such Governmental Order or other action shall have become final and non-appealable; or

(e) by the mutual written consent of the Seller and the Purchaser

Section 8.02 Effect of Termination: Breakup Fee.

(a) In the event of termination of this Agreement in compliance with Section 8.01, this Agreement shall forthwith become void and there shall be no liability on the part of any party hereto except (a) as set forth in 5.02(c), in this Article VIII, and in Article IX ancl (b) that nothing herein shall relieve any party from liability for any breach of this Agreement.

(b) In the event that the Closing shall fail to occur by August 3I,2019 due to the unilateral act or action of Seller or Purchaser to avoid closing or otherwise terminate the Agreement, subject to other written agreement of the parties or any right of adjournment, the terminating party shall pay the other party, as liquidated damages the sum of "information relating to dimages redacted" as its sole and exclusive remedy hereunder or otherwise at law or in equity (and the each party waives all other rights of recovery and all claims against the other puttl"r and its Affiliates, officers, directors, employees, agents, successors and assigns hereunder or otherwise at law or in equity (other than to retain the Deposit as liquidated damages), in the event of such termination), it being agreed that damages would be difficult, if not impossible, to ascertain and that the liquidated damages hereinabove specified are a fair and reasonable estimate of the actual damages that the party would suffer in the event of a default; provided, however, that in the event such failure to close by August 3I,2019 is due to a default by the Seller under this Agreement or a failure of one or more conditions set forth in Section 6.02 ot an express right to terminate this Agreement in favor of the Purchaser, then the Purchaser may (i) terminate this Agreement by delivering written notice to the Seller, (ii) waive the default and proceed to close the transaction or (iii) continue this Agreement pending the Purchaser's action for specific performance, in which latter event the Purchaser, as a condition to such action, shall not accept liquidated damages.

Section 8.03 Amendment. This Agreement may not be amended or modified except (a) by an instrument in writing signed by or on behalf of the parties hereto or (b) by a waiver in accordance with Section 8.04.

Section 8.04 Waiver. Any party hereto may (a) extend the time for the performance of any of the obligations or other acts of another party, (b) waive any inaccuracies in the representations and warranties of another party contained herein or in any document delivered by another party pursuant hereto or (c) waive compliance with any of the agreements of another party orionditions to such party's obligations contained herein. Any such extension or waiver rluti U" valid only if set forth in an instrument in writing signed by the party to be bound thereby. Any waiver of any term or condition shall not be construed as a waiver of any subsequent breach or a subsequent waiver of the same term or condition, or a waiver of any other term or condition of this Agreement. The failure of any party to assert any of its rights hereunder shall not constitute a waiver of any of such rights. All rights and remedies existing under this Agreement are cumulative to, and not exclusive of, any rights or remedies otherwise available'

ARTICLE IX

GENERAL PROVISIONS

Section 9.01 Expenses. Except as otherwise specified in this Agreement, all costs and expenses, including fees and disbursements of counsel, financial advisors and accountants, incurred in connection with this Agreement and the transactions contemplated by this Agreement shall be paid by the party incurring such costs and expenses, whether or not the Closing shall have occurred. Notwithstanding the foregoing, except as set forth in Section 5.08, any fees payable to any Governmental Authority within the United States in connection with this Agreement and the transactions contemplated by this Agreement shall be paid by the Purchaser.

Section 9.02 Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by email with receipt confirmed, by nationally recognized ovemight courier service, by telecopy, facsimile or registered or certified mail (postage prepaid, retum receipt requested) to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 9.02):

if to the Seller:

Challa Enterprises, LLC 3820 NW 14th Street, Suites A & B Topeka, KS 66618 8t3-376-8923 "email redacted"

with a copy (which shall not constitute notice)

Stubbs Alderton & Markiles LLP 15260 Ventura Blvd.,20th floor Sherman Oaks, CA. 91403 Email: [email protected] Attention: Jonathan Hodes

ifto the Purchaser or Parent:

HempFusion,Inc. 708 Gravenstein HwyN. Suite 188 Sebastopol, CA95472 "email redacted"

with a copy (which shall not constitute notice) to: FarPoint Venture Law PC - 44 - 2604 3'd Ave, Suite 100

Seattle WA 98121 Email: scott. [email protected] Attention: Scott Greenburg

Section 9.03 Public Announcements. No party hereto shall make, or cause to be made, any press release or public announcement in respect of this Agreement or the transactions contemplated by this Agreement or otherwise communicate with any news media without the prior written consent of the other parties, and the parties shall cooperate as to the timing and contents of any such press release or public announcement'

Section 9.04 Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any Law or public policy, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect for so long as the economic or legal substance of the transactions contemplated by this Agreement is not affected in any matrner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modi$ this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated by this Agreement are consuillmated as originally contemplated to the greatest extent possible'

Section 9.05 Entire Asreement. This Agreement (including the Disclosure Schedule), the Ancillary Agreements and all other agreements contemplated hereby and thereby constitute the entire agreement of the parties hereto with respect to the subject matter hereof and thereof and supersede all prior agreements and undertakings, both written and oral, between the Seller, on the one hand, and the Purchaser, on the other hand, with respect to the subject matter hereof and thereof.

Section 9.06 Assiqnment. This Agreement may not be assigned by operation of law or otherwise without the express written consent of the parties hereto (which consent may be granted or withheld in the sole discretion of such party); provided, however, that the Purchaser may assign this Agreement or any of its rights and obligations hereunder to a subsidiary or one or more Affiliates of the Parent without the consent of the Seller so long as the obligations hereunder are unconditionally guaranteed in writing by the Parent in a guaranty agreement approved by Seller.

Section 9.07 No Third-Party Beneficiaries. This Agreement shall be binding upon and inure solely to the benefit of the parties hereto and their permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person, including any union or any employee or former employee of the Seller, any legal or equitable right, benefit or remedy of *y nutor. whatsoever, including any rights of employment for any specified period, under or by reason of this Agreement.

section 9.08 Governins Law. ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY AND INTERPRETATION OF THIS AGREEMENT AND THE EXHIBITS HERETO WILL BE GOVERNED BY THE INTERNAL LAW, AND NOT TIIE LAW OF CONFLICTS, OF TIIE STATE OF COLORADO. All Actions arising out of or relating to this Agreement shall be heard and determined exclusively in any Colorado federal

court, provided, however, that if such federal court does not have jurisdiction over such Action, such Action shall be heard and determined exclusively in any Colorado state court sitting in Denver County. Consistent with the preceding sentence, the parties hereto hereby (a) submit to the exclusive jurisdiction of any federal or state court siffing in Denver County for the purpose of any Action arising out of or relating to this Agreement brought by any party hereto and (b) irrevocably waive, and agree not to assert by way of motion, defense, or otherwise, in any such Action, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that the Action is brought in an inconvenient forum, that the venue of the Action is improper, or that this Agreement or the transactions contemplated by this Agreement may not be enforced in or by any of the abovenamed courts.

Section 9.09 Waiver of Jury Trial. Each of the parties hereto hereby waives to the fullest extent permitted by applicable law any right it may have to a trial by j.try with respect to any litigation related to this Agreement or the transactions contemplated by this Agreement. Each of the parties hereto hereby (a) certifies that no representative, agent or attorney of the other party has represented, expressly or otherwise, that such other party would not, in the event of litigation, seek to enforce the foregoing waiver and (b) acknowledges that it has been induced to enter into this Agreement and the transactions contemplated by this Agreement, as applicable, by, among other things, the mutual waivers and certifications in this Section 9.09.

Section 9.10 Specific Performance. Each party hereto agrees and acknowledges that remedies at law for any breach of its obligations under this Agreement are inadequate and will cause ireparable harm and that in addition thereto, the non-breaching parties shall be entitled to seek equitable relief, including injunction and specific performance, in the event of any such breach.

Section 9.11 Headinss. 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 9.12 Construction. As used herein, unless the context otherwise requires: references to "Article" or "Section" are to an article or section hereof; ooinclude," 'oincludes" and "including" are deemed to be followed by "without limitation" whether or not they are in fact followed by such words or words of like import; "hereof," o'herein," "hereunder" and comparable terms refer to the entirety of this Agreement and not to any particular article, section or other subdivision hereof or attachment hereto; references to an agreement or other instrument or law, statute or regulation are referred to as amended and supplemented from time to time (and, in the case of a statute or regulation, to any successor provision) and all regulations, rulings and interpretations promulgated pursuant thereto; and the headings of the various articles, sections and other subdivisions hereof are for convenience of reference only and shall not modifu, define or limit any of the terms or provisions hereof.

Section 9.13 Counterparts. This Agreement may be executed and delivered (including by facsimile transmission) 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.

Section 9.14 Currency. Unless otherwise specified in this Agfeement, all references to crurency, monetary values and dollars set forth herein shall mean United States Dollars and all payments hereunder shall be made in United States Dollars.

IN WITNESS WHEREOF, the Seller and the Purchaser have caused this Agreement to be executed by their respective officers thereunto duly authorized as of the date first written above.

SELLER CHALLA ENTERPRISES, L.L.C.("SELLER")
"Jason Mitchell"By:Name: Jason MitchellTitle: CEO
PURCHASER PROBULIN ACQUISITION LLC("PURCHASER")
By"Ian deOueiroz"Name: Ian deQueiroz,Title: Manager
PARENT HEMPFUSION, INC. ("PARENT")
By"ran

Name: Ian deQueiroz Title: CEO

EXHIBIT 1.01(a)

FORM OF ASSIGNMENT OF INTELLECTUAL PROPERTY

ASSIGNMENT OF INTELLECTUAL PROPERTY

AS SIGNMENT OF INTELLECTUAL PROPERTY (this "A$qig4!qsql'), dated as of 20l9,by and between CHALLA ENTERPRISES, LLC, a Kansas limited liability company ("Assignor"), and PROBULIN ACQUISITION LLC, a Washington limited liability company ("Assig499").

WHEREAS, pursuant to that certain Asset Purchase Agreement, dated July , 20l9,by and among Assignor, Assignee and HempFusion, Inc., a Nevada corporation (the "Asset Purchase Agreement"; unless otherwise defined herein, capitalizedterms shall be used herein as defined in the Asset Purchase Agreement), Assignee, among other things, acquired all right, title and interest of Assignor in and to the Assets, including certain intellectual property;

WHEREAS, as a condition to Closing, Assignor and Assignee agreed to enter into this Assignment pursuant to which Assignor shall assign to Assignee all of its right, title and interest in the Transferred Intellectual Property.

NOW THEREFORE, in consideration of the premises, the mutual agreements and covenants set forth in the Asset Purchase Agteement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Assignor and Assignee agree as follows:

  1. Assisnment. Assignor hereby assigns, transfers and conveys to Assignee good and marketable title to all of Assignor's right, title, and interest in and to the Transferred Intellectual Property, including without limitation the foregoing that are listed on Schedule A attached hereto, free and clear of any encumbrances, liens, pledges, hypothecation, mortgage or security interest.

  2. Recordation of Patents. Trademarks and Copyrights. If Assignee elects to record this Assignment with the United States Patent & Trademark Office, United States Copyright Office or applicable state or non-United States governmental or international authorities or registries, Assignee shall bear all costs and fees associated with such recording. Assignor hereby authorizes and requests the Commissioner of Patents and Trademarks of the United States, Register of Copyrights of the United States and any official of any state or non-United States country whose duty it is to issue intellectual property registrations, to issue all registrations from any applications for registration included in the Transferred Intellectual Property to Assignee.

  3. Further Actions. Assignor hereby appoints Assignee as its agent to act in Assignor's name and on Assignor's behalf to take any action necessary to effect the transfer of any of the Transferred Intellectual Property to Assignee, or prosecute or otherwise enforce any claims, rights or benefits relating to the Transferred lntellectual Property.

  4. Governing Law. This Agreement shall be govemed by, and construed in accordance with, the laws of the State of Delaware applicable to contracts executed in and to be performed entirely within that State.

  5. Countemarts. This Assignment may be executed and delivered (including by facsimile transmission) in one or more counterparts, and by Assignor and Assignee 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.

  6. Severability. If any term or other provision of this Assignment is invalid, illegal or incapable of being enforced by any Law or public policy, all other terms and provisions of this Assignment shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to either Assignor or Assignee. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, Assignor and Assignee hereto shall negotiate in good faith to modiff this Assignment so as to effect the original intent of Assignor and Assignee as closely as posibl" in an acceptable manner in order that the transactions contemplated by this Assignment are consummated as originally contemplated to the greatest extent possible.

lsignature page foll ow sl

IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment to be made effective as of the date first written above.

CHALLA ENTERPRISES, LLC PROBULIN ACQUISITION LLC

By: By:

Name: Title:

Name: Title:

SCHEDULE A

TRANSFERRED INTELLECTUAL PROPERTY

IATTACHED HERETOI

EXHIBIT 1.0lft)

FORM OF ASSIGNMENT OF LEASES

ASSIGNMENT OF LEASE

ASSIGNMENT OF LEASE (this "Asgignlsgl$") dated as of 20l9,by and among CHALLA ENTERPRISES, LLC,aKansas limited liability company ("Assignor"), PROBULIN ACQUISITION LLC, a Washington limited liability company ("Assignee"), and S HTINSICKER INVESTMENTS, LLC, a Kansas corporation, successor in interest of McElroy Investments, Inc. ("Landlord")'

WHEREAS, Assignor is the tenant under that certain lease dated April22, 2015, as amended, by and between Assignor and Landlord (the o'@"), relating to the premises located at3820 and 3840 N.W. 14th Street, Suites A&B in each building, Topeka, Kansas 66618;

WHEREAS, Assignor desires to transfer all of its right, title and interest in and to the Lease to the Assignee pursuant to the terms of that certain Asset Purchase Agreement, dated as of 20l9,by and among Assignor, Assignee and HempFusion, Inc. (the "Asset Purchase Agreement"; unless otherwise defined herein, capitalizedterms shall be used herein as defined in the Asset Purchase Agreement), and Assignee desires to accept the transfer thereof and assume the obligations thereunder; and

WHEREAS, Landlord agrees to consent to such transfer and grant a novation as contemplated herebY.

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

  1. Representations. Assignor represents and warrants to Assignee that (a) Assignor has delivered to Assignee a true, correct and complete copy of the Lease and (b) Assignor is not in default under the Lease as of the date hereof.

  2. Assignment. Assignor assigns all of its right, title and interest in and to the Lease to Assignee and delegates to Assignee all of Assignor's duties, obligations and responsibilities under the Lease effective as of the date hereof.

  3. Assumption of Lease. Assignee hereby accepts the assignment of the Lease and assumes and shall faithfully perform all of Assignor's obligations under the Lease arising from and after the date hereof.

  4. Consent to Assienment and Novationl. Effective as of the date hereof, Landlord hereby (a) consents to the assignment effected hereby; (b) agrees to

INote to Draft: Landlord may not agree to an assignment and novation. In such caseo parties will need to negotiate terms acceptable to Landlord.

rccogaTzeAssignee as the tenant under the Lease and thereby establish direct privity of contract with Assignee; and (c) grants Assignor a novation with respect to all liabilities and obligations under the Lease arising or accruing after the date hereof.

  1. Counterparts. This Assignment may be executed and delivered (including by facsimile hansmission) 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.

  2. Governing Law. This Assignment shall be govemed by, and construed in accordance with, the laws of the State of Delaware applicable to contracts executed in and to be performed in that State.

  3. Severabilitv. If any term or other provision of this Assignment is invalid, illegal or incapable of being enforced by any Law or public policy, all other terms and provisions of this Assignment shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to either Assignor or Assignee. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modiff this Assignment so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated by this Assignment are consummated as originally contemplated to the greatest extent possible.

ls ignatur e p age fo I I ow sl

IN WITNESS WHEREOF, the parties have executed this Assignment as of the date and year first above written.

CHALLA ENTERPRISES, LLC, A Kansas limited liability company

By:

Name: Title:

PROBULIN ACQUISITION LLC, A Washington limited liability company

By:

Name: Title:

ACKNOWLEDGED, CONSENTED AND AGREED TO:

SHLINSICKER INVESTMENTS, LLC, A Kansas limited liability company

By:

Name: Title:

EXHIBIT 1.01(c)

FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT

FORM OF'ASSIGNMENT AI\D ASSUMPTION AGREEMENT

Assumption of Contracts, Not Including Real Property

This Assignment and Assumption Agreement (this"Assamption Agreemenl') is made and entered into as of 20l9,by and between CHALLA ENTERPRISES, LLC, a Kansas limited liability company (the "Transferor") and PROBULIN ACQUISITION LLC, a Washington limited liability company n (the ooTransferee"). The Transferor, the Transferee and HempFusion, Inc. are parties to that certain Asset Purchase Agreement dated July -, 2019 (the "Assit Agreemenf'). Capitalized terms used without definitions in this Assumption Agreement will have the same meanings ascribed to such terms in the Asset Agreement. This Assumption Agreement is being made and entered into pursuant to the Asset Agreement.

  1. Assumption of Contracts. In accordance with and subject to the terms and conditions set forth in the Asset Agreement, the Transferor hereby assigns to Transferee all of Transferor's right, title and interest in, to and under, and Transferee hereby assumes, the Contracts listed on the assumed contracts schedule attached hereto as Appendix I (the "Assumed Contractso'), and Transferee agrees to assume, pay, perform, satisfy, and discharge any liabilities, debts or obligations that accrue under, and undertakes to be bound by the terms of, the Assumed Contracts after the Closing Date. The foregoing assumption shall be effective immediately, except with respect to any Assumed Contract by the terms of which a consent is required from a third party to effectuate the assumption of such Assumed Contracts, in which case the assumption shall be effective upon receipt of such consent. The Transferee does not assume and does not agree to assume or pay any obligations or Liabilities that accrue under the Assumed Contracts prior to the Closing Date.

  2. Further Assurances. The Transferor, for itself and its successors and assigns, hereby covenants and agrees that, without further consideratiofi, atany time and from time to time after ihe date hereof, it will cooperate with the Transferee to execute and deliver such other documents and instruments and to do such further acts and things as from time to time may be reasonably requested by the Transferee to evidence, vest, perfect and confirm, document, and carry out the assignment of the Assumed Contracts to the Transferee contemplated by the Asset Agreement and this Assumption Agreement. The Transferor hereby appoints the Transferee as the Transferor's attorney-in-fact (this appointment being irrevocable and coupled with an interest) to execute such documents and instruments on its behalf.

  3. Unassignable Contracts. To the extent that any of the Assumed Contracts are not assignable or otherwise transferable by the Transferor to the Transferee without the consent, appioval, or waiver of another party thereto or any third party (including any governmental ug"n"y), or if such assignment or transfer would constitute a breach thereof or of any other material contract binding upon the Transferor, or a violation of any applicable law, then neither the Asset Agreement nor this Assumption Agreement shall constitute an assignment or transfer (or an atiempted assignment or transfer) thereof until such consent, approval, or waiver of such party or parties has been duly obtained.

  4. Effect of Asreement. Nothing in this Assumption Agreement will, or will be deemed to, modify or otherwise affect any provisions of the Asset Agteement or affect or modify any of the rights or obligations of the parties under the Asset Agreement. In the event of any conflict between the provisions hereof and the provisions of the Asset Agreement, the provisions of the Asset Agreement will govern and control. This Assumption Agreement may be executed in counterparts (including by facsimile transmission), each of which when executed and delivered shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement.

  5. Governing Law. This Assumption Agreement shall be construed in accordance with and be governed by the domestic laws of the state of Colorado without giving effect to any choice or conflict of law provision or rule (whether of the state of Colorado or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the state of Colorado.

IREMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANKT

IN WITNESS WHEREOF, the parties have caused this Assumption Agreement to be executed as of the day and year first written above by their respective officers thereunto duly authorized.

"Transferor"

CHALLA ENTERPRTSES, LLC, a Kansas limited liability company

Name: Title:

"Transferee"

PROBULTN ACQUTSTTTON LLC,

a Washington limited liability company

By:

Name: Its:

APPENDIX 1

Assumed Contracts Schedule

Vendor Pumose Contract Date Assienment Tennination Date

EXHIBIT 1.01(d)

FORM OF BILL OF SALE

BILL OF SALE AI\D ASSIGNMENT AI\D ASSUMPTION AGREEMENT

This BILL OF SALE AND ASSIGNMENT AND ASSUMPTION (this "Bill of Sale and Assig "), is entered into as of 2019("Effective Date"), by and between CHALLA ENTERPRISES, LLC, a Kansas limited liability company (the'oSeller"), and PROBULIN ACQUISITION LLC, a Washington limited liability company (the "Bughasel').

WHEREAS, the Seller, the Purchaser and HempFusion, Inc., a Nevada corporation, have entered into an Asset Purchase Agreement, dated as of July (the "Asset Purchase Agree "; unless otherwise defined herein, capitalized -,2019 terms shall be used herein as defined in the Asset Purchase Agreement);

WHEREAS, pursuant to the terms of the Asset Purchase Agreement, the Purchaser has agreed to purchase from the Seller, and the Seller has agreed to sell, convey, transfer, assign, grant and deliver to the Purchaser, all of the Seller's right, title and interest in and to all of the Assets, as listed in detail on Exhibit A hereto; and

WHEREAS, the execution and delivery of this Bill of Sale and Assignment by the Seller is a condition to the obligations of the Purchaser to consummate the transactions contemplated by the Asset Purchase Agreement.

NOW, THEREFORE, in consideration of the promises and mutual agreements set forth in the Asset Purchase Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Seller does hereby agree as follows:

  1. Sale and Assisnment of Assets. The Seller hereby sells, assigns, transfers, conveys, grants, sets over, releases, delivers, vests and confirms unto the Purchaser and its successors and assigns, forever, the entire right, title and interest ofthe Seller free and clear of all Encumbrances (other than Permitted Encumbrances) in and to any and all of the Assets, as listed in detail on Exhibit A hereto, other than the Excluded Assets, as defined in the Asset Purchase Agreement.

  2. Assumption of Assumed Liabilities. In accordance with and subject to the terms and conditions set forth in the Asset Purchase Agreement, the Purchaser hereby assumes and agrees to perform the Assumed Liabilities, as listed in detail on Exhibit B hereto.

  3. Action on Behalf of the Seller. The Seller hereby constitutes and appoints the Purchaser, its successors and assigns, as the Seller's true and lawful attorney, with full power of substitution, in the Seller's name and stead, but on behalf and for the benefit of the Purchaser, its successors and assigns, to demand and receive any and all of the Assets, and to give receipts and releases for them respecting the same, and any part thereof, and from time to time to institute and prosecute in the Seller's name with respect

to the Assets, or otherwise, at the expense and for the benefit of the Purchaser, its successors and assigns, any and all proceedings at law or in equity or otherwise, which the Purchaser, its successors and assigns, thinks proper for the collection or reduction to possession of any of the Assets or for the collection and enforcement of any claim or right ofany kind hereby sold, conveyed, transferred and assigned, or intended so to be, and to do all acts and things in relation to the Assets which the Purchaser, its successors or assigns shall deem desirable, the Seller hereby declaring that the foregoing powers are coupled with an interest and are and shall be irrevocable by the Seller or by its dissolution or in any manner or for any reason whatsoever. The Seller further authorizes the Purchaser, its successors and assigns, to receive and open all mail, facsimiles and other communications, and all express or other packages, addressed to the Seller or to any of its officers and to retain the same insofar as they relate to the Assets, but any such mail, facsimiles, communications or express or other packages not relating to the Assets (or relating to the Assets prior to the Closing, except as they related to Assumed Liabilities) shall be forwarded with reasonable dispatch to the Seller. The foregoing shall constitute full authorization to the postal authorities, express delivery companies, and all other persons to make delivery of such items to the Purchaser.

  1. Further Assurances. The Seller hereby covenants and agrees that, at any time and from time to time after the Effective Date, at the Purchaser's request, the Seller will do, execute, acknowledge and deliver, or will cause to be done, executed, acknowledged and delivered, any and all further acts, conveyances, transfers, assignments, and assurances as necessary to grant, sell, convey, assign, transfer, set over to or vest in the Purchaser any of the Assets.

  2. Unassienable Assets. To the extent that any of the Assets are not assignable or otherwise transferable by the Seller to the Purchaser without the consent, approval, or waiver of another party thereto or any third party (including any govemmental agency), or such assignment or transfer would constitute a breach thereof or of any material contract binding upon the Seller, or a violation of any applicable law, then neither the Asset Purchase Agreement nor this Bill of Sale and Assignment shall constitute an assignment or transfer (or an attempted assignment or transfer) thereof until such consent, approval, or waiver of such party or parties has been duly obtained.

  3. No Third Party Beneficiaries. This Bill of Sale and Assignment shall be binding upon and inure solely to the benefit of the Purchaser and its permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person, any legal or equitable right, benefit or remedy of any nature whatsoever, under or by reason of this Bill of Sale and Assignment'

7. Severabilitv. If any term or other provision of this Bill of Sale and Assignment is invalid, illegal or incapable of being enforced by any Law or public policy, all other terms and provisions of this Bill of Sale and Assignment shall nevertheless remain in full force and effect so long as the economic or legal substance of the

hansactions contemplated hereby is not affected in any manner materially adverse to either the Seller or the Purchaser. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Bill of Sale and Assignment so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated by this Bill of Sale and Assignment are consummated as originally contemplated to the greatest extent possible.

  1. Governing Law. This Bill of Sale and Assignment shall be governed by, and construed in accordance with, the laws of the State of Colorado applicable to contracts executed in and to be performed in that State'

ls i gn ature pa ge fo I I ow sf

IN WITNESS WHEREOF, this Bill of Sale and Assignment has been executed by the parties as of the Effective Date.

PURCHASER:

PROBULTN ACQUISTTTON LLC

By:
Name:
Title:

SELLER:

CHALLA ENTERPRISES, LLC

By:
Name
Title:

Exhibit A Assets

"Information relating to Assets redacted"

Exhibit B Assumed Liabilities

"Information relating to Assumed Liabililies redacted"

EXHIBIT 1.01 (e)

"Form of Agreement redacted"

Exhibit A- Budget and Funding Schedule

Exhibit B Description of Service Activities

Nature of Services (Professional Services):

  • r Business Development and Sales Support
  • o Marketing Support [needs to be flushed out]
  • o Accounting / Financials
  • o Management [needs to be flushed out]

Nature of Shared Non-Employee Costs (Shared):

  • r Internet Costs
  • o Software license costs (Microsoft Developer Tools, Microsoft Office, etc.)
  • o Office Space (rent)
  • . utilities
  • . Office Supplies
  • o Shared Food and Entertainment

Exhibit C- Shared Non-Employee Expense Allocations Schedule

"Information relating to Shared Non-Employee Expense Allocations redacled"

EXHIBIT 2.03(c)

ALLOCATION OF PURCHASE PRICE AND ASSUMED LIABILITIES

"Information relating to Allocation of Purchase Price and Assumed Liabilities redacted"

EXHIBIT 7.03

AGREEMENT TO ARBITRATE

(a) In the event of any Dispute under Section 7.01 of the Agreement, the parties agree to use commercially reasonable efforts to negotiate a mutually acceptable resolution; provided that, if after 30 days following any parfy's request for such negotiation, no resolution has been reached, such Dispute shall be finally settled by confidential arbitration administered by the Judicial Arbitration and Mediation Services, Inc. ("JAMS"). Any party may initiate arbitration by notice to the other party(ies) that will be a party to the arbitration (a "Request for Arbitration"). The arbitration shall be conducted in accordance with the JAMS rules governing commercial arbitration in effect at the time of the arbitration, except as they may be modified by the provisions of the Agreernent. The place of arbitration shall be Denver, Colorado, unless an alternate location is unanimously agreed by all parties to the arbitration. The arbitration shall be conducted by one neutral arbitrator appointed by mutual agreement of the parties within 15 days after delivery of the Request for Arbitration. In the event that the parties shall fail to appoint an arbitrator and deliver notice in writing of such appointment to all other parties to the arbitration within such 15-day period, upon request of any party to the arbitration, JAMS shall appoint such arbitrator within 30 days following receipt of such request. The arbitrator shall be an individual who has no direct material business relationship with any of the parties to the arbitration and who has at least 20 years of experience in the practice of law specializingincorporate or commercial transactions. The arbitration shall commence within 30 days after the appointment of the arbitrator; the arbitration shall be completed within 45 days following commencement; and the arbitrator's award shall be made within 30 days following such completion. The parties to the arbitration shall not unreasonably withhold consent to reasonable extensions of the time limits specified in the foregoing sentence.

(b) The arbitrator will apply the substantive law (and the law of remedies, if applicable) of the State of Colorado without giving effect to the principles of conflicts of law and will be without jurisdiction to apply any different substantive law. The arbitrator will render an award and a written, reasoned opinion in support thereof. The arbitrator may entertain a motion to dismiss atd/or a motion for summary judgment by any party to the arbitration, applying the standards governing such motions under the Federal Rules of Civil Procedure, and may rule upon any claim or counterclaim, or any portion thereof (each, a o'ArbiEAtiq4-el@"), without holding an evidentiary hearing. The parties waive to the fullest extent permitted by law any rights to appeal, or to review of, any arbitrator's award by any court. The arbitrator's award shall be final and binding, and judgment on the award may be entered in any court of competent jurisdiction.

(c) In any Dispute arising out of Section 7.01 of the Agreement, the arbitrator may, in the arbitrator's sole discretion, award to the prevailing party to the arbitration, if any, the attomeys' fees and costs reasonably incurred by the prevailing party to the arbitration in connection with such Dispute. If the arbitrator determines aparty to the arbitration to be the prevailing party to the arbitration under circumstances where the prevailing party to the arbitration won on some but not all of the Arbitration Claims, the arbitrator may, in the arbitrator's sole discretion, award such prevailing party to the arbifation an appropriate percentage, as determined by the arbitrator in the arbitrator's sole discretion, of the attorneys' fees and costs reasonably incurred by such prevailing party in connection with such Proceeding.

(d) Nothing herein shall prevent a party from seeking injunctive relief (including specific performance), where appropriate, from a court of competent jurisdiction to compel arbitration, to prevent irreparable harm or to enforce any arbitration award.

(e) The parties agree to maintain the confidentiality as to all aspects of any arbitration, except as may be required by applicable law or order, or to maintain or satis$ any suitability requirements for any license by aty governmental authority, including professional societies and organizations; provided that nothing herein shall prevent a party from disclosing information regarding the arbitration for purposes of enforcing the award or in any Dispute involving one or more of the parties. The parties further agree to obtain the arbitrator's agreement to preserve the confidentiality of the arbitration.

Disclosure Schedule to the Asset Purchase Agreement

Dated as of July 26,2019

" Di s clo sure S che dule re dac te d"

AMENDMENT TO ASSET PURCHASE AGREEMENT

This Amendment to Asset Purchase Agreement (this "Amendlsgnl"), dated August 5, 2020, amends that certain ASSET PURCHASE AGREEMENT dated as of July 26,2019 (the "Agreement") with respect to Section 2.02thereof, and is made by and among the original parties to the Agreement, namely Challa Enterprises,LLC, a Kansas limited liability company (the "Seller"), Probulin Probiotics LLC, aWashington limited liability company (formerly known as Probulin Acquisition LLC) (the "Purchaser") that is 100% owned by HempFusion, Inc., a Nevada corporation ("Parent"), and Parent. Capitalized terms used herein and not otherwise defined shall have the meanings given them in the Agreement'

WHEREAS, due to various circumstances the Seller, Purchaser and Parent desire to amend the Agreement with respect to the terms of Total Maximum Consideration, and specifically the definition and calculation of the Second Payment.

NOW, THEREFORE, in consideration of the premises and the mutual agreements and covenants hereinafter set forth, the parties hereto hereby agree as follows:

Section 2.03(a)(i) 2 is amended in its entirety to read as follows

  1. "second Payment" and "Adjusted Payment": cash payment to be made on the 12 month anniversary of the Closing Date, with the value determined by using a base payment of $3,000,000 and adjusting the payment by multiplying this base payment by the percentage of the actual 12 month trailing revenues as of the then most recent previous month end, as compared to the target trailing 12 month revenues of $5,000,000 (e.g., $4,000,000 actual revenue would equate to 80% of $5,000,000, which in turn equates to 80% of $3,000,000, or $2,400,000); and to the extent the Second Payment so calculated is less than $3,000,000, a cash payment ("Adjusted Payment") to be made onthe24 month anniversary of the Closing Date, with the value determined by using a base payment of $3,000,000 ("Adjusted Base") and adjusting the payment by multiplying this Adjusted Base payment by the percentage of the actual 12 month trailing revenues as of the then most recent previous month end, as compared to the target trailing 12 month revenues of $5,000,000 (e.g., $4,000,000 actual revenue would equate to 80Yo of $5,000,000, which in turn equates to 80% of the Adjusted Base), and subtracting the amount of the Second Payment; payment of the sum of the Second Payment and the Adjusted Payment to be capped at $3,000,000;

No other term of the Agreement is to be or is amended hereby, and all other terms are to remain as originally written.

IN WITNESS WHEREOF, the Seller, the Purchaser and the Parent have caused this Amendment Agreement to be executed by their respective officers thereunto duly authorized as of the date first written above.

SELLER CHALLA ENTERPRISES, L.L.C ("SELLER")

Rv: ",Iason Mitchell"

Name: Jason Mitchell Title: Manager

PURCHASER PROBULIN PROBIOTICS LLC ("PURCHASER")

By: "Ian deQueiroz" Name: Ian deQueiroz, Title: Manager

PARENT

HEMPFUSION, INC. ("PARENT")

By: "Ian deQ.ueiroz" Name: Ian deQueiroz Title: CEO