EXHIBIT 10.6

 

 

MERGER AGREEMENT

 

BETWEEN

 

CANNABIS KINETICS CORP.

 

AND

 

JEREMY N. STOUT, INC.

 

d/b/a

 

THE BIG TOMATO

 

 
1

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INDEX

 

 

Page 

 

ARTICLE I – PLAN OF MERGER

5        

ARTICLE II - REPRESENTATIONS AND WARRANTIES

5

 

2.0l

- 

Organization

5

 

2.02

-

Capital

6

 

2.03

-

Directors and Officers

6

 

2.04

-

Financial Statements

6

 

2.05

-

Absence of Changes

6

 

2.06

-

Absence of Undisclosed Liabilities

6

 

2.07

-

Tax Returns

6

 

2.08

-

Corporate Matters

6

 

2.09

-

Intellectual Property

7

 

2.l0

-

Contracts and Leases

7

 

2.11

-

Insurance Policies

7

 

2.12

-

Compliance with Laws

7

 

2.13

-

Litigation

7

 

2.14

-

Ability to Carry Out Obligations

7

 

2.15

-

SEC Documents

7

 

2.16

-

Market for Common Stock

8

 

2.17

-

Full Disclosure

8

 

2A

-

Organization

8

 

2B

-

Capital

8

 

2C

-

Directors and Officers, Compensation; Banks

8

 

2D

-

Financial Statements

8

 

2E

-

Absence of Changes

9

 

2F

-

Absence of Undisclosed Liabilities

9

 

2G

-

Tax Returns

9

 

2H

-

Corporate Matters

9

 

2I

-

Intellectual Property

9

 

2J

-

Contracts and Leases

9

 

2K

-

Insurance Policies

9

 

2L

-

Compliance with Laws

10

 

2M

-

Litigation

10

 

2N

-

Ability to Carry Out Obligations

10

 

2O

-

Full Disclosure

10

 

2P

-

Assets/Stock

10

 

 
2

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ARTICLE III - OBLIGATIONS BEFORE CLOSING

11

 

3.0l

-

Investigative Rights

11

 

3.02

-

Conduct of Business

11

       

ARTICLE IV - CONDITIONS PRECEDENT TO PERFORMANCE BY CKC

11

 

4.01

-

Conditions

11

 

4.02

-

Accuracy of Representations

11

 

4.03

-

Performance

11

 

4.04

-

Absence of Litigation

11

 

4.05

-

Other

12

       

ARTICLE V - CONDITIONS PRECEDENT TO PERFORMANCE BY TBT

12

 

5.01

-

Conditions

12

 

5.02

-

Accuracy of Representations

12

 

5.03

-

Performance

12

 

5.04

-

Absence of Litigation

12

 

5.05

-

Other

12

       

ARTICLE VI - CLOSING

13

 

6.01

-

Closing

13

 

6.02

-

Deliveries at Closing

14

 

6.03

-

Post Closing Matters

14

       

ARTICLE VII - REMEDIES

14

 

7.01

-

Arbitration

14

 

7.02

-

Costs

14

 

7.03

-

Termination

15

       

ARTICLE VIII - MISCELLANEOUS

15

 

8.01

-

Captions and Headings

15

 

8.02

-

No Oral Change

15

 

8.03

-

Non-Waiver

15

 

8.04

-

Time of Essence

16

 

8.05

-

Entire Agreement

16

 

8.06

-

Governing Law

16

 

8.07

-

Counterparts

16

 

8.08

-

Notices

16

 

8.09

-

Binding Effect

14

 

8.10

-

Effect of Closing

17

 

8.11

-

Mutual Cooperation

17

 

8.12

-

Expenses

17

 

 
3

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LIST OF EXHIBITS

 

Exhibit A

-

Plan of Merger

19

Exhibit B

-

Officers and Directors (CKC)

20

Exhibit C

-

Financial Statements – Changes in Financial Condition (CKC)

21

Exhibit D

-

Patents, Trademarks, Trade Names, and Copyrights (CKC)

22

Exhibit E

-

Material Contracts and Leases (CKC)

23

Exhibit F

-

Insurance Policies and Litigation (CKC)

24

Exhibit G

-

Officers and Directors, Bank Accounts, Safe Deposit Boxes, Powers of Attorney
(TBT)

25

Exhibit H

-

Financial Statements – Changes in Financial Condition (TBT)

26

Exhibit I

-

Patents, Trademarks, Trade Names and Copyrights (TBT)

27

Exhibit J

-

Material Contracts (TBT)

28

Exhibit K

-

Insurance Policies and Litigation (TBT)

29

 

 
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PLAN OF MERGER

 

THIS AGREEMENT, made this 17th day of October, 2014, by and between Cannabis
Kinetics Corp. (“CKC”), Jeremy N. Stout, Inc., d/b/a The Big Tomato (“TBT”) and
the shareholders of TBT is made for the purpose of setting forth the terms and
conditions upon which CKC will acquire all the outstanding shares of TBT.

 

In consideration of the mutual promises, covenants, and representations
contained herein, the parties hereto agree as follows:

 

ARTICLE I 

PLAN OF MERGER

 

Subject to the terms and conditions of this Agreement, CKC, TBT, and the
shareholders of TBT will enter into the Plan of Merger attached to this
Agreement as Exhibit A.

 

As provided in the Plan of Merger, CKC will acquire the shares of TBT for:

 

 

·

 cash of $400,000;

       

·

 a promissory note, made payable to Jeremy N. Stout in the principal amount of
$1,000,000;

       

·

 a promissory note, made payable to Josh Field in the principal amount of
$1,000,000; and

       

·

 2,700,000 shares of the restricted common stock of CKC.

 

Each note will be payable in eight equal installments of $125,000 plus interest
at 8% per year. Each note will be secured by all of the assets of TBT and the
shares of TBT

 

It is intended that the Plan of Merger shall constitute a reorganization within
the meaning of Section 368 of the Internal Revenue Code of 1986, as amended (the
"Code"), and that this Agreement shall constitute a "plan of reorganization" for
the purposes of Section 368 of the Code.

 

ARTICLE II 

REPRESENTATIONS AND WARRANTIES

 

Representations and Warranties of CKC.

 

2.01 Organization. CKC is a corporation duly organized, validly existing, and in
good standing under the laws of Nevada, has all necessary corporate power to own
its properties and to carry on its business as now owned and operated by it, and
is duly qualified to do business and is in good standing in each of the states
where its business requires qualification.

 

2.02 Capital. The authorized capital stock of CKC consists of 2,610,000,000
shares of common stock and 10,000,000 shares of preferred stock, of which
31,208,206 shares of common stock are outstanding as of the date hereof. At
closing, CKC will not have any outstanding shares of preferred stock except as
shown on Exhibit C. There are no subscriptions, options, rights, warrants,
convertible securities, or other agreements or commitments outstanding
obligating CKC to issue or to transfer from treasury any additional shares of
its capital stock except as shown on Exhibit C. All outstanding shares of CKC
are validly issued, fully paid and not assessable and not subject to any
preemptive rights.

 

 
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2.03 Directors and Officers. Exhibit B to this Agreement contains the names and
titles of all directors and officers of CKC.

 

2.04 Financial Statements. Exhibit C to this Agreement contains the balance
sheet of CKC as of August 31, 2014 and the related statement of income for the
period then ended (the “CKC Financial Statements”). The CKC Financial Statements
comply as to form in all material respects with applicable requirements of the
U.S. Securities and Exchange Commission with respect thereto, are accurate and
in accordance with the books and records of CKC, have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis during the period involved, except as may be indicated in the notes
thereto or as permitted by rules of the Securities and Exchange Commission.

 

2.05 Absence of Changes. Since August 31, 2014, there has not been any change in
the financial condition or results of operations of CKC, except changes
reflected on Exhibit C or changes in the ordinary course of business, which
changes have not in the aggregate been materially adverse.

 

2.06 Absence of Undisclosed Liabilities. CKC did not as of August 31, 2014 have
any debt, liability, or obligation of any nature, whether accrued, absolute,
contingent, or otherwise, and whether due or to become due, that is not
reflected on Exhibit C.

 

2.07 Tax Returns. Within the times and in the manner prescribed by law, CKC has
filed all federal, state, and local tax returns required by law and has paid all
taxes, assessments, and penalties due and payable. The provision for taxes, if
any, reflected in CKC's balance sheet as of August 31, 2014 is adequate for any
and all federal, state, county, and local taxes for the period ending on the
date of that balance sheet and for all prior periods, whether or not disputed.
There are no present disputes as to taxes of any nature payable by CKC.

 

2.08 Investigation of Financial Condition. Without in any manner reducing or
otherwise mitigating the representations contained herein, TBT shall have the
opportunity between the date of this Agreement and the Closing to meet with
CKC's accountants and attorneys to discuss the financial condition of CKC. CKC
shall make available to TBT the books and records of CKC. Such books and records
have been maintained in the ordinary course of business, and are true and
correct copies of such books and records. The minutes of CKC are a complete and
accurate record of all meetings of the shareholders and directors of CKC and
accurately reflect all actions taken at such meetings. The signatures of the
directors and/or officers on such minutes are the valid signatures of CKC 's
directors and/or officers who were duly elected or appointed on the dates that
the minutes were signed by such persons. The stock book of CKC contains an
accurate record of all transactions with respect to the capital stock of CKC.

 

 
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2.09 Patents, Trademarks, Trade Names, and Copyrights. Exhibit D attached hereto
and made a part hereof lists all trademarks, trademark registrations or
applications, trade names, service marks, patents, copyrights, copyright
registrations or applications which are owned by CKC. No person other than CKC
owns any trademark, trademark registration or application, service mark, trade
name, copyright, or copyright registration or application the use of which is
necessary or contemplated in connection with the operation of CKC 's business.

 

2.10 Contracts and Leases. Exhibit E attached hereto and made a part hereof
contains a summary of the provisions of all material contracts, leases, and
other agreements of CKC presently in existence or which have been agreed to by
CKC (whether written or oral). Except as disclosed on Exhibit E, CKC is not in
default under of these agreements or leases.

 

2.11 Insurance Policies. Exhibit F to this Agreement is a description of all
insurance policies held by CKC concerning its business and properties. All these
policies are in the respective principal amounts set forth in Exhibit F and are
in full force and effect.

 

2.12 Compliance with Laws. CKC has complied with, and is not in violation of,
applicable federal, state, or local statutes, laws, and regulations affecting
its properties or the operation of its business, including, but not limited to,
federal and state securities laws.

 

2.13 Litigation. Other than as disclosed on Exhibit F, CKC is not a party to any
suit, action, arbitration, legal, administrative, or other proceeding, or
governmental investigation pending or, to the best knowledge of CKC, threatened
against or affecting CKC or its business, assets, or financial condition. CKC is
not in default with respect to any order, writ, injunction, or decree of any
federal, state, local, or foreign court, department, agency, or instrumentality.
CKC is not engaged in any legal action to recover moneys due to CKC or damages
sustained by CKC.

 

2.14 No Further Consent. No consent, approval, order, or authorization, of, or
registration, declaration or filing with, any court, administrative agency,
commission or other governmental authority or instrumentality is required in
connection with the execution, delivery and performance of this Agreement.

 

2.15 SEC Documents. CKC has furnished TBT with copies of its annual report on
Form 10-K for the year ended October 31, 2012 and its quarterly report on
Form 10-Q for the period ended August 31, 2014 as filed with the Securities and
Exchange Commission. These reports are accurate in all material respects. CKC
has filed all required forms, reports and documents with the Securities and
Exchange Commission (the “SEC”) since CKC has been required to file such forms
(collectively, the “SEC Reports”), all of which have complied in all material
respects with all applicable requirements of the Securities Act and the Exchange
Act. None of the SEC Reports, including without limitation any financial
statements or schedules included therein, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein not misleading. Each of the
balance sheets (including the related notes) included in the SEC Reports fairly
presents the consolidated financial position of CKC and its subsidiaries as of
the respective dates thereof, and the other related statements (including the
related notes) included therein fairly present the results of operations and the
changes in the financial position of CKC and its subsidiaries for the respective
fiscal years, except, in the case of interim financial statements, for year-end
audit adjustments, consisting only of normal year-end adjustments as permitted
by rules of the SEC. Each of the financial statements (including the related
notes) included in the SEC Reports has been prepared in accordance with
generally accepted accounting principles consistently applied during the periods
involved, except as otherwise noted therein.

 

 
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2.16 Market for Common Stock. CKC’s common stock is quoted on the OTC Bulletin
Board. No letter “E” has been appended to CKC’s common stock during the past
twenty-four months and CKC has not received any notice of the possible or
pending delisting of CKC’s common stock.

 

2.17 Full Disclosure. None of the representations and warranties made by the CKC
Principals, or in any certificate or memorandum furnished or to be furnished by
the CKC Principal, or on their behalf, contains or will contain any untrue
statement of material fact, or omit any material fact the omission of which
would be misleading. CKC has disclosed to TBT all reasonably foreseeable
contingencies which, if such contingencies transpire, would have a material
adverse effect on CKC.

 

Representations and Warranties of TBT and the Shareholders of TBT.

 

2A. Organization. TBT is a corporation duly organized, validly existing, and in
good standing under the laws of Colorado, has all necessary corporate powers to
own its properties and to carry on its business as now owned and operated by it,
and is duly qualified to do business and is in good standing in each of the
states where its business requires qualification, except in those states where
the failure to be so qualified would not have a material adverse effect on TBT.

 

2B. Capital. The authorized capital stock of TBT consists of 50 shares of common
stock. Immediately prior to Closing, 50 shares of common stock will be issued
and outstanding. All of the shares are validly issued, fully paid, and
non-assessable. At Closing, there will be no outstanding preferred shares and no
outstanding subscriptions, options, rights, warrants, convertible securities, or
other agreements or commitments obligating TBT to issue or to transfer from
treasury any additional shares of its capital stock of any class.

 

2C. Directors and Officers' Compensation; Banks. Exhibit G to this Agreement
contains: (i) the names and titles of all directors and officers of TBT and all
persons whose compensation from TBT as of the date of this Agreement will equal
or is expected to equal or exceed, at an annual rate, the sum of $1,000; (ii)
the name and address of each bank with which TBT has an account or safety
deposit box, and the names of all persons who are authorized to draw thereon or
have access thereto; and (iii) the names of all persons who have a power of
attorney from TBT and a summary of the terms thereof.

 

2D. Financial Statements. Exhibit H to this Agreement sets forth the balance
sheet of TBT as of August 31, 2014, and the related statement of income for the
period then ended (the “TBT Financial Statements”). The TBT Financial Statements
are complete and correct in all material respects and fairly present in all
material respects the financial condition and results of operation of TBT at
such date and for such period and show all material liabilities, absolute or
contingent, of TBT.

 

 
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2E. Absence of Changes. Since August 31, 2014, there has not been any material
change in the financial condition or operations of TBT, except (i) changes in
the ordinary course of business, which changes have not in the aggregate been
materially adverse, and (ii) changes disclosed on Exhibit H.

 

2F. Absence of Undisclosed Liabilities. TBT did not as of August 31, 2014 have
any debt, liability, or obligation of any nature, whether accrued, absolute,
contingent, or otherwise, and whether due or to become due, that is not
reflected on Exhibit H.

 

2G. Tax Returns. Within the times and in the manner prescribed by law, TBT has
filed all federal, state, and local tax returns required by law and has paid all
taxes, assessments, and penalties due and payable, except where the failure to
file and/or pay would not have a material adverse effect on TBT. No federal
income tax returns of TBT have been audited by the Internal Revenue Service. The
provision for taxes, if any, reflected in TBT’s balance sheet as of August 31,
2014, is adequate for any and all federal, state, county, and local taxes for
the period ending on the date of that balance sheet and for all prior periods,
whether or not disputed. There are no present disputes as to taxes of any nature
payable by TBT.

 

2H. Investigation of Financial Condition of TBT. Without in any manner reducing
or otherwise mitigating the representations contained herein, CKC shall have the
opportunity to meet with TBT 's accountants and attorneys to discuss the
financial condition of TBT. TBT shall make available to CKC the books and
records of TBT. The minutes of TBT are a complete and accurate record of all
meetings of the shareholders and directors of TBT and accurately reflect all
actions taken at such meetings. The signatures of the directors and/or officers
on such minutes are the valid signatures of TBT’s directors and/or officers who
were duly elected or appointed on the dates that the minutes were signed by such
persons.

 

2I. Patents, Trademarks, Trade Names, and Copyrights. Exhibit I attached hereto
and made a part hereof lists all trademarks, trademark registrations or
applications, trade names, service marks, patents, copyrights, copyright
registrations or applications which are owned by TBT. No person other than TBT
owns any trademark, trademark registration or application, service mark, trade
name, copyright, or copyright registration or application the use of which is
necessary or contemplated in connection with the operation of TBT’s business.

 

2J. Contracts and Leases. Exhibit J is a list of the material contracts, leases
and other agreements of TBT presently in existence or which have been agreed to
by TBT. Except as listed in Exhibit J, TBT is not a party to any other material
contract or agreement, whether written or oral. Except as noted on Exhibit J,
TBT is not in default under any of these agreements or leases.

 

2K. Insurance Policies. Exhibit K to this Agreement is a description of all
insurance policies held by TBT concerning its business and properties. All these
policies are in the respective principal amounts set forth in Exhibit K and are
in full force and effect.

 

 
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2L. Compliance with Laws. TBT has complied with, and is not in violation of,
applicable federal, state, or local statutes, laws, and regulations affecting
its properties or the operation of its business, including but not limited to
federal and state securities laws. TBT does not have any employee benefit plan
which is subject to the provisions of the Employee Retirement Income Security
Act of 1974. Neither TBT nor its officers/directors are currently or have
previously been under investigation by any regulatory agency. TBT has never had
any consent decrees or enforcement actions brought against it.

 

2M. Litigation. Other than as disclosed on Exhibit K, TBT is not a party to any
suit, action, arbitration, legal, administrative, or other proceeding, or
governmental investigation pending or, to the best knowledge of TBT, threatened
against or affecting TBT or its business, assets, or financial condition. TBT is
not in default with respect to any order, writ, injunction, or decree of any
federal, state, local, or foreign court, department, agency, or instrumentality.
TBT is not engaged in any legal action to recover moneys due to it or damages
sustained by it other than as disclosed on Exhibit K.

 

2N. Ability to Carry Out Obligations. TBT and the TBT shareholders have the
right, power, and authority to enter into, and perform their obligations under
this Agreement. The execution and delivery of this Agreement by TBT and the TBT
shareholders and the performance by TBT and the TBT shareholders of their
obligations hereunder will not cause, constitute, or conflict with or result in
(a) any breach or violation of any of the provisions of or constitute a default
under any license, indenture, mortgage, charter, instrument, articles of
incorporation, by-law, or other agreement or instrument to which TBT is a party,
or by which it may be bound, nor will any consents or authorizations of any
party other than those hereto be required, (b) an event that would permit any
party to any agreement or instrument to terminate it or to accelerate the
maturity of any indebtedness or other obligation of TBT, or (c) an event that
would result in the creation or imposition or any lien, charge, or encumbrance
on any asset of TBT or would create any obligations for which TBT would be
liable, except as contemplated by this Agreement.

 

2O. Full Disclosure. None of the representations and warranties made by TBT in
any certificate or memorandum furnished or to be furnished by TBT, or on its
behalf, contains or will contain any untrue statement of material fact, or omit
any material fact the omission of which would be misleading. TBT has disclosed
to CKC all reasonably foreseeable contingencies which, if such contingencies
transpire, would have a material adverse effect on TBT.

 

2P. Assets/Stock.TBT has good and marketable title to all of its property, free
and clear of all mortgages, liens, pledges, charges, encumbrances or interest of
any third party whatsoever. The TBT shareholders have good and remarkable title
to their shares of TBT, free and clear of all mortgages, liens, pledges,
charges, encumbrances or interest of any third party whatsoever.

 

 
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ARTICLE III 

OBLIGATIONS BEFORE CLOSING

 

3.01 Investigative Rights. From the date of this Agreement until the date of
closing, each party shall provide to the other party, and such other party's
counsel, accountants, auditors, and other authorized representatives, full
access during normal business hours to all of each party's properties, books,
contracts, commitments, records and correspondence and communications with
regulatory agencies for the purpose of examining the same. Each party shall
furnish the other party with all information concerning each party's affairs as
the other party may reasonably request.

 

3.02 Conduct of Business. Prior to the Closing, and except as contemplated by
this Agreement, each party shall conduct its business in the normal course, and
shall not sell, pledge, or assign any assets, without the prior written approval
of the other party, except in the regular course of business. Except as
contemplated by this Agreement, neither party to this Agreement shall issue or
sell any shares, stock, options or other securities, amend its Articles of
Association, Articles of Incorporation or By-laws, declare dividends, redeem
stock or other securities, incur additional or newly-funded material
liabilities, acquire or dispose of fixed assets, change senior management,
change employment terms, guarantee obligations of any third party, settle or
discharge any balance sheet receivable for less than its stated amount, pay more
on any liability than its stated amount, or enter into any other transaction
other than in the regular course of business, or enter into any agreement or
take any action that is likely to cause any of the representations and
warranties of such party under this Agreement not to be true and correct as of
the Closing, or that is likely to affect the Closing. However, and
notwithstanding any provision in this Agreement to the contrary, TBT hereby
assents and permits CKC to raise further financing in any manner, or issue
shares of its capital stock in connection with an acquisition.

 

ARTICLE IV 

CONDITIONS PRECEDENT TO PERFORMANCE BY CKC

 

4.01 Conditions. CKC’s obligations hereunder shall be subject to the
satisfaction, at or before the Closing, of all the conditions set forth in this
Article IV. CKC may waive any or all of these conditions in whole or in part
without prior notice; provided, however, that no such waiver of a condition
shall constitute a waiver by CKC of any other condition of or any of CKC’s other
rights or remedies, at law or in equity, if TBT shall be in default of any of
its representations, warranties, or covenants under this agreement.

 

4.02 Accuracy of Representations. Except as otherwise permitted by this
Agreement, all representations and warranties by TBT in this Agreement or in any
written statement that shall be delivered to CKC by TBT under this Agreement
shall be true on and as of the Closing Date as though made at those times.

 

4.03 Performance. TBT shall have performed, satisfied, and complied with all
covenants, agreements, and conditions required by this Agreement to be performed
or complied with by it, on or before the closing. TBT shall have obtained all
necessary consents and approvals necessary to consummate the transactions
contemplated hereby.

 

4.04 Absence of Litigation. No action, suit, or proceeding before any court or
any governmental body or authority, pertaining to the transaction contemplated
by this agreement or to its consummation, shall have been instituted or
threatened on or before the Closing.

 

 
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4.05 Other. In addition to the other provisions of this Article IV, CKC’s
obligations hereunder shall be subject to the satisfaction, at or before the
Closing, of the following:

 

 

·

the directors and shareholders of TBT will have approved the Plan of Merger;

       

·

TBT will have submitted to CKC financial statements, audited as necessary and in
proper form, which will be required to be filed by CKC in an 8-K report with the
Securities and Exchange Commission.

 

ARTICLE V 

CONDITIONS PRECEDENT TO PERFORMANCE BY TBT

 

5.01 Conditions. The obligations of TBT, and the obligations of the shareholders
of TBT, hereunder shall be subject to the satisfaction, at or before the
Closing, of the conditions set forth in this Article V. TBT may waive any or all
of these conditions in whole or in part without prior notice; provided, however,
that no such waiver of a condition shall constitute a waiver by TBT of any other
condition of or any of TBT’s other rights or remedies, at law or in equity, if
CKC shall be in default of any of its representations, warranties, or covenants
under this agreement.

 

5.02 Accuracy of Representations. Except as otherwise permitted by this
Agreement, all representations and warranties by CKC in this Agreement or in any
written statement that shall be delivered to TBT by CKC under this Agreement
shall be true on and as of the Closing Date as though made at those times.

 

5.03 Performance. CKC shall have performed, satisfied, and complied with all
covenants, agreements, and conditions required by this Agreement to be performed
or complied with by it, on or before the closing. CKC shall have obtained all
necessary consents and approvals necessary to consummate the transactions
contemplated hereby.

 

5.04 Absence of Litigation. No action, suit, or proceeding before any court or
any governmental body or authority, pertaining to the transaction contemplated
by this agreement or to its consummation, shall have been instituted or
threatened on or before the closing.

 

5.05 Other. In addition to the other provisions of this Article V, the
obligations of TBT, and the obligations of the shareholders of TBT, hereunder
shall be subject to the satisfaction, at or before the Closing, of the
following:

 

 

·

the directors of CKC will have approved the Plan of Merger;

       

·

CKC will not have more than 32,000,000 outstanding shares of common stock.

       

·

the form of note, security agreement and stock pledge agreement, to be delivered
to the TBT shareholders at Closing, will be in form and upon terms satisfactory
to the TBT shareholders.

       

·

TBT will have entered into employment contracts with the TBT shareholders, to be
effective at Closing, in form and upon terms satisfactory to the TBT
shareholders.

       

·

the TBT shareholders will be satisfied that they will be able to elect
“installment sale” treatment with respect to the $2,000,000 note and the
2,700,000 shares of CKC common stock will not result in a taxable gain at the
time those shares are issued to the TBT shareholders.

 

 
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ARTICLE VI 

CLOSING

 

6.01 Closing. The Closing of this transaction shall be held at the offices of
Hart and Hart, or such other location as the parties may agree. Unless the
closing of this transaction takes place before December 17, 2014, then either
party may terminate this Agreement without liability to the other party,
excluding claims for breaches of obligations by any party hereto prior to such
termination.

 

6.02 Deliveries at Closing. At Closing CKC will deliver the following to the TBT
shareholders:

 

 

·

Certified check in the amount of $200,000 made payable to Jeremy N. Stout;

 

 

   

·

Certified check in the amount of $200,000 made payable to Josh Field;

 

 

   

·

a promissory note, made payable to Jeremy N. Stout in the principal amount of
$1,000,000; and

 

 

   

·

a promissory note, made payable to Josh Field in the principal amount of
$1,000,000.

 

 

   

·

Stock certificate representing 1,350,000 shares of CKC’s restricted common stock
registered in the name of Jeremy N. Stout.

 

 

   

·

Stock certificate representing 1,350,000 shares of CKC’s restricted common stock
registered in the name of Josh Field.

 

 

   

·

Security agreements and stock pledge agreements.

 

 

   

·

Employment Agreement between TBT and Jeremy Stout.

 

 

   

·

Employment Agreement between TBT and Josh Field.

 

At Closing, the TBT shareholders will deliver the following to CKC:

 

 

·

Stock certificate representing 25 shares of TBT’s common stock registered in the
name of Jeremy N. Stout and endorsed to CKC.

 

 

   

·

Stock certificate representing 25 shares of TBT’s common stock registered in the
name of Josh Field and endorsed to CKC.

 

 

   

·

Subscription agreements signed by Jeremy Stout and Josh Field.

 

 
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6.03 Post Closing Matters.

 

Following the Closing:

 

 

·

CKC will sell up to 300,000 shares of its common stock, at a price of $0.001 per
share, to persons designated by the TBT shareholders, and

 

 

   

·

the TBT shareholders will repay any amounts which they owe TBT, will forgive any
loans they have made to TBT, and will pay any liabilities of TBT for federal or
state income taxes.

 

Operations. Until all obligations of CKC, pursuant to the Note and this
Agreement, have been satisfied, the parties agree as follows:

 

1. TBT will continue to operate under the name “the Big Tomato”.

 

2. The TBT retail store and warehouse will remain at their present locations.

 

3. TBT will not issue any additional shares of its capital stock.

 

4. CKC will use its best efforts to have its need for any hydroponic equipment
or supplies purchased from TBT at then prevailing retail prices charged by TBT,
assuming TBT is able to supply the equipment and supplies at prices and upon
terms (including shipping) which are equal to or less than that which could be
obtained by CKC elsewhere.

 

5. So long as the operations of TBT are able to generate net income of at least
$50,000 per quarter, TBT will be operated by the present shareholders of TBT,
subject to the reasonable direction of CKC’s board of directors.

 

6. Notwithstanding the above, if either Jeremy Stout or Josh Field is terminated
for Cause, as that term is defined in the employment agreement of such person,,
then Jeremy Stout or Josh Field, as the cause may be, will be removed from the
operations of TBT. If both Jeremy Stout and Josh Field are terminated, for
Cause, then TBT will be operated subject to the direction of CKC’s board of
directors, or such officers as the board of directors may designate. If Jeremy
Stout or Josh Field voluntarily terminates his employment with TBT, then such
person will no longer have any involvement with TBT.

 

ARTICLE VII 

REMEDIES

 

7.01 Arbitration. Any dispute in any way involving this Agreement will be
settled through binding arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association in Denver, Colorado.

 

7.02 Costs. If any legal action or any arbitration or other proceeding is
brought for the enforcement of this Agreement, or because of an alleged dispute,
breach, default, or misrepresentation in connection with any of the provisions
of this Agreement, the successful or prevailing party or parties shall be
entitled to recover reasonable attorney's fees and other costs incurred in that
action or proceeding, in addition to any other relief to which it or they may be
entitled.

 

 
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7.03 Termination. In addition to the other remedies, TBT or CKC may on or prior
to the Closing Date terminate this Agreement, without liability to the other
party:

 

(i) If any bona fide action or proceeding shall be pending against TBT or CKC on
the Closing Date that could result in an unfavorable judgment, decree, or order
that would prevent or make unlawful the carrying out of this Agreement or if any
agency of the federal or of any state or national government shall have objected
at or before the closing date to this acquisition or to any other action
required by or in connection with this Agreement;

 

(ii) If the legality and sufficiency of all steps taken and to be taken by each
party in carrying out this Agreement shall not have been approved by the
respective party's counsel, which approval shall not be unreasonably withheld.

 

(iii) If a party breaches any representation, warranty, covenant or obligation
of such party set forth herein and such breach is not corrected within ten days
of receiving written notice from the other party of such breach.

 

ARTICLE VIII 

MISCELLANEOUS

 

8.01 Captions and Headings. The Article and paragraph headings throughout this
Agreement are for convenience and reference only, and shall in no way be deemed
to define, limit, or add to the meaning of any provision of this Agreement.

 

8.02 No Oral Change. This Agreement and any provision hereof, may not be waived,
changed, modified, or discharged orally, but only by an agreement in writing
signed by all parties hereto.

 

8.03 Non-Waiver. Except as otherwise expressly provided herein, no waiver of any
covenant, condition, or provision of this Agreement shall be deemed to have been
made unless expressly in writing and signed by the party against whom such
waiver is charged; and (i) the failure of any party to insist in any one or more
cases upon the performance of any of the provisions, covenants, or conditions of
this Agreement or to exercise any option herein contained shall not be construed
as a waiver or relinquishment for the future of any such provisions, covenants,
or conditions, (ii) the acceptance of performance of anything required by this
Agreement to be performed with knowledge of the breach or failure of a covenant,
condition, or provision hereof shall not be deemed a waiver of such breach or
failure, and (iii) no waiver by any party of one breach by another party shall
be construed as a waiver with respect to any other or subsequent breach.

 

8.04 Time of Essence. Time is of the essence of this Agreement and of each and
every provision hereof.

 

 
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8.05 Entire Agreement. This Agreement contains the entire Agreement and
understanding between the parties hereto, and supersedes all prior agreements,
understandings and the letters of intent between the parties.

 

8.06 Governing Law. This Agreement and its application shall be governed by the
laws of Nevada.

 

8.07 Counterparts. This Agreement may be executed simultaneously in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

 

8.08 Notices. All notices, requests, demands, and other communications under
this Agreement shall be in writing and shall be deemed to have been duly given
on the date of service if served personally on the party to whom notice is to be
given, or on the third day after mailing if mailed to the party to whom notice
is to be given, by first class mail, registered or certified, postage prepaid,
and properly addressed as follows:

 

Cannabis Kinetics Corp.

 

324 W 71st Avenue, Unit 5

Westminster, CO 80030

 

With copy to:

 

Hart & Hart, LLC

1624 Washington Street

Denver, CO 80203

 

Jeremy N. Stout, Inc.

 

8216 Swadley Court

Arvada, CO 80005

 

 
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8.09 Binding Effect. This Agreement will be binding upon the parties herein even
though this Agreement may not be signed by all persons whose names appear on the
signature page of this Agreement. This Agreement shall inure to and be binding
upon and be enforceable against the respective successors of each of the parties
to this Agreement. No party may assign or transfer any of its rights or
obligations hereunder, without the prior written consent of the other parties
hereto. Nothing in this Agreement, express or implied, shall give to any person
other than the parties hereto any benefit or any legal or equitable right,
remedy or claim under this Agreement.

 

8.10 Effect of Closing. All representations, warranties, covenants, and
agreements of the parties contained in this Agreement, or in any instrument,
certificate, opinion, or other writing provided for in it, shall survive the
closing of this Agreement and shall remain in effect for a period of twelve
months thereafter. In the event there is any material misrepresentation or
warranty of any party to this Agreement, then TBT (if such misrepresentation is
made by CKC) or CKC ( if such misrepresentation is made by TBT) may rescind this
Agreement during the 30 day period following the closing of this Agreement.

 

8.11 Mutual Cooperation. The parties hereto shall cooperate with each other to
achieve the purpose of this Agreement, and shall execute such other and further
documents and take such other and further actions as may be necessary or
convenient to effect the transaction described herein. Neither party will
intentionally take any action, or omit to take any action, which will cause a
breach of such party's obligations pursuant to this Agreement.

 

8.12 Expenses.Each of the parties hereto agrees to pay all of its own expenses
(including without limitation, attorneys' and accountants' fees) incurred in
connection with this Agreement, the transactions contemplated herein and
negotiations leading to the same and the preparations made for carrying the same
into effect. Each of the parties expressly represents and warrants that no
finder or broker has been involved in this transaction and each party agrees to
indemnify and hold the other party harmless from any commission, fee or claim of
any person, firm or corporation employed or retained by such party (or claiming
to be employed or retained by such party) to bring about or represent such party
in the transactions contemplated by this Agreement.

 

 
17

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AGREED TO AND ACCEPTED as of the date first above written.

 

  CANNABIS KINETICS CORP.           By: /s/ Eric Hagen       Eric Hagen, Chief
Executive Officer                

JEREMY N. STOUT, INC.

By: /s/ Jeremy N. Stout Jeremy N. Stout, Chief Executive Officer    

SHAREHOLDERS OF JEREMY N. STOUT, INC.

  By: /s/ Jeremy N. Stout Jeremy N. Stout     By: /s/ Josh Field Josh Field

 

Cannabis Kinetics Plan of Merger Stout Big Tomato 10-16-14

 

 
18

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EXHIBIT A

 

PLAN OF MERGER

 

(a) CONSTITUENT CORPORATIONS:

 

Jeremy N. Stout, Inc. d/b/a The Big Tomato (“TBT”)

 

 

(A Colorado corporation)

 

 

 

 

 

JNS, Inc. (“JNS”)

 

 

(A Colorado corporation)

 

 

 

 

 

JNS is a wholly owned subsidiary of TBT

 

 

 

(b)  SURVIVING CORPORATION:

 

Jeremy N. Stout, Inc. d/b/a The Big Tomato (“TBT”)

 

 

(A Colorado corporation)

 

(c) Pursuant to C.R.S. 7-111-104 and effective as of the date of the merger

 

(i) all shares of JNS shall be cancelled;

 

(ii) all assets of JNS shall become assets of TBT;

 

(iii) all liabilities of JNS shall be assumed by TBT;

 

(iv) JNS shall cease to exist;

 

(v) the shareholders of TBT will receive $400,000 in cash, notes in the
collective principal amount of $2,000,000 and 2,700,000 shares of the common
stock of Cannabis Kinetics Corp. in exchange for all outstanding shares of TBT;

 

(vi) all issued and outstanding shares of TBT will be owned by Cannabis Kinetics
Corp.

 

Cannabis Kinetics Plan of Merger The Big Tomato 10-15-14

 

 
19

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EXHIBIT B

 

Officers and Directors (CKC)

 

Name

 

Position

 

 

 

Eric Hagen

 

Chief Execuive Officer and a Director

 

 

 

Jonatha Hunt

 

Secretary and a Director

 

 

 

Steven Brandt 

 

Treasurer and a Director

 

 
20

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EXHIBIT C

 

Financial Statements- Changes in

Financial Condition (CKC)

 

Incorporated by reference to the financial statements included in the 10-Q
report of CKC for the period ended August 31, 2014.

 

 
21

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EXHIBIT D

 

Patents, Trademarks, Trade Names and

Copyrights (CKC)

 

Patents

 

Patent Number   Date of Patent

Description

     

 None

 

Trademarks

 

To be furnished by amendment.

 

Trade Names

 

To be furnished by amendment

 

Copyrights

 

None.

 

 
22

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EXHIBIT E

 

Material Contracts and Leases (CKC)

 

None other than those referred to in the filings of CKC with the Securities and
Exchange Commission.

 

 
23

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EXHIBIT F

 

Insurance Policies (CKC)

 

Policy   Insurer Limit   Coverage Limit

 

Expiration Date

         

 None

 

Litigation (CKC)

 

Case Name   Case Number   Disposition   Description              

 None.

 

 
24

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EXHIBIT G

 

Officers and Directors (TBT)

 

Name

 

Position

      Jeremy Stout   Chief Executive Officer and a Director       Josh Field  
Vice President and a Director

 

Bank Accounts, Safe Deposit

Boxes, Powers of Attorney (TBT)

 

Credit Union of the Rockies

 

 
25

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EXHIBIT H

 

Financial Statements- Changes in Financial

 Condition (TBT)

 

See Attached.

 

 
26

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EXHIBIT I

 

Patents, Trademarks, Trade Names and Copyrights (TBT)

 

A Time to Grow

The Big Tomato

 

 
27

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EXHIBIT J

 

Material Contracts (TBT)

 

Retail office Lease

Warehouse Lease

 

 
28

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EXHIBIT K

 

Insurance Policies (TBT)

 

Travelers Insurance

State Farm Insurance

 

Litigation (TBT)

 

None.

 

 

Cannabis Kinetics Plan of Merger Stout Big Tomato 10-16-14

 

 
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