STRATEGIC ALLIANCE AGREEMENT

 

This Strategic Alliance Agreement (this “Agreement”) is made and entered into as
of April 17, 2020, by and between CBD Biotech, Inc., a California corporation
(“CBD Biotech”) and Integrity Cannabis Solutions, Inc., a Florida corporation
(“ICS”), hereinafter individually a “Party” and collectively the “Parties”.

 

RECITALS

 

A.                 Whereas, Bakhu Holdings Corp., a Nevada corporation (“Bakhu”)
holds an exclusive license for a proprietary process and technology that uses
cell culturing to grow targeted cells to produce a concentrated unique end
product at a reduced cost (the “Bakhu Licensed Science”) as more fully defined
below.

 

B.                  Whereas, CBD Biotech is a wholly-owned subsidiary of Bakhu
and holds an exclusive sublicense (the “Bakhu-CBD Biotech Sublicense”) of the
Bakhu Licensed Science, as it relates to the production and manufacturing of
CBD, CBD byproducts and CBD derivatives, from non-psychoactive, low-THC cannabis
sativa plant strains and cannabinoids (collectively “Cannabis”). The field of
use under the CBD Biotech Sublicense is exclusive to production, methods, and
products of CBD and its derivatives, and excludes and prohibits any THC related
products having measureable tetrahydrocannabinol concentration potency above
3.0% on a dry weight basis, production methods, techniques, or Know How.

 

C.                  Whereas, CBD Biotech and its Affiliates have certain
expertise and proprietary knowledge necessary to design and create a laboratory
that can produce such CBD end product at commercial scale.

 

D.                 Whereas, David Ambrose, the principal owner, director,
President and Chief Executive Officer of ICS, has experience in operating a
pharmaceutical production laboratory at commercial scale in the state of Florida
and has access to commercial space within which the Production Facility (as
defined below) can be built and operated, and could be utilized as a prospective
training facility for any sublicensee of the Bakhu Licensed Science.

 

E.                  Whereas, the Parties desire to collaborate with each other
and establish a strategic alliance, as further described herein (i) to
facilitate the building and operating of the Production Facility (as defined
below) in the State of Florida, and (ii) exploiting the business opportunity of
producing, manufacturing and selling the CBD, CBD byproducts and CBD
derivatives, produced at said Production Facility.

 

F.                  Whereas, concurrently with the execution and delivery of
this Agreement and subject to the validation of the Bakhu Licensed Science upon
completion of the Bakhu Efficacy Test (as defined below), and with the delivery
of an Offtake Agreement from such third-parties in accordance with terms set
forth in Section 2.1.7 below, CBD Biotech and ICS shall execute and enter into
the CBD Biotech Sublicense Agreement (as defined below) under which CBD Biotech
shall sublicense the Bakhu Licensed Science to ICS for the expressed purpose of
producing, manufacturing and selling CBD and CBD end products in the State of
Florida.

 

G.                 Whereas, in connection with the foregoing, CBD Biotech and
ICS agree and acknowledge that the cooperation between CBD Biotech and ICS is an
important component to achieve their respective strategic objectives, and they
desire to continue and further enhance the strategic cooperative alliance
between them as contemplated under this Agreement.

 

 

 1 

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants,
agreements and conditions contained in this Agreement, the parties hereto,
intending to be legally bound hereby, agree as follows:

 

ARTICLE 1.
DEFINITIONS

 

Defined Terms. For the purposes of this Agreement, the following capitalized
terms shall have the meanings ascribed to them below:

 

“Affiliate” means, with respect to a specified Person, a Person that directly or
indirectly through one or more intermediaries, controls or is controlled by, or
is under common control with, the Person specified.

 

“Ambrose” means David Ambrose, the principal owner, director, President and
Chief Executive Officer of ICS.

 

“Bakhu Efficacy Test” means the test of the Bakhu Licensed Science as conducted
by Baku pursuant to the Bakhu License Agreement, to demonstrate that the
application of the Bakhu Licensed Science can produce end product at a
commercial scale within standards of efficacy and a reduced costs, as completed
by and under such criteria as set forth on Exhibit 1, hereto, with the results
of such test confirmed by a third party lab mutually agreed upon by the Parties.

 

“Bakhu License Agreement” means the Amended and Restated Patent and Technology
License Agreement between Cell Science Holdings Ltd., as Licensor and Bakhu, s
Licensee, dated December 31, 2019

 

“Bakhu Licensed Science” means the Licensed Science as defined in the CBD
Biotech Sublicense Agreement.

 

“Business Day” means any day other than a Saturday or a Sunday or a day on which
banks located in Los Angeles, California generally are authorized or required by
Law or regulation to close.

 

“CBD Biotech Sublicense Agreement” means that certain Sublicense Agreement by
and between CBD Biotech as Sublicensor and ICS as the Sublicensee, in the form
of Exhibit 2, executed concurrently herewith.

 

“CBD” means Cannabidiol which is a phytocannabinoid derived from the cannabis
sativa and Hemp plant which is CBD and its derivatives, and excludes and
prohibits any CBD products having measureable tetrahydrocannabinol concentration
potency above 3.0% on a dry weight basis.

 

“Commercially Reasonable Efforts” means the reasonable efforts that a reasonably
prudent Person would contemplate using in similar circumstances in an effort to
achieve a desired result set forth in this Agreement in a reasonably expeditious
manner; provided, that, “Commercially Reasonable Efforts” shall not require the
provision of any consideration to any third party of any amounts, except for the
costs of making filings in the ordinary course of

 2 

business, the reasonable fees and expenses of counsel and accountants, nominal
consent fees, and the customary fees and charges of Governmental Authorities.

 

“Delivery Schedule” means Delivery Schedule set forth on Exhibit 3, hereto,
setting for the prescribed deadline for the delivery of information and
materials, and completion of performance of certain tasks attributed to the
Parties as set forth in this Agreement.

 

“Dr. Whitton” means Dr. Peter Whitton, the inventor of the CBD Biotech Licensed
Science and one of the principal owners of CBD Biotech.

 

“Effective Date” means that date when (a) the Bakhu Efficacy Test has been
successfully completed, (b) CBD Biotech has delivered the Lab Operating Manual
to ICS pursuant to Section 2.1.1, and (c) CBD Biotech has delivered the Lab
Equipment Requirements to ICS pursuant to Section 2.1.3.

 

“FDA” means United States Food and Drug Administration.

 

“FTC” means the United States Federal Trade Commission.

 

“Governmental Approval” means any authorization, consent, approval,
certification, permit, franchise, privilege, variance, immunity, license or
order of, or any filing, registration or qualification with, any Governmental
Authority.

 

“Governmental Authority” means any foreign, international, multinational,
national, federal, state, provincial, regional, local or municipal court or
other governmental, administrative or regulatory authority, agency or body
exercising executive, legislative, judicial, regulatory or administrative
functions.

 

“Intellectual Property” means all of the following, whether arising under the
Laws of the United States or any other jurisdiction in the world: (i) patents
and patent applications, including continuations, continuations-in-part,
divisions, reissues, reexaminations, substitutions, and extensions thereof; (ii)
published and unpublished works of authorship, whether or not copyrightable,
including computer software programs and databases, whether or not registered,
copyrights in and to the foregoing, together with all common law rights and
moral rights therein, and any applications and registrations therefor; (iii)
trademarks, service marks, trade dress, brands, trade names, logos, Internet
domain names and other similar identifiers of origin, in each case, as
applicable, whether or not registered, and any and all common law rights
thereto, and registrations and applications for registration thereof and any
goodwill associated therewith; (iv) trade secrets, know-how, and other
confidential or proprietary information, including methods, processes,
protocols, specifications, patterns, techniques, algorithms, data, designs and
models; (v) any other intellectual property rights created or arising under
applicable Law; (vi) all pending applications to register or otherwise obtain
legal protection for any of the foregoing in (i) through (iv) ; (vii) all rights
to make an application in the future to register or otherwise obtain legal
protection for any of the foregoing in (i) through (iv), (viii) all rights of
priority under U.S. federal laws and international conventions with respect to
any of the foregoing in (i) through (iv) ; (ix) all continuations,
continuations-in-part, divisions, renewals, extensions, patents of addition,
reexaminations, or reissues of any of the foregoing and all related applications
therefor; (x) all goodwill associated with any of trademarks, service marks,
trade identification, trade dress and trade names; (xi) all rights to sue with
respect to past and future infringements, misappropriations or violations of any
of the foregoing.

 

 3 

“Intellectual Property Rights” means the Intellectual Property that is owned or
licensed by CBD Biotech and ICS, respectively, and used or held for use in the
conduct of the respective business of CBD Biotech and ICS, together with (x) the
right to sue and recover for past infringements or misappropriations thereof,
(y) any and all corresponding rights that, now or hereafter, may be secured
throughout the world with respect thereto and (z) all copies and tangible
embodiments thereof.

 

“Knowledge” or other references to CBD Biotech’s or ICS’s knowledge or awareness
shall mean the actual knowledge of Dr. Peter Whitton on behalf of CBD Biotech
and David Ambrose on behalf of ICS, respectively.

 

“Law” means any and all foreign, international, multinational, national,
federal, state, provincial, regional, local, municipal and other administrative
laws (including common law), statutes, codes, orders, ordinances, rules and
regulations, constitutions and treaties, other requirement or rule of law
enacted, promulgated or issued and put into effect by a Governmental Authority.

 

“Licensee Prospect” means an unaffiliated third-party who expresses interest in
the sublicensing from ICS and/or CBD Biotech of the Bakhu Licensed Science as it
relates to CBD and the scope of use covered by the Bakhu-CBD Biotech Sublicense.

 

“Liens” means any liens, pledges, mortgages, deeds of trust, security interests,
claims, leases, charges, options, rights of first refusal, easements,
servitudes, conditional sales contracts and title retention agreements.

 

“Material Adverse Effect” shall mean any material adverse change or effect that
individually or in the aggregate results in the Seller’s inability to consummate
the transactions contemplated hereby or maintain the covenants of the
agreements; provided, however, that changes or effects relating to: (i) changes
in economic or political conditions or the financing, banking, currency or
capital markets in general; (ii) changes in laws or orders or interpretations
thereof; (iii) any natural disaster or any acts of terrorism, sabotage, military
action or war (whether or not declared) or any escalation or worsening thereof,
whether or not occurring or commenced before, on or after the date of this
Agreement, in each case, shall be deemed to not constitute a “Material Adverse
Effect” and shall not be considered in determining whether a “Material Adverse
Effect” has occurred.

 

“Offtake Agreement” means that Supply and Offtake Agreement as set forth in
Section 2.1.7, in the form attached hereto as Exhibit 4.

 

“Person” means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or Governmental Authority.

 

“Production Facility” means a commercial scale production facility equipped with
a minimum of two hundred ten (210), one thousand (1,000) liter bioreactors
capable of yielding CBD end product concentrate utilizing the Bakhu Licensed
Science.

 

“Proceeding” means pending, stayed, or completed action, inquiry, proceeding,
suit, hearing arbitration, alternate dispute resolution mechanism,
investigation, administrative hearing, whether brought by or in the right of any
party or otherwise and whether civil, criminal, administrative, or
investigative, in which a Party was, is, or will be involved as a party or
otherwise.

 4 

 

“Share Compensation” means one-half percent (0.5%) of the outstanding common
shares of Bakhu, as adjusted to take into account any additional issuance of
shares by Bakhu, from time to time. As of the Effective Date there are
300,000,000 shares of Bakhu outstanding and therefore the Share Compensation
equals one million five hundred thousand (1,500,000) shares of common stock of
Bakhu.

 

“Sublicense Fees” means the license fees and royalty payable by ICS to CBD
Biotech pursuant to and as set forth in the CBD Biotech Sublicense Agreement.

 

“TG United Companies” means TB United, Inc., TG United Liquids, Inc, TG United
Labs, Inc. and/or TG United Pharmaceutical, Inc.

 

ARTICLE 2.
EVALUATION OF BAKHU LICENSED SCIENCE

SUBLICENSE LICENSE AND CONSTRUCTION OF PRODUCTION FACILITY

2.1               CBD Biotech Services, Obligations and Deliverables. In
furtherance of the strategic objectives to exploit the business opportunity of
producing CBD end products using the Bakhu Licensed Science, and to facilitate
the building and operating of the Production Facility in the State of Florida,
CBD Biotech agrees to provide the services, performed such tasks and deliver the
information, set forth below, by the dates as set forth on the Delivery
Schedule:

 

2.1.1          Bakhu Licensed Science Related Information. CBD Biotech through
Whitton, and his associates shall, within thirty (30) Business Days after the
completion of a successful Bakhu Efficacy Test, provide all technical and other
information, and documentation and other materials reasonably (collectively the
“Lab Operating Manual”) necessary as requested by ICS necessary to gain a
working knowledge regarding procedures, process and protocals for utilizing the
Bakhu License Science effectively.

 

2.1.2          Continued Support of Dr. Whitton. CBD Biotech shall facilitate
the cooperation of Dr. Whitton as an information resource, and a full
explanation of the Bakhu Licensed Science, as well as trade secret formulas, to
ICS in furtherance of ICS working knowledge for utilizing the Bakhu License
Science.

 

2.1.3          Production Facility Related Information. CBD Biotech shall,
within thirty (30) Business Days after the Effective Date, provide all technical
and other information, documentation and other materials reasonably requested by
ICS, necessary for ICS to understand the production process and to evaluate the
prospective cost to build the Production Facility. In this regard, CBD Biotech
shall provide up to date and accurate technical information including without
limitation optimal design and layout recommendations, along with the necessary
lab, manufacturing and production equipment and tooling specifications (the “Lab
Equipment Requirements”), end product handling protocols, testing and quality
control procedures and criteria.

 

2.1.4          Sublicense Agreement. CBD Biotech shall enter into the CBD
Biotech Sublicense Agreement with ICS in the form attached hereto as Exhibit 2,
which shall become effective upon the Effective Date as defined above (i.e. the
completion of the Bakhu Efficacy Test, the delivery of the Lab Operating Manual
and the delivery of Lab Equipment Requirements.

 5 

The CBD Biotech Sublicense shall entitle ICS to use the Bakhu Licensed Science
to produce, manufacture, market and sell CBD, CBD byproducts and CBD
derivatives. In conjunction with the CBD Biotech Sublicense Agreement, CBD
Biotech shall provide all documents, manuals and specifications for building
proprietary equipment required and necessary for the use of the Bakhu Licensed
Science. The CBD Biotech Sublicense Agreement shall be for an initial term of
thirty (30) years, subject to the right of CBD Biotech to buyback and terminate
the CBD Biotech Sublicense Agreement as set forth in Article 5., below.

 

2.1.5          CBD Biotech Resources. CBD Biotech through its contracted
resources, shall procure and provide to ICS, knowledgeable engineering and
laboratory design support, including assistance with all mechanical components,
equipment and tooling requirements necessary in using the CBD Biotech Licensed
Science, as well as operational requirements, production, safety and processing
manuals, to insure that the proposed finished Production Facility as customized
to the proposed location facility syncs with the current lab operations and
equipment of ICS. CBD Biotech shall provide a list of all current engineers,
suppliers and or vendors for all equipment and supplies necessary to support
construction and operation of the Production Facility.

 

2.1.6          Consulting Services of Dr. Whitton. CBD Biotech shall, at CBD
Biotech’s sole costs and expense, retain the consulting services of Dr. Whitton,
as well, limited to up to eighty (80) hours of professional consulting services
of a such mechanical and other engineer as necessary to support the ICS’s team
of engineers and contractors for the construction and equipping of the
Production Facility, and the initial start-up of the operation, including
training the lab technicians that will be responsible for operating the
Production Facility.

 

2.1.7          Offtake Agreement. CBD Biotech shall, prior to expenditure of
funds for equipment for the Production Facility, deliver a Supply and Offtake
Agreement (the “Offtake Agreement“) in the form attached hereto as Exhibit 4,
from one or more parties, for the purchase of the entire monthly production or
the percentage of production as required by ICS, of the CBD produced by the
Production Facility in Florida, at the then current market wholesale rate for
CBD concentrate. Said Offtake Agreement shall be on terms and conditions
mutually agreed by ICS and the respective purchasers and for a minimum term of
24 months. Said Offtake Agreement shall become effective upon signing and shall
commence upon the completion and commencement of operations of the Production
Facility with the initial successful monthly production of CBD end product
concentrate utilizing the Bakhu Licensed Science. In the event of failure or
performance of the parties to purchase the monthly production as agreed between
the parties, CBD Biotech shall have the right to substitute other parties on the
same terms and conditions, and such substitution shall not constitute a breach
of the terms of the agreement.

 

2.2               ICS Services, Obligations and Deliverables. In furtherance of
the strategic objections to exploit the business opportunity of producing CBD
end products using the Bakhu Licensed Science through the sublicensing of the
Bakhu Licensed Science to ICS, and to facilitate the building and operating of
the Production Facility in the State of Florida, ICS agrees to provide the
services, performed such tasks and deliver the information, set forth below, by
the dates as set forth on the Delivery Schedule:

 

2.2.1          Production Facility Completion and Commencement of Operations.
ICS agrees to provide all resources and manpower to build out the Production
Facility equipped with a minimum of two hundred ten (210), one thousand (1,000)
liter bioreactors, and support equipment that can produce dried CBD concentrate
in the same ratios as the Bakhu Efficacy Test per annum, with the completion of
the Production Facility and commencement of operations by April 2021, subject to
the availability of the necessary equipment and third party regulatory licensing
and permits.

 

 6 

2.2.2          Oversight of and Costs of Construction of Production Facility.
ICS shall have complete autonomy with regard to the construction of the
Production Facility and shall be solely responsible for:

 

(a)                obtaining any and all necessary landlord permissions to
modify any building for the expressed purpose of building and operating the
Production Facility;

 

(b)                obtaining any required approvals and all permits necessary to
make improvements and modify the proposed structures to support the Production
Facility;

 

(c)                the payment of all costs and expenses associated therewith
including without limitation the costs of the purchase or related lease for such
facility, any build out of the facility, all furniture, fixtures, equipment and
tooling, all utilities and, insurance associated with the Production Facility;

 

(d)                obtaining any and all permits and licenses necessary to
operate the Production Facility and any distribution facility located in the
state of Florida, included the costs of such permits or licenses;

 

(e)                providing and managing all staffing, as employees, and or
sub-contractors necessary to support the validation and certification of the
Production Facility before commercial operation begins;

 

(f)                 the recruitment and training of employees to operate the
Production Facility and any distribution facility;

 

(g)                compliance with all state and federal tax regulations;

 

(h)                providing ongoing administrative and operational services of
the Production Facility and any distribution facility in full compliance with
all pertinent laws and regulations.

 

2.2.3          Training of Sublicensees. ICS will cooperate with CBD Biotech to
develop a Licensee Training Program, and conduct the training of individual
sublicensees referred by CBD Biotech, in the classroom and or laboratory setting
in the Production Facility for a fee per licensee.

 

2.2.4          ICS Sublicensing: ICS intends to assist in the promotion and
selling of sublicenses. CBD Biotech will pay ICS a fee equal to five percent
(5.00%) of the gross initial upfront license fee received by CBD Biotech under
each license sold in which ICS is the source of the Licensee Prospect. CBD
Biotech will pay ICS a fee equal to five percent (5.00%) of the gross initial
upfront license fee received by CBD Biotech from the purchase of a sublicense by
a licensee in which CBD Biotech is the source of the Licensee Prospect, and ICS
assists in the closing of the sale.

 

 7 

2.2.1          Sublicense Agreement. ICS shall enter into the CBD Biotech
Sublicense Agreement with CBD Biotech in the form attached hereto as Exhibit 2,
and shall pay to CBD Biotech, the licensed fees and royalties, as generally set
forth in Section 3.5, below and more fully set forth in CBD Biotech Sublicense
Agreement.

 

 

2.2.6          Offtake Agreement. ICS shall enter into the Offtake Agreement in
the form attached hereto as Exhibit 4 pursuant to Section 2.1.7, with such
Offtake Agreement becoming effective and commence upon the completion and
commence of operations of the Production Facility with the initial successful
monthly production of CBD end product concentrate.

 

ARTICLE 3.
Compensation

3.1               Compensation of ICS. In consideration of the services of ICS
constructing and building of the Production Facility, as provided in this
Agreement, ICS shall receive and CBD Biotech through its Parent or Affiliates
shall issue or cause to be issued to ICS such number of restricted shares of
Bakhu Common Stock (the “Share Compensation”), equal to one-half percent (0.5%)
of the outstanding common shares of Bakhu, as adjusted to take into account any
additional issuance of shares by Bakhu, from time to time. As of the Effective
Date there are 300,000,000 shares of Bakhu outstanding and therefore the Share
Compensation as of the Effective Date equals one million five hundred thousand
(1,500,000) shares of common stock of Bakhu. The Share Compensation shall be
released to ICS upon satisfaction of the conditions set forth in Section 3.3
below.

 

3.2               Intentionally Left Blank

 

3.3               Disbursement and Release of Share Compensation. CBD Biotech
shall release and deliver to ICS, the Bakhu stock certificate representing the
Share Compensation upon the completion and commence of operations of the
Production Facility with the initial successful monthly production of CBD end
product concentrate in the same production ratios as the Bakhu Efficacy Test
results.

 

3.4               Release of Shares upon Sale of Bakhu Licensed Science or
Termination of Sublicense Agreement. Notwithstanding anything to the contrary
above, in the event of the sale of all rights covered by the patents or licenses
relating to the Bakhu Licensed Science, or the termination of the CBD Biotech
Sublicense Agreement with ICS as provided in Section 6.1, all Shares
Compensation shares of Bakhu shall be released by CBD Biotech to ICS, regardless
of whether or not the construction of the Production Facility has been
completed.

 

3.5               Sublicense Fees and Royalties. In consideration of the grant
of, and pursuant to the terms of the CBD Biotech Sublicense Agreement, as more
specifically set forth therein, ICS shall pay to CBD Biotech a license fee (the
“License Fee”) and a continuing gross royalty (the “Royalty”) as follows:

 

3.5.1          License Fee. As provided in the CBD Biotech Sublicense Agreement
and not in addition to the license fee therein, ICS shall pay the license fee,
of $250,000 to CBD Biotech, in two installments:

 

(a)                the first installment of the License Fee, in the amount of
USD$125,000 USD, shall be paid within twelve (12) months of the sale date for
the first monthly product of CBD; and

 

(b)                the second installment of the License Fee, in the amount of
USD$125,000 shall be paid on the six month anniversary date of the payment of
installment one above.

 

 8 

3.5.2          Royalty. ICS shall also pay to CBD Biotech, a gross royalty equal
to 8% of the wholesale product price sales revenue from the production of CBD
raw product concentrate, produced in the Production Facility using the Bakhu
Licensed Science. The royalty payments shall be paid quarterly in arrears,
beginning post the first quarter of commercial production,

 

3.6               Training Program Compensation. In consideration for housing
and operating a training facility for sublicensees of the Bakhu Licensed
Science, CBD Biotech shall pay to ICS a training fee of $10,000.00 per
sublicensee being trained.

 

ARTICLE 4.
intellectual property rights

 

4.1               Each of CBD Biotech and ICS shall retain ownership of their
own respective Intellectual Property and Intellectual Property Rights. Nothing
in this Agreement shall convey ownership of any Intellectual Property or
Intellectual Property Rights, from one Party to the other Party.

 

4.2               All benefits, if any, that are sourced from, or systemic to
any modification, improvement or enhancement of the Bakhu Licensed Science
derived or made as part of the construction and operations of the Production
Facility, shall be owned by CBD Biotech and all services provided by ICS,
Ambrose, or any employee or consultant of ICS, shall be consider a work for
hire, with the Share Compensation paid herein, as the full and final
consideration for any such modifications, improvements or enhancements or work
products thereof.

 

ARTICLE 5.
cOVENANTS AND OTHER AGREEMENTS

 

5.1               Reciprocal Buyback and Sublicense Termination. The Parties
agree that in the event of the sale to a non-affiliated third party, of the
Bakhu Licensed Science and any license rights associated therewith, then CBD
Biotech shall have the option, on 45-days prior written notice to ICS, to
terminate the CBD Biotech Sublicense Agreement entered into pursuant to this
Agreement, subject to payment of a termination fee by CBD Biotech to ICS as set
forth in Section 5.2 below.

 

5.2               Termination Fee. In the event of the termination of the CBD
Biotech Sublicense Agreement by CBD Biotech, as provided in Section 5.1 above,
CBD Biotech shall pay to ICS a termination fee (the “Termination Fee”) equal to
the actual license fees paid by ICS to CBD Biotech pursuant to the CBD Biotech
Sublicense Agreement and the release and delivery by CBD Biotech to ICS of the
Bakhu stock certificate representing Share Compensation. The payment of the
Termination Fee shall be a condition precedent to CBD Biotech’s rights to
terminate the CBD Biotech Sublicense Agreement and shall be paid on the
effective date of the termination of the CBD Biotech Sublicense Agreement.

 

5.3               Mandatory Purchase of Production Facility Equipment. In
addition to the payment of the Termination Fee as set forth in Section 5.2, in
the event of the termination of the CBD Biotech Sublicense Agreement by CBD
Biotech as provided in Section 6.1 above, CBD Biotech shall have the obligation
to reimburse ICS and purchase from ICS all lab operational equipment acquired,
installed and necessary to operate the Production Facility established by ICS
pursuant to this Agreement and the CBD Biotech Sublicense Agreement, by making a
single payment to ICS (the “Equipment Purchase Payment”), equal to one hundred
percent (100%) of ICS’ actual cost incurred. The payment of the Equipment
Purchase Payment shall be a condition precedent to CBD Biotech’s rights to
terminate the CBD Biotech Sublicense Agreement and shall be paid on the
effective date of the termination of the CBD Biotech Sublicense Agreement.

 9 

5.4               Post Purchase Joint Ownership of Production Facility Equipment
Upon payment of the Equipment Purchase Payment by CBD Biotech as set forth in
Section 5.3, CBD Biotech and ICS shall jointly and equally own the production
facility lab equipment acquired, and shall jointly determine the business use of
said equipment. By way of example, if ICS, at the time that CBD Biotech
exercises CBD Biotech’s buyback and termination rights hereunder, has invested
$3.8 million in the equipment and installation to create the Production
Facility, then as a result of the termination of the CBD Biotech Sublicense
Agreement with ICS, CBD Biotech shall pay ICS an Equipment Purchase Payment of
$3.8 million.

 

5.5               CBD Biotech First Right of Refusal to Acquire ICS. In the
event that ICS elects to sell all or any part or interest in the physical
facilities, licenses, equipment, and operating contracts of ICS, the TG United
Companies or Ambrose, CBD Biotech and its Affiliates shall the conditional first
right of refusal, which must be exercised within thirty (30) days of written
notice and paid within ninety (90) days of exercise, to acquire all or any part
thereof, with or without the business entities, and such purchase shall be
conditioned upon the payment of such price as mutually agreed to by CBD Biotech
and its Affiliates, and ICS, the TG United Companies or Ambrose, respectively.

 

5.6               Public Announcements. Neither CBD Biotech nor ICS shall make,
or permit any representative to make, any public statements, including any press
releases, with respect to this Agreement or the transactions contemplated hereby
without the prior written consent of both Parties. Either Party shall have the
right to make such disclosures as it may deem necessary or advisable to comply
with applicable law, including pursuant to the rules and regulations of the FTC
or FDA. If any public announcement of release is to be made, CBD Biotech and ICS
shall jointly agree on the content and substance of all public announcements
concerning this Agreement.

 

 ARTICLE 6.
Confidential Information

 

6.1               Confidential Information. In conjunction with and pursuant to
this Agreement, the Parties may wish to disclose confidential information to
each other.  For purposes of this Agreement, “Confidential Information” means
confidential, non-public information, know-how and data (technical or
non-technical) that is disclosed in writing, orally, graphically, in machine
readable form, or in any other manner by or on behalf of a disclosing Party to a
receiving Party or its Affiliates for purposes of this Agreement (the
“Purpose”).  Confidential Information may be disclosed in any form (e.g. oral,
written, graphic, electronic or sample) by or on behalf of disclosing Party or
its Affiliates, or may be otherwise accessible to receiving Party or its
Affiliates.

 

6.2               Non-Disclosure and Limited Use. Without disclosing Party’s
prior written consent, receiving Party will: (a) not use any part of or the
whole of the Confidential Information for any purpose other than the Purpose;
(b) restrict the dissemination of Confidential Information to individuals within
its own organization and disclose the Confidential Information only to those of
its officers, employees and Affiliates who have a legitimate need to have access
to the Confidential Information, who will be bound by confidentiality and
non-use commitments no less restrictive than those of this Agreement, and who
will have been made aware of the confidential nature of the Confidential
Information; (c) protect the Confidential Information by using the same degree
of care, but not less than a reasonable degree of care, to prevent the
unauthorized use, dissemination, or publication of the Confidential Information
as receiving Party uses to protect its own confidential information of a like
nature; (d) preserve the confidentiality of the Confidential Information, not
disclose it to any third party, and take all necessary and reasonable
precautions to prevent such information from being accessible to any third
party; and (f) promptly notify the disclosing Party upon becoming aware of
evidence or suspicion of any unauthorized use or disclosure of the Confidential
Information.  The foregoing obligations will exist for a period of three (3)
years from the date of completion of the Production Facility in relation to
which the Confidential Information is disclosed or used.

 

 

 10 

 

6.3               Scope. The obligations of confidentiality and non-use listed
in this Article 7 will not apply to information: (a) which is in the public
domain or public knowledge at the time of disclosure, or which subsequently
enters the public domain through no fault of receiving Party; (b) which was
rightfully in the possession of receiving Party at the time of disclosure by
disclosing Party; (c) which is independently developed by receiving Party
without use of disclosing Party’s Confidential Information; (d) which the
receiving Party receives legally from any third party and which is not subject
to an obligation of confidentiality; or (e) is communicated to the receiving
party’s scientific or other evaluation committee. The receiving Party may also
disclose Confidential Information of any other Party where it is required to
disclose such pursuant to Applicable Law; provided, however, that receiving
Party will make reasonable efforts, if legally permissible, to (i) notify
disclosing Party prior to the disclosure of any part of or the whole of the
Confidential Information and (ii) allow disclosing Party the opportunity to
contest and avoid such disclosure, and provided, further, that receiving Party
will disclose only that portion of such Confidential Information that it is
legally required to disclose.

 

6.4               Ownership. All Confidential Information disclosed to receiving
Party pursuant to this Agreement will be and remain the disclosing Party’s
property.  Nothing contained herein will be construed as granting to receiving
Party any proprietary right on or in relation to any part of or the whole of the
Confidential Information, or any right to use any of the Confidential
Information except for the Purpose.  Receiving Party will return to disclosing
Party all documents and other materials which constitute Confidential
Information, as well as all copies thereof, promptly upon request or upon
termination of this Agreement (whichever is earlier); provided, however, that
receiving Party may keep one copy of the Confidential Information received under
this Agreement in its secure files in accordance with the terms of this
Agreement for the sole purpose of maintaining a record of the Confidential
Information received hereunder and for compliance with this Agreement and/or
Applicable Laws.

 

6.5               Injunctive relief. Improper use or disclosure of the
Confidential Information by receiving Party is likely to cause substantial harm
to disclosing Party.  Therefore, in the event of a breach, threatened breach, or
intended breach of this Agreement by receiving Party, in addition to any other
rights and remedies available to it at law or in equity, disclosing Party will
be entitled to seek preliminary and final injunctions enjoining and restraining
such breach, threatened breach, or intended breach.

 

ARTICLE 7.
representation and warranties OF CBD Biotech

 

CBD Biotech hereby represents and warrants to ICS that the following
representations and warranties are true and correct as of the Effective Date.

 

7.1               Organization and Power. CBD Biotech is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California, and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as currently conducted,
and is qualified to do business in each jurisdiction where qualification is
required.

 

 11 

7.2               Authorization; No Breach; Valid and Binding Agreement.

 

(a)                CBD Biotech has full corporate power and authority to execute
and deliver, and enter into, this Agreement, and to consummate the transactions
contemplated by this Agreement. This Agreement is a legal, valid and binding
agreement of CBD Biotech enforceable against CBD Biotech in accordance with its
terms, subject to the laws of bankruptcy, insolvency and moratorium and other
laws or equitable principles generally affecting creditors’ rights. CBD Biotech
has obtained approval by its Board of Directors for the execution of this
Agreement and the consummation of the transactions contemplated hereby. Other
than obtaining the required corporate approval from its Board of Directors, no
consent, authorization, order or approval is required in connection with the
execution and delivery by CBD Biotech of this Agreement.

 

(b)                The execution, delivery, and performance by CBD Biotech of
this Agreement and the other documents to be executed pursuant to this Agreement
will not violate, conflict with, result in any breach of, or constitute a
default under (i) CBD Biotech’s organizational documents, or (ii) any law or
(iii) result in the imposition of any Lien over the CBD Biotech Licensed
Science.

 

7.3               Governmental Consents. CBD Biotech will comply with all
registration, disclosure, consent, approval or authorization of any Governmental
Authority required to be obtained by CBD Biotech in connection with its
execution, delivery and performance of this Agreement, or the consummation by
CBD Biotech of the transactions contemplated hereby.

 

7.4               Litigation.  There is no Proceeding, at law or in equity,
pending against or, to CBD Biotech’s Knowledge, threatened against or by CBD
Biotech, relating to the Bakhu Licensed Science, nor is there any order of any
Governmental Authority or arbitrator pending against or, to CBD Biotech’s
Knowledge threatened against CBD Biotech, the adverse outcome of which would,
individually or in the aggregate, prohibit, restrict or delay, in any material
respect, the performance by CBD Biotech or CBD Biotech’s obligations under this
Agreement.

 

ARTICLE 8.
representation and warranties OF Ics

 

ICS Hereby represents and warrants to CBD Biotech that the following
representations and warranties are true and correct as of the Effective Date.

 

8.1               Organization and Power. ICS is a corporation duly organized,
validly existing and in good standing under the laws of the State of Florida,
and has all requisite corporate power and authority to own, lease and operate
its properties and to carry on its business as currently conducted, and is
qualified to do business in each jurisdiction where qualification is required.

 

8.2               Authorization; No Breach; Valid and Binding Agreement.

 

(a)                ICS has full corporate power and authority to execute and
deliver, and enter into, this Agreement, and to consummate the transactions
contemplated by this Agreement. This Agreement is a legal, valid and binding
agreement of ICS enforceable against ICS in accordance with its terms, subject
to the laws of bankruptcy, insolvency and moratorium and other laws or equitable
principles generally affecting creditors’ rights. ICS has obtained approval by
its Board of Directors for the execution of this Agreement and the consummation
of the transactions contemplated hereby. Other than obtaining the required
corporate approval from its Board of Directors, no consent, authorization, order
or approval is required in connection with the execution and delivery by ICS of
this Agreement.

 

 12 

(c)                The execution, delivery, and performance by ICS of this
Agreement and the other documents to be executed pursuant to this Agreement will
not violate, conflict with, result in any breach of, or constitute a default
under (i) ICS’s organizational documents, or (ii) any law or (iii) result in the
imposition of any Lien over any assets of ICS.

 

8.3               Governmental Consents. ICS will obtain any and all consent,
approval or authorization of any Governmental Authority required to be obtained
by ICS in connection with its execution, delivery and performance of this
Agreement, or the consummation by ICS of the transactions contemplated hereby.

 

8.4               Litigation.  There is no Proceeding, at law or in equity,
pending against or, to ICS’s Knowledge, threatened against or by ICS, nor is
there any order of any Governmental Authority or arbitrator pending against or,
to ICS’s Knowledge threatened against ICS, the adverse outcome of which would,
individually or in the aggregate, prohibit, restrict or delay, in any material
respect, the performance by ICS or ICS’s obligations under this Agreement.

 

8.5               Investment Representations. ICS further represents and
warrants that:

 

(a)                Restricted Securities. The share of Bakhu which constitute
the Share Compensation as set forth in Section 3.1, are “Restricted Securities”
as defined in the Securities Act of 1933 (the “Act”) and may not be resold
unless the shares are registered under the Act, or an exemption from
registration under the Act is available.

 

(b)                Investment Purpose. ICS is acquiring the shares for its own
account for investment only and not with a view towards, or for resale in
connection with, the public sale or distribution thereof, except pursuant to
sales registered or exempted under the Act. Other than the potential assignment
and transfer of the shares to David Ambrose, the owner of ICA, ICS does not
presently have any agreement or understanding, directly or indirectly, with any
Person to distribute any of the Shares.

 

(c)                Reliance on Exemptions. ICS understands that the Shares are
being offered and sold to it in reliance on specific exemptions from the
registration requirements of United States federal and state securities laws and
that Bakhu is relying in part upon the truth and accuracy of, and the compliance
with, the representations, warranties, agreements, acknowledgments and
understandings of each of ICS set forth herein in order to determine the
availability of such exemptions and the eligibility of ICS to acquire the
Shares.

 

(d)                ICS Can Protect Its Interest; No General Solicitation. ICS by
reason of the management, business or financial experience of its owner,
Ambrose, has the capacity to protect its own interests in connection with the
acquisition of the Shares. ICS is aware of no publication of any advertisement
or general solicitation in connection with the issuance and acquisition of the
Shares contemplated in this Agreement.

 

(e)                Bakhu Information. ICS has had an opportunity to discuss the
business, management and financial affairs of CBD and its Parent, Bakhu with
such officers and management of Bakhu as ICS deems necessary, and the
opportunity to ask questions of and receive answers regarding the terms and
conditions of an investment in the Shares. ICS has sought such accounting, legal
and tax advice, as it has considered necessary to make an informed investment
decision with respect to its acquisition of the Shares.

 

 13 

(f)                 No Governmental Review. ICS understands that neither the
United states Securities and Exchange Commission (the “SEC”) or any securities
administrator of any state in the United States, has passed on or made any
recommendation or endorsement of the Shares, or the fairness or suitability of
the acquisition of the Shares.

 

(g)                Transfer or Resale. ICS understands that Rule 144 (“Rule
144”) promulgated under the Act requires, among other conditions, a one year
holding period prior to the resale (in limited amounts) of shares acquired in a
non-public offering without having to satisfy the registration requirements
under the Act. ICS understands that Bakhu makes no representation or warranty
regarding its fulfillment in the future of any reporting requirements under the
Securities Exchange Act of 1934 (the “Exchange Act”), as amended, or its
dissemination to the public of any current financial or other information
concerning Bakhu, as is required by Rule 144 as one of the conditions of its
availability. ICS understands and hereby acknowledges that Bakhu is under no
obligation to register the Shares under the Act. ICS acknowledges that Bakhu may
consent and permit the transfer of Shares by ICS only if such request for
transfer is accompanied by an opinion of counsel reasonably satisfactory to
Bakhu and its counsel that neither the sale nor the proposed transfer results in
a violation of the Act or any applicable state “Blue Sky” laws (collectively
“Securities Laws”).

 

(h)                Legend Requirements. ICS understands and agrees that Bakhu
shall cause the legends set forth below, or substantially equivalent legends, to
be placed upon any certificate evidencing ownership of the Shares, together with
any other legends that may be required by the SEC or by applicable state or
federal securities laws:

 

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 (THE “ACT”) AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED,
PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IN THE
OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER,
SALE OR TRANSFER, PLEDGE OR HYPOTHECATION OTHERWISE COMPLIES WITH THE ACT.

 

ARTICLE 9.

CONDITIONS TO PARTIES OBLIGATIOINS

 

9.1               Conditions of the CBD Biotech Obligation. CBD Biotech’
obligation to effect this Agreement is subject to the satisfaction as of the
following conditions precedent (any of which conditions precedent may be waived
by CBD Biotech):

 

(a)                Representations and Warranties. Each representation and
warranty of ICS set forth in Article 7., true and correct in all material
respects at and as of the Effective Date.

 

(b)                Covenants. ICS shall have performed and observed in all
material respects each covenant and other obligation required to be performed or
observed by it pursuant to this Agreement and any other documents to be executed
pursuant to this Agreement.

 

(c)                Proceedings. No action shall be pending before any
Governmental Authority or government order issued the result of which would
prevent or prohibit the consummation of this Agreement.

 

 14 

(d)                Deliverables of ICS. ICS shall have delivered, or cause to be
delivered, to the CBD Biotech all information and deliverables, and any
documents to which ICS is a party duly executed by ICS, including a license to
produce and distribute CBD products in the State of Florida.

 

9.2               Conditions of the ICS’s Obligation. ICS’s obligation to effect
this Agreement is subject to the satisfaction as of the following conditions
precedent (any of which conditions precedent may be waived by ICS:

 

(a)                Representations and Warranties. Each representation and
warranty of CBD Biotech set forth in Article 8., above shall be true and correct
in all material respects at and as of the Effective Date.

 

(b)                CBD Biotech shall have performed and observed in all material
respects each covenant and other obligation required to be performed or observed
by it pursuant to this Agreement and any other documents to be executed pursuant
to this Agreement.

 

(c)                Proceedings. No action shall be pending before any
Governmental Authority or government order issued the result of which would
prevent or prohibit the consummation of this Agreement.

 

(d)                Deliverables of CBD Biotech. CBD Biotech shall have
delivered, or cause to be delivered, to the ICS all information and
deliverables, and any documents to which CBD Biotech is a party duly executed by
CBD Biotech.

 

ARTICLE 10.

 

TERMINATION

 

10.1            Termination. This Agreement may be terminated:

 

(a)                at any time by mutual written agreement of CBD Biotech and
ICS;

 

(b)                by either CBD Biotech or ICS, if a material breach of any
provision of this Agreement has been committed by the other party, and such
material breach results in a condition of this Agreement becoming incapable of
being satisfied and such material breach has not been waived in writing;

 

(c)                by ICS if CBD Biotech has failed to complete the delivery or
performance of a specified milestone by the date set forth in the Delivery
Schedule, and CBD Biotech fails to remedy non-delivery or non-performance within
30 days after receiving written notice describing in reasonable detail
non-delivery or non-performance; and

 

(d)                by CBD Biotech if ICS has failed to complete the delivery or
performance of a specified milestone by the date set forth in the Delivery
Schedule, and ICS fails to remedy non-delivery or non-performance within 30 days
after receiving written notice describing in reasonable detail non-delivery or
non-performance.

 

(e)                Notwithstanding Sections 10.1(c) and (d) above, in the event
that the non-delivery or non-performance is caused by or a result of the actions
of a third party, CBD Biotech or ICS, as the case may be, demonstrating that the
alleged non-delivery or non-performance is curable but the time to cure such
default of breach exceeds the 30 day cure period, the cure period will be
extended to such reasonable time cure in light of the applicable circumstances,
as required by the third party action.

 15 

 

10.2            Effect of Termination.

 

(a)                In the event of termination of this Agreement, all
obligations of the parties under this Agreement will terminate, except that the
obligations of the Parties in Article 6 and Article 7, which shall continue in
full force and effect in accordance with its terms.

 

(b)                In the event of termination of this Agreement pursuant to
Section 10.1(b) due to a material breach by CBD Biotech, CBD Biotech shall be
liable to ICS in an amount equal to $10,000 and the release and delivery by CBD
Biotech to ICS of the stock certificate representing Share Compensation set
forth in Section 3.1. The Parties intend that the Liquidated Damages constitute
compensation, and not a penalty. The Parties also acknowledge and agree that
ICS’s harm caused by such a material breach by CBD Biotech may be impossible or
very difficult to accurately estimate, and that the Liquidated Damages are a
reasonable estimate of the minimum anticipated or actual harm that would arise
from such material breach by CBD Biotech.

 

(c)                In the event of termination of this Agreement pursuant to
Section 10.1(b) due to a material breach by ICS, ICS shall be liable to CBD
Biotech in an amount equal to $10,000. The Parties intend that the Liquidated
Damages constitute compensation, and not a penalty. The Parties also acknowledge
and agree that CBD Biotech’s harm caused by such a material breach by ICS may be
impossible or very difficult to accurately estimate, and that the Liquidated
Damages are a reasonable estimate of the minimum anticipated or actual harm that
would arise from such material breach by ICS.

 

(d)                In the event of termination of this Agreement pursuant to
Section 10.1(c), due to the non-performance by CBD Biotech, then CBD Biotech
shall be liable to ICS in an amount equal to $10,000 and delivery by CBD Biotech
to ICS of the stock certificate representing Share Compensation set forth in
Section 3.1.

 

(e)                In the event of termination of this Agreement pursuant to
Section 10.1(d), due to the non-performance by ICS, then ICS shall be liable to
CBD Biotech in an amount equal to $10,000.

 

ARTICLE 11.

MISCELLANOUS

 

11.1            Expenses. Except as otherwise expressly provided herein, each of
CBD Biotech and ICS shall pay all of its own fees and expenses incurred in
connection with this Agreement and the transactions contemplated hereby.

 

11.2            Notices. All notices and other communications among the Parties
shall be in writing and shall be deemed to have been duly given (a) when
delivered in person, (b) when delivered by a nationally recognized delivery
service or (c) when delivered by facsimile or email with receipt confirmed,
addressed as follows:

 

 

 16 

 

Notices to CBD Biotech:

CBD Biotech, Inc.

Attn: Thomas K. Emmitt

One World Trade Center, Suite 130

Long Beach, CA 90831

Facsimile: (310) 997-1484

Email: tkemmitt@yahoo.com

 

Notices to ICS:

Integrity Cannabis Solutions Inc.

Attn: David Ambrose

16255 Aviation Loop Drive

Brooksville, Florida 34604

Facsimile: 352-754-8507

Email: dambrose@tgunited.com

 

11.3            Entire Agreement. This Agreement, including the Exhibits and
Schedules attached hereto, and any agreement, certificate, instrument or other
document executed and delivered in connection herewith, constitute the entire
agreement and understanding of the parties hereto with respect to the subject
matter hereof, and supersede all other prior or contemporaneous covenants,
agreements, undertakings, obligations, promises, arrangements, communications,
representations and warranties, whether oral or written, by either party hereto
or by any stockholder, director, officer, employee, agent, Affiliate or
representative of either Party hereto.

 

11.4            Assignment. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the Parties and their
respective successors. Neither this Agreement nor any of the rights, interests
or obligations hereunder may be assigned or delegated by any of the parties
hereto without the prior written consent of the non-assigning Parties.

 

11.5            Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.

 

11.6            Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. Any rule of construction to the
effect that ambiguities are to be resolved against the drafting party shall not
be applied in the construction or interpretation of this Agreement.

 

11.7            Amendment and Waiver. Any provision of this Agreement may be
amended or waived only in a writing signed by CBD Biotech and ICS. No waiver of
any provision hereunder or any breach or default thereof shall extend to or
affect in any way any other provision or prior or subsequent breach or default.

 

11.8            Third Party Beneficiaries. The provisions of this Agreement
shall be binding upon and shall inure to the benefit of the Parties and their
successors and permitted assigns. Nothing expressed or referred to in this
Agreement shall be construed to give any Person other than the Parties to this
Agreement any legal or equitable right, remedy or claim under or with respect to
this Agreement or any provision of this Agreement.

 

11.9            Governing Law. All issues and questions concerning the
construction, validity, interpretation and enforceability of this Agreement, any
documents contemplated hereby, and the Exhibits and Schedules hereto shall be
governed by, and construed in accordance with, the laws of the State of Florida,
without giving effect to any choice of law or conflict of law rules or
provisions.

 

 

 17 

 

11.10        Jurisdiction. Any action seeking to enforce any provision of, or
based on any matter arising out of or in connection with, this Agreement or the
transactions contemplated hereby or thereby shall be brought in and determined
exclusively by the state courts in San Diego County in the State of California
(or in the event of exclusive federal jurisdiction, the courts of the Southern
District of California), and each of the Parties hereby consents to the
jurisdiction of such courts in any such action. In no event shall either Party
have any right to recover from the other Party any consequential damages as to
any matter under, relating to or arising out of this Agreement or the
transactions contemplated hereby.

 

11.11        Waiver of Jury Trial. To the fullest extent permitted by applicable
law, the Parties hereto hereby voluntarily and irrevocably waives trial by jury
in any Proceeding brought in connection with this Agreement, any of the related
agreements and documents, or any of the transactions contemplated hereby or
thereby.

 

11.12        Time of Essence. With regard to all dates and time periods set
forth or referred to in this Agreement, time is of the essence. The parties
hereto acknowledge that, as a material inducement to each party’s execution of
this Agreement, such party will be relying upon the timely performance by the
other party hereto of its obligations hereunder.

 

11.13        Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Delivery of an executed
counterpart of a signature page to this Agreement by facsimile, portable
document format (.pdf), DocuSign or other electronic transmission shall be
equally as effective as delivery of a manually executed counterpart of this
Agreement.

 

IN WITNESS WHEREOF, the Parties have executed this Agreement on the day and year
first above written.

 

 

  CBD BIOTECH, INC.                     Dated: April 17, 2020 /s/ Thomas K.
Emmitt   _________________________________   By:  Thomas K. Emmitt  
Title:  President and CEO

 

 

  INTERGRITY CANNABIS SOLUTIONS, INC.                     Dated: April 17, 2020
/s/ David Ambrose   _________________________________   By:  David Ambrose  
Title:  President and CEO

 

 18 

 

Exhibit 1

 

BAKHU EFFICACY TESTING CRITERIA

 

Planned demonstration of application of proprietary science and processes at
commercial scale within standards of agreed efficacy.

 

The Parties (as defined therein) to that certain Strategic Alliance Agreement
(the “Agreement”) all agree that a commercial scaled demonstration of the Bakhu
Licensed Science, as defined in the Agreement, is necessary to satisfy the
claims of the inventor, and as a condition precedent to the parties obligations
and the entering into the CBD Sublicense Agreement and the payment of the
License Fees thereunder.

 

To this specific end, the Parties agree that the “Bakhu Efficacy Testing”
referred to in the Agreement as conducted by Bakhu pursuant to the Bakhu License
Agreement, shall have the following attributes, and target delivering the
results set forth herein below, and the delivery of such results shall
demonstrate, for purposes of this Exhibit and the terms of the Agreement,
acceptable “efficacy” of the proprietary science underlying the Licensed Science
for commercial and licensing purposes (hereinafter “Efficacy Demonstration”).

 

The “Science Team” as referenced in this Exhibit consists of professional
scientists from ICS and Bakhu under the direction of Dr Peter Whitton.

 

Overall objective: The end product, in quantity, and quality shall meet the
representative claims, oral and written, summarized below:

 

  A. Representative Claims and Proposed Actions and Duties of the Inventor:

 

  1. General Claim: The Licensed Science and processes may be utilized to
dissect a cell of a cannabis donor plant that has a measurable THC percentage
level, and thereafter grow duplicate cells in a laboratory commercial
application over a combined period of 36 weeks, so that each grow process,
utilizing a 1,000 liter bioreactor will produce, after filtering, and drying, 15
KG (23.375 lbs.) of powdered cells with the same percentage of THC as the donor
cell.

 

  2. Specific Claim: The Licensed Science may be utilized to dissect a donor
cell from a cannabis plant, with a lab tested and verified beginning THC levels,
re-produce that cell to a flask level within six to eight weeks, and thereafter
reproduce that cell culture from flask to a 10 liter seed culture to be added to
a 1,000 liter disposable bioreactor container with the 10 liter of cells
containing the identical levels of THC as the original donor cell.

 

  3. Specific Claim: The Licensed Science processes may be utilized to add a 10
liter seed culture to a 1,000 liter medium culture, and in approximately 12
weeks of cell growth process, harvest through a process of filtering,
approximately 100 liters of production cells, which are then laboratory dried to
approximately 15KG (23.375 lbs.) of powdered cells, and these end product dried
cells shall contain the same THC  percentages as the donor cell, and the cells
in the 10 liter seed culture originally added to the bioreactor  at the
beginning of the growth cycle. (Section 2 and 3 combined as the “Efficacy
Demonstration”).

 

  4. Specific Claim: The Science Team, and their retained professionals can
design a commercial production laboratory, which shall be sized initially with
a  bioreactor of 1,000  liter disposable bioreactor bladder, and all necessary
supporting equipment for the laboratory, and the production facility (as needed
for mixing, seed culturing, sterilization, drying, and packing) and thereafter
oversee the construction and testing of such a facility, and coincidently,
prepare all necessary handbooks and supporting process documentation, that will
result in a documented demonstration of the commercialization of the science
process more fully described in Section 1 above.

 

  5. Specific Claim: The Science Team, and their retained professionals and
contractors will oversee the construction and equipping of the proposed
laboratory, and production facility in a site selected and provided by Licensee,
including the selection of all equipment and supporting material necessary to
complete the laboratory and production facility to the written standards of the
Science Team.

 

 19 

  6. Specific Duties: The equipment, necessary contractors, labor, permits,
insurance, and improvements to procure and prepare the lab and production
facility will be paid for and owned by Licensee. Additionally, all supplies,
utilities, security, and any fees or expenses common to operation of a lab and a
production facility shall be paid by Licensee during the Efficacy Demonstration.

 

  7. Specific Duty: The Science Team and their retained professionals will
administer any testing, adjusting, and operational exercise required to ready
the laboratory and production facility for this specific “efficacy
demonstration.”

 

  8. Specific Duty: The Science Team will select the plant(s) to be utilized as
the donor plants for the Efficacy Demonstration from a resource provided by
Licensee.

 

  9. Specific Duty: The Science Team will dissect and test the “donor” cell for
the level of THC.

 

  10. Specific Duty: The Science Team will distribute selected cells to a
third-party lab in the State of California to affirm the percentage of THC in
the donor cells at the initiation of the culture growing process, with the lab
test cost paid by Licensee.

 

  11. Specific Duty: The Science Team will dissect and grow the flask of cells,
which will then be utilized to grow the 10 liters of cells for Bioreactor One
Production cycle, and when this process is complete, begin the cell production
cycle for Bioreactor One.

 

  12. Specific Duty: The Science Team will dissect and grow the flask of cells,
which will be utilized to grow the 10 liters of cells for Bioreactor Two
Production cycle, and when this process is complete, begin the cell production
cycle for Bioreactor Two. It is assumed that the Science Team may make
adjustments to the processes utilized for the second demonstration utilizing
Bioreactor Two.

 

  13. Specific Duty: At the end of the production cycle, the Science Team will
harvest the production cells from each bioreactor, filter the harvested cells,
dry the harvested cells, and test the end product cells for to ascertain if the
desired result as set forth in Section One has been achieved.

 

 

14. Specific Duty: The Science Team shall make available to a third-party test
lab in the State of California of Licensee’s choosing sufficient quantities of
the produced harvested and dried cells from Bioreactor One process and
Bioreactor Two process to allow that third party testing lab to verify the
stated claims and representations of the Science Team lab tested results.

 

  15. Specific Agreement: Only the third-party lab tested results shall be
utilized to ascertain if the claims of the Science Team are verified.

 

  16. Specific Agreement: The third-party lab tested results from the second
bioreactor test of the Licensed Science process shall be utilized to determine
efficacy of the Licensed Science process unless the results from Bioreactor One
test prove superior to Bioreactor Two test.

 

  17.

Specific Detail on the Acceptable “Standard Result”: The efficacy demonstration
of the Licensed Science and process as set forth generally in Section 1 above,
which results in: (a) the cells produced, harvested and dried during the full
cycle of the Science process contain at least 90% of the levels of THC as the
donor cell, with this result affirmed by a third party testing lab, and (b) this
result is achieved at a projected utility and supplies cost of between $0.10 and
$0.30 per gram, shall be considered an Acceptable Standard Result.

 

This result, for purposes of this Agreement, is the “Standard Result” claimed by
the inventor and acceptable to the Parties.

 

 

  19. Specific Notice: Results at significant variation with the “Standard
Result” devalue the science for licensing and production purposes, and depending
on the variation, render the science commercially valueless.

 

 20 

 

Extension of the Efficacy Demonstration Period: In the event that anything less
than a 90% Efficacy Demonstration is achieved during the test, it is agreed by
the Parties that Science Team may extend the efficacy test period, adding an
additional test cycle with one or both bioreactors, and make adjustments to
their proprietary process to attempt to achieve the claimed results and achieve
a 90% Efficacy Demonstration. The purpose of the expanded test is so the Science
Team may attempt to improve the results by potentially working the remaining
“bugs” in the system so improvements in yield may occur.

 

 

 

 

 

 

 

 

 

 

 

 

 21 

 

Exhibit 2

 

CBD Biotech Sublicense Agreement

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 22 

 

 

Exhibit 3

 

CBD Biotech - CBD Biotech, Inc.

DA - David Ambrose

ICS - ICS Cannabis Solutions, Inc.
PW - Dr. Peter Whitton

 

Section

Agreement

Responsible

Party

 

Milestone

 

Due Date

        2.1.1 CBD Biotech / PW Delivery of Bakhu Science Related Information
Within 30 Business days of the Effective Date         2.1.2 CBD Biotech / PW
Delivery of requested support information required by ICS Ongoing after the
Effective Date         2.1.3 CBD Biotech / PW Delivery of Production Facility
requested information Within 30 Business days of the Effective Date        
2.2.1  ICS Completion of Production Facility April 2021                        
                                                                               
               

 

 

 

 

 

 

 

 

 

 

 23 

 

 

Exhibit 4

 

Offtake Agreement

 

[Subject to Completion between ICS and Party TBD]

 

 

 

 24