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6450 Cameron Street #113 | Las Vegas, NV | 89014 | 702.209.2429 |
www.digipath.com | info@digipath.com

 

Strictly Confidential

 

September 25, 2019

 

Kyle Remenda

Philippe Henry

VSSL Enterprises Ltd.

1-1385 Stevens Road

West Kelowna, British Columbia

Canada V1Z2S9

 

Re: Binding Letter of Intent to for the Acquisition of VSSL Enterprises Ltd. by
Digipath

 

Ladies and Gentlemen:

 

This letter sets forth the terms and conditions under which Digipath, Inc., a
Nevada corporation (“Purchaser”), will acquire from Kyle Remenda and Philippe
Henry (the “Shareholders”) all of the outstanding shares of capital stock of
VSSL Enterprises Ltd., a British Columbia corporation (the “Company”). We are
enthusiastic about this opportunity and look forward to proceeding with the
preparation of definitive documentation and an expeditious closing of the
acquisition (the “Transaction”).

 

1. Acquisition of Shares. As soon as possible following the execution of this
letter, Purchaser, Shareholders and the Company will enter into a definitive
Stock Purchase Agreement (the “Sale Agreement”) providing for the sale by the
Shareholders to Purchaser of all of the outstanding shares of capital stock of
the Company (the “Shares”), so that following the closing of the Transaction
(the “Closing”), the Company will be a wholly owned subsidiary of the Purchaser.

 

2. Purchase Price. The Sale Agreement will provide that as consideration for the
sale of the Shares to Purchaser, Purchaser will, upon the Closing:

 

(a) pay to the Shareholders, in cash, the aggregate amount of $200,000; and

 

(b) cause to be issued to the Shareholders an aggregate of 6,000,000 shares of
common stock of the Purchaser.

 

 

 

 

3. Definitive Agreements. Upon receipt of a fully countersigned copy of this
letter, we will instruct our counsel to commence the drafting of a definitive
Sale Agreement. It will contain, among other things, covenants, representations,
warrantees, closing conditions, indemnities, and other terms and provisions that
are customary in transactions of this type.

 

4. Employment and Consulting Agreements. Concurrently with the execution of this
Agreement, the Purchaser will enter into (i) an Employment Agreement with Kyle
Remenda, pursuant to which he will serve as the Purchaser’s Chief Executive
Officer (the “Employment Agreement”), and (ii) a Consulting Agreement with
Philippe Henry pursuant to which he will serve as the Purchaser’s Chief
Operating Officer (the “Consulting Agreement”).

 

5. Closing Conditions. The consummation of the Transaction will be subject to
the satisfaction of various conditions that are customary for a transaction of
this type, including, but not limited to, the following:

 

(a) the Purchaser shall have completed its due diligence investigation of the
Company, and the results thereof shall be satisfactory to the Purchaser in its
sole discretion (provided that such due diligence investigation shall be
completed within 30 days of the execution of this letter);

 

(b) the Company’s financial statements required to be filed by the Purchaser
with the Securities and Exchange Commission as a result of the Closing in
connection with Purchaser’s reporting obligations under the Securities Exchange
Act of 1934, as amended (the “1934 Act”), shall been audited as required by the
1934 Act;

 

(c) any required governmental approvals to the Transaction shall have been
obtained; including, without limitation, as it relates to the Access to Cannabis
for Medical Purposes Regulations - Registration Certificate issued by Health
Canada to Philippe Henry;

 

(d) at the date of the Closing (the “Closing Date”), Kyle Remenda shall continue
to be employed by the Purchaser as its Chief Executive Officer pursuant to the
Employment Agreement, and Philippe Henry shall continue to be a consultant to
the Purchaser serving as its Chief Operating Officer pursuant to the Consulting
Agreement;

 

(e) the Shareholders shall have transferred and assigned to the Company all of
the assets owned by them that are related to the business conducted or proposed
to be conducted by the Company, including, without limitation, the intellectual
property, genetic and other assets described on Exhibit A hereto (the
“Shareholder Assets”).

 

(f) the parties shall have complied with and fulfilled all covenants and
agreements set forth in the Sale Agreement which are, by their terms, to be
complied with or fulfilled prior to or simultaneously with the Closing,
including, without limitation, that the Company shall own the Shareholder Assets
free and clear of all liens, encumbrances and restrictions; and

 

(g) there shall have been no occurrence prior to the Closing Date of any
material adverse change (as defined in the Sale Agreement) with respect to the
Company, nor any pending or threatened material adversarial proceeding affecting
the Company.

 

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6. Exclusivity. Seller agrees that, from the date hereof until 5:00 P.M. Pacific
Standard Time on the date that is 90 calendar days after and excluding the date
hereof (the “Exclusivity Period”):

 

(a) The Shareholders and the Company shall deal exclusively with Purchaser with
regard to the Transaction;

 

(b) The Shareholders, the Company and their affiliates will not, directly or
indirectly, (i) solicit submission of offers from any person other than the
Purchaser relating to any acquisition of any capital stock or assets of the
Company (outside the ordinary course of business), or any merger, consolidation
or business combination with the Company (an “Acquisition Proposal”), (ii)
respond in any way to an unsolicited Acquisition Proposal (other than to respond
that the Shareholders and the Company are under an exclusivity obligation during
the Exclusivity Period and not able to respond substantively), or (iii)
participate in any discussions or negotiations with, or furnish any information
regarding the Shareholders or the Company to, any person other than the
Purchaser, in each case in connection with or furtherance of an Acquisition
Proposal, or otherwise in any manner knowingly encourage or engage in any
Acquisition Proposal by any person other than the Purchaser;

 

(c) The Shareholders, the Company and their affiliates shall cease any
discussions or negotiations with any third parties that may be ongoing with
respect to any potential Acquisition Proposal or any transaction inconsistent
with, or that would frustrate or render it materially more difficult to
consummate the Transaction; and

 

(d) If, at any time during the Exclusivity Period, any Shareholder, the Company
or any of their affiliates receives, or learns that any of their representatives
has received, any written communication from any person or entity other than the
Purchaser that constitutes or could reasonably lead to an indication of
interest, an offer or proposal regarding any potential Acquisition Proposal, the
Shareholders shall promptly, and in any event within 48 hours of receipt of such
communication, inform the Purchaser of the communication and the party from whom
the communication is received.

 

7. Conduct of Business. During the Exclusivity Period, the Company shall conduct
its business in the ordinary course of business consistent with past practice
and shall notify the Purchaser of: (a) any change to the manner in which it
conducts such business relative to its past conduct; or (b) any event or
circumstance of which any Shareholder becomes aware and which it reasonably
believes could have a material adverse effect on the condition (financial or
otherwise), business operations, management, commercial relationships or
goodwill of the Company.

 

8. Binding Letter of Intent. This letter shall be considered a binding letter of
intent subject to definitive documentation.

 

9. Fees and Expenses. Each party will bear its own expenses in connection with
the Transaction, whether or not the Transaction is consummated.

 

10. Miscellaneous. This letter shall be governed by, and construed in accordance
with, the laws of the State of Nevada without reference to conflict of laws
principles. This letter may be executed in counterparts, each of which shall be
deemed an original, but which all together shall constitute one and the same
document. This letter shall be effective upon the exchange of executed signature
pages, whether in original form, by facsimile, or in pdf format.

 

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Please sign and return the signature page that follows to evidence your
agreement to the terms of this letter.

 

  Very truly yours,         DIGIPATH, INC.         By: /s/ Todd Denkin   Name:
Todd Denkin   Title: Chief Executive Officer

 

Agreed and accepted this 25th day of September, 2019:

 

/s/ Kyle Remenda   Kyle Remenda  

 

/s/ Philippe Henry   Philippe Henry  

 

VSSL ENTERPRISES LTD.

 

By: /s/ Kyle Remenda   Name: Kyle Remenda   Title: Chief Executive Officer  

 

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EXHIBIT A

 

Shareholder Assets

 

1. Health Canada Licenses:

 

a. SEC-72FH6VU9O2-2018: Security clearance granted to Philippe Henry attached.

 

b. MCR-136403: Cultivation license to Philippe Henry under which VSSL genetic
IP, including TRU-HEMP ID was developed, attached.

 

c. APP-C21CWUPL1W-2019: Research license in progress. Proposal attached.

 

d. APP-9T4634C8UW-2019: Analytical testing license submitted for targeted
genotyping.

 

e. APP-WTJX26HT0N: Industrial Hemp license draft for 1216644 B.C. Ltd. share
certificate provided in due diligence folder.

 

f. LIC-1DJC7509IB-2019: Industrial Hemp license at Nursery site (provided in due
diligence folder).

 

g. Nursery License in preparation for 1211884 B.C. Ltd. (share certificate
provided in due diligence folder) to be submitted October 2019.

 

2. Genetic declaration of seed stock for nursery license applications attached.

 

3. RBC Hemp LLC. Share certificate attached.

 

4. Lab equipment and reagent stock attached.

 

5. NIRLab proposal attached.

 

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