ycbd_ex101





Execution
Version





 Exhibit 10.1


 



ASSET PURCHASE AGREEMENT


 



by and among


 



Twenty Two Capital, LLC,


 



cbdMD, Inc.,


 



John J.
Wiesehan III,


 



Vieo Design, LLC,


 



and


 



Bradley D. Trawick


 


 


 



Dated July 22, 2021

 


 


 


 


 




 








 










 


 


 


 


 


 



Exhibits


 



1.            


Exhibit 2.7(a)(i)--Bill of Sale and Assignment of Contract
Rights








2.            


Exhibit 2.7(a)(ii)--Assignment and Assumption
Agreement








3.            


Exhibit 2.7(a)(iv)--Assignment of Servicemarks and
Trademarks








4.            


Exhibit 2.7(a)(vi)--Employment Agreements








5.            


Exhibit 2.7(a)(vii)--Escrow Agreement








6.            


Exhibit 2.7(a)(viii)—Transition Service
Agreement








7.            


Exhibit 2.7(a)(ix)--Lock Up Agreement








8.            


Exhibit 2.7(a)(x)-- Domain Name Transfer Agreement






 



Ancillary Documents


 




1.            


Disclosure Letter






 




 








 










 



ASSET PURCHASE AGREEMENT

 


This
Asset Purchase Agreement (“Agreement”) is
dated July 22, 2021, by and among cbdMD, Inc., a North Carolina
corporation (“Buyer”);
Twenty Two Capital, LLC, a North Carolina limited liability company
(“Twenty
Two”); Vieo Design, LLC, a Tennessee limited liability
company (“Vieo”) (Twenty
Two and Vieo, collectively, “Seller”); John
J. Wiesehan III, a resident of North Carolina (“JW”); and
Bradley D. Trawick, a resident of North Carolina
(“BT”) (JW and
BT are referred to herein as “Shareholders”).

 



RECITALS

 


JW owns
One Hundred Sixty One Thousand Five Hundred and Fifty (161,550)
shares of the Series A Units of Twenty Two and BT owns One Hundred
and Seven Thousand Seven Hundred (107,700) shares of the Series A
Units of Twenty Two, which constitute Eighty Nine and Three
Quarters percent (89.75%) of the issued and outstanding shares of
Series A Units of Twenty Two. Twenty Two owns one hundred percent
of the membership interest of Vieo. Seller desires to sell, and
Buyer desires to purchase, the Assets of Seller comprising the
Business for the consideration and on the terms set forth in this
Agreement.

 


The
parties, intending to be legally bound, agree as
follows:

 



ARTICLE
I






 


Definitions
and Usage

 

Section
1.1 Definitions.
For purposes of this Agreement, the following terms and variations
thereof have the meanings specified or referred to in this Section
1.1:

 


“Accounts
Receivable”--(a) all trade accounts receivable,
merchant receivables and other rights to payment from customers of
Seller and the full benefit of all security for such accounts or
rights to payment, including all trade accounts receivable
representing amounts receivable in respect of goods shipped or
products sold or services rendered to customers of Seller
associated with the Business, (b) all other accounts or notes
receivable of Seller and the full benefit of all security for such
accounts or notes associated with the Business and (c) any
claim, remedy or other right related to any of the
foregoing.

 


“Agreed Accounting
Principles” means GAAP, subject to the modifications
and exceptions set forth on Schedule 1.1.

 


“Assets”--as
defined in Section 2.1.

 


“Assignment and Assumption
Agreement”--as defined in Section
2.7(a)(ii).

 


“Assumed
Liabilities”--as defined in Section
2.4(a).

 


“Balance
Sheet”--as defined in Section 3.4.

 


“Bill of
Sale”--as defined in Section 2.7(a)(i).

 


“Breach”--any
breach of, or any inaccuracy in, any representation or warranty or
any breach of, or failure to perform or comply with, any covenant
or obligation, in or of this Agreement or any other
Contract.

 


“Business”--all
(a) the operating business associated with Seller’s
production, marketing, sale and distribution of CBD and related or
associated products (specifically excluding any products containing
Delta 8) directly to consumers through the domain name https://www.directcbdonline.com, indirectly
through one or more intermediaries or distributors or otherwise,
and (b) the operating business associated with Vieo as conducted
over the last year.

 



 







 





 


“Business
Day”--any day other than (a) Saturday or Sunday or (b)
any other day on which banks in North Carolina are permitted or
required to be closed.

 


“Buyer”--as
defined in the first paragraph of this Agreement.

 


“Buyer Indemnified
Persons”--as defined in Section 6.2.

 


“Closing”--as
defined in Section 2.6.

 


“Closing
Date”--the date on which the Closing actually takes
place.

 


“COBRA”--as
defined in Section 3.15(c).

 


“Code”--the
Internal Revenue Code of 1986.

 


“Confidential
Information”--as defined in Section 7.1.

 


“Consent”--any
approval, consent, ratification, waiver or other
authorization.

 


“Contemplated
Transactions”--all of the transactions contemplated by
this Agreement.

 


“Contract”--any
agreement, contract, Lease, consensual obligation, promise or
undertaking (whether written or oral and whether express or
implied), whether or not legally binding.

 


“Copyrights”--as
defined in Section 3.23(a)(iii).

 


“Damages”--as
defined in Section 6.2.

 


“Disclosing
Party”--as defined in Section 7.1.

 


“Disclosure
Letter”--the disclosure letter delivered by Seller and
Shareholders to Buyer concurrently with the execution and delivery
of this Agreement.

 


“Domain Name Transfer
Agreement”--as defined in Section
2.7(a)(x).

 


“Earnout
Period”--the period beginning on the Closing Date and
ending on the first anniversary hereof.

 


“Earnout
Shares”--as defined in Section 2.3(b).

 


“Effective
Time”--The time at which the Closing is
consummated.

 


“Employee
Plans”--as defined in Section 3.15.

 



 







 





 


“Employment
Agreement”--as defined in Section
2.7(a)(vi).

 


“Encumbrance”--any
charge, claim, community or other marital property interest,
condition, equitable interest, lien, option, pledge, security
interest, mortgage, right of way, easement, encroachment,
servitude, right of first option, right of first refusal or similar
restriction, including any restriction on use, voting (in the case
of any security or equity interest), transfer, receipt of income or
exercise of any other attribute of ownership.

 


“ERISA”--the
Employee Retirement Income Security Act of 1974.

 


“Escrow
Account” means the
account into which the Escrow Amount is deposited with the Escrow
Agent and held by it, subject to disbursement as provided in
Section
6.6 and in the Escrow
Agreement.

 


“Escrow Agent”
– shall mean Nason Yeager Gerson Harris & Fumero,
P.A.

 


“Escrow
Agreement”--as defined in Section
2.7(a)(viii).

 


“Escrow Funds”
-- the Escrow Amount and the funds
maintained from time to time in the Escrow Account established
pursuant to the Escrow Agreement (which funds shall be disbursed
and released in accordance with the terms and conditions of the
Escrow Agreement).

 


“Exchange
Act”--the Securities Exchange Act of
1934.

 


“Excluded
Assets”--as defined in Section 2.2.

 


“GAAP”--generally
accepted accounting principles for financial reporting in the
United States, applied on a basis consistent with the basis on
which the Balance Sheet and the other financial statements referred
to in Section 3.4 were prepared.

 


“Governing
Documents”--with respect to any particular entity, (a)
if a corporation, the articles or certificate of incorporation and
the bylaws; (b) if a general partnership, the partnership agreement
and any statement of partnership; (c) if a limited partnership, the
limited partnership agreement and the certificate of limited
partnership; (d) if a limited liability company, the articles of
organization and operating agreement; (e) if another type of
Person, any other charter or similar document adopted or filed in
connection with the creation, formation or organization of the
Person; (f) all equityholders’ agreements, voting agreements,
voting trust agreements, joint venture agreements, registration
rights agreements or other agreements or documents relating to the
organization, management or operation of any Person or relating to
the rights, duties and obligations of the equityholders of any
Person; and (g) any amendment or supplement to any of the
foregoing.

 


“Governmental
Authorization”--any Consent, license, registration or
permit issued, granted, given or otherwise made available by or
under the authority of any Governmental Body or pursuant to any
Legal Requirement required or used in connection with the
Business.

 


“Governmental
Body”--any:

 


(a)           nation,
state, county, city, town, borough, village, district or other
jurisdiction;

 


(b)           federal,
state, local, municipal, foreign or other government;

 


(c)           governmental
or quasi-governmental authority of any nature (including any
agency, branch, department, board, commission, court, tribunal or
other entity exercising governmental or quasi-governmental
powers);

 


(d)           multinational
organization or body;

 


(e)           body
exercising, or entitled or purporting to exercise, any
administrative, executive, judicial, legislative, police,
regulatory or taxing authority or power; or

 


(f)           official
of any of the foregoing.

 



 







 





 


“Indemnification
Shares”--as defined in Section 2.3(b).

 


“Indemnified
Person”--as defined in Section 6.6.

 


“Indemnifying
Person”--as defined in Section 6.6.

 


“Intellectual Property
Assets”--as defined in Section 3.25(a).

 


“Interim Balance
Sheet”--as defined in Section 3.4.

 


“Inventories”--all
inventories of Seller purchased for or otherwise for use in the
Business, wherever located, including all finished goods, work in
process, raw materials, spare parts and all other materials and
supplies to be used or consumed by Seller in the production of
finished goods.

 


“IRS”--the
United States Internal Revenue Service and, to the extent relevant,
the United States Department of the Treasury.

 


“Knowledge”—
an individual will be deemed to have Knowledge of a particular fact
or other matter if:

 


(a)           that
individual is actually aware of that fact or matter;
or

 


(b)           a
prudent individual could be expected to discover or otherwise
become aware of that fact or matter in the course of conducting a
reasonable investigation regarding the accuracy of any
representation or warranty contained in this
Agreement.

 


A
Person (other than an individual) will be deemed to have Knowledge
of a particular fact or other matter if any individual who is
serving, or who has at any time served, as a director, officer,
partner, executor or trustee of that Person (or in any similar
capacity) has, or at any time had, Knowledge of that fact or other
matter (as set forth in (a) and (b) above), and any such individual
(and any individual party to this Agreement) will be deemed to have
conducted a reasonable investigation regarding the accuracy of the
representations and warranties made herein by that Person or
individual. Notwithstanding the foregoing, with respect to
individuals relevant to the determination of Knowledge with respect
to Seller shall include the Shareholders.

 


“Lease”--any
Real Property Lease or any lease or rental agreement, license,
right to use or installment and conditional sale agreement to which
Seller is a party and any other Seller Contract pertaining to the
leasing or use of any Tangible Personal Property.

 


“Legal
Requirement”--any federal, state, local, municipal,
foreign, international, multinational or other constitution, law,
ordinance, principle of common law, code, regulation, statute or
treaty.

 


“Liability”--with
respect to any Person, any liability or obligation of such Person
of any kind, character or description, whether known or unknown,
absolute or contingent, accrued or unaccrued, disputed or
undisputed, liquidated or unliquidated, secured or unsecured, joint
or several, due or to become due, vested or unvested, executory,
determined, determinable or otherwise, and whether or not the same
is required to be accrued on the financial statements of such
Person.

 


“Lock Up
Agreement”--as defined in Section
2.7(a)(ix).

 


“Marks”--as
defined in Section 3.23(a)(i).

 


“Net Revenue
Certificate”--as defined in Section
2.8(a).

 



 







 





 


“Net
Revenues”--all the net revenues (as recorded by the
Buyer pursuant to the Agreed Accounting Principles) of the Business
acquired under this Agreement arising during the Earnout Period
from all products sold on the URL www.directcbdonline.com.

 


“Order”--any
order, injunction, judgment, decree, ruling, assessment or
arbitration award of any Governmental Body or
arbitrator.

 


“Part”--a part
or section of the Disclosure Letter.

 


“Patents”--as
defined in Section 3.23(a)(ii).

 


“Payables
Payment”--as defined in Section 2.3(a).

 


“Permitted
Encumbrances” means (i) Encumbrances for Taxes not yet
due and payable or Taxes being contested in good faith by any
appropriate proceeding for which adequate reserves have been
established in accordance with the Agreed Accounting Principles,
(ii) statutory landlord’s, mechanic’s or other similar
Encumbrances arising or incurred in the ordinary course of business
and for amounts which are not delinquent and which are set forth on
the face of the Balance Sheet, (iii) liens created in connection
with capitalized lease obligations, (iv) recorded easements,
covenants and other restrictions of record, provided, that no such
item described in this clause (iv) impairs the current use,
occupancy, value or marketability of title of the property subject
thereto, and (v) Encumbrances set forth in Part 1.1 with respect to
any indebtedness as of Closing.

 


“Person”--an
individual, partnership, corporation, business trust, limited
liability company, limited liability partnership, joint stock
company, trust, unincorporated association, joint venture or other
entity or a Governmental Body.

 


“Proceeding”--any
action, arbitration, audit, hearing, investigation, litigation or
suit (whether civil, criminal, administrative, judicial or
investigative, whether formal or informal, whether public or
private) commenced, brought, conducted or heard by or before, or
otherwise involving, any Governmental Body or
arbitrator.

 


“Purchase
Price”--as defined in Section 2.3.

 


“Real Property
Lease”--any storage, warehouse, production or office
space lease.

 


“Receiving
Party”--as defined in Section 7.1.

 


“Record”--information
that is inscribed on a tangible medium or that is stored in an
electronic or other medium and is retrievable in perceivable
form.

 


“Related
Person”--With respect to a particular
individual:

 


(a)           each
other member of such individual’s Family;

 


(b)           any
Person that is directly or indirectly controlled by any one or more
members of such individual’s Family;

 


(c)           any
Person in which members of such individual’s Family hold
(individually or in the aggregate) a Material Interest;
and

 


(d)           any
Person with respect to which one or more members of such
individual’s Family serves as a director, officer, partner,
executor or trustee (or in a similar capacity).

 



 







 





 


With
respect to a specified Person other than an
individual:

 


(a)           any
Person that directly or indirectly controls, is directly or
indirectly controlled by or is directly or indirectly under common
control with such specified Person;

 


(b)           any
Person that holds a Material Interest in such specified
Person;

 


(c)           each
Person that serves as a director, officer, partner, executor or
trustee of such specified Person (or in a similar
capacity);

 


(d)           any
Person in which such specified Person holds a Material Interest;
and

 


(e)           any
Person with respect to which such specified Person serves as a
general partner or a trustee (or in a similar
capacity).

 


For
purposes of this definition, (a) “control” (including
“controlling,” “controlled by,” and
“under common control with”) means the possession,
direct or indirect, of the power to direct or cause the direction
of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise, and shall
be construed as such term is used in the rules promulgated under
the Securities Act; (b) the “Family” of an
individual includes (i) the individual, (ii) the individual’s
spouse, (iii) any other natural person who is related to the
individual or the individual’s spouse within the second
degree and (iv) any other natural person who resides with such
individual; and (c) “Material
Interest” means direct or indirect beneficial
ownership (as defined in Rule 13d-3 under the Exchange Act) of
voting securities or other voting interests representing at least
ten percent (10%) of the outstanding voting power of a Person or
equity securities or other equity interests representing at least
ten percent (10%) of the outstanding equity securities or equity
interests in a Person.

 


“Representative”--with
respect to a particular Person, any director, officer, manager,
employee, agent, consultant, advisor, accountant, financial
advisor, legal counsel or other representative of that
Person.

 


“Residual Cash
Payment”--as defined in Section 2.3(a).

 


“Retained
Liabilities”--as defined in Section
2.4(b).

 


“Securities
Act”--as defined in Section 3.3.

 


“Seller”--as
defined in the first paragraph of this Agreement.

 


“Seller
Contract”--any Contract necessary or used in operating
or otherwise directly benefiting the Business (a) under which
Seller has or may acquire any rights or benefits; (b) under which
Seller has or may become subject to any obligation or liability; or
(c) by which Seller or any of the assets owned or used by Seller is
or may become bound.

 


“Shareholders”--as
defined in the first paragraph of this Agreement.

 


“Software”--all
computer software and subsequent versions thereof, including source
code, object, executable or binary code, objects, comments,
screens, user interfaces, report formats, templates, menus, buttons
and icons and all files, data, materials, manuals, design notes and
other items and documentation related thereto or associated
therewith.

 


“Straddle
Period” means any taxable period beginning on or prior
to and ending after the Closing Date.

 


“Subsidiary”--with
respect to any Person (the “Owner”), any
corporation or other Person of which securities or other interests
having the power to elect a majority of that corporation’s or
other Person’s board of directors or similar governing body,
or otherwise having the power to direct the business and policies
of that corporation or other Person (other than securities or other
interests having such power only upon the happening of a
contingency that has not occurred), are held by the Owner or one or
more of its Subsidiaries.

 



 







 





 


“Tangible Personal
Property”--all machinery, equipment, tools, furniture,
office equipment, computer hardware, supplies, materials, vehicles
and other items of tangible personal property (other than
Inventories) of every kind owned or leased by Seller necessary or
used in the Business (wherever located and whether or not carried
on Seller’s books), together with any express or implied
warranty by the manufacturers or sellers or lessors of any item or
component part thereof and all maintenance records and other
documents relating thereto.

 


“Tax”-- any
income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, property, environmental,
windfall profit, customs, vehicle, airplane, boat, vessel or other
title or registration, capital stock, franchise, employees’
income withholding, foreign or domestic withholding, social
security, unemployment, disability, real property, personal
property, sales, use, transfer, value added, alternative, add-on
minimum and any other tax of any kind whatsoever, and any fee,
assessment, levy, tariff, charge or duty in the nature of tax and
any interest, penalty, addition or additional amount thereon
imposed, assessed or collected by or under the authority of any
Governmental Body or payable under any tax-sharing agreement or any
other Contract.

 


“Tax
Return”--any return (including any information
return), report, statement, schedule, notice, form, declaration,
claim for refund or other document or information filed with or
submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment,
collection or payment of any Tax or in connection with the
administration, implementation or enforcement of or compliance with
any Legal Requirement relating to any Tax.

 


“Third
Party”--a Person that is not a party to this
Agreement.

 


“Third-Party
Claim”--any claim against any Indemnified Person by a
Third Party, whether or not involving a Proceeding.

 


“Transition Service
Agreement”--as defined in Section
2.7(a)(ix).

 

Section
1.2   Usage

 

(a) Interpretation. In this Agreement,
unless a clear contrary intention appears:

 

(i) the singular number
includes the plural number and vice versa;

 

(ii) reference
to any Person includes such Person’s successors and assigns
but, if applicable, only if such successors and assigns are not
prohibited by this Agreement, and reference to a Person in a
particular capacity excludes such Person in any other capacity or
individually;

 

(iii) reference
to any gender includes each other gender;

 

(iv) reference
to any agreement, document or instrument means such agreement,
document or instrument as amended or modified and in effect from
time to time in accordance with the terms thereof;

 

(v) reference to any
Legal Requirement means such Legal Requirement as amended,
modified, codified, replaced or reenacted, in whole or in part, and
in effect from time to time, including rules and regulations
promulgated thereunder, and reference to any section or other
provision of any Legal Requirement means that provision of such
Legal Requirement from time to time in effect and constituting the
substantive amendment, modification, codification, replacement or
reenactment of such section or other provision;

 

(vi) “hereunder,”
“hereof,” “hereto,” and words of similar
import shall be deemed references to this Agreement as a whole and
not to any particular Article, Section or other provision
hereof;

 

(vii) “including”
(and with correlative meaning “include”) means
including without limiting the generality of any description
preceding such term;

 

(viii) “or”
is used in the inclusive sense of
“and/or”;

 



 







 





 

(ix) with
respect to the determination of any period of time,
“from” means “from and including” and
“to” means “to but excluding”;
and

 

(x) references to
documents, instruments or agreements shall be deemed to refer as
well to all addenda, exhibits, schedules or amendments
thereto.

 

(b) Accounting Terms and Determinations.
Unless otherwise specified herein, all accounting terms used herein
shall be interpreted and all accounting determinations hereunder
shall be made in accordance with the Agreed Accounting
Principles.

 



ARTICLE
II






 


Sale
and Transfer of Assets; Closing

 

Section
2.1   Assets to be
Sold. Upon the terms and subject to the conditions set forth
in this Agreement, at the Closing, but effective as of the
Effective Time, Seller shall sell, convey, assign, transfer and
deliver to Buyer, and Buyer shall purchase and acquire from Seller,
free and clear of any Encumbrances (other than Permitted
Encumbrances), all of Seller’s right, title and interest in
and to all of Seller’s property and assets, real, personal or
mixed, tangible and intangible, of every kind and description,
wherever located, necessary, associated with or used in the
Business, including the following (but excluding the Excluded
Assets):

 

(a) all Tangible
Personal Property, including those items described in Part
2.1(a);

 

(b) all
Inventories;

 

(c) all Accounts
Receivable;

 

(d) all Seller
Contracts listed in Part 3.19 (unless specifically listed in Part
2.2(f));

 

(e) all Governmental
Authorizations and all pending applications therefor or renewals
thereof, in each case to the extent transferable to Buyer and
necessary or used in the Business, including those listed in Part
3.16(b);

 

(f) all data and
Records related to the operations of the Business, including client
and customer lists and Records, referral sources, research and
development reports and Records, production reports and Records,
service and warranty Records, equipment logs, operating guides and
manuals, financial and accounting Records, creative materials,
advertising materials, promotional materials, studies, reports,
correspondence and other similar documents and Records and, subject
to Legal Requirements, copies of all personnel Records and other
Records described in Section 2.2(g);

 

(g) all of the
intangible rights and property of Seller necessary or used in the
Business, including Intellectual Property Assets, going concern
value, goodwill, telephone, telecopy and e-mail addresses and
listings;

 

(h) all insurance
benefits, including rights and proceeds, arising from or relating
to the Assets or the Assumed Liabilities prior to the Effective
Time, unless extended in accordance with this
Agreement;

 

(i) all claims of
Seller against third parties relating to the Assets, whether choate
or inchoate, known or unknown, contingent or noncontingent;
and

 

(j) all rights of
Seller necessary or used in the Business relating to deposits and
prepaid expenses, claims for refunds and rights to offset in
respect thereof that are not listed in Part 2.2(d) and that are not
excluded under Section 2.2(h).

 


All of
the property and assets to be transferred to Buyer hereunder are
herein referred to collectively as the “Assets.”

 


Notwithstanding the
foregoing, the transfer of the Assets pursuant to this Agreement
shall not include the assumption of any Liability related to the
Assets unless Buyer expressly assumes that Liability pursuant to
Section 2.4(a).

 



 







 





 

Section
2.2   Excluded
Assets. Notwithstanding anything to the contrary contained
in Section 2.1 or elsewhere in this Agreement, the following assets
of Seller (collectively, the “Excluded
Assets”) are not part of the sale and purchase
contemplated hereunder, are excluded from the Assets and shall
remain the property of Seller after the Closing:

 

(a) all cash, cash
equivalents and short-term investments;

 

(b) all minute books,
stock Records and corporate seals;

 

(c) the shares of
capital stock of Seller held in treasury;

 

(d) those rights
relating to deposits and prepaid expenses and claims for refunds
and rights to offset listed in Part 2.2(d);

 

(e) all insurance
policies and rights of Seller (except to the extent specified in
Section 2.1(i) and (j));

 

(f) all of the Seller
Contracts listed in Part 2.2(f) or not otherwise acquired under
Section 2.1(d);

 

(g) all personnel
Records and other Records that Seller is required by law to retain
in its possession;

 

(h) Tax Returns and
Tax-related Records of Seller;

 

(i) all claims for, and
rights with respect to, any refunds, credits or similar benefits
with respect to Taxes and other governmental charges of whatever
nature;

 

(j) all rights in
connection with and assets of the Employee Plans;

 

(k) all rights of
Seller under this Agreement, the Bill of Sale, the Assignment and
Assumption Agreement, and the Escrow Agreement; and

 

(l) the property and
assets expressly designated in Part 2.2(k).

 

Section
2.3   Consideration.
The consideration for the Assets (the “Purchase
Price”) will be (a) Two Million dollars ($2,000,000)
as adjusted herein, (b) Six Hundred Thousand (600,000) shares of
Buyer’s Common Stock as adjusted herein, and (c) the
assumption of the Assumed Liabilities.

 

(a) Cash Purchase Price. In accordance with
Section 2.7(b), at the Closing, the cash Purchase Price shall be
delivered by Buyer to Seller as follows: (i) Two Hundred Thousand
dollars ($200,000) (the “Escrow
Amount”) paid to the escrow agent pursuant to the
Escrow Agreement, (ii) payment directly to the vendors, lenders and
others listed in Part 2.3 in the amounts set forth in Part 2.3 (the
“Payables
Payment”), and (iii) all remaining amounts of the cash
purchase price set forth in this Section 2.3 by wire transfer to
Twenty Two (“Residual Cash
Payment”).

 

(b) Stock Purchase Price. In accordance
with Section 2.7(b), (i) at the Closing, Buyer will issue a stock
certificate to Twenty Two for three hundred thousand (300,000)
shares of the Buyer’s common stock, par value $.001 per share
(the “Common
Stock”); (ii) one hundred thousand (100,000) shares of
the Buyer’s Common Stock shall be issued to Twenty Two on or
before January 31, 2023, less any amounts setoff against such
shares for indemnification claims pending against or paid by Buyer
as contemplated in Article 6 (“Indemnification
Shares”), and (iii) the remaining stock purchase price
under this Section 2.3, as adjusted pursuant to Section 2.8, shall
be issued to Twenty Two on or before the sixtieth (60th) day following the
first year anniversary of the Closing Date (the “Earnout
Shares”).

 

(c) The balance of the
Purchase Price shall be paid by the execution and delivery of the
Assignment and Assumption Agreement.

 



 







 





 

Section
2.4   Liabilities.

 

(a) Assumed Liabilities. On the Closing
Date, but effective as of the Effective Time, Buyer shall assume
and agree to discharge only the following Liabilities of Seller
(the “Assumed
Liabilities”):

 

(i) any Liability to
Seller’s customers incurred by Seller in the ordinary course
of business for nondelinquent orders outstanding as of the
Effective Time reflected on Seller’s books (other than any
Liability arising out of or relating to a Breach that occurred
prior to the Effective Time);

 

(ii) any
Liability to Seller’s customers under written warranty
agreements reviewed by Buyer and given by Seller to its customers
in the ordinary course of business prior to the Effective Time
(other than any Liability arising out of or relating to a Breach
that occurred prior to the Effective Time); and

 

(iii) any
Liability arising after the Effective Time under the Seller
Contracts described in Part 3.19 (other than any Liability listed
in Part 2.2, any Seller Contract listed in Part 2.2(f) or arising
out of or relating to a Breach that occurred prior to the Effective
Time).

 

(b) Retained Liabilities. The Retained
Liabilities shall remain the sole responsibility of and shall be
retained, paid, performed and discharged solely by Seller.
“Retained
Liabilities” shall mean every Liability of Seller
other than the Assumed Liabilities, including:

 

(i) any Liability
arising out of or relating to products of Seller to the extent
manufactured or sold prior to the Effective Time other than to the
extent assumed under Section 2.4(a);

 

(ii) subject
to Section 5.2, any Liability of the Seller for Taxes;

 

(iii) any
Liability for Taxes, including (A) any Taxes arising as a result of
Seller’s operation of the Business or otherwise or ownership
of the Assets prior to the Effective Time, (B) any Taxes that will
arise as a result of the sale of the Assets pursuant to this
Agreement and (C) any deferred Taxes of any nature;

 

(iv) any
Liability under any Contract not assumed by Buyer under Section
2.4(a), including any Liability arising out of or relating to
Seller’s indebtedness or any security interest related
thereto;

 

(v) any environmental,
health and safety Liabilities arising out of or relating to the
operation of Seller’s business or Seller’s leasing,
ownership or operation of real property prior to the Effective
Time;

 

(vi) any
Liability accruing prior to the Effective Time under the Employee
Plans or relating to payroll, vacation, sick leave, workers’
compensation, unemployment benefits, vacation pay, pension
benefits, employee stock option or profit-sharing plans, health
care plans or benefits or any other employee plans or benefits of
any kind for Seller’s employees or former employees or
both;

 

(vii) any
Liability under any employment, severance, retention or termination
agreement with any employee of Seller or any of its Related Persons
that accrued prior to the Effective Time or as a result of the
Closing;

 

(viii) any
Liability under any employment, severance, retention or termination
agreement with any employee of Seller or any of its Related Persons
arising as a result of any events prior to the Effective Time or as
a result of such employee’s termination of employment with
Seller (but excluding any portion of such Liability, if any,
relating to any period of time following the Effective
Time);

 

(ix) any
Liability to indemnify, reimburse or advance amounts to any
officer, director, employee or agent of Seller unless set forth on
Part 2.4(b)(ix);

 

(x) any Liability
arising out of or relating to any employee grievance occurring
prior to the Effective Time, whether or not the affected employees
are hired by Buyer;

 

(xi) any
Liability to indemnify, reimburse or advance amounts to any
officer, director, employee or agent of Seller that accrued prior
to the Effective Time or as result of the Closing;

 

(xii) any
Liability to distribute to any of Seller’s shareholders or
otherwise apply all or any part of the consideration received
hereunder that accrued prior to the Effective Time;

 



 







 





 

(xiii) any
Liability arising out of any Proceeding pending as of the Effective
Time;

 

(xiv) any
Liability arising out of or resulting from Seller’s
compliance or noncompliance with any Legal Requirement or Order of
any Governmental Body prior to the Effective Time;

 

(xv) any
Liability of Seller under this Agreement or any other document
executed in connection with the Contemplated Transactions;
and

 

(xvi) any
Liability of Seller based upon Seller’s acts or omissions
occurring after the Effective Time.

 

Section
2.5   Allocation.
The Purchase Price shall be allocated among the Assets in
accordance with Section 1060 of the Code and the Treasury
Regulations promulgated thereunder and the principles set forth on
Part 2.5. After the Closing, the parties shall make consistent use
of the allocation determined hereunder for all Tax purposes and in
all filings, declarations and reports with the IRS in respect
thereof, including the reports required to be filed under Section
1060 of the Code. Buyer shall prepare, in accordance with this
Section 2.5 (including Part 2.5), and deliver IRS Form 8594 to
Seller within forty-five (45) days after the Closing Date to be
filed with the IRS (such IRS Form 8594 to be adjusted as
appropriate to reflect differences between Buyer’s and
Seller’s IRS Form 8594 and updated in accordance with this
Section 2.5 (including Part 2.5) upon any subsequent adjustment to
the Purchase Price). In any Proceeding related to the determination
of any Tax, neither Buyer nor Seller or Shareholders shall contend
or represent that such allocation is not a correct
allocation.

 

Section
2.6   Closing.
The purchase and sale provided for in this Agreement (the
“Closing”) will
take place at the offices of Buyer, commencing at 10:00 a.m. (local
time) on the date hereof.

 

Section
2.7   Closing
Obligations. In addition to any other documents to be
delivered under other provisions of this Agreement, at the
Closing:

 

(a) Seller and
Shareholders, as the case may be, shall deliver to
Buyer:

 

(i) a bill of sale for
all of the Assets that are Tangible Personal Property in the form
of Exhibit
2.7(a)(i) (the “Bill of Sale”)
executed by Seller;

 

(ii) an
assignment of all of the Assets that are intangible personal
property in the form of Exhibit 2.7(a)(ii), which
assignment shall also contain Buyer’s undertaking and
assumption of the Assumed Liabilities (the “Assignment and Assumption
Agreement”) executed by Seller;

 

(iii) for
each interest in real property identified on Part 3.7, an
Assignment and Assumption of Lease in the form of Exhibit 2.7(a)(iii) or such
other appropriate document or instrument of transfer, as the case
may require, each in form and substance satisfactory to Buyer and
its counsel and executed by Seller;

 

(iv) assignments
of all Intellectual Property Assets and separate assignments of all
registered Marks, Patents and Copyrights in the form of
Exhibit 2.7(a)(iv)
executed by Twenty Two;

 

(v) such other deeds,
bills of sale, assignments, certificates of title, documents and
other instruments of transfer and conveyance as may reasonably be
requested by Buyer, each in form and substance satisfactory to
Buyer and its legal counsel and executed by Seller;

 

(vi) employment
agreements in the form of Exhibit 2.7(a)(vi), executed by
JW and BT (collectively, the “Employment
Agreement”);

 

(vii) an
escrow agreement in the form of Exhibit 2.7(a)(vii), executed
by Seller and each Shareholder and the escrow agent (the
“Escrow
Agreement”);

 

(viii) a
transition service agreement in the form of Exhibit 2.7(a)(viii),
executed by Decoy Holdings, LLC and Seller (the “Transition Service
Agreement”);

 

(ix) a lock up
and leak out agreement in the form of Exhibit 2.7(a)(ix), executed
by Seller, Shareholder and other shareholders of Seller (the
“Lock Up
Agreement”); and

 

(x) a domain name
transfer agreement in the form of Exhibit 2.7(a)(x) executed by
Seller (the “Domain Name Transfer
Agreement”).

 



 







 





 

(b) Buyer shall deliver
to Seller and Shareholders, as the case may be, or on behalf of
Seller or Shareholders:

 

(i) The Residual Cash
Payment by wire transfer to an account specified by Seller in a
writing delivered to Buyer at least three (3) business days prior
to the Closing Date;

 

(ii) The
Payables Payment (directly to the Persons set forth in Part
2.3);

 

(iii) the
Escrow Agreement, executed by Buyer and the Escrow Agent, together
with the delivery of the Escrow Amount to the Escrow Agent
thereunder;

 

(iv) a
certificate representing Three Hundred Thousand (300,000) shares of
the Buyer’s Common Stock;

 

(v) the Assignment and
Assumption Agreement executed by Buyer;

 

(vi) the
Employment Agreement executed by Buyer;

 

(vii) the
Transition Service Agreement executed by Buyer;

 

(viii) the
Lock Up Agreements executed by Buyer; and

 

(ix) the
Domain Name Transfer Agreement executed by Buyer.

 

Section
2.8   Earnout.

 

(a) Net Revenue Certificate. Promptly
following the end of the Earnout Period, but no later than
forty-five (45) days following the end of such Earnout Period,
Buyer’s Chief Financial Officer (or other financial officer
designated by Buyer) shall deliver to Twenty Two a certificate (a
“Net
Revenue Certificate”) setting forth the calculation of
the Net Revenues for the Business for the Earnout Period. The Buyer
shall respond promptly to any questions raised by Twenty Two in
relation to the Net Revenue Certificate, and shall give all access
reasonably requested by Twenty Two to the books, records and
working papers of the Buyer or its affiliates that relate to the
calculation of the Net Revenues in order to enable Twenty Two to
review and verify the Net Revenue Certificate. Unless within the
fifteen (15) day period following Twenty Two’s receipt of the
Net Revenue Certificate, Twenty Two delivers a written notice to
the Buyer (the “Earnout Challenge
Notice”) setting forth in reasonable detail any and
all items of disagreement related to the Net Revenue Certificate,
the Net Revenue Certificate shall be conclusive and binding upon
the Buyer and Twenty Two. Upon the delivery of an Earnout Challenge
Notice by Twenty Two regarding the Earnout Statement (and the
calculation of Net Revenues contained therein), such parties shall
negotiate in good faith to resolve such disagreement and confirm
the final calculation of the Net Revenues.

 

(b) Earnout Share Calculation. Promptly,
but no later than fifteen (15) days after the final determination
of the Net Revenues for the Earnout Period as set forth in Section 2.8(a), the Buyer shall issue stock
certificates for the Earnout Shares to Twenty Two as
follows:

 

(i) The number of
Earnout Shares shall equal Two Hundred Thousand (200,000) in the
event that the Net Revenues equals or exceeds Four Million Dollars
($4,000,000) during the Earnout Period.

 

(ii) In
the event the Net Revenues during the Earnout Period equals or
exceeds Three Million Dollars ($3,000,000) but is less than Four
Million Dollars ($4,000,000), the number of Earnout Shares shall
equal the number resulting from the following calculation: (y) Two
Hundred Thousand (200,000), multiplied by (z) one (1) minus the
difference between the actual Net Revenues and Four Million
Dollars, divided by 4,000,000. By way of illustration, in the event
the Net Revenues during the Earnout Period are (A) $3,250,000, then
the number of Earnout Shares shall be 162,500 (200,000 X 1 –
(3,250,000-4,000,000)/4,000,000), or (B) $3,750,000, then the
number of Earnout shares shall be 187,500 (200,000 X 1 –
(3,750,000 – 4,000,000)/4,000,000).

 

(iii) In
the event the Net Revenues during the Earnout Period are less than
Three Million Dollars ($3,000,000), the number of Earnout Shares
shall be zero.

 



 







 





 

(c) Marketing and Advertising Commitment.
From the Closing and continuing during the Earnout Period, Buyer
agrees to spend at least Ninety Thousand Dollars ($90,000) per
quarter for marketing, advertising and online traffic related
expenses for www.directcbdonline.com.

 

(d) Operation of the Business. Buyer, the
Seller and the Shareholders each acknowledge and agree that there
is no assurance that the Seller will become entitled to receive the
Earnout Shares, Buyer has not promised nor projected the Earnout
Shares and neither Buyer nor any of its affiliates owes any
fiduciary or other express or implied duty to the Seller or the
Shareholders except as required under applicable law and the
Buyer’s organizational documents. During the Earnout Period,
Buyer agrees to act in good faith, in accordance with all Legal
Requirements and operate the Business in a manner that is not
designed or intended to impede or interfere with, and it agrees
that it will not take, cause to be taken, or fail to take or cause
to be taken, any action that has the purpose or intent of impeding
or interfering with the attainment of the Earnout Shares. Further,
except with the prior written consent of Twenty Two, from the
Closing and continuing during the Earnout Period:

 

 

(i) Buyer
will cause the books of the Business, taken as a whole, to remain
as a separate corporate entity or as a separate division of
Buyer;

 

 

(ii) Buyer
will not wind-up or eliminate the Business and will facilitate the
continued operation of the Business platform, including without
limitation, www.directcbdonline.com; and

 

(e) Buyer will, and
will cause the Business to, use commercially reasonable efforts to
maintain complete and accurate books and records related to the
calculation of Net Revenue.

 

Section
2.9   Consents.
If there are any Consents that have not yet been obtained (or
otherwise are not in full force and effect) as of the Closing,
notwithstanding Sections 2.1 and 2.4, neither this Agreement nor
the Assignment and Assumption Agreement nor any other document
related to the consummation of the Contemplated Transactions shall
constitute a sale, assignment, assumption, transfer, conveyance or
delivery or an attempted sale, assignment, assumption, transfer,
conveyance or delivery of the Seller Contracts, and following the
Closing, the parties shall use commercially reasonable efforts, and
cooperate with each other, to obtain the Consent relating to such
Seller Contract as quickly as practicable. Pending the obtaining of
such Consents, the parties shall cooperate with each other in any
reasonable and lawful arrangements designed to provide to Buyer the
benefits of use of the Seller Contract for its term (or any right
or benefit arising thereunder, including the enforcement for the
benefit of Buyer of any and all rights of Seller against a third
party thereunder). Once a Consent for the sale, assignment,
assumption, transfer, conveyance and delivery of a Seller Contract
is obtained, Seller shall promptly assign, transfer, convey and
deliver such Seller Contract to Buyer, and Buyer shall assume the
obligations under such Seller Contract assigned to Buyer from and
after the date of assignment to Buyer pursuant to a special-purpose
assignment and assumption agreement substantially similar in terms
to those of the Assignment and Assumption Agreement (which
special-purpose agreement the parties shall prepare, execute and
deliver in good faith at the time of such transfer, all at no
additional cost to Buyer).

 



ARTICLE
III






 


Representations and
Warranties

 


of
Seller and Shareholders

 


Seller
and Shareholder represent and warrant, jointly and severally, to
Buyer, as follows:

 

Section
3.1   Organization
and Good Standing.

 

(a) The Seller is a
limited liability company duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation,
with full corporate power and authority to conduct its business as
it is now being conducted, to own or use the properties and assets
that it purports to own or use, and to perform all its obligations
under the Seller Contracts. Seller is duly qualified to do business
as a foreign entity and is in good standing under the laws of each
state or other jurisdiction in which either the ownership or use of
the properties owned or used by it, or the nature of the activities
conducted by it, requires such qualification.

 

(b) Complete and
accurate copies of the Governing Documents of Seller, as currently
in effect, are attached to Part 3.1(b).

 

(c) Seller has no
Subsidiary (other than Vieo) and does not own any shares of capital
stock or other securities of any other Person.

 



 







 





 

Section
3.2   Enforceability;
Authority; No Conflict.

 

(a) This Agreement
constitutes the legal, valid and binding obligation of Seller and
each Shareholder, enforceable against each of them in accordance
with its terms. Upon the execution and delivery by Seller and
Shareholders of the Escrow Agreement, the Employment Agreement and
each other agreement to be executed or delivered by any or all of
Seller and Shareholders at the Closing (collectively, the
“Seller’s Closing
Documents”), each of Seller’s Closing Documents
will constitute the legal, valid and binding obligation of each of
Seller and the Shareholders, enforceable against each of them in
accordance with its terms. Seller has the absolute and unrestricted
right, power and authority to execute and deliver this Agreement
and the Seller’s Closing Documents to which it is a party and
to perform its obligations under this Agreement and the
Seller’s Closing Documents, and such action has been duly
authorized by all necessary action by Seller’s shareholders
and board of directors. Each Shareholder has all necessary legal
capacity to enter into this Agreement and the Seller’s
Closing Documents to which such Shareholder is a party and to
perform his obligations hereunder and thereunder.

 

(b) Neither the
execution and delivery of this Agreement nor the consummation or
performance of any of the Contemplated Transactions will, directly
or indirectly (with or without notice or lapse of
time):

 

(i) Breach (A) any
provision of any of the Governing Documents of Seller or (B) any
resolution adopted by the board of directors or the shareholders of
Seller;

 

(ii) Breach
or give any Governmental Body or other Person the right to
challenge any of the Contemplated Transactions or to exercise any
remedy or obtain any relief under any Legal Requirement or any
Order to which Seller or either Shareholder, or any of the Assets,
may be subject;

 

(iii) contravene,
conflict with or result in a violation or breach of any of the
terms or requirements of, or give any Governmental Body the right
to revoke, withdraw, suspend, cancel, terminate or modify, any
Governmental Authorization that is held by Seller or that otherwise
relates to the Assets or to the business of Seller;

 

(iv) Breach
any provision of, or give any Person the right to declare a default
or exercise any remedy under, or to accelerate the maturity or
performance of, or payment under, or to cancel, terminate or
modify, any Seller Contract;

 

(v) cause Buyer to
become subject to, or to become liable for the payment of, any
Tax;

 

(vi) result
in the imposition or creation of any Encumbrance (other than
Permitted Encumbrances) upon or with respect to any of the Assets;
or

 

(vii) result
in any shareholder of the Seller having the right to exercise
dissenters’ appraisal rights.

 

(c) Except as set forth
in Part 3.2(c), neither Seller nor either Shareholder is required
to give any notice to or obtain any Consent from any Person in
connection with the execution and delivery of this Agreement or the
consummation or performance of any of the Contemplated
Transactions.

 

Section
3.3   Capitalization.
The authorized equity securities of Twenty Two consist of Three
Hundred Thousand (300,000) shares of Series A Units, of which Three
Hundred Thousand (300,000) shares are issued and outstanding.
Shareholders are the record and beneficial owners and holders of
the shares owned by each of them, free and clear of all
Encumbrances (other than Permitted Encumbrances). There are no
Series B Units of the Seller issued or outstanding. All the issued
and outstanding membership interest in Vieo is owned by Twenty Two.
There are no Contracts relating to the issuance, sale or transfer
of any equity securities or other securities of Seller. None of the
outstanding equity securities of Seller was issued in violation of
the Securities Act of 1933, as amended (the “Securities
Act”), or any other Legal Requirement.

 

Section
3.4   Financial
Statements. Seller has delivered to Buyer: (a) a balance
sheet of Seller as at December 31, 2020 (including the notes
thereto, the “Balance
Sheet”), and the related statements of income, changes
in shareholders’ equity and cash flows for the fiscal year
then ended, including in each case the notes thereto, (b) balance
sheets of Seller as at December 31 in each of the fiscal years 2018
and 2019, and the related statements of income, changes in
shareholders’ equity and cash flows for each of the fiscal
years then ended, including in each case the notes thereto; and (c)
a balance sheet of Seller as at June 30, 2021 (the
“Interim
Balance Sheet”) and the related statement of income
for the six (6) months then ended, including in each case the notes
thereto certified by Seller’s chief financial officer. Such
financial statements fairly present the financial condition and the
results of operations, changes in shareholders’ equity and
cash flows of Seller as at the respective dates of and for the
periods referred to in such financial statements, all in accordance
with the Agreed Accounting Principles. The financial statements
have been from and are in accordance with the accounting Records of
Seller and reflect the consistent application of such accounting
principles throughout the periods involved. Part 2.3 of the
Disclosure Letter sets forth all the current amounts payable by
Seller to any vendor, lender or Third Party which is owed by Seller
as of the Closing Date.

 



 







 





 

Section
3.5   Books
and Records. The books of account and other financial
Records of Seller, all of which have been made available to Buyer,
are complete and correct and represent actual, bona fide
transactions and have been maintained in accordance with sound
business practices and the requirements of Section 13(b)(2) of the
Exchange Act (regardless of whether the Seller is subject to that
Section or not), including the maintenance of an adequate system of
internal controls. The minute books of Seller, all of which have
been made available to Buyer, contain accurate and complete Records
of all meetings held of, and corporate action taken by, the
shareholders, the board of directors and committees of the board of
directors of Seller, and no meeting of any such shareholders, board
of directors or committee has been held for which minutes have not
been prepared or are not contained in such minute
books.

 

Section
3.6   Sufficiency
of Assets. The Assets (a) constitute all of the assets,
tangible and intangible, of any nature whatsoever, necessary to
operate Business in the manner presently operated and operated over
the course of the last year and (b) include all of the operating
assets of the Business.

 

Section
3.7   Description
of Leased Real Property. Part 3.7 contains a correct street
address which Seller has a leasehold interest and an accurate
description (by location, name of lessor, date of Lease and term
expiry date) of all Real Property Leases.

 

Section
3.8   Title
to Assets. Seller owns good and transferable title to all of
the Assets free and clear of any Encumbrances (other than Permitted
Encumbrances).

 

Section
3.9   Condition
of Assets. Each item of Tangible Personal Property is in
good repair and good operating condition, ordinary wear and tear
excepted, is suitable for immediate use in the ordinary course of
business and is free from latent and patent defects. No item of
Tangible Personal Property is in need of repair or replacement
other than as part of routine maintenance in the ordinary course of
business. All Tangible Personal Property used in Seller’s
business is in the possession of Seller.

 

Section
3.10 Accounts
Receivable. All Accounts Receivable that are reflected on
the Balance Sheet or the Interim Balance Sheet or on the accounting
Records of Seller as of the Closing Date represent or will
represent valid obligations arising from sales actually made or
services actually performed by Seller in the ordinary course of
business. Except to the extent paid prior to the Closing Date, such
Accounts Receivable are or will be as of the Closing Date current
and collectible net of the respective reserves shown on the Balance
Sheet or the Interim Balance Sheet. There is no contest, claim,
defense or right of setoff, other than returns in the ordinary
course of business of Seller, under any Contract with any account
debtor of an Account Receivable relating to the amount or validity
of such Account Receivable. Part 3.10 contains a complete and
accurate list of all Accounts Receivable as of the date of Closing,
which list sets forth the aging of each such Account
Receivable.

 

Section
3.11 Inventories.
All items included in the Inventories consist of a quality and
quantity usable and, with respect to finished goods, saleable, in
the ordinary course of business of Seller except for obsolete items
and items of below-standard quality, all of which have been written
off or written down to net realizable value in the Balance Sheet or
the Interim Balance Sheet. Seller is not in possession of any
inventory not owned by Seller, including goods already sold. All of
the Inventories have been valued at the lower of cost or market
value on a first in, first out basis. Inventories now on hand that
were purchased after the date of the Balance Sheet or the Interim
Balance Sheet were purchased in the ordinary course of business of
Seller at a cost not exceeding market prices prevailing at the time
of purchase. The quantities of each item of Inventories (whether
raw materials, work-in-process or finished goods) are not excessive
but are reasonable in the present circumstances of Seller.
Work-in-process Inventories are valued in accordance with the
Agreed Accounting Principles.

 

Section
3.12 No Undisclosed
Liabilities. Seller has no Liability except for Liabilities
reflected or reserved against in the Balance Sheet or the Interim
Balance Sheet and current liabilities incurred in the ordinary
course of business of Seller since the date of the Interim Balance
Sheet.

 

Section
3.13 Taxes.
Seller has filed or caused to be filed on a timely basis all Tax
Returns with respect to the Business that are or were required to
be filed pursuant to applicable Legal Requirements. All such Tax
Returns filed by Seller are true, correct and complete in all
material respects. Seller has paid all Taxes with respect to the
Business that have become due including pursuant to any Tax
assessment received by Seller from a Governmental Body. Seller
currently is not the beneficiary of any extension of time within
which to file any Tax Return with respect to the Business. No claim
has ever been made by any Governmental Body in a jurisdiction where
Seller does not file Tax Returns with respect to the Business that
it is or may be subject to taxation by that jurisdiction with
respect to the Business. There are no Encumbrances on any of the
Assets that arose in connection with any failure (or alleged
failure) to pay any Tax due and payable (or alleged to be due and
payable).

 

Section
3.14 No Material Adverse
Change. Since the date of the Balance Sheet, there has not
been any material adverse change in the business, operations,
prospects, assets, results of operations or condition (financial or
other) of Seller, and no event has occurred or circumstance exists
that may result in such a material adverse change.

 

Section
3.15 Employee
Benefits.

 

(a) Set forth in Part
3.15 is a complete and correct list of all “employee benefit
plans” as defined by Section 3(3) of ERISA, all specified
fringe benefit plans as defined in Section 6039D of the Code, and
all other bonus, incentive-compensation, deferred-compensation,
profit-sharing, stock-option, stock-appreciation-right,
stock-bonus, stock-purchase, employee-stock-ownership, savings,
severance, change-in-control, supplemental-unemployment, layoff,
salary-continuation, retirement, pension, health, life-insurance,
disability, accident, group-insurance, vacation, holiday,
sick-leave, fringe-benefit or welfare plan, and any other employee
compensation or benefit plan, agreement, policy, practice,
commitment, contract or understanding (whether qualified or
nonqualified, currently effective or terminated, written or
unwritten) and any trust, escrow or other agreement related thereto
that (i) is maintained or contributed to by Seller or with respect
to which Seller or any other corporation or trade or business
controlled by, controlling or under common control with Seller
(within the meaning of Section 414 of the Code or Section
4001(a)(14) or 4001(b) of ERISA) (“ERISA
Affiliate”) may have any liability, and (ii) provides
benefits, or describes policies or procedures applicable to any
current or former director, officer, employee or service provider
of Seller, or the dependents of any thereof, regardless of how (or
whether) liabilities for the provision of benefits are accrued or
assets are acquired or dedicated with respect to the funding
thereof (collectively the “Employee
Plans”). Part 3.15 identifies as such any Employee
Plan that is (w) a “Defined Benefit
Plan” (as defined in Section 414(l) of the Code); (x)
a plan intended to meet the requirements of Section 401(a) of the
Code; (y) a “Multiemployer
Plan” (as defined in Section 3(37) of ERISA); or (z) a
plan subject to Title IV of ERISA, other than a Multiemployer Plan.
Also set forth on Part 3.15 is a complete and correct list of all
ERISA Affiliates of Seller during the last six (6)
years.

 



 







 





 

(b) Seller has
delivered to Buyer true, accurate and complete copies of the
following, to the extent applicable to each Employee Plan, (i) the
documents comprising each Employee Plan (or, with respect to any
Employee Plan which is unwritten, a detailed written description of
eligibility, participation, benefits, funding arrangements, assets
and any other matters which relate to the obligations of Seller or
any ERISA Affiliate); (ii) all trust agreements, insurance
contracts or any other funding instruments related to the Employee
Plans; (iii) all rulings, determination letters, no-action letters
or advisory opinions from the IRS, the U.S. Department of Labor,
the Pension Benefit Guaranty Corporation (“PBGC”) or any
other Governmental Body that pertain to each Employee Plan and any
open requests therefor; (iv) the most recent actuarial and
financial reports (audited and/or unaudited) and the annual reports
filed with any Government Body with respect to the Employee Plans
during the current year and each of the three preceding years; (v)
all collective bargaining agreements pursuant to which
contributions to any Employee Plan(s) have been made or obligations
incurred (including both pension and welfare benefits) by Seller or
any ERISA Affiliate, and all collective bargaining agreements
pursuant to which contributions are being made or obligations are
owed by such entities; (vi) all securities registration statements
filed with respect to any Employee Plan; (vii) all contracts with
third-party administrators, actuaries, investment managers,
consultants and other independent contractors that relate to any
Employee Plan, (viii) with respect to Employee Plans that are
subject to Title IV of ERISA, the Form PBGC-1 filed for each of the
three most recent plan years; and (ix) all summary plan
descriptions, summaries of material modifications and memoranda, or
employee handbooks. Full payment has been made of all amounts that
are required under the terms of each Employee Plan to be paid as
contributions with respect to all periods prior to and including
the last day of the most recent fiscal year of such Employee Plan
ended on or before the date of this Agreement and all periods
thereafter prior to the Closing Date, and no accumulated funding
deficiency or liquidity shortfall (as those terms are defined in
Section 302 of ERISA and Section 412 of the Code) has been incurred
with respect to any such Employee Plan, whether or not waived.
Seller has paid in full all required insurance premiums, subject
only to normal retrospective adjustments in the ordinary course,
with regard to the Employee Plans for all policy years or other
applicable policy periods ending on or before the Closing
Date.

 

(c) Seller has, at all
times, complied, and currently complies, in all material respects
with the applicable continuation requirements for its welfare
benefit plans, including (1) Section 4980B of the Code (as well as
its predecessor provision, Section 162(k) of the Code) and Sections
601 through 608, inclusive, of ERISA, which provisions are
hereinafter referred to collectively as “COBRA” and (2)
any applicable state statutes mandating health insurance
continuation coverage for employees.

 

(d) Each Employee Plan
that is intended to be qualified under Section 401(a) of the Code
has received a favorable determination or opinion letter from the
IRS, and Seller has no Knowledge of any circumstances that will or
could result in revocation of any such favorable determination or
opinion letter. Each trust created under any Employee Plan has been
determined to be exempt from taxation under Section 501(a) of the
Code, and Seller is not aware of any circumstance that will or
could result in a revocation of such exemption.

 

(e) Except as provided
on Part 3.15(e), the consummation of the Contemplated Transactions
will not accelerate the time of vesting or the time of payment, or
increase the amount, of compensation due to any director, employee,
officer, former employee or former officer of Seller. There are no
contracts or arrangements providing for payments that could subject
any person to liability for tax under Section 4999 of the
Code.

 

(f) Except for the
continuation coverage requirements of COBRA, Seller has no
obligations or potential liability for benefits to employees,
former employees or their respective dependents following
termination of employment or retirement under any of the Employee
Plans that are “Employee Welfare Benefit Plans” as
defined in Section 3(1) of ERISA.

 

Section
3.16 Compliance with
Legal Requirements; Governmental
Authorizations.

 

(a) Except as set forth
in Part 3.16(a):

 

(i) To the
Seller’s and Shareholders’ Knowledge, the Seller is,
and at all times since December 31, 2018, has been, in full
compliance with each Legal Requirement that is or was applicable to
it or to the conduct or operation of its business or the ownership
or use of any of the Assets;

 

(ii) To
the Seller’s and Shareholders’ Knowledge, no event has
occurred or circumstance exists that (with or without notice or
lapse of time) (A) may constitute or result in a violation by
Seller of, or a failure on the part of Seller to comply with, any
Legal Requirement or (B) may give rise to any obligation on the
part of Seller to undertake, or to bear all or any portion of the
cost of, any remedial action of any nature; and

 

(iii) Seller
has not received, at any time since December 31, 2018, any written
or, to the Knowledge of the Seller, oral notice or other
communication from any Governmental Body or any other Person
regarding (A) any actual, alleged, possible or potential violation
of, or failure to comply with, any Legal Requirement or (B) any
actual, alleged, possible or potential obligation on the part of
Seller to undertake, or to bear all or any portion of the cost of,
any remedial action of any nature.

 



 







 





 

(b) Part 3.16(b)
contains a complete and accurate list of each Governmental
Authorization that is held by Seller used in the Business or that
otherwise relates to Business or the Assets. Each Governmental
Authorization listed or required to be listed in Part 3.16(b) is
valid and in full force and effect. Except as set forth in Part
3.16(b):

 

(i) To the Knowledge of
the Seller, Seller is, and at all times since December 31, 2018,
has been, in material compliance with all of the terms and
requirements of each Governmental Authorization identified or
required to be identified in Part 3.16(b);

 

(ii) no
event has occurred or circumstance exists that may (A) constitute
or result in a violation of or a failure to comply with any term or
requirement of any Governmental Authorization listed or required to
be listed in Part 3.16(b) or (B) result in the revocation,
withdrawal, suspension, cancellation or termination of, or any
modification to, any Governmental Authorization listed or required
to be listed in Part 3.16(b);

 

(iii) Seller
has not received, at any time since December 31, 2018, any notice
or other communication (whether oral or written) from any
Governmental Body or any other Person regarding (A) any actual,
alleged, possible or potential violation of or failure to comply
with any term or requirement of any Governmental Authorization or
(B) any actual, proposed, possible or potential revocation,
withdrawal, suspension, cancellation, termination of or
modification to any Governmental Authorization; and

 

(iv) all
applications required to have been filed for the renewal of the
Governmental Authorizations listed or required to be listed in Part
3.16(b) have been duly filed on a timely basis with the appropriate
Governmental Bodies, and all other filings required to have been
made with respect to such Governmental Authorizations have been
duly made on a timely basis with the appropriate Governmental
Bodies.

 


The
Governmental Authorizations listed in Part 3.16(b) collectively
constitute all of the Governmental Authorizations necessary to
permit Seller to lawfully conduct and operate the Business in the
manner in which it currently conducts and operates the Business and
to permit Seller to own and use its assets in the manner in which
it currently owns and uses such assets.

 

Section
3.17 Legal Proceedings;
Orders.

 

(a) Except as set forth
in Part 3.17(a), there is no pending or, to Seller’s and
Shareholders’ Knowledge, threatened Proceeding:

 

(i) by or against
Seller or that otherwise relates to or may affect the business of,
or any of the assets owned or used by, Seller; or

 

(ii) that
challenges, or that may have the effect of preventing, delaying,
making illegal or otherwise interfering with, any of the
Contemplated Transactions.

 


To the
Knowledge of Seller, no event has occurred or circumstance exists
that is reasonably likely to give rise to or serve as a basis for
the commencement of any such Proceeding. Seller has delivered to
Buyer copies of all pleadings, correspondence and other documents
relating to each Proceeding listed in Part 3.17(a). There are no
Proceedings listed or required to be listed in Part 3.17(a) that
could have a material adverse effect on the business, operations,
assets, condition or prospects of Seller or upon the
Assets.

 

(b) Except as set forth
in Part 3.17(b):

 

(i) there is no Order
to which Seller, the Business or any of the Assets is subject;
and

 

(ii) to
the Knowledge of Seller, no officer, director, agent or employee of
Seller is subject to any Order that prohibits such officer,
director, agent or employee from engaging in or continuing any
conduct, activity or practice relating to the
Business.

 



 







 





 

(c) Except as set forth
in Part 3.17(b):

 

(i) Seller is, and, at
all times since December 31, 2018, has been in material compliance
with all of the terms and requirements of each Order to which it or
any of the Assets is or has been subject;

 

(ii) To
the Knowledge of the Seller, no event has occurred or circumstance
exists that is reasonably likely to constitute or result in a
violation of or failure to comply with any term or requirement of
any Order to which Seller or any of the Assets is subject;
and

 

(iii) Seller
has not received, at any time since December 31, 2018, any written
or, to the Knowledge of the Seller, oral notice or other
communication from any Governmental Body or any other Person
regarding any actual, alleged, possible or potential violation of,
or failure to comply with, any term or requirement of any Order to
which Seller or any of the Assets is or has been
subject.

 

Section
3.18 Absence of Certain
Changes and Events. Except as set forth in Part 3.18, since
the date of the Balance Sheet, Seller has conducted the Business
only in the ordinary course of business and there has not been
any:

 

(a) change in
Seller’s authorized or issued capital stock, grant of any
stock option or right to purchase shares of capital stock of Seller
or issuance of any security convertible into such capital
stock;

 

(b) amendment to the
Governing Documents of Seller;

 

(c) payment (except in
the ordinary course of business) or increase by Seller of any
bonuses, salaries or other compensation to any shareholder,
director, officer or employee or entry into any employment,
severance or similar Contract with any director, officer or
employee;

 

(d) adoption of,
amendment to or increase in the payments to or benefits under, any
Employee Plan;

 

(e) damage to or
destruction or loss of any Asset, whether or not covered by
insurance;

 

(f) entry into,
termination of or receipt of notice of termination of (i) any
license, distributorship, dealer, sales representative, joint
venture, credit or similar Contract to which Seller is a party, or
(ii) any Contract or transaction involving a total remaining
commitment by Seller of at least $15,000;

 

(g) sale (other than
sales of Inventories in the ordinary course of business), lease or
other disposition of any Asset or property of Seller (including the
Intellectual Property Assets) or the creation of any Encumbrance
(other than Permitted Encumbrances) on any Asset;

 

(h) cancellation or
waiver of any claims or rights with a value to Seller in excess of
$15,000;

 

(i) indication by any
customer or supplier of an intention to discontinue or change the
terms of its relationship with Seller;

 

(j) material change in
the accounting methods used by Seller; or

 

(k) Contract by Seller
to do any of the foregoing.

 



 







 





 

Section
3.19 Contracts; No
Defaults.

 

(a) Part 3.19(a)
contains an accurate and complete list, and Seller has delivered to
Buyer accurate and complete copies, of:

 

(i) each Seller
Contract that involves performance of services or delivery of goods
or materials by Seller of an amount or value in excess of
$15,000;

 

(ii) each
Seller Contract that involves performance of services or delivery
of goods or materials to Seller of an amount or value in excess
$15,000;

 

(iii) each
Seller Contract that was not entered into in the ordinary course of
business and that involves expenditures or receipts of Seller in
excess of $15,000;

 

(iv) each
Seller Contract affecting the ownership of, leasing of, title to,
use of or any leasehold or other interest in any real or personal
property (except personal property leases and installment and
conditional sales agreements having a value per item or aggregate
payments of less than $15,000 and with a term of less than one
year);

 

(v) each Seller
Contract with any labor union or other employee representative of a
group of employees relating to wages, hours and other conditions of
employment;

 

(vi) each
Seller Contract (however named) involving a sharing of profits,
losses, costs or liabilities by Seller with any other
Person;

 

(vii) each
Seller Contract containing covenants that in any way purport to
restrict Seller’s business activity or limit the freedom of
Seller to engage in any line of business or to compete with any
Person;

 

(viii) each
Seller Contract providing for payments to or by any Person based on
sales, purchases or profits, other than direct payments for
goods;

 

(ix) each
power of attorney of Seller that is currently effective and
outstanding;

 

(x) each Seller
Contract entered into other than in the ordinary course of business
that contains or provides for an express undertaking by Seller to
be responsible for consequential damages;

 

(xi) each
Seller Contract for capital expenditures in excess of
$15,000;

 

(xii) each
written warranty, guaranty and/or other similar undertaking with
respect to contractual performance extended by Seller other than in
the ordinary course of business; and

 

(xiii) each
amendment, supplement and modification (whether oral or written) in
respect of any of the foregoing.

 


Part
3.19(a) sets forth reasonably complete details concerning such
Contracts, including the date, parties to the Contracts, and such
Contracts have been made available to Buyer.

 

(b) Neither Shareholder
has or may acquire any rights under, and neither Shareholder has or
may become subject to any obligation or liability under, any
Contract that relates to the business of Seller or any of the
Assets.

 



 







 





 

(c) Except as set forth
in Part 3.19(a):

 

(i) each Contract
identified or required to be identified in Part 3.19(a) and which
is to be assigned to or assumed by Buyer under this Agreement is in
full force and effect and is valid and enforceable in accordance
with its terms;

 

(ii) each
Contract identified or required to be identified in Part 3.19(a)
and which is being assigned to or assumed by Buyer is assignable by
Seller to Buyer without the consent of any other Person;
and

 

(iii) to
the Knowledge of Seller, no Contract identified or required to be
identified in Part 3.19(a) and which is to be assigned to or
assumed by Buyer under this Agreement will upon completion or
performance thereof have a material adverse affect on the business,
assets or condition of Seller or the business to be conducted by
Buyer with the Assets.

 

(d) Except as set forth
in Part 3.19(a):

 

(i) Seller is, and at
all times since December 31, 2018, has been, in material compliance
with all applicable terms and requirements of each Seller Contract
which is being assumed by Buyer;

 

(ii) to
the Knowledge of the Seller, no event has occurred or circumstance
exists that (with or without notice or lapse of time) may
contravene, conflict with or result in a breach of, or give Seller
or other Person the right to declare a default or exercise any
remedy under, or to accelerate the maturity or performance of, or
payment under, or to cancel, terminate or modify, any Seller
Contract that is being assigned to or assumed by
Buyer;

 

(iii) to
the Knowledge of the Seller, no event has occurred or circumstance
exists under or by virtue of any Contract that (with or without
notice or lapse of time) would cause the creation of any
Encumbrance (other than Permitted Encumbrances) affecting any of
the Assets; and

 

(iv) Seller
has not given to or received from any other Person, at any time
since December 31, 2018, any written or, to the Knowledge of the
Seller, oral notice or other communication regarding any actual,
alleged, possible or potential violation or beach of, or default
under, any Contract which is being assigned to or assumed by
Buyer.

 

(e) There are no
renegotiations of, attempts to renegotiate or outstanding rights to
renegotiate any material amounts paid or payable to Seller under
current or completed Contracts with any Person having the
contractual or statutory right to demand or require such
renegotiation and no such Person has made written demand for such
renegotiation.

 

(f) Each Contract
relating to the sale, design, manufacture or provision of products
or services by Seller has been entered into in the ordinary course
of business of Seller and has been entered into without the
commission of any act alone or in concert with any other Person, or
any consideration having been paid or promised, that is or would be
in violation of any Legal Requirement.

 

Section
3.20 Insurance.
Seller has delivered to Buyer an accurate and complete copies of
all policies of insurance (and correspondence relating to coverage
thereunder) to which Seller is a party or under which Seller is or
has been covered at any time since December 31, 2018, a list of
which is included in Part 3.20.

 

Section
3.21 Employees.

 

(a) Part 3.21(a)
contains a complete and accurate list of the following information
for each employee, director, independent contractor, consultant and
agent of Seller, including each employee on leave of absence or
layoff status: employer; name; job title; date of hiring or
engagement; date of commencement of employment or engagement;
current compensation paid or payable and any change in compensation
since December 31, 2020; sick and vacation leave that is accrued
but unused; and service credited for purposes of vesting and
eligibility to participate under any Employee Plan, or any other
employee or director benefit plan.

 



 







 





 

(b) To the Knowledge of
Seller, no officer, director, agent, employee, consultant, or
contractor of Seller is bound by any Contract that purports to
limit the ability of such officer, director, agent, employee,
consultant, or contractor (i) to engage in or continue or perform
any conduct, activity, duties or practice relating to the business
of Seller or (ii) to assign to Seller or to any other Person any
rights to any invention, improvement, or discovery. To
Seller’s and Shareholders’ Knowledge, no former or
current employee of Seller is a party to, or is otherwise bound by,
any Contract that in any way adversely affected, affects, or will
affect the ability of Seller or Buyer to conduct the business as
heretofore carried on by Seller.

 

Section
3.22 Labor Disputes;
Compliance.

 

(a) In the past three
(3) years, Seller has been in compliance in all material respects
with all Legal Requirements relating to employment practices, terms
and conditions of employment, equal employment opportunity,
nondiscrimination, immigration, wages, hours, benefits, collective
bargaining and other requirements, the payment of social security
and similar Taxes and occupational safety and health. Seller is not
liable for the payment of any Taxes, fines, penalties, or other
amounts, however designated, for failure to comply with any of the
foregoing Legal Requirements.

 

(b) (i) Seller has not
been, and is not now, a party to any collective bargaining
agreement or other labor contract; (ii) since December 31, 2018,
there has not been, there is not presently pending or existing, and
to Seller’s and Shareholders’ Knowledge there is not
threatened, any strike, slowdown, picketing, work stoppage or
employee grievance process involving Seller; (iii) to
Seller’s and Shareholders’ Knowledge in the past three
(3) years no event has occurred or circumstance exists that could
provide the basis for any work stoppage or other labor dispute;
(iv) there is not pending or, to Seller’s and
Shareholders’ Knowledge, threatened against or affecting
Seller any Proceeding relating to the alleged violation of any
Legal Requirement pertaining to labor relations or employment
matters, including any charge or complaint filed with the National
Labor Relations Board or any comparable Governmental Body, and
there is no organizational activity or other labor dispute against
or affecting Seller or the facilities; (v) no application or
petition for an election of or for certification of a collective
bargaining agent is pending; (vi) no grievance or arbitration
Proceeding exists that might have an adverse effect upon Seller or
the conduct of its business; (vii) there is no lockout of any
employees by Seller, and no such action is contemplated by Seller;
and (viii) to Seller’s and Shareholders’ Knowledge in
the past three (3) years there has been no charge of discrimination
filed against or threatened against Seller with the Equal
Employment Opportunity Commission or similar Governmental
Body.

 

Section
3.23 Intellectual
Property Assets.

 

(a) The term
“Intellectual Property
Assets” means all intellectual property owned or
licensed (as licensor or licensee) by Seller in which Seller has a
proprietary interest which are necessary or used in the Business,
including:

 

(i) Seller’s
name, all assumed fictional business names, trade names, registered
and unregistered trademarks, service marks and applications
(collectively, “Marks”);

 

(ii) all
patents, patent applications and inventions and discoveries that
may be patentable (collectively, “Patents”);

 

(iii) all
registered and unregistered copyrights in both published works and
unpublished works (collectively, “Copyrights”);

 

(iv) all
rights in mask works;

 

(v) all know-how, trade
secrets, confidential or proprietary information, customer lists,
Software, technical information, data, process technology, plans,
drawings and blue prints (collectively, “Trade
Secrets”); and

 

(vi) all
rights in internet web sites and internet domain names presently
used by Seller (collectively “Net
Names”).

 

(b) Part 3.23(b)
contains a complete and accurate list and summary description,
including any royalties paid or received by Seller, and Seller has
delivered to Buyer accurate and complete copies, of all Seller
Contracts relating to the Intellectual Property Assets, except for
any license implied by the sale of a product and perpetual, paid-up
licenses for commonly available Software programs with a value of
less than $500 under which Seller is the licensee. There are no
outstanding and, to Seller’s and Shareholders’
Knowledge, no threatened disputes or disagreements with respect to
any such Contract.

 



 







 





 

(c) (i) The
Intellectual Property Assets are all those necessary for the
operation of the Business as it is currently conducted. Seller is
the owner or licensee of all right, title and interest in and to
each of the Intellectual Property Assets, free and clear of all
Encumbrances (other than Permitted Encumbrances), and has the right
to use without payment to a Third Party all of the Intellectual
Property Assets, other than in respect of licenses listed in Part
3.23(c).

 

(i) Except as set forth
in Part 3.23(c), all former and current employees of Seller have
executed written Contracts with Seller that assign to Seller all
rights to any inventions, improvements, discoveries or information
relating to the business of Seller.

 

(d) The Seller has no
Patents necessary or used with the Business.

 

(e) (i) Part 3.23(e)
contains a complete and accurate list and summary description of
all Marks.

 

(i) All Marks have been
registered with the United States Patent and Trademark Office, are
currently in compliance with all formal Legal Requirements
(including the timely post-registration filing of affidavits of use
and incontestability and renewal applications), are valid and
enforceable and are not subject to any maintenance fees or taxes or
actions falling due within ninety (90) days after the Closing
Date.

 

(ii) No
Mark has been or is now involved in any opposition, invalidation or
cancellation Proceeding and, to Seller’s and
Shareholders’ Knowledge, no such action is threatened with
respect to any of the Marks.

 

(iii) To
Seller’s and Shareholders’ Knowledge, there is no
potentially interfering trademark or trademark application of any
other Person.

 

(iv) No
Mark is infringed or, to Seller’s and Shareholders’
Knowledge, has been challenged or threatened in any way. None of
the Marks used by Seller infringes or is alleged to infringe any
trade name, trademark or service mark of any other
Person.

 

(v) All products and
materials containing a Mark bear the proper federal registration
notice where permitted by law.

 

(f) (i) Part 3.23(f)
contains a complete and accurate list and summary description of
all Copyrights.

 

(i) All of the
registered Copyrights are currently in compliance with formal Legal
Requirements, are valid and enforceable, and are not subject to any
maintenance fees or taxes or actions falling due within ninety (90)
days after the date of Closing.

 

(ii) No
Copyright is infringed or, to Seller’s and
Shareholders’ Knowledge, has been challenged or threatened in
any way. None of the subject matter of any of the Copyrights
infringes or is alleged to infringe any copyright of any Third
Party or is a derivative work based upon the work of any other
Person.

 

(iii) All
works encompassed by the Copyrights have been marked with the
proper copyright notice.

 

(g) (i) With respect to
each Trade Secret, the documentation relating to such Trade Secret
is current, accurate and sufficient in detail and content to
identify and explain it and to allow its full and proper use
without reliance on the knowledge or memory of any
individual.

 

(i) Seller has taken
all reasonable precautions to protect the secrecy, confidentiality
and value of all Trade Secrets (including the enforcement by Seller
of a policy requiring each employee or contractor to execute
proprietary information and confidentiality agreements
substantially in Seller’s standard form, and all current and
former employees and contractors of Seller have executed such an
agreement).

 

(ii) Seller
has good title to and an absolute right to use the Trade Secrets.
The Trade Secrets are not part of the public knowledge or
literature and, to Seller’s and Shareholders’
Knowledge, have not been used, divulged or appropriated either for
the benefit of any Person (other than Seller) or to the detriment
of Seller. No Trade Secret is subject to any adverse claim or has
been challenged or threatened in any way or infringes any
intellectual property right of any other Person.

 



 







 





 

(h) (i) Part 3.23(h)
contains a complete and accurate list and summary description of
all Net Names.

 

(i) All Net Names have
been registered in the name of Seller and are in compliance with
all formal Legal Requirements.

 

(ii) No
Net Name has been or is now involved in any dispute, opposition,
invalidation or cancellation Proceeding and, to Seller’s and
Shareholders’ Knowledge, no such action is threatened with
respect to any Net Name.

 

(iii) To
Seller’s and Shareholders’ Knowledge, there is no
domain name application pending of any other person which would or
would potentially interfere with or infringe any Net
Name.

 

(iv) No
Net Name is infringed or, to Seller’s and Shareholders’
Knowledge, has been challenged, interfered with or threatened in
any way. No Net Name infringes, interferes with or is alleged to
interfere with or infringe the trademark, copyright or domain name
of any other Person.

 

Section
3.24 Compliance with the
Foreign Corrupt Practices Act and Export Control and Antiboycott
Laws. Seller and its Representatives have not, to obtain or
retain business, directly or indirectly offered, paid or promised
to pay, or authorized the payment of, any money or other thing of
value (including any fee, gift, sample, travel expense or
entertainment with a value in excess of one hundred dollars
($100.00) in the aggregate to any one individual in any year) to:
(i) any person who is an official, officer, agent, employee or
representative of any Governmental Body or of any existing or
prospective customer (whether government owned or nongovernment
owned); or (ii) any other individual or entity while knowing or
having reason to believe that all or any portion of such money or
thing of value would be offered, given, or promised, directly or
indirectly, to any such official, officer, agent, employee,
representative, political party, political party official,
candidate, individual, or any entity affiliated with such customer,
political party or official or political office.

 

Section
3.25 Relationships with
Related Persons. Except as disclosed in Part 3.25, neither
Seller nor either Shareholder nor any Related Person of any of them
has, or since January 1, 2020, has had, any interest in any
property (whether real, personal or mixed and whether tangible or
intangible) used in or pertaining to Seller’s business.
Neither Seller nor either Shareholder nor any Related Person of any
of them owns, or since January 1, 2020, has owned, of record or as
a beneficial owner, an equity interest or any other financial or
profit interest in any Person that has (a) had business dealings or
a material financial interest in any transaction with Seller other
than business dealings or transactions disclosed in Part 3.25, each
of which has been conducted in the ordinary course of business with
Seller at substantially prevailing market prices and on
substantially prevailing market terms or (b) engaged in a Competing
Business in any market presently served by Seller, except for
ownership of less than five percent (5%) of the outstanding capital
stock of any Competing Business that is publicly traded on any
recognized exchange or in the over-the-counter market. Except as
set forth in Part 3.25, neither Seller nor either Shareholder nor
any Related Person of any of them is a party to any Contract with,
or has any claim or right against, Seller.

 

Section
3.26 Brokers or
Finders. Except as provided on Part 3.26, neither Seller nor
any of its Representatives have incurred any obligation or
liability, contingent or otherwise, for brokerage or finders’
fees or agents’ commissions or other similar payments in
connection with the sale of Seller’s business or the Assets
or the Contemplated Transactions which will not be paid and such
engagement terminated at the Closing.

 



ARTICLE
IV





 


Representations
and Warranties of Buyer

 


Buyer
represents and warrants to Seller and Shareholders as
follows:

 

Section
4.1   Organization
and Good Standing. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State
of North Carolina, with full corporate power and authority to
conduct its business as it is now conducted.

 

Section
4.2   Authority;
No Conflict.

 

(a) This Agreement
constitutes the legal, valid and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms. Upon the
execution and delivery by Buyer of the Assignment and Assumption
Agreement, the Escrow Agreement, the Employment Agreements, and
each other agreement to be executed or delivered by Buyer at
Closing (collectively, the “Buyer’s Closing
Documents”), each of the Buyer’s Closing
Documents will constitute the legal, valid and binding obligation
of Buyer, enforceable against Buyer in accordance with its
respective terms. Buyer has the absolute and unrestricted right,
power and authority to execute and deliver this Agreement and the
Buyer’s Closing Documents and to perform its obligations
under this Agreement and the Buyer’s Closing Documents, and
such action has been duly authorized by all necessary corporate
action.

 



 







 





 

(b) Neither the
execution and delivery of this Agreement by Buyer nor the
consummation or performance of any of the Contemplated Transactions
by Buyer will give any Person the right to prevent, delay or
otherwise interfere with any of the Contemplated Transactions
pursuant to:

 

(i) any provision of
Buyer’s Governing Documents;

 

(ii) any
resolution adopted by the board of directors or the shareholders of
Buyer;

 

(iii) any
Legal Requirement or Order to which Buyer may be subject;
or

 

(iv) any
Contract to which Buyer is a party or by which Buyer may be
bound.

 


Buyer
is not and will not be required to obtain any Consent from any
Person in connection with the execution and delivery of this
Agreement or the consummation or performance of any of the
Contemplated Transactions.

 

Section
4.3   Certain
Proceedings. There is no pending Proceeding that has been
commenced against Buyer and that challenges, or may have the effect
of preventing, delaying, making illegal or otherwise interfering
with, any of the Contemplated Transactions. To Buyer’s
Knowledge, no such Proceeding has been threatened.

 

Section
4.4   Brokers
or Finders. Neither Buyer nor any of its Representatives
have incurred any obligation or liability, contingent or otherwise,
for brokerage or finders’ fees or agents’ commissions
or other similar payment in connection with the Contemplated
Transactions.

 

Section
4.5   No Additional
Representations. Buyer hereby acknowledges and agrees that,
except as set forth in ARTICLE III
hereof, neither the Seller nor any Shareholder is making any
representation or warranty, express or implied, of any nature
whatsoever.

 



ARTICLE
V






 


Additional
Covenants

Section
5.1   Employees
and Employee Benefits.

 

(a) Information on Active Employees. For
the purpose of this Agreement, the term “Active
Employees” shall mean all employees listed in Part
5.1(a).

 

(b) Employment of Active Employees by
Buyer.

 

(i) Buyer is not
obligated to hire any Active Employee but must make a bona fide
offer of conditional employment to all Active
Employees.

 

(ii) Neither
Seller nor either Shareholder nor their Related Persons shall
solicit the continued employment of any Active Employee agreed to
be hired by Buyer (unless and until Buyer has informed Seller in
writing that the particular Active Employee will not be hired by
Buyer).

 

(iii) Each
Active Employee who is hired by Buyer (each, a “Hired Active
Employee”) shall become an employee of Buyer effective
as of the Closing. The employment of each Hired Active Employee
shall be deemed terminated with Seller immediately prior to the
Effective Time. Buyer shall pay, perform or otherwise satisfy all
Liabilities in full related to Buyer’s offers of employment
when such Hired Active Employee accepts such offer.

 



 







 





 

(iv) It
is understood and agreed that (A) Buyer’s offers of
employment as set forth in this section shall not constitute any
commitment, Contract or understanding (expressed or implied) of any
obligation on the part of Buyer to a post-Closing employment
relationship of any fixed term or duration or upon any terms or
conditions other than those that Buyer may establish pursuant to
individual offers of employment, and (B) employment offered by
Buyer is “at will” and may be terminated by Buyer or by
an employee at any time for any reason (subject to any written
commitments to the contrary made by Buyer or an employee and Legal
Requirements). Nothing in this Agreement shall be deemed to prevent
or restrict in any way the right of Buyer to terminate, reassign,
promote or demote any of the Hired Active Employees after the
Closing or to change adversely or favorably the title, powers,
duties, responsibilities, functions, locations, salaries, other
compensation or terms or conditions of employment of such
employees.

 

(c) Salaries and Benefits.

 

(i) Seller shall be
responsible for (A) the payment of all wages and other remuneration
due to Active Employees with respect to their services as employees
of Seller payable through the close of business on the Closing Date
and with respect to such Active Employees which Buyer does not
hire, including pro rata bonus payments and all vacation pay earned
prior to the Closing Date; (B) the payment of any termination or
severance payments and the provision of health plan continuation
coverage in accordance with the requirements of COBRA and Sections
601 through 608 of ERISA; and (C) any and all payments to employees
required under the WARN Act.

 

(ii) Seller
shall be liable for any claims made or incurred by Active Employees
and their beneficiaries through the Closing Date and with respect
to such Active Employees which Buyer does not hire under the
Employee Plans. For purposes of the immediately preceding sentence,
a charge will be deemed incurred, in the case of hospital, medical
or dental benefits, when the services that are the subject of the
charge are performed and, in the case of other benefits (such as
disability or life insurance), when an event has occurred or when a
condition has been diagnosed that entitles the employee to the
benefit.

 

(d) Seller’s Retirement and Savings
Plans. All Hired Active Employees who are participants in
Seller’s retirement plans shall retain their accrued benefits
under Seller’s retirement plans as of the Buyer’s
hiring date, and Seller (or Seller’s retirement plans) shall
retain sole liability for the payment of such benefits as and when
such Hired Active Employees become eligible therefor under such
plans. All Hired Active Employees shall become fully vested in
their accrued benefits under Seller’s retirement plans as of
the Closing Date, and Seller will so amend such plans if necessary
to achieve this result. Seller shall cause the assets of each
Employee Plan to equal or exceed the benefit liabilities of such
Employee Plan on a plan-termination basis as of the Effective
Time.

 

(e) No Transfer of Assets. Neither Seller
nor Shareholders nor their respective Related Persons will make any
transfer of pension or other employee benefit plan assets to
Buyer.

 

(f) Collective Bargaining Matters. Buyer
will set its own initial terms and conditions of employment for the
Hired Active Employees and others it may hire, including work
rules, benefits and salary and wage structure, all as permitted by
law. Buyer is not obligated to assume any collective bargaining
agreements under this Agreement. Seller shall be solely liable for
any severance payment required to be made to its employees due to
the Contemplated Transactions. Any bargaining obligations of Buyer
with any union with respect to bargaining unit employees subsequent
to the Closing, whether such obligations arise before or after the
Closing, shall be the sole responsibility of Buyer.

 

(g) General Employee
Provisions.

 

(i) Seller and Buyer
shall give any notices required by Legal Requirements and take
whatever other actions with respect to the plans, programs and
policies described in this Section 5.1 as may be necessary to carry
out the arrangements described in this Section 5.1.

 

(ii) Seller
and Buyer shall provide each other with such plan documents and
summary plan descriptions, employee data or other information as
may be reasonably required to carry out the arrangements described
in this Section 5.1.

 

(iii) If
any of the arrangements described in this Section 5.1 are
determined by the IRS or other Governmental Body to be prohibited
by law, Seller and Buyer shall modify such arrangements to as
closely as possible reflect their expressed intent and retain the
allocation of economic benefits and burdens to the parties
contemplated herein in a manner that is not prohibited by
law.

 

(iv) Seller
shall provide Buyer with completed I-9 forms and attachments with
respect to all Hired Active Employees, except for such employees as
Seller certifies in writing to Buyer are exempt from such
requirement or unless Buyer is treating the Hired Active Employees
as new hires.

 

(v) Except as required
by applicable Legal Requirements, Buyer shall not have any
responsibility, liability or obligation, whether to Active
Employees, former employees, their beneficiaries or to any other
Person, with respect to any employee benefit plans, practices,
programs or arrangements (including the establishment, operation or
termination thereof and the notification and provision of COBRA
coverage extension) maintained by Seller.

 



 







 





 

Section
5.2   Tax
Covenants. All real property taxes, personal property taxes
and other ad valorem taxes levied with respect to the Assets (other
than Transfer Taxes) for a Straddle Period shall be apportioned
based on the number of days of the Straddle Period ending on and
including the Closing Date and the number of days of the Straddle
Period after the Closing Date. Seller shall be liable for the
amount of such taxes that is attributable to the portion of the
Straddle Period ending on and including the Closing Date, and Buyer
shall be liable for the amount of such taxes that is attributable
to the remaining portion of the Straddle Period. Seller and Buyer
shall cooperate to promptly pay or reimburse the other for any such
taxes based on their respective liability for such taxes as
determined pursuant to this Section 5.2(b). Any refunds of
such taxes with respect to a Straddle Period shall be apportioned
between the Seller and Buyer in a similar manner.

 


Section 5.3   Seller’s
Charlotte Lease. The Buyer agrees to pay six (6) months of
rent (on a monthly basis when due) to Seller or directly to the
landlord in an amount equal to Seller’s contractual monthly
rent payment pursuant to Seller’s charlotte real property
lease (Suite K only).

 

Section
5.4   Payment
of All Retained Liabilities Resulting from Sale of Assets by
Seller. In addition to payment of Taxes pursuant to Section
5.2, Seller shall pay, or make adequate provision for the payment,
in full all the Retained Liabilities and other Liabilities of
Seller under this Agreement when due. If any such Liabilities are
not so paid or provided for, or if Buyer reasonably determines that
failure to make any payments will impair Buyer’s use or
enjoyment of the Assets or conduct of the business previously
conducted by Seller with the Assets, Buyer may, at any time after
the Closing Date, elect to make all such payments directly (but
shall have no obligation to do so) and set off and deduct the full
amount of all such payments from the Escrow Agreement.

 

Section
5.5   Removing
Excluded Assets. On or before the Closing Date, Seller shall
remove all Excluded Assets from all facilities and other real
property to be occupied by Buyer. Such removal shall be done in
such manner as to avoid any damage to the facilities and other
properties to be occupied by Buyer and any disruption of the
business operations to be conducted by Buyer after the Closing. Any
damage to the Assets or to the facilities resulting from such
removal shall be paid by Seller at the Closing.

 

Section
5.6   Reports
and Returns. Seller shall promptly after the Closing prepare
and file all reports and returns required by Legal Requirements
relating to the business of Seller as conducted using the Assets,
to and including the Effective Time.

 

Section
5.7   Assistance
in Proceedings. Seller will, upon reasonable request by the
Buyer, cooperate with Buyer and its counsel in the contest or
defense of, and make available its personnel and provide reasonable
access to its books and Records in connection with, any Proceeding
involving or relating to (a) any Contemplated Transaction or (b)
any action, activity, circumstance, condition, conduct, event,
fact, failure to act, incident, occurrence, plan, practice,
situation, status or transaction on or before the Closing Date
involving Seller or its business or either
Shareholder.

 

Section
5.8   Noncompetition,
Nonsolicitation and Nondisparagement.

 

(a) Noncompetition. For a period of five
(5) years after the Closing Date, Seller and Shareholders shall
not, anywhere in the United States, directly or indirectly invest
in, own, manage, operate, finance, control, advise, render services
to or guarantee the obligations of any Person engaged in the
Business (“Competing
Business”), provided, however, that the Seller and
each Shareholder may, individually or collectively, (i) purchase or
otherwise acquire up to (but not more than) five percent (5%) of
any class of the securities of any Person (but may not otherwise
participate in the activities of such Person) or (ii) render
services to a Person engaged in or planning to become engaged in
the Business, so long as the Seller or applicable Shareholder does
not render services to the applicable division, group, department
or subdivision of such Person engaged in the Business. For the
avoidance of doubt, the term “Competing
Business” shall not include any Person engaged in or
planning to become engaged in the sale of Delta 8
products.

 

(b) Nonsolicitation. For a period of five
(5) years after the Closing Date, Seller shall not, directly or
indirectly (and in each case for purposes of providing, or
directing to a Person who provides, products or services that are
competitive with those provided by Buyer or the
Business):

 

(i) solicit the
business of any Person who is a customer of Buyer;

 

(ii) cause,
induce or attempt to cause or induce any customer, supplier,
licensee, licensor, franchisee, employee, consultant or other
business relation of Buyer to cease doing business with Buyer, to
deal with any competitor of Buyer or in any way interfere with its
relationship with Buyer;

 

(iii) cause,
induce or attempt to cause or induce any customer, supplier,
licensee, licensor, franchisee, employee, consultant or other
business relation of Seller on the Closing Date or within the year
preceding the Closing Date to cease doing business with Buyer, to
deal with any competitor of Buyer or in any way interfere with its
relationship with Buyer; or

 

(iv) hire,
retain or attempt to hire or retain any employee or independent
contractor of Buyer or in any way interfere with the relationship
between Buyer and any of its employees or independent
contractors.

 

(c) Nondisparagement. After the Closing
Date, Seller will not disparage Buyer or any of Buyer’s
shareholders, directors, officers, or employees; provided, that
nothing herein shall prevent the provision of truthful information
made in the course of sworn testimony or in any administrative,
judicial or arbitral proceedings or investigations.

 



 







 





 

(d) Modification of Covenant. If a final
judgment of a court or tribunal of competent jurisdiction
determines that any term or provision contained in Section 5.8(a)
through (c) is invalid or unenforceable, then the parties agree
that the court or tribunal will have the power to reduce the scope,
duration or geographic area of the term or provision, to delete
specific words or phrases or to replace any invalid or
unenforceable term or provision with a term or provision that is
valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision. This
Section 5.8 will be enforceable as so modified after the expiration
of the time within which the judgment may be appealed. This Section
5.8 is reasonable and necessary to protect and preserve
Buyer’s legitimate business interests and the value of the
Assets and to prevent any unfair advantage conferred on
Seller.

 

Section
5.9   Customer
and Other Business Relationships. For the period of twelve
(12) months following Closing, Seller will, upon reasonable request
by Buyer, cooperate with Buyer in its efforts to continue and
maintain for the benefit of Buyer those business relationships of
Seller existing prior to the Closing and relating to the business
to be operated by Buyer after the Closing, including relationships
with lessors, employees, regulatory authorities, licensors,
customers, suppliers and others. Seller will refer to Buyer all
inquiries relating to such business. Neither Seller nor any of its
officers, employees, agents or shareholders shall take any action
that would actually diminish the value of the Assets after the
Closing or that would interfere with the business of Buyer to be
engaged in after the Closing, including disparaging the name or
business of Buyer.

 

Section
5.10   Retention
of and Access to Records. After the Closing Date, Buyer
shall retain for a period consistent with Buyer’s
record-retention policies and practices those Records of Seller
delivered to Buyer. Buyer also shall provide Seller and
Shareholders and their Representatives reasonable access thereto,
during normal business hours and on at least three days’
prior written notice, to enable them to prepare financial
statements or Tax Returns or deal with Tax audits. After the
Closing Date, Seller shall provide Buyer and its Representatives
reasonable access to Records that are Excluded Assets, during
normal business hours and on at least three days’ prior
written notice, for any reasonable business purpose specified by
Buyer in such notice.

 

Section
5.11 Further
Assurances. The parties shall cooperate reasonably with each
other and with their respective Representatives in connection with
any steps required to be taken as part of their respective
obligations under this Agreement, and shall (a) furnish upon
request to each other such further information; (b) execute and
deliver to each other such other documents; and (c) do such other
acts and things, all as the other party may reasonably request for
the purpose of carrying out the intent of this Agreement and the
Contemplated Transactions.

 



ARTICLE
VI






 


Indemnification;
Remedies

 

Section
6.1   Survival.
All representations, warranties, covenants and obligations in this
Agreement and the Disclosure Letter and any other certificate or
document delivered pursuant to this Agreement shall survive the
Closing and the consummation of the Contemplated Transactions,
subject to Section 6.7.

 

Section
6.2   Indemnification
and Reimbursement by Seller and Shareholders. Seller and
each Shareholder, jointly and severally, will indemnify and hold
harmless Buyer, and its Representatives, shareholders, subsidiaries
and Related Persons (collectively, the “Buyer Indemnified
Persons”), and will reimburse the Buyer Indemnified
Persons for any loss, liability, claim, damage, or expense
(including costs of investigation and defense and reasonable
attorneys’ fees and expenses), whether or not involving a
Third-Party Claim (collectively, “Damages”),
arising from or in connection with:

 

(a) any Breach of any
representation or warranty made by Seller or either Shareholder in
(i) this Agreement (without giving effect to any supplement to the
Disclosure Letter), (ii) any transfer instrument or (iii) any other
certificate, document, writing or instrument delivered by Seller or
either Shareholder pursuant to this Agreement;

 

(b) any Breach of any
covenant or obligation of Seller or either Shareholder in this
Agreement or in any other certificate, document, writing or
instrument delivered by Seller or either Shareholder pursuant to
this Agreement;

 

(c) any Liability
arising out of the ownership or operation of the Assets prior to
the Effective Time other than the Assumed Liabilities;

 

(d) any brokerage or
finder’s fees or commissions or similar payments based upon
any agreement or understanding made, or alleged to have been made,
by any Person with Seller or either Shareholder (or any Person
acting on their behalf) in connection with any of the Contemplated
Transactions;

 

(e) any noncompliance
with any bulk sales Legal Requirements or fraudulent transfer law
in respect of the Contemplated Transactions; or

 

(f) any Retained
Liabilities.

 



 







 





 

Section
6.3   Indemnification
and Reimbursement by Buyer. Buyer will indemnify and hold
harmless Seller, and its Representatives, shareholders,
subsidiaries and Related Persons (collectively, the
“Seller
Indemnified Persons”) and will reimburse the Seller
Indemnified Persons, for any Damages arising from or in connection
with:

 

(a) any Breach of any
representation or warranty made by Buyer in this Agreement or in
any certificate, document, writing or instrument delivered by Buyer
pursuant to this Agreement;

 

(b) any Breach of any
covenant or obligation of Buyer in this Agreement or in any other
certificate, document, writing or instrument delivered by Buyer
pursuant to this Agreement;

 

(c) any claim by any
Person for brokerage or finder’s fees or commissions or
similar payments based upon any agreement or understanding alleged
to have been made by such Person with Buyer (or any Person acting
on Buyer’s behalf) in connection with any of the Contemplated
Transactions;

 

(d) any obligations of
Buyer with respect to bargaining with the collective bargaining
representatives of Hired Active Employees subsequent to the
Closing; or

 

(e) any Assumed
Liabilities.

 

Section
6.4   Time
Limitations.

 

(a) Seller and
Shareholders will have liability (for indemnification or otherwise)
with respect to any Breach of (i) a covenant or obligation or (ii)
a representation or warranty as to which a claim may be made at any
time, only if on or before December 31, 2022, if Buyer notifies
Seller or Shareholders of a claim specifying the factual basis of
the claim in reasonable detail to the extent then known by
Buyer.

 

(b) Buyer will have
liability (for indemnification or otherwise) with respect to any
Breach of (i) a covenant or obligation or (ii) a representation or
warranty, only if on or before December 31, 2022, Seller or
Shareholders notify Buyer of a claim specifying the factual basis
of the claim in reasonable detail to the extent then known by
Seller or Shareholders.

 

Section
6.5   Dollar
Limitations on Indemnification.

 

(a) No indemnification
payments shall be payable pursuant to the indemnification
obligations of Seller or Shareholders pursuant to Section 6.2 or
the indemnification obligations of Buyer pursuant to Section 6.3,
respectively, unless the total aggregate indemnification
obligations under either such Section, as applicable to the
Indemnified Person, exceeds $25,000 (the "Threshold"). Once
the Threshold is satisfied against an Indemnifying Person, the
Indemnifying Person shall pay to the Indemnified Person the
Threshold plus the amount of all indemnification obligations in
excess of the Threshold, subject to the provisions of this Article
6.

 

(b) No Indemnified
Persons shall be entitled to recover indemnifiable Damages from the
other party under Section 6.2 or
Section 6.3 for more than an amount equal to the aggregate of the
Escrow Amount and the valuation of the Indemnification Shares, with
each Indemnification Share having the value equal to the NYSE
listed closing stock price of YCBD at the close of trading on the
day immediately preceding the Closing Date (the “Cap”);
provided, that the Cap shall not apply with respect to any Damages
resulting from or relating to any claim for fraud or intentional
misrepresentation. For the avoidance of doubt, the Escrow Amount
and the Indemnification Shares shall be the Buyer Indemnified
Persons’ sole recourse against the Seller and the
Shareholders for recovering indemnifiable Damages under Section 6.2 other than with respect to any
claim for fraud or intentional misrepresentation.

 

Section
6.6   Right of Setoff;
Escrow; Satisfaction of Claims.

 

(a) Upon notice to
Seller specifying in reasonable detail the basis therefor, Buyer
may setoff (or withhold until final resolution) the Indemnification
Shares or any other amount to which it may be entitled under this
Article VI against amounts otherwise payable or issuable to Seller
or Shareholders, including the amounts set forth in the Escrow
Agreement. For purposes of this Section 6, the basis for
determining the number of Indemnification Shares which shall be
used to setoff such amounts owed by Seller or Shareholders
hereunder shall be the NYSE listed closing stock price of YCBD at
the close of trading on the day immediately preceding the Closing
Date. Neither the exercise of nor the failure to exercise such
right of setoff or to give a notice of a claim under the Escrow
Agreement will constitute an election of remedies or limit Buyer in
any manner in the enforcement of any other remedies that may be
available to it.

 

(b) On or before the
fifth (5th) Business Day following December 31, 2022 (the
“Release
Date”), Buyer and the Seller shall deliver joint
written instructions to the Escrow Agent instructing the Escrow
Agent to release any the Escrow Funds less the aggregate amount of
Damages specified in notice of any Third-Party Claim or Direct
Claim to the Seller. To the extent that any amount has been
reserved and withheld from distribution from the Escrow Account on
the Release Date on account of an unresolved claim for
indemnification and, subsequent to the Release Date, such claim is
resolved, the Buyer and Seller shall deliver joint written
instructions to the Escrow Agent instructing the Escrow Agent to
(x) release to Buyer an amount from the Escrow Funds (not to exceed
any amounts then in the Escrow Account) equal to amount of Damages,
if any, due in respect of such claim as finally resolved and (y)
release to the Seller any remaining Escrow Funds not reserved and
withheld from distribution in accordance with this Section
6.6(b).

 



 







 





 

Section
6.7   Third-Party
Claims.

 

(a) Promptly after
receipt by a Person entitled to indemnity under Section 6.2, 6.3
(to the extent provided in the last sentence of Section 6.3) or 6.4
(an “Indemnified
Person”) of notice (a “Claim Notice”)
of the assertion of a Third-Party Claim against it, such
Indemnified Person shall give notice to the Person obligated to
indemnify under such Section (an “Indemnifying
Person”) of the assertion of such Third-Party Claim,
provided that the failure to notify the Indemnifying Person will
not relieve the Indemnifying Person of any liability that it may
have to any Indemnified Person, except to the extent that the
Indemnifying Person demonstrates that the defense of such
Third-Party Claim is prejudiced by the Indemnified Person’s
failure to give such notice.

 

(b) If an Indemnified
Person delivers a Claim Notice to the Indemnifying Person pursuant
to Section 6.6(a), the Indemnifying Person shall be entitled to
participate in the defense of such Third-Party Claim and, to the
extent that it wishes (unless (i) the Indemnifying Person is also a
Person against whom the Third-Party Claim is made and the
Indemnified Person determines in good faith that joint
representation would be inappropriate or (ii) the Indemnifying
Person fails to provide reasonable assurance to the Indemnified
Person of its financial capacity to defend such Third-Party Claim
and provide indemnification with respect to such Third-Party
Claim), to assume the defense of such Third-Party Claim. After
notice from the Indemnifying Person to the Indemnified Person of
its election to assume the defense of such Third-Party Claim, the
Indemnifying Person shall not, so long as it diligently conducts
such defense, be liable to the Indemnified Person under this
Article VI for any fees of other counsel or any other expenses with
respect to the defense of such Third-Party Claim, in each case
subsequently incurred by the Indemnified Person in connection with
the defense of such Third-Party Claim, other than reasonable costs
of investigation. If the Indemnifying Person assumes the defense of
a Third-Party Claim, no compromise or settlement of such
Third-Party Claims may be effected by the Indemnifying Person
without the Indemnified Person’s Consent unless
(i) there is no finding or admission of any violation of Legal
Requirement or any violation of the rights of any Person; (ii) the
sole relief provided is monetary damages that are paid in full by
the Indemnifying Person; and (iii) the Indemnified Person shall
have no liability with respect to any compromise or settlement of
such Third-Party Claims effected without its Consent. If a Claim
Notice is given to an Indemnifying Person and the Indemnifying
Person does not, within thirty (30) days after the delivery of such
Claim Notice, give notice to the Indemnified Person of its election
to assume the defense of such Third-Party Claim, the Indemnifying
Person will be bound by any determination made in such Third-Party
Claim or any compromise or settlement effected by the Indemnified
Person.

 

(c) Notwithstanding the
foregoing, if an Indemnified Person determines in good faith that
there is a reasonable probability that a Third-Party Claim may
adversely affect it or its Related Persons other than as a result
of monetary damages for which it would be entitled to
indemnification under this Agreement, the Indemnified Person may,
by notice to the Indemnifying Person, assume the exclusive right to
defend, compromise or settle such Third-Party Claim, but the
Indemnifying Person will not be bound by any determination of any
Third-Party Claim so defended for the purposes of this Agreement or
any compromise or settlement effected without its Consent (which
may not be unreasonably withheld).

 

(d) Notwithstanding the
provisions of Section 8.4, Seller and each Shareholder hereby
consent to the nonexclusive jurisdiction of any court in which a
Proceeding in respect of a Third-Party Claim is brought against any
Buyer Indemnified Person for purposes of any claim that a Buyer
Indemnified Person may have under this Agreement with respect to
such Proceeding or the matters alleged therein and agree that
process may be served on Seller and Shareholders with respect to
such a claim anywhere in the world.

 

(e) With respect to any
Third-Party Claim subject to indemnification under this Article VI:
(i) both the Indemnified Person and the Indemnifying Person, as the
case may be, shall keep the other Person fully informed of the
status of such Third-Party Claim and any related Proceedings at all
stages thereof where such Person is not represented by its own
counsel, and (ii) the parties agree (each at its own expense) to
render to each other such assistance as they may reasonably require
of each other and to cooperate in good faith with each other in
order to ensure the proper and adequate defense of any Third-Party
Claim.

 

(f) With respect to any
Third-Party Claim subject to indemnification under this Article VI,
the parties agree to cooperate in such a manner as to preserve in
full (to the extent possible) the confidentiality of all
Confidential Information and the attorney-client and work-product
privileges. In connection therewith, each party agrees that: (i) it
will use its commercially reasonable, in respect of any Third-Party
Claim in which it has assumed or participated in the defense, to
avoid production of Confidential Information (consistent with
applicable law and rules of procedure), and (ii) all communications
between any party hereto and counsel responsible for or
participating in the defense of any Third-Party Claim shall, to the
extent possible, be made so as to preserve any applicable
attorney-client or work-product privilege.

 

Section
6.8   Indemnification
Procedure for Direct
Claims. Any
Indemnified Person asserting a claim on account of Damages that do
not arise from a Third-Party Claim (a “Direct Claim”)
shall deliver a Claim Notice to the Indemnifying Person prior to
the expiration of the applicable time limitation set forth in
Section 6.4. The Claim
Notice shall describe such claim and the nature and amount, or
anticipated amount, of the Damages, to the extent that the nature
and amount thereof are determinable at such time. If the
Indemnifying Person in good faith objects to any claim made in such
Claim Notice, then the Indemnifying Person shall deliver a written
notice (a “Claim Dispute
Notice”) to the Indemnified Person during the thirty
(30) day period commencing following delivery by the Indemnified
Person of the Claim Notice. The Claim Dispute Notice shall set
forth in reasonable detail the principal basis for the dispute of
any claim made in the Claim Notice. Each claim for indemnification
set forth in such Claim Notice shall be deemed to have been
conclusively determined in the Indemnified Person’s favor for
purposes of this ARTICLE VI on the
terms set forth in the Claim Notice upon the earlier of (i) notice
that the Indemnifying Person agrees with the Direct Claims asserted
in the Claim Notice or (ii) expiration of such thirty (30) day
period if the Indemnifying Person does not deliver a Claim Dispute
Notice to the Indemnified Person prior to the expiration of such
thirty (30) day period. In such event, the Indemnified Person will
be free to pursue such remedies as may be available to the
Indemnified Person at the Indemnifying Person’s expense
pursuant to the terms and subject to the provisions of this
Agreement.

 

Section
6.9   Other
Limitations on Indemnification.

 

(a) Payments by an
Indemnifying Person pursuant to Article VI in respect of any Damage
shall be limited to the amount of any liability or damage that
remains after deducting therefrom any insurance proceeds and any
indemnity, contribution or other similar payment received or
reasonably expected to be received by the Indemnified Person in
respect of any such claim. The Indemnified Person shall use its
commercially reasonable efforts to recover under insurance policies
or indemnity, contribution or other similar agreements for any
Damages prior to seeking indemnification under this
Agreement.

 

(a) Each Indemnified
Person, as applicable, shall take, and cause its affiliates to
take, all reasonable steps required by applicable law to mitigate
any Damages upon becoming aware of any event or circumstance that
would be reasonably expected to, or does, give rise
thereto.

 



 







 





 



ARTICLE
VII





 


Confidentiality

 

Section
7.1   Definition
of Confidential Information.

 

(a) As used in this
Article I, the term “Confidential
Information” includes any and all of the following
information of Seller, Buyer or Shareholders that has been or may
hereafter be disclosed in any form, whether in writing, orally,
electronically or otherwise, or otherwise made available by
observation, inspection or otherwise by either party (Buyer on the
one hand or Seller and Shareholders, collectively, on the other
hand) or its Representatives (collectively, a “Disclosing
Party”) to the other party or its Representatives
(collectively, a “Receiving
Party”):

 

(i) all information
that is a trade secret under applicable trade secret or other
law;

 

(ii) all
information concerning product specifications, data, know-how,
formulae, compositions, processes, designs, sketches, photographs,
graphs, drawings, samples, inventions and ideas, past, current and
planned research and development, current and planned manufacturing
or distribution methods and processes, customer lists, current and
anticipated customer requirements, price lists, market studies,
business plans, computer hardware, Software and computer software
and database technologies, systems, structures and
architectures;

 

(iii) all
information concerning the business and affairs of the Disclosing
Party (which includes historical and current financial statements,
financial projections and budgets, tax returns and
accountants’ materials, historical, current and projected
sales, capital spending budgets and plans, business plans,
strategic plans, marketing and advertising plans, publications,
client and customer lists and files, contracts, the names and
backgrounds of key personnel and personnel training techniques and
materials, however documented), and all information obtained from
review of the Disclosing Party’s documents or property or
discussions with the Disclosing Party regardless of the form of the
communication; and

 

(iv) all
notes, analyses, compilations, studies, summaries and other
material prepared by the Receiving Party to the extent containing
or based, in whole or in part, upon any information included in the
foregoing.

 

(b) Any trade secrets
of a Disclosing Party shall also be entitled to all of the
protections and benefits under applicable trade secret law and any
other applicable law. If any information that a Disclosing Party
deems to be a trade secret is found by a court of competent
jurisdiction not to be a trade secret for purposes of this Article
I, such information shall still be considered Confidential
Information of that Disclosing Party for purposes of this Article I
to the extent included within the definition. In the case of trade
secrets, each of Buyer, Seller and Shareholders hereby waives any
requirement that the other party submit proof of the economic value
of any trade secret or post a bond or other security.

 

Section
7.2   Restricted
Use of Confidential Information.

 

(a) Each Receiving
Party acknowledges the confidential and proprietary nature of the
Confidential Information of the Disclosing Party and agrees that
such Confidential Information (i) shall be kept confidential by the
Receiving Party; (ii) shall not be used for any reason or purpose
other than to evaluate and consummate the Contemplated
Transactions; and (iii) without limiting the foregoing, shall not
be disclosed by the Receiving Party to any Person, except in each
case as otherwise expressly permitted by the terms of this
Agreement or with the prior written consent of an authorized
representative of Seller with respect to Confidential Information
of Seller or Shareholders (each, a “Seller
Contact”) or an authorized representative of Buyer
with respect to Confidential Information of Buyer (each, a
“Buyer
Contact”). Each of Buyer and Seller and Shareholders
shall disclose the Confidential Information of the other party only
to its Representatives who require such material for the purpose of
evaluating the Contemplated Transactions and are informed by Buyer,
Seller or Shareholders, as the case may be, of the obligations of
this Article I with respect to such information. Each of Buyer,
Seller and Shareholders shall (iv) enforce the terms of this
Article I as to its respective Representatives; (v) take such
action to the extent necessary to cause its Representatives to
comply with the terms and conditions of this Article I; and (vi) be
responsible and liable for any breach of the provisions of this
Article I by it or its Representatives.

 

(b) Unless and until
this Agreement is terminated, Seller and each Shareholder shall
maintain as confidential any Confidential Information (including
for this purpose any information of Seller or Shareholders of the
type referred to in Sections 7.1(a)(i), (ii) and (iii), whether or
not disclosed to Buyer) of the Seller or Shareholders relating to
any of the Assets or the Assumed Liabilities.

 

(c) From and after the
Closing, the provisions of Section 7.2(a) above shall not apply to
or restrict in any manner Buyer’s use of any Confidential
Information of the Seller or Shareholders relating to any of the
Assets or the Assumed Liabilities.

 



 







 





 

Section
7.3   Exceptions.
Sections 7.2(a) and (b) do not apply to that part of the
Confidential Information of a Disclosing Party that a Receiving
Party demonstrates (a) was, is or becomes generally available to
the public other than as a result of a breach of this Article I or
the Confidentiality Agreement by the Receiving Party or its
Representatives; (b) was or is developed by the Receiving Party
independently of and without reference to any Confidential
Information of the Disclosing Party; or (c) was, is or becomes
available to the Receiving Party on a nonconfidential basis from a
Third Party not bound by a confidentiality agreement or any legal,
fiduciary or other obligation restricting disclosure. Neither
Seller nor either Shareholder shall disclose any Confidential
Information of Seller or Shareholders relating to any of the Assets
or the Assumed Liabilities in reliance on the exceptions in clauses
(b) or (c) above.

 

Section
7.4   Legal
Proceedings. If a Receiving Party becomes compelled in any
Proceeding or is requested by a Governmental Body having regulatory
jurisdiction over the Contemplated Transactions to make any
disclosure that is prohibited or otherwise constrained by this
Article I, that Receiving Party shall provide the Disclosing Party
with prompt notice of such compulsion or request so that it may
seek an appropriate protective order or other appropriate remedy or
waive compliance with the provisions of this Article I. In the
absence of a protective order or other remedy, the Receiving Party
may disclose that portion (and only that portion) of the
Confidential Information of the Disclosing Party that, based upon
advice of the Receiving Party’s counsel, the Receiving Party
is legally compelled to disclose or that has been requested by such
Governmental Body, provided, however, that the Receiving Party
shall use reasonable efforts to obtain reliable assurance that
confidential treatment will be accorded by any Person to whom any
Confidential Information is so disclosed. The provisions of this
Section 7.4 do not apply to any Proceedings between the parties to
this Agreement.

 

Section
7.5   Return
or Destruction of Confidential Information. If this
Agreement is terminated, each Receiving Party shall (a) destroy all
Confidential Information of the Disclosing Party prepared or
generated by the Receiving Party without retaining a copy of any
such material; (b) promptly deliver to the Disclosing Party all
other Confidential Information of the Disclosing Party, together
with all copies thereof, in the possession, custody or control of
the Receiving Party or, alternatively, with the written consent of
a Seller Contact or a Buyer Contact (whichever represents the
Disclosing Party) destroy all such Confidential Information; and
(c) certify all such destruction in writing to the Disclosing
Party, provided, however, that the Receiving Party may retain a
list that contains general descriptions of the information it has
returned or destroyed to facilitate the resolution of any
controversies after the Disclosing Party’s Confidential
Information is returned.

 

Section
7.6   Attorney-Client
Privilege. The Disclosing Party is not waiving, and will not
be deemed to have waived or diminished, any of its attorney work
product protections, attorney-client privileges or similar
protections and privileges as a result of disclosing its
Confidential Information (including Confidential Information
related to pending or threatened litigation) to the Receiving
Party, regardless of whether the Disclosing Party has asserted, or
is or may be entitled to assert, such privileges and protections.
The parties (a) share a common legal and commercial interest in all
of the Disclosing Party’s Confidential Information that is
subject to such privileges and protections; (b) are or may become
joint defendants in Proceedings to which the Disclosing
Party’s Confidential Information covered by such protections
and privileges relates; (c) intend that such privileges and
protections remain intact should either party become subject to any
actual or threatened Proceeding to which the Disclosing
Party’s Confidential Information covered by such protections
and privileges relates; and (d) intend that after the Closing the
Receiving Party shall have the right to assert such protections and
privileges. No Receiving Party shall admit, claim or contend, in
Proceedings involving either party or otherwise, that any
Disclosing Party waived any of its attorney work-product
protections, attorney-client privileges or similar protections and
privileges with respect to any information, documents or other
material not disclosed to a Receiving Party due to the Disclosing
Party disclosing its Confidential Information (including
Confidential Information related to pending or threatened
litigation) to the Receiving Party.

 



ARTICLE
VIII





 


General
Provisions

 

Section
8.1   Expenses.
Except as otherwise provided in this Agreement, each party to this
Agreement will bear its respective fees and expenses incurred in
connection with the preparation, negotiation, execution and
performance of this Agreement and the Contemplated Transactions,
including all fees and expense of its Representatives. Buyer will
pay one-half and Seller will pay one-half of the fees and expenses
of the escrow agent under the Escrow Agreement. If this Agreement
is terminated, the obligation of each party to pay its own fees and
expenses will be subject to any rights of such party arising from a
Breach of this Agreement by another party.

 

Section
8.2   Public
Announcements. Any public announcement, press release or
similar publicity with respect to this Agreement or the
Contemplated Transactions will be issued, if at all, at such time
and in such manner as mutually determined by the
parties.

 

Section
8.3   Notices.
All notices, Consents, waivers and other communications required or
permitted by this Agreement shall be in writing and shall be deemed
given to a party when (a) delivered to the appropriate address by
hand or by nationally recognized overnight courier service (costs
prepaid); (b) sent by facsimile or e-mail with confirmation of
transmission by the transmitting equipment; or (c) received or
rejected by the addressee, if sent by certified mail, return
receipt requested, in each case to the following addresses,
facsimile numbers or e-mail addresses and marked to the attention
of the person (by name or title) designated below (or to such other
address, facsimile number, e-mail address or person as a party may
designate by notice to the other parties):

 


Seller
(before the Closing):


Twenty
Two Capital LLC


1303
Lost Oak Rd, Charlotte, NC 28270


Attention: John
Wiesehan III


E-mail
address: john@blueprintstrat.com


 


with a
mandatory copy to:


 


Morris,
Manning and Martin, LLP


1600
Atlanta Financial Center


3343
Peachtree Road, NE


Atlanta, GA
30326


Attention: Nick
Foreste


E-mail
address: nforeste@mmmlaw.com


 



 







 






 


Seller
(after the Closing):


Twenty
Two Capital LLC


1303
Lost Oak Rd, Charlotte, NC 28270


Attention: John
Joseph Wiesehan III


E-mail
address: john@blueprintstrat.com


 


with a
mandatory copy to:


Morris,
Manning and Martin, LLP


1600
Atlanta Financial Center


3343
Peachtree Road, NE


Atlanta, GA
30326


Attention: Nick
Foreste


E-mail
address: nforeste@mmmlaw.com


 


Shareholder: John
Wiesehan III


Address: 1303 Lost
Oak Rd., Charlotte, NC 28270


E-mail
address: john@blueprintstrat.com


 


Shareholder:
Bradley Trawick


Address: 3502 Fawn
Hill Rd. Matthews, NC 28105


E-mail
address: Btrawick02@gmail.com


 


Buyer:
cbdMD, Inc.


Address: 8845 Red
Oak Blvd., Charlotte, NC 28217


Attention: Martin
A. Sumichrast


E-mail
address: Marty@cbdmd.com


 


with a
mandatory copy to: Brian Pearlman


Nason,
Yeager, Gerson, Harris & Fumero, P.A.


Seacoast National
Centre


3001
PGA Boulevard, Suite 305


Palm
Beach Gardens, FL 33410


E-mail
address: bpearlman@nasonyeager.com

 



 







 





 

Section
8.4   Jurisdiction;
Service of Process. Any Proceeding arising out of or
relating to this Agreement or any Contemplated Transaction may be
brought in the courts of the State of North Carolina, County of
Mecklenburg, or, if it has or can acquire jurisdiction, in the
United States District Court for the Eastern District of North
Carolina, and each of the parties irrevocably submits to the
exclusive jurisdiction of each such court in any such Proceeding,
waives any objection it may now or hereafter have to venue or to
convenience of forum, agrees that all claims in respect of the
Proceeding shall be heard and determined only in any such court and
agrees not to bring any Proceeding arising out of or relating to
this Agreement or any Contemplated Transaction in any other court.
The parties agree that either or both of them may file a copy of
this paragraph with any court as written evidence of the knowing,
voluntary and bargained agreement between the parties irrevocably
to waive any objections to venue or to convenience of forum.
Process in any Proceeding referred to in the first sentence of this
section may be served on any party anywhere in the
world.

 

Section
8.5   Enforcement
of Agreement. Seller and Shareholders acknowledge and agree
that Buyer would be irreparably damaged if any of the provisions of
this Agreement are not performed in accordance with their specific
terms and that any Breach of this Agreement by Seller or
Shareholders could not be adequately compensated in all cases by
monetary damages alone. Accordingly, in addition to any other right
or remedy to which Buyer may be entitled, at law or in equity, it
shall be entitled to enforce any provision of this Agreement by a
decree of specific performance and to temporary, preliminary and
permanent injunctive relief to prevent Breaches or threatened
Breaches of any of the provisions of this Agreement, without
posting any bond or other undertaking.

 

Section
8.6   Waiver;
Remedies Cumulative. The rights and remedies of the parties
to this Agreement are cumulative and not alternative. Neither any
failure nor any delay by any party in exercising any right, power
or privilege under this Agreement or any of the documents referred
to in this Agreement will operate as a waiver of such right, power
or privilege, and no single or partial exercise of any such right,
power or privilege will preclude any other or further exercise of
such right, power or privilege or the exercise of any other right,
power or privilege. To the maximum extent permitted by applicable
law, (a) no claim or right arising out of this Agreement or any of
the documents referred to in this Agreement can be discharged by
one party, in whole or in part, by a waiver or renunciation of the
claim or right unless in writing signed by the other party; (b) no
waiver that may be given by a party will be applicable except in
the specific instance for which it is given; and (c) no notice to
or demand on one party will be deemed to be a waiver of any
obligation of that party or of the right of the party giving such
notice or demand to take further action without notice or demand as
provided in this Agreement or the documents referred to in this
Agreement.

 

Section
8.7   Entire
Agreement and Modification. This Agreement supersedes all
prior agreements, whether written or oral, between the parties with
respect to its subject matter (including any letter of intent and
any confidentiality agreement between Buyer and Seller) and
constitutes (along with the Disclosure Letter, Exhibits and other
documents delivered pursuant to this Agreement) a complete and
exclusive statement of the terms of the agreement between the
parties with respect to its subject matter. This Agreement may not
be amended, supplemented, or otherwise modified except by a written
agreement executed by the party to be charged with the
amendment.

 

Section
8.8   Disclosure
Letter.

 

(a) The information in
the Disclosure Letter constitutes (i) exceptions to particular
representations, warranties, covenants and obligations of Seller
and Shareholders as set forth in this Agreement or (ii)
descriptions or lists of assets and liabilities and other items
referred to in this Agreement. If there is any inconsistency
between the statements in this Agreement and those in the
Disclosure Letter (other than an exception expressly set forth as
such in the Disclosure Letter with respect to a specifically
identified representation or warranty), the statements in this
Agreement will control.

 

(b) The statements in
the Disclosure Letter, and those in any supplement thereto, shall
be deemed to modify the representations and warranties in ARTICLE III only to the extent that it is
reasonably apparent on the face of the disclosure that the
disclosure in one section is applicable to other sections. The
specification of any dollar amount in the representations and
warranties contained in this Agreement or the inclusion of any
specific item in the Disclosure Letter is not intended to imply
that such amounts, or higher or lower amounts, or the items so
included or other items, are or are not required to be disclosed or
are within or outside of the ordinary course of business, and
neither party shall use the fact of the setting of such amounts or
the fact of the inclusion of any such item in the Disclosure Letter
in any dispute or controversy with any party as to whether any
obligation, item or matter not described herein or included in a
Disclosure Letter is or is not required to be disclosed (including
whether such amounts are required to be disclosed as material) or
in the ordinary course of business for the purposes of this
Agreement. The information contained in the Disclosure Letter is
disclosed solely for the purposes of this Agreement, and no
information contained therein shall be deemed to be an admission by
any party hereto to any third party of any matter whatsoever,
including of any violation of any Legal Requirement or Breach of
any agreement. The information contained in the Disclosure Letter
is intended to qualify the representations and warranties in
ARTICLE III but is not intended to
constitute a representation or warranty itself for purposes of this
Agreement.

 

Section
8.9   Assignments,
Successors and No Third-Party Rights. No party may assign
any of its rights or delegate any of its obligations under this
Agreement without the prior written consent of the other parties,
except that Buyer may assign any of its rights and delegate any of
its obligations under this Agreement to any Subsidiary of Buyer and
may collaterally assign its rights hereunder to any financial
institution providing financing in connection with the Contemplated
Transactions. Subject to the preceding sentence, this Agreement
will apply to, be binding in all respects upon and inure to the
benefit of the successors and permitted assigns of the parties.
Nothing expressed or referred to in this Agreement will 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,
except such rights as shall inure to a successor or permitted
assignee pursuant to this Section 8.9.

 

Section
8.10 Severability.
If any provision of this Agreement is held invalid or unenforceable
by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision
of this Agreement held invalid or unenforceable only in part or
degree will remain in full force and effect to the extent not held
invalid or unenforceable.

 



 







 





 

Section
8.11 Construction.
The headings of Articles and Sections in this Agreement are
provided for convenience only and will not affect its construction
or interpretation. All references to “Articles,”
“Sections” and
“Parts” refer
to the corresponding Articles, Sections and Parts of this Agreement
and the Disclosure Letter.

 

Section
8.12 Time of
Essence. With regard to all dates and time periods set forth
or referred to in this Agreement, time is of the
essence.

 

Section
8.13 Governing
Law. This Agreement will be governed by and construed under
the laws of the State of North Carolina without regard to
conflicts-of-laws principles that would require the application of
any other law.

 

Section
8.14 Execution of
Agreement. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy
of this Agreement and all of which, when taken together, will be
deemed to constitute one and the same agreement. The exchange of
copies of this Agreement and of signature pages by facsimile
transmission shall constitute effective execution and delivery of
this Agreement as to the parties and may be used in lieu of the
original Agreement for all purposes. Signatures of the parties
transmitted by facsimile shall be deemed to be their original
signatures for all purposes.

 

Section
8.15 Shareholder
Obligations. The liability of each Shareholder hereunder
shall be joint and several with Seller and with the other
Shareholder. Where in this Agreement provision is made for any
action to be taken or not taken by Seller, Shareholders jointly and
severally undertake to cause Seller to take or not take such
action, as the case may be. Without limiting the generality of the
foregoing, Shareholders shall be jointly and severally liable with
Seller for the indemnities set forth in Article 6.

 


(signature
page follows)

 


 




 








 






 


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

 


SHAREHOLDERS:

 


/s/ John J.
Wiesehan 


John
J. Wiesehan III

 


/s/ Bradley D.
Trawick 


Bradley
D. Trawick


 


SELLER:

 


Twenty
Two Capital, LLC


 


 


 


By:
/s/ John J.
Wiesehan 


Name:                      John
J. Wiesehan


Title:
CEO


 


Vieo
Design, LLC


 


 


 


By:
/s/ John J.
Wiesehan 


Name:                      John
J. Wiesehan


Title:
CEO


 


BUYER:

 


cbdMD,
Inc.


 


 


 


By:/s/ Martin S.
Sumichrast 


Name:
Martin A. Sumichrast


Title:
Co-CEO