Document:

ex10-2

 

  
Exhibit
10.2 

 

 

 

 

 

 

 

 

 

 

ASSET AND EQUITY PURCHASE AGREEMENT

 

 

 

BY AND AMONG

 

YOUNGEVITY INTERNATIONAL, INC.,

 

KHRYSOS INDUSTRIES, INC.,

 

KHRYSOS GLOBAL, INC.,

 

LEIGH DUNDORE AND

 

DWAYNE DUNDORE

 

 

 

Dated February 12, 2019

 

 

 

 

 

 

 

 

 

ASSET AND EQUITY PURCHASE AGREEMENT

 

THIS ASSET AND EQUITY PURCHASE
AGREEMENT, dated February 12, 2019 (this “Agreement”), is entered into by
and among Youngevity International, Inc., a Delaware corporation
(“YGYI”), with
an address at 2400 Boswell Road, Chula Vista, California 91914,
Khrysos Industries, Inc., a Delaware corporation and wholly owned
subsidiary of YGYI (“KII”), with an address at 2400
Boswell Road, Chula Vista, California 91914, Khrysos Global, Inc.,
a Florida corporation (“KGI” or “Seller”), with an address at 622
E. Myers Blvd., Mascotte, Florida 34753, Leigh Dundore
(“LD”), with an
address at 622 E. Myers Blvd., Mascotte, Florida 34753, and Dwayne
Dundore (the “Representing
Party”), with an address at 622 E. Myers Blvd.,
Mascotte, Florida

 

WHEREAS, Seller owns and desires to sell
and assign to YGYI substantially all of its Assets (as more
specifically defined herein) and YGYI desires to purchase and
acquire such Assets from Seller and, thereafter, to use, market,
license, sublicense, develop, maintain, collect and otherwise deal
with the Assets without restriction.

 

WHEREAS, LD owns free and clear of all Liens all of the
outstanding equity of INXL Laboratories, Inc., a Florida
corporation (“INXL”), and desires to sell to KII all of the
outstanding equity of INXL.

 

WHEREAS, LD and the Representing Party
own free and clear of all Liens all of the outstanding equity of
INXL Holdings, Inc., a Florida corporation (“INXH”), and desire to sell to KII
all of the outstanding equity of INXH.

 

NOW, THEREFORE, in consideration of the
foregoing premises and the respective representations, warranties,
covenants and agreements contained in this Agreement, and for other
good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, and intending to be legally bound
hereby, the parties agree as follows:

 

 

 

ARTICLE I

 

DEFINED TERMS

 

In
addition to terms defined elsewhere in this Agreement, the
following terms shall have the meanings assigned to them herein,
unless the context otherwise indicates, both for purposes of this
Agreement and all Exhibits and Schedules referenced
herein:

 

“Action” means any action,
complaint, summons, citation, notice, directive, order, suit,
proceeding, actual claim, arbitration, litigation, audit, judgment,
letter, inquiry, investigation or other communication from any
Person or Governmental Entity.

 

“Affiliate” means, as to a Person,
any other Person controlling, controlled by or under common control
with such first Person. As used in this definition, the term
“control” shall mean the power, directly or indirectly,
to vote more than 50% of the outstanding voting equity of an entity
or the right, directly or indirectly, to designate a majority of
the directors of a Person (in the case of a corporation) or the
Persons exercising similar functions (in the case of an
unincorporated Person).

 

“Ancillary Document” means any
writing, certificate, exhibit, schedule, transfer document,
statement, list, report, instrument, agreement or other document
furnished or delivered in connection with this
Agreement.

 

“Assets” means all of the
properties, assets, rights, claims, leasehold interests, contracts
and goodwill used in the Business and owned by the Seller, wherever
located, whether tangible or intangible, including, but not limited
to, the Contracts related to the Business identified on
Schedule A (the
“Acquired Contracts”), Intellectual Property,
proprietary rights, Inventory, product formulas, product
registrations and other assets identified on

 

Schedule A .

 

“Balance Sheet” is defined in the
definition of “Financial Statements”.

 

 

 

-1-

 

 

 

“Benefit Plan” means any employee
benefit plan including: (i) any (a) nonqualified deferred
compensation or retirement plan or arrangement or superannuation
plan; (b) qualified defined contribution retirement plan or
arrangement; or (c) qualified defined benefit retirement plan or
arrangement, which is an “employee pension benefit
plan”; (ii) any “employee welfare benefit plan”
or material fringe benefit plan or program; or (iii) any stock
purchase, stock option, profit sharing, deferred compensation,
welfare, pension, retirement, severance pay, employment,
change-in-control, vacation pay, company awards, salary
continuation, sick leave, excess benefit, bonus or other incentive
compensation, life insurance, or other employee benefit plan,
contract, program, policy or other arrangement.

 

“Business” means the current
business of Seller, INXL and INXH relating to, among other things,
the sale and distribution of Seller’s Products and products
of INXL and the various services provided by Seller and INXL,
including installation, automation control and engineering services
and laboratory services, as set forth on Schedule C.

 

“Business Day” means any day other
than a Saturday, Sunday or other day on which federally chartered
commercial banks in New York, New York are authorized by Law to
close.

 

“Capital Stock” means (i) in the
case of a corporation, its shares of capital stock; (ii) in the
case of a partnership or limited liability company, its partnership
or membership interests or units (whether general or limited); and
(iii) any other interest that confers on a Person the right to
receive a share of the profits and losses or distribution of assets
of the issuing entity.

 

“Charter Documents” means, with
respect to any entity, the certificate of incorporation, articles
of incorporation, by-laws, constitution, operating agreement,
articles of organization or other similar organizational documents
of such entity (in each case, as amended).

 

“Claims” is defined in Section 9.1(a).

 

“Closing Date” means the date which
is three (3) days after all of the conditions set forth in
Article VI have
been satisfied or waived or such other date mutually agreed to by
the parties.

 

“Consents” is defined in
Section
5.4(a).

 

“Consulting Agreement” shall mean
the Consulting Agreement to be entered into between YGYI and the
Representing Party in substantially the form of Exhibit B annexed
hereto.

 

“Contingent Consideration Warrants”
shall have the meaning set forth in Section 2.3.

 

“Contract” means any agreement,
contract, license, lease, commitment, arrangement or understanding,
written or oral.

 

“Disclosure Schedule” means the
Disclosure Schedule.

 

“Employees” means those Persons
employed by Seller, INXL or INXH immediately prior to the
Closing.

 

“Environment” means all
indoor or outdoor air, water including surface water, groundwater,
drinking water and wetlands, surface or subsurface land, and all
natural resources including all forests and marine resources,
minerals, oil, gas, fish, wildlife and biota.

 

“Environmental Action” means any
complaint, summons, citation, notice, directive, order, claim,
litigation, investigation, proceeding, judgment, letter or other
communication from or threatened from any Governmental Entity
(whether United States or foreign) or any other Person involving a
Release from or on the real property or any violation of any order,
permit or Environmental Law.

 

 

 

-2-

 

 

“Environmental Laws” means any and
all applicable Laws relating to the Environment, human health,
worker health and safety, preservation or reclamation of natural
resources, climate change or the management, handling, use,
generation, treatment, storage, transportation, disposal,
manufacture, distribution, formulation, packaging, labeling,
Release or threatened Release of or exposure to Hazardous
Materials, whether now existing or subsequently amended or enacted,
including but not limited to: the Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. Section 9601
et seq. (“CERCLA”); the Federal Water
Pollution Control Act, 33 U.S.C. Section 1251 et seq.; the Clean
Air Act, 42 U.S.C. Section 7401 et seq.; the Toxic Substances
Control Act, 15 U.S.C. Section 2601 et seq.; the Occupational
Safety and Health Act, 29 U.S.C. Section 651 et seq.; the Emergency
Planning and Community Right-to-Know Act of 1986, 42 U.S.C. Section
11001 et seq.; the Safe Drinking Water Act, 42 U.S.C. Section
300(f) et seq.; the Hazardous Materials Transportation Act, 49
U.S.C. Section 1801 et seq.; the Federal Insecticide, Fungicide and
Rodenticide Act 7 U.S.C. Section 136 et seq.; the Resource
Conservation and Recovery Act of 1976, 42 U.S.C. Section 6901 et seq.; the
Oil Pollution Act of 1990, 33 U.S.C. Section 2701 et seq.; any
similar or implementing federal, state or local Law or non-U.S. Law
and regulation and all amendments or regulations promulgated
thereunder; and any common law doctrine, including but not limited
to, negligence, nuisance (including related to noise, dust or
vibration), trespass, personal injury or property damage related to
or arising out of the presence, Release or exposure to Hazardous
Materials.

 

“Equity Securities” means (i)
Capital Stock and (ii) options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights or other
Contracts that, directly or indirectly, could require the issuer
thereof to issue, sell or otherwise cause to become outstanding
Capital Stock.

 

“Financial Statements” means
Seller’s, INXL’s and INXH’s financial statements
consisting of the balance sheet as of December 31, 2018 (the
“Balance Sheet”)
and the related statement of income and cash flows for the period
then ended as of December 31, 2018.

 

“Governmental Entity” means any
domestic or foreign governmental or regulatory authority, agency,
commission, body, court or other legislative, executive or judicial
governmental entity.

 

“Hazardous Materials” means any
substance: (i) the presence of which requires investigation or
remediation under any Environmental Law or Environmental Action;
(ii) which is or becomes defined as a hazardous waste, hazardous
substance, toxic substance, pollutant, or contaminant or noxious or
dangerous or is regulated in any manner under any Environmental Law
or Environmental Action; or (iii) which contains gasoline, diesel
fuel, other petroleum hydrocarbons, PCBs, asbestos, lead-based
paint, or radon gas.

 

“Indebtedness” means any of the
following: (i) any indebtedness, including accrued interest, for
borrowed money; (ii) any inter-company debt; (iii) any obligations
evidenced by bonds, debentures, notes or other similar instruments;
(iv) any obligations to pay the deferred purchase price of property
or services, except trade accounts payable and other current
liabilities arising in the ordinary course of business (other than
inter-company debt); (v) any obligations as lessee under
capitalized leases; (vi) any indebtedness created or arising under
any conditional sale or other title retention agreement with
respect to acquired property; (vii) any obligations, contingent or
otherwise, under acceptance credit, letters of credit or similar
facilities; (viii) obligations relating to interest rate
protection, swap agreements and collar agreements, and obligations
arising from the extinguishment of indebtedness (e.g. prepayment
penalties); and (ix) any guaranty of any of the
foregoing.

 

“Indemnified Party” is
defined in Section
9.2.

 

“Intellectual Property” means: (i)
(x) all patents, patent applications, , provisional patents, design
patents, PCT filings, invention disclosures and other rights to
inventions or designs, (y) trademarks and service marks (whether or
not registered), trade names, logos, trade dress and other
proprietary indicia, trade secret rights, moral rights or other
literary property or author’s rights, and all goodwill
associated therewith and (z) all registered and unregistered
copyrights in both published and unpublished works; and all
applications, registrations, issuances, divisions, continuations,
renewals, reissuances and extensions of the foregoing; (ii)
documentation, advertising copy, marketing materials, web-sites,
specifications, mask works, drawings, graphics, databases,
recordings and other works of authorship, whether or not protected
by copyright law; (iii) computer programs, including software
programs utilized by Seller, INXL or INXH any and all software
implementations of algorithms, models and methodologies, whether in
source code or object code, design documents, flow-charts, user
manuals and training materials relating thereto and any
translations thereof; and (iv) all forms of legal rights and
protections that may be obtained for, or may pertain to, the
Intellectual Property set forth in clauses (i) through (iii) in any
country of the world.

 

 

 

-3-

 

 

 “Inventory”
means all personal property or goods currently owned by Seller,
INXH and INXL currently saleable in the ordinary course of business
or to be furnished under contracts of service and all materials,
supplies, parts, work-in-process, finished goods, packaging and
other inventories of materials and personal property used or
consumed in the operation of the Business.

 

 “INXL Assets” means
INXL’s existing laboratoryand all equipment located in the
laboratory and necessary to operate the laboratory.

 

 “Knowledge” (i)
with respect to YGYI means facts within the actual, personal
knowledge of YGYI’s Chief Executive Officer or Chief
Financial Officer and (ii) with respect to Seller means facts
within the actual, personal knowledge of the Representing
Party.

 

“Law” or “Laws” means any and all applicable
statutes, laws, ordinances, proclamations, regulations, published
requirements, orders, decrees, authorizations, licenses, permits
and rules of any foreign, federal, state or local government,
political subdivision or governmental or regulatory authority,
agency, board, bureau, commission, instrumentality or court or
quasi-governmental authority, including, without limitation, those
covering environmental, tax, energy, safety, health,
transportation, bribery, record keeping, zoning, discrimination,
antitrust and wage and hour matters, and in each case as amended
and in effect from time to time.“Lien” means with respect to any
property or asset, any lien, pledge, claim, charge, security
interest, mortgage, adverse claim or other encumbrance of any
nature whatsoever.

 

“Losses” means losses, damages,
liabilities, deficiencies, debts, obligations, judgments, interest,
awards, penalties, fines, costs or expenses of whatever kind,
including reasonable attorneys’ fees and the cost of
enforcing any right to indemnification hereunder.

 

“Material Adverse Effect” means a
material adverse effect on the assets, liabilities, business,
operations, or condition (financial or otherwise) of each of
Seller, INXL or INXH individually or of such entities collectively
as a group.

 

 “Party”
means any a party to this Agreement as set forth in the first
paragraph of this Agreement.

 

“Permitted Liens” means: (i) Liens
securing the payment of current real or personal property, taxes,
assessments or other governmental charges or levies which are not
yet delinquent, or which are being contested in good faith and as
to which adequate reserves have been established; (ii)
materialmen’s, mechanics’, carriers’,
workmen’s, repairmen’s or other like Liens incurred in
the ordinary course of business securing obligations or payments
not yet due and that do not impact the conduct of Seller, INXL or
INXH or the present proposed use of affected property; (iii) zoning
restrictions, easements, licenses, restrictions on the use of real
property or minor irregularities in title thereto, which do not
materially impair, alone or in the aggregate, the use of the
property affected thereby in the operation of the Business or the
value of such property for the purpose of the Business; and (iv)
workers’ compensation and unemployment compensation liens for
amounts not yet due.

 

“Person” means a corporation, an
association, a partnership, a limited liability company, an
organization, a business, any other entity, an individual, a
government or political subdivision thereof or a government
agency.

 

“Proprietary Information” means
inventions (whether or not patentable), trade secrets, technical
data, databases, customer lists, designs, tools, methods,
processes, technology, ideas, formulas, know-how, source codes,
product road maps and other proprietary information and
materials.

 

“Release” means any releasing,
spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, disposing or dumping of
Hazardous Substances into the Environment.

 

“Representatives” means with
respect to a Person, such Person’s directors, managers,
officers, employees, investment bankers, attorneys, accountants,
financial advisors, consultants and other advisors or
representatives.

 

“Representing Party” is defined in
the first paragraph of this Agreement.

 

 “Seller’s Benefit
Plan” is defined in Section 5.19(a).

 

“Seller’s Contracts” shall
mean the Contracts listed on Schedule 5.17(a)
hereto.

 

“Subsidiaries” means, with respect
to any specified Person, any other Person of which: (i) more than
50% of the outstanding Capital Stock is held, directly or
indirectly, by such specified Person or (ii) over which the
specified Person has the power, directly or indirectly, to
designate a majority of the directors thereof (if such other Person
is a corporation) or the individuals exercising similar functions
(if such other Person is unincorporated).

 

“Tax” or “Taxes” means any and all federal,
state, local or foreign net or gross income, gross receipts, net
proceeds, sales, use, ad valorem, value added, franchise,
withholding, payroll, employment, excise, property, deed, stamp,
alternative or add-on minimum, environmental, profits, windfall
profits, transaction, license, lease, service, service use,
occupation, severance, energy, unemployment compensation, social
security, workers’ compensation, capital, premium and other
taxes, assessments, customs, duties, fees, levies or other
governmental charges of any nature whatever, whether disputed or
not, together with any interest, penalties, fines, additions to tax
or additional amounts with respect thereto.

 

“Tax Authority” means any
Governmental Entity having jurisdiction with respect to any
Tax.

 

“Tax Returns” means any return,
declaration, report, claim for refund, or information return or
statement relating to Taxes, including any schedule or attachment
thereto and any amendment thereof.

 

 “Transactions”
means the transactions contemplated in this Agreement.

 

 “YGYI
Indemnified Party” is defined in Section 9.1.

 

 

 

-4-

 

 

 

ARTICLE II

 

SALE AND PURCHASE OF ASSETS

 

2.1           Sale
and Purchase. Subject to the terms and conditions contained
herein, on the Closing Date, Seller agrees to sell, transfer,
assign, convey and deliver to KII, and KII agrees to purchase from
the Seller, all of the Seller’s right, title and interest in
and to, the Assets free and clear of any liens, pledges, security
interests, claims or encumbrances of any kind, except as set forth
on Disclosure Schedule and for Permitted Liens. Subject to the
terms and conditions contained herein, on the Closing Date, LD
agrees to sell, transfer, assign, convey and deliver to KII, and
KII agrees to purchase from LD, all of LD’s right, title and
interest in and to, all
the outstanding Capital Stock of INXL free and clear of any liens,
pledges, security interests, claims or encumbrances of any kind,
except as set forth on Disclosure Schedule and for Permitted
Liens. Subject to the
terms and conditions contained herein, on the Closing Date, LD and
the Representing Party agree to sell, transfer, assign, convey and
deliver to KII, and KII agrees to purchase from LD and the
Representing Party, all of LD’s and the Representing
Party’s right, title and interest in and to, all the
outstanding Capital Stock of INXH free and clear of any liens,
pledges, security interests, claims or encumbrances of any kind,
except as set forth on Disclosure Schedule and for Permitted
Liens.

 

2.2           Assumption
of Liabilities. Other than the Assumed Liabilities set forth
on Schedule A,
which shall be assumed by KII at closing pursuant to an Assignment,
Bill of Sale and Assumption Agreement in substantially the form of
Exhibit A annexed
hereto, KII shall not assume, pay or discharge, and shall not be
liable for, and Seller, Representing Party and LD shall, jointly
but not severally, discharge, indemnify and hold YGYI, KII and each
of their Affiliates (and their respective officers and directors)
harmless, in accordance with the provisions of, and subject to the
conditions and limitations set forth in, Article IX hereof, from and
against, any liability (actual or contingent), loss, commitment,
obligation or expense of Seller, LD or the Representing
Party:

 

(a) incident to, or
arising out of, the negotiation and preparation of, or the
performance of any Seller, LD or the Representing Party under this
Agreement;

 

(b) incident to, or
arising out of, any claims, actions, suits, proceedings,
liabilities, fines, penalties, deficiencies or judgments existing
on the Closing Date or arising at any time thereafter as a result
of or in connection with the conduct of the business of the Seller,
INXL or INXH prior to Closing Date, including, without limitation,
the ownership or use of the Assets, INXL Assets or INXH’s
Assets by Seller, LD or the Representing Party, and Seller’s
and the Representing Party’ conduct of the Seller’s
business up to and including the Closing Date and LD’s and
the Representing Party’s conduct of INXL’s and
INXH’s business up to and including the Closing
Date;

 

 

 

-5-

 

 

(c)           incident
to, or arising out of, any tax liabilities (or penalties or
interest thereon) or regulatory liabilities (or fines or
penalties), of any nature whatsoever of any of Seller, LD, the
Represnting Party INXL or INXH whether on account of this Agreement
or otherwise, including, without limitation; (i) any which may
arise as a result of the sale of the Assets or equity of INXLas
contemplated by this Agreement; or (ii) relating to the operations
of such Seller prior to or after the Closing Date;

 

(d)           incident
to, or arising out of, any liabilities with respect to the conduct
of the business of Seller INXL or INXH up to and including the
Closing Date; and

 

(e)           incident
to, or arising out of, any liabilities of Seller INXL or INXH not
reflected in the Balance Sheet or Seller’s , Representing
Party’s or LD’s Schedules.

 

2.3           The
Purchase Price. The consideration payable by KII for the
Assets and equity of INXL and INXH to be sold to it as provided
herein shall be an aggregate of Sixteen Million Dollars
($16,000,000) (the “Purchase
Price”), payable as follows, and which shall be
allocated among the Seller, the Representing Party and LD in such
manner as they shall determine in their discretion:

 

(a) YGYI shall instruct
its transfer agent to issue to Seller, the Representing Party and
LD on the Closing Date an aggregate of 1,794,972 restricted shares
of its common stock, par value $.001 per share (the
“Shares”), which
shall have a deemed value of Fourteen Million Dollars ($14,000,000)
for the purposes of this Agreement; and

 

(b) KII shall pay to
the Seller, the Representing Party and LD and aggregate of Two
Million Dollars ($2,000,000) in cash in accordance with the
following payment schedule:

 

a.

Five Hundred
Thousand Dollars ($500,000) in cash on the Closing
Date;

 

b.

Five Hundred
Thousand Dollars ($500,000) in cash thirty (30) days following the
Closing Date;

 

c.

Two Hundred Fifty
Thousand Dollars ($250,000) in cash ninety (90) days following the
Closing Date;

 

d.

Two Hundred Fifty
Thousand Dollars ($250,000) in cash one hundred and eighty (180)
days following the Closing Date;

 

e.

Two Hundred Fifty
Thousand Dollars ($250,000) in cash two hundred and seventy (270)
days following the Closing Date and

 

f.

Two Hundred Fifty
Thousand Dollars ($250,000) in cash one (1) year following the
Closing Date.

 

(c) In
addition to the consideration set forth in clauses (a) and (b) in
Section 2.3 above, the Representing Party shall, subject to the
approval of the holders of at least a majority of the issued and
outstanding shares of YGYI common stock and the approval of Nasdaq,
be entitled to be issued within five days of the later of the
receipt of such approval and the filing of all requisite documents
with the Securities and Exchange Commission and the passing of all
requisite mailing and waiting periods the following additional
consideration (collectively, the “Contingent Consideration
Warrants”);such warrants to be in the form annexed hereto as
Exhibit
C:

 

(i) a
warrant to purchase an aggregate 500,000 shares of YGYI common
stock at an exercise price of $10 per share (subject to appropriate
adjustment in the event of any stock dividend, stock split,
combination or other similar recapitalization with respect to the
YGYI common stock) exercisable upon the generation by the Business
of $25,000,000 in cumulative (including all periods after the
Closing Date) revenue 
during any of the years ended December 31, 2019,
2020, 2021, 2022, 2023 or 2024;

 

(ii) a
warrant to purchase 500,000 shares of YGYI common stock at an
exercise price of $10 per share (subject to appropriate adjustment
in the event of any stock dividend, stock split, combination or
other similar recapitalization with respect to the YGYI common
stock) exercisable upon the generation by the Business of
$75,000,000 in cumulative (including all periods after the Closing
Date) revenue during any of the years ended December 31, 2019,
2020, 2021, 2022, 2023 or 2024; and

 

 

 

-6-

 

 

(iii) a
warrant to purchase 500,000 shares of YGYI common stock at an
exercise price of $10 per share (subject to appropriate adjustment
in the event of any stock dividend, stock split, combination or
other similar recapitalization with respect to the YGYI common
stock) exercisable upon the generation by the Business of
$150,000,000 in cumulative (including all periods after the Closing
Date) revenue after the Closing Date during any of the years ended
December 31, 2019, 2020, 2021, 2022, 2023 or 2024;

 

(iv) a
warrant to purchase an aggregate 500,000 shares of YGYI common
stock at an exercise price of $10 per share (subject to appropriate
adjustment in the event of any stock dividend, stock split,
combination or other similar recapitalization with respect to the
YGYI common stock) exercisable upon the generation by the Business
of $10,000,000 in cumulative (including all periods after the
Closing Date) net income before taxes during any of the years ended
December 31, 2019, 2020, 2021, 2022, 2023 or 2024;

 

(v) a
warrant to purchase 500,000 shares of YGYI common stock at an
exercise price of $10 per share (subject to appropriate adjustment
in the event of any stock dividend, stock split, combination or
other similar recapitalization with respect to the YGYI common
stock) exercisable upon the generation by the Business of
$30,000,000 in cumulative (including all periods after the Closing
Date) net income before taxes during any of the years ended
December 31, 2019, 2020, 2021, 2022, 2023 or 2024; and

 

(vi) a
warrant to purchase 500,000 shares of YGYI common stock at an
exercise price of $10 per share (subject to appropriate adjustment
in the event of any stock dividend, stock split, combination or
other similar recapitalization with respect to the YGYI common
stock) exercisable upon the generation by the Business of
$60,000,000 in cumulative (including all periods after the Closing
Date) net income before taxes during any of the years ended
December 31, 2019, 2020, 2021, 2022, 2023 or 2024;

 

If the
services of the Representative Party are terminated by KII due to a
breach of the Consulting Agreement or the Representative Party
terminates his services with KII prior to attaining the milestones
set forth above then the right to receive the Contingent
Consideration Warrants shall terminate and each Warrant shall
provide that it shall terminate upon such occurrence.” The
Warrants will vest upon the attainment of the foregoing sales
objectives only once for each level attained, and such level must
be attained within six (6) years of the issuance. It being agreed
and understood that if the milestone set forth in clause (i) and
(ii) is attained in the same year prior to December 31, 2024 then
the warrant set forth in clauses (i) and (ii) shall be fully vested
in the year the milestone is attained (B) if the milestone set
forth in clause (iv) and (v) above is attained in the same year
prior to December 31, 2024 then the warrant set forth in clause
(iv) and (v) shall be fully vested in the year the milestone is
attained (C) if the milestone set forth in clause (i), (ii) and
(iii) is attained in the same year prior to December 31, 2024 then
the warrant set forth in clauses (i)(ii) and (iii) shall be fully
vested and (D) if the milestone set forth in clause (iv), (v) and
(vi) is attained in the same year prior to December 31, 2024 then
the warrant set forth in clauses (iv)(v) and (VI) shall be fully
vested YGYI agrees that it shall seek the approval of the holders
of at least a majority of the issued and outstanding shares of YGYI
on or before the Closing.

 

2.5           Allocation
of Purchase Price. The consideration paid by KII hereunder
shall be allocated among the Assets and the other covenants and
agreements of Seller, LD and the Representing Party as provided
herein in accordance with Form 8594 which shall be prepared by KII
and must be agreed upon by KII , LD, the Representing Party and
Seller prior to the Closing in accordance with Section 1060 of the
Internal Revenue Code and the Treasury Regulations thereunder (and
any similar provision of state, local or foreign law, as
appropriate), as a condition to Closing. Sellers and KII agree to
report the transactions contemplated by this Agreement for U.S.
federal tax purposes in a manner consistent with such allocation,
and all tax returns filed by them with respect to such transactions
will be completed and filed in accordance with such
allocation.

 

 

 

-7-

 

 

ARTICLE III

 

THE CLOSING AND OTHER RIGHTS

 

3.1           Transfer
of Seller’s Assets/Equity. At the Closing, pursuant to
and in accordance with the Assignment, Bill of Sale and Assumption
Agreement in substantially the form of Exhibit A annexed hereto,
Seller will convey and transfer the Assets to KII. Any transfer
taxes shall be payable by Seller. At the Closing, LD will convey
and transfer the Capital Stock of INXH to KII and LD and
Representing Party Seller will convey and transfer the the Capital
Stock of INXL to KII by delivery of stock certificates and stock
powers.

 

3.2           Disclosure
Schedules. As of the date of this Agreement, Seller, LD and
Representing Party has delivered to YGYI and KII, contemporaneously
with the execution of this Agreement, the Disclosure
Schedule.

 

3.3           The
Closing.

 

(a)           The
Closing shall take place remotely via the exchange of documents and
signatures at 10:00 A.M. (ET) on February 15, 2019, or at such other time and place as
the Parties agree (the date of the Closing, the “Closing Date”).

 

(b)       No
action actually taken at the Closing with respect to the
consummation of the Transactions shall be deemed to have been taken
until such time as the last of the actions actually taken at the
Closing is completed.

 

(c)           At
the Closing, each Party shall execute, deliver and file each
document, agreement and instrument required of such Party by this
Agreement to be so executed, delivered and filed in connection with
the Transactions as set forth in Sections 3.4 and 3.5 and which have not been
theretofore accomplished.

 

(d)           Each
Party shall, from time to time after the Closing Date at the
reasonable request of another Party and without further
consideration, execute and deliver or cause to be executed and
delivered to the other such further instruments of transfer,
assignment, conveyance and assumption, and shall take or cause to
be taken such other action as reasonably requested by the other
Party, as may be necessary to effectively implement and carry into
effect the Transactions.

 

3.4 YGYI’s and KII’s
Deliveries. At the Closing, YGYI and KII shall deliver to
Seller, LD and the Representing Party, as applicable:

 

(a) An executed
Assignment, Bill of Sale and Assumption Agreement with respect to
the Assets in substantially the form of Exhibit A annexed
hereto;

 

(b) An executed
Consulting Agreement with the Representing Party in substantially
the form of Exhibit
B annexed hereto;

 

(c)        Executed
Employment Agreements with Leigh Dundore, Joe Kalahar, Dustin
Dundore and Joshua Carmona in substantially the form of
Exhibit D annexed
hereto;

 

(d)        The
Written Consent of the holders of at least a majority of the issued
and outstanding shares of YGYI approving the issuance of the
Contingent Consideration Warrants and the shares of common stock
underlying the Contingent Consideration Warrants; and

 

(e)        Such
other documents, instruments or certificates that may be reasonably
required to carry out the provisions of this Agreement and
consummate the Transactions.

 

3.5           Seller’s,
LD’s and Representing Party’s Deliveries. At the
Closing, Seller, LD and the Representing Party shall
deliver:

 

(a)
An
executed Assignment, Bill of Sale and Assumption Agreement with
respect to the Assets in substantially the form of Exhibit A annexed
hereto;

 

(a)
An
executed Consulting Agreement with the Representing Party in
substantially the form of Exhibit B annexed
hereto;

 

 

 

-8-

 

 

(b)
Executed Employment
Agreements with Leigh Dundore, Joe Kalahar, Dustin Dundore and
Joshua Carmona in substantially the form of Exhibit D annexed
hereto;

 

(c)
Officer’s
certificates as set forth in Section 6.2(c);

 

(e)
Resolutions adopted by the board of directors of the Seller,
authorizing it to execute and deliver this Agreement and to perform
its obligations hereunder and authorizing the Transactions
certified by an officer or manager of each Seller;

 

(f)
Resolutions adopted by the shareholders of the Seller authorizing
it to sell all of the Assets, execute and deliver this Agreement
and to perform its obligations hereunder and authorizing the
Transactions;

 

(g) An
assignment of all applicable permits and licenses to be transferred
to KII in respect of the Assets being sold to KII, including an
assignment to be filed with the Unites States Patent and Trademark
Office;

 

(h) A
release or discharge of any liens over the Assets, INXL,INXH,INXL
Assets or assets of INXH;

 

(i) A
copy of all Contracts and other information and documentation
related to the operations of the Business as currently conducted
other documents, instruments or certificates as may reasonably be
required to carry out the provisions of this Agreement and
consummate the Transactions;

 

(j) All
documents, instruments, certificates, consents, authorizations,
orders or approvals required in order to execute and deliver this
Agreement and to effectuate the Transactions contemplated hereby in
form, scope and substance reasonably satisfactory to KII, including
stock certificates evidencing all the outstanding Capital Stock of
INXL and INXH, together with executed stock powers in blank ;
and

 

(k) All
approvals, consents, permits and waivers of any Governmental Entity
and any Person necessary for the consummation of the Transactions
contemplated by this Agreement and no such approval, consent,
permit or waiver of any Governmental Entity or such other third
party shall contain any term or condition that KII in its
reasonable discretion determines to be unduly
burdensome.

 

           

 

ARTICLE IV

 

Representations OF YGYI AND KII

 

YGYI
and KII represent and warrant to each of the Seller, LD and the
Representing Party that each statement contained in this
Article IV is true
and correct, and will be true and correct as of the Closing
Date.

 

4.1           Organization
and Good Standing. YGYI and KII are each a corporation duly
organized, validly existing and in good standing under the Laws of
the State of Delaware and have all requisite corporate power to
own, lease and operate their properties and to carry on their
business as now being conducted.

 

4.2           Authority
and Enforceability. YGYI and KII have, and will have on the
Closing Date, the requisite power and authority to enter into this
Agreement and to consummate the Transactions, subject to
shareholder and Nasdaq approval of the Contingent Consideration
Warrants. The execution and delivery by YGYI and KII of this
Agreement and/or the Ancillary Documents to which it is a party and
the consummation by YGYI and KII of the Transactions have been duly
authorized by all necessary corporate action on the part of YGYI
and KII, respectively. The Shares and Contingent Consideration
Warrants being issued to Seller hereunder have been duly authorized
and validly issued and are fully paid and non-assessable. This
Agreement and/or the Ancillary Documents to which it is a party
have each been duly executed and delivered by YGYI and KII and,
assuming due authorization, execution and delivery by Seller, LD
and the Representing Party, constitute the valid and binding
obligation of YGYI and KII, enforceable against each in accordance
with their terms, except as such enforceability may be limited by:
(i) bankruptcy, insolvency, reorganization, moratorium or other
similar Laws affecting or relating to creditors’ rights
generally and (ii) the availability of injunctive relief and other
equitable remedies.

 

 

 

-9-

 

 

4.3           No
Conflicts; Authorizations.

 

(a)           The
execution and delivery by YGYI and KII of this Agreement and/or the
Ancillary Documents do not, and the consummation by YGYI and KII of
the Transactions will not: (i) violate the provisions of any of the
Charter Documents of YGYI or KII; (ii) violate any Contract to
which YGYI or KII is a party; (iii) violate any Law of any
Governmental Entity applicable to YGYI or KII on the Closing Date;
or (iv) result in the creation of any Liens upon any of the assets
owned or used by YGYI or KII except in each such case where such
violation or Lien would not reasonably be expected to impair
materially the ability of YGYI or KII to perform its obligations
under this Agreement or consummate the Transactions.

 

(b)           No
authorization or order of, registration, declaration or filing
with, or notice to, any Governmental Entity or any other Person is
required by or with respect to YGYI or KII in connection with the
execution and delivery of this Agreement and the consummation of
the Transactions, except for such authorizations, orders,
registrations, declarations, filings and notices the failure to
obtain or make which would not reasonably be expected to impair
materially the ability of YGYI or KII to perform its obligations
under this Agreement or consummate the Transactions.

 

4.4           Litigation;
Compliance with Law. There is no Action pending or, to
YGYI’s or KII’s knowledge, threatened, against YGYI or
KII that reasonably could be expected to materially adversely
affect YGYI’s or KII’s ability to consummate the
Transactions.

 

4.5           Ability
to Perform Agreement. To YGYI’s and KII’s
knowledge, there is no occurrence, event or condition with respect
to it that would prevent it from performing this Agreement in all
material respects. No solvency proceeding of any character,
including bankruptcy, receivership, reorganization, composition or
arrangement with creditors (including any assignment for the
benefit of creditors), voluntary or involuntary, affecting the
business of YGYI or KII (other than as a creditor) is pending or is
currently being contemplated by YGYI or KII or is being threatened
against YGYI or KII by any other Person. Neither YGYI nor KII has
made any assignment for the benefit of creditors or taken any
action in contemplation of, or which would constitute the basis
for, the institution of any such insolvency proceedings. YGYI and
KII are able to pay their liabilities as they become due, including
the paying the Purchase Price as set forth in this
Agreement.

 

4.6           SEC
Documents. YGYI has filed on a timely basis all reports,
schedules, forms, statements and other documents required to be
filed by it with the Securities and Exchange Commission
(“SEC”) pursuant to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the “1934
Act”), including material filed pursuant to Section 13(a) or
15(d) (the “SEC Documents”). As of their respective
dates, the SEC Documents complied in all material respects with the
requirements of the Securities Act of 1933, as amended (the
“1933 Act”) or the 1934 Act as the case may be and the
rules and regulations of the SEC promulgated thereunder and other
federal, state and local laws, rules and regulations applicable to
such SEC Documents, and none of the SEC Documents contained any
untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which
they were made, not misleading. The financial statements of YGYI
included in the SEC Documents comply as to form in all material
respects with applicable accounting requirements and the published
rules and regulations of the SEC or other applicable rules and
regulations with respect thereto. Such financial statements have
been prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods
involved (except (i) as may be otherwise indicated in such
financial statements or the notes thereto or (ii) in the case of
unaudited interim statements, to the extent they may not include
footnotes or may be condensed or summary statements) and fairly
present in all material respects the financial position of YGYI as
of the dates thereof and the results of operations and cash flows
for the periods then ended (subject, in the case of unaudited
statements, to normal year end audit adjustments).

 

4.7           Brokers
or Finders. No broker, or investment banker is entitled to
any brokerage, or other fee or commission in connection with the
Transactions contemplated by this Agreement based upon arrangements
made by or on behalf of YGYI, KII or any of their
Affiliates.

 

4.8           No
Other Representations and Warranties. Except for the
representations and warranties contained in this Article IV, YGYI and KII have
not made or makes any other express or implied representation or
warranty, either written or oral, on behalf of YGYI or KII,
including any representation or warranty as to the accuracy or
completeness of any information regarding the business and the
assets of YGYI or KII furnished or made available to Seller
(including any information, documents or material delivered to
Seller, LD or the Representing Party in management presentations or
in any other form in expectation of the transactions contemplated
hereby) or as to the future revenue, profitability or success of
the Business, or any representation or warranty arising from
statute or otherwise in Law.

 

 

 

 

 

-10-

 

 

ARTICLE V

 

Seller, LD AND Representing Party representations

 

Each of
the Seller, LD and the Representing Party hereby jointly and
severally represents and warrants to YGYI and KII that the
statements contained in this Article V are true and correct,
except as may be set forth in the disclosure schedule dated and
delivered as of the date hereof by Seller to YGYI (the
“Disclosure
Schedule”), which is attached to this Agreement. The
Disclosure Schedule shall be arranged in sections corresponding to
each section and subsection of this Article V and shall include the
separate Schedules referenced in this Article V, provided, however, that all section
headings in these Disclosure Schedules correspond to the sections
of the Asset Purchase Agreement but information provided in any
section of these Disclosure Schedules shall also constitute
disclosure for purposes of such other sections of the Asset
Purchase Agreement where such information is relevant and its
applicability is evident.

 

5.1           Organization
and Good Standing.

 

(a)           KGI
is a corporation duly organized, validly existing and in good
standing under the applicable Laws of the State of Florida. INXH
and INXL are each a corporation duly organized, validly existing
and in good standing under the applicable Laws of the State of
Florida. Carolina Botanical Development LLC (“CBC”) is a limited liability
company duly organized validly existing and in good standing under
the applicable laws of the State of South Carolina. Xtraction
Services Inc. (“XSI”) is a corporation duly organized,
validly existing and in good standing under the applicable Laws of
the State of Delaware. Noble Tech Ventures, Inc.
(“NTV”) is a corporation duly organized,
validly existing and in good standing under the applicable Laws of
the State of Delaware. Each of the Seller, INXL and INXH has all
requisite power and authority to own, lease and operate its
properties and to carry on the Business as currently conducted. LD
owns the Capital Stok of INXL free and clear of all Liens and has
the requisite power to sell to KII the Capital Stock of INXL and
INXL has the requisite power and authority to own, lease and
operate its properties and to carry on the business as currently
conducted by INXL. LD and Representing Party own all of the Capital
Stock of INXH free and clear of all Liens and has the requisite
power to sell to KII the Capital Stock of INXH and INXH has the
requisite power and authority to own, lease and operate its
properties and to carry on the business as currently conducted by
INXH . Each of the Seller, INXL and INXH is duly authorized,
qualified and licensed to do business and is in good standing as a
foreign corporation in each jurisdiction in which it owns or leases
property or conducts any business so as to require such
qualification, except where the failure to be so licensed or
qualified or in good standing would not have a Material Adverse
Effect. Schedule
5.1 contains a true and complete list of each jurisdiction
in which each of the Sellers is qualified to do
business.

 

(b)           Seller
previously have delivered to YGYI true and complete copies of the
Charter Documents of each of the Seller, CBC, XSI and NTV as
presently in effect. Seller is not in default under, or in
violation of, any provision of its respective Charter Documents. LD
and the Representing Party previously have delivered to YGYI true
and complete copies of the Charter Documents of INXL and INXH as
presently in effect. Neither INXL nor INXH is in default under, or
in violation of, any provision of its respective Charter
Documents

 

5.2           Capitalization.
Schedule 5.2 sets
forth the capitalization of Seller, INXL and INXH which includes
all of the outstanding equity of Seller, INXLand INXH. There are no
options or warrants or outstanding rights to acquire any equity of
Seller, INXL or INXH and no preemptive rights or rights of first
refusal or change of control provisions that would result in the
issuance of securities upon consummation of the Transaction. Except
as set forth on Schedule
5.2, none of the Seller, INXL or INXH holds any Equity
Securities or other equity interest in any entity. Except as set
forth on Schedule
5.2, none of the Seller, INXL or INXH have any
Subsidiaries.

 

5.3           Authority
and Enforceability. Each of the Seller, LD and the
Representing Party has the requisite power and authority to enter
into this Agreement and the Ancillary Documents and to consummate
the Transactions. All corporate action required to be taken by the
Seller, INXL and INXH’s Board of Directors, managers, members
and stockholders in order to authorize the Sellers and LD to enter
into this Agreement and to consummate the Transaction has been
taken or will be taken prior to the Closing. The execution and
delivery by Seller, LD and the Representing Party of this Agreement
and the Ancillary Documents and the consummation of the
Transactions have been duly authorized by all necessary corporate
action on the part of Seller, INXL or INXH and no further
authorization or approval, whether of the officers or directors of
Seller, INXL or INXH or of governmental bodies or otherwise is
necessary to fully authorize the execution, delivery and
performance of this Agreement by Seller, LD and the Representing
Party. This Agreement and the Ancillary Documents have been duly
executed and delivered by Seller, LD and the Representing Party and
constitute the valid and binding obligations of Seller, LD and the
Representing Party, respectively, enforceable against each of them
in accordance with their respective terms, except as such
enforceability may be limited by: (i) bankruptcy, insolvency,
reorganization, moratorium or other similar Laws affecting or
relating to creditors’ rights generally and (ii) the
availability of injunctive relief and other equitable
remedies.

 

 

 

-11-

 

 

5.4           No
Conflicts; Authorizations.

 

(a)
Neither the Seller, LD or INXL are in violation or default (i) of
any provisions of their certificate of incorporation, bylaws or
operating agreements, (ii) of any instrument, judgment, order, writ
or decree, (iii) under any note, indenture or mortgage, or (iv)
under any lease, agreement, mortgage contract or purchase order to
which it is a party or by which it is bound. The execution and
delivery of this Agreement and the Ancillary Documents by Seller,
LD and the Representing Party does not, and the performance by
Seller, LD and the Representing Party of their respective
obligations hereunder and thereunder, and the consummation by
Seller, LD and the Representing Party of the Transaction (in each
case, with or without the giving of notice or lapse of time, or
both) will not, directly or indirectly: (i) violate the provisions
of any of the Charter Documents of Seller, INXL or INXH; (ii)
violate or constitute a default, an event of default or an event
creating rights of acceleration, termination, cancellation,
imposition of additional obligations or loss of rights or require a
consent to assignment or change of control, under any Contract (A)
to which Seller, LD, INXL, INXH or the Representing Party is a
party; (B) of which Seller, LD, INXL, INXH or the Representing
Party is a beneficiary; or (C) by which Seller, LD, INXL,INXH or
the Representing Party, or any of the Assets or their assets is
bound; (iii) violate or conflict with any Law applicable to Seller,
LD, INXL, INXH or the Representing Party, or any of their
respective assets, or give any Governmental Entity or other Person
the lawful right to challenge any of the Transactions or to
exercise any remedy or obtain any relief under, or revoke, cancel,
terminate or otherwise modify any rights held under, any such Law;
or (iv) result in the creation of any Liens (other than Permitted
Liens), except in the cases of clauses (ii) and (iii), where the
violation, breach, conflict default, acceleration or failure to
give notice would not have a Material Adverse Effect upon any of
the Assets, the assets of INXH or INXL Assets owned or used by
Seller, INXL or INXH. Schedule 5.4 sets forth and
enumerates all notices, authorizations, consents, licenses,
permits, waivers, assignments and other approvals and actions that
are necessary in connection with the execution and delivery by
Seller, LD and the Representing Party of this Agreement and the
consummation by Seller, LD and the Representing Party of the
Transactions, under any Law or Contract to which Seller, LD or the
Representing Party is a party or to which their Assets are subject
(collectively, “Consents”) and the consummation of
the Business after the consummation of the
Transactions.

 

(b)           No
authorization, consent, registration, declaration or filing with,
or notice to, any Governmental Entity or other Person is required
by or with respect to the Seller, LD, INXL or the Representing
Party in connection with the execution and delivery by Seller, LD,
or the Representing Party of this Agreement or the consummation by
Seller, LD, or the Representing Party of the Transactions, except
for such filings, authorizations, registrations, consents,
declarations, filings or notice which, in the aggregate, would not
have a Material Adverse Effect.

 

5.5           Financial
Statements/Internal Accounting Controls.

 

(a)           Schedule
5.5 includes true, correct and complete copies of the
Financial Statements. The Financial Statements have been prepared
in accordance with U.S. generally accepted accounting principles
and are based on the books and records of Seller, INXL and INXH and
fairly in all material respects present the consolidated financial
condition of each of the Seller, INXL and INXH as of the respective
dates they were prepared and the results of the operations of
Seller, INXL and INXH for the periods indicated therein. Except as
set forth on Schedule 5.5, the Financial Statements have not been
rendered untrue, incomplete or unfair as representations of the
financial condition or results of operations of the Seller and INXL
by the subsequent discovery of events or occurrences, which should
have been reflected in such Financial Statements.

 

(b)           Each
of the Seller, INXL and INXH maintains a system of internal
accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management’s
general or specific authorizations and (ii) transactions are
recorded as necessary and to maintain asset accountability. Each of
the Seller, INXL and INXH has established disclosure controls and
procedures for Seller, INXH and INXL and designed such disclosure
controls and procedures to ensure that material information
relating to SellerI, INXH and INXL s made known to their officers
by others. The officers or managers, as applicable of Seller, INXH
and INXL have evaluated the effectiveness of such Seller’s
and INXL’s controls and procedures. Since the date of the
Balance Sheet (December 31, 2016), there have been no changes in
any Seller’s or INXL’s internal controls or other
factors that could significantly affect Seller’s,
INXH’s or INXL’s internal controls.

 

(c)           Except
as set forth in Schedule
5.5, the Financial Statements reflect all debts,
liabilities, obligations or commitments of Seller, INXL or INXH or
LD related to the Business of a type or nature that would be
required to be reflected on a balance sheet, except those which
have been incurred in the ordinary course of business since the
Balance Sheet Date and which are not material in amount. None of
the Seller,, INXH, Representing Party, LD or INXL is on the date
hereof insolvent or unable to pay its current liabilities as they
become due. Except as set forth in the Financial Statements,
neither the Business nor the Assets nor the INXL Assets nor the
assets of INXH are subject to any liability upon or with respect
to, subject to or obligated in any other way to provide funds in
respect of or to guarantee or assume in any manner, any debt,
liability or obligation of any other Person and there is no basis
for the assertion of any such claim or liability. YGYI has been
provided with true, correct and complete copies of all of
Seller’s, INXh’s and INXL’ssales account records
for the past six (6) months. Schedule 5.5(c) sets forth the
aggregate outstanding debt and payables of each of the Seller, INXL
and INXH as of December 31, 2018 and a detailed list of the debt
divided into categories such as debt subject to forbearance
agreements, payables owed for commission, amounts owed for taxes,
etc.

 

 

 

-12-

 

 

(d) As
of the execution of this Agreement, the Sellers will have $25
million dollars worth of bona fide purchase orders from third
parties for Seller’s Products and related services within the
year 2019.

 

5.6       
Title to
Assets.

 

(a) The Seller has good
and marketable title to or a valid leasehold interest in all of the
tangible personal Assets being sold by Seller hereunder. LD has has
good and marketable title to all of the outstanding capital Stock
of INXL and INXL has good and marketable title to or a valid
leasehold interest in all of the tangible personal INXL Assets. LD
and Representing Party have good and marketable title to all of the
outstanding capital Stock of INXH and INXH has good and marketable
title to or a valid leasehold interest in all of the tangible
personal assets of INXH.

 

(b)           Except
as set forth on Schedule
5.6, as of Closing none of such Assets, or INXL Assets or
assets of INXH, or the use thereof: (i) is subject to any easements
or restrictions or to any Liens , or to any rights of others of any
kind of nature whatsoever; (ii) encroaches or infringes on the
property or rights of another; or (iii) contravenes any applicable
law or ordinance or any other administrative regulation or violates
any restrictive covenant or any provision of law. There are no
agreements or arrangements between Seller, LD, INXL, INXH or the
Representing Party, and any third person, which have any adverse
effect upon Seller’s title to or other rights respecting the
Assets, INXL’s title to or other rights respecting the INXL
Assets, LD’s title to or other rights respecting the Capital
Stock of INXL, INXH’s title to or other rights respecting the
assets or INXH, or LD’s or Representing Party’s title
to or other rights respecting the Capital Stock of INXH. Further,
and not in limitation of any of the foregoing provisions of this
Section 5.6, except
as described in Schedule
5.6:

 

(i)      Seller
has the full right and power to transfer the Assets and LD and the
Representiong Party havew full right and power to transfer the
Capital Stock of INXL and INXH;

 

(ii)                 The
Seller has the right to bring actions for the infringement of its
interest and proprietary rights in, all of the Assets, INXL has the
right to bring actions for the infringement of its interest and
proprietary rights in, all of the INXL Assets and INXH has the right to bring actions
for the infringement of its interest and proprietary rights in, all
of its assets;

 

(iii)
None of the Seller, INXL or INXH has any present or future
obligation or requirement to compensate any person with respect to
any of the Assets, INXL Assets or the assets of INXH, whether by
the payment of royalties or not, or whether by reason of the
ownership, use, license, lease, sale or any commercial use or any
disposition whatsoever of any of such assets and neither the sale
of the Assets nor the sale of the INXL Assetsor assets of INXH
triggers any such rights or similar rights;

 

(iv)                 the
ownership, production, marketing, license, lease, use or other
disposition of any product or service presently being licensed or
leased by Seller, INXL or INXH to any person does not and will not
violate any license or agreement of the Seller, INXL or INXH with
any person or infringe any right of any other person
(NA);

 

(v)                 there
are no express or implied warranties outstanding with respect to
any products or services provided by Seller, INXL or INXH, except
as set forth on Schedule
5.6 or may be provided by law; and

 

(vi)                 none
of the present or former employees of Seller, INXL or INXH own
directly or indirectly, or has any other right or interest in, in
whole or in part, any of the Assets or INXL Assets and each ahs
signed an assignment of any inventions to the Seller, INXL or INXH,
as applicable;

 

(vii)
all of the entities listed on Schedule 3.2 which own any of the
Assets or Capital Stock of INXLor INXH are parties to this
Agreement; .and

 

(viii)the Assets,
INXL Assets and assets of INXH constitute all rights necessary for
each of the Seller, INXL and INXH to conduct its business as now
conducted.

 

5.7           Inventory
and Current Products. All Inventory is of a quality,
quantity and condition useable or saleable in the ordinary course
of business and an expiration date of at least twelve (12) months
from the Closing Date, except as reserved in accordance with past
practices. Except as reserved in accordance with past practices or
as set forth on Schedule
5.7, none of such Inventory is obsolete and no write-down of
such Inventory has been made or should have been made in the period
since the date of the Balance Sheet. The quantities of Inventory
are not excessive and are reasonable in the present circumstances
of the Business. No Inventory is held on a consignment basis.
Seller and INXL own the Inventory held by them free and clear of
all Liens other than Permitted Liens. Schedule 5.7 sets forth a list
of all Products being developed, manufactured, marketed or sold by
Seller, INXH and INXL as of the Closing Date.

 

 

 

-13-

 

 

5.8           Accounts
Receivable. The accounts receivable of the Seller, INXL and
INXH as of the Closing Date are: (a) valid and genuine and have
arisen solely out of bona fide sales and deliveries of goods,
performance of services and other business transactions in the
ordinary course of business consistent with past practice; (b) not
subject to valid defenses, set-offs or counterclaims; and (c)
collectible after billing at the full recorded amount thereof in
each case as reserved in accordance with past practices and are
owned by Seller, INXL and INXH free and clear of all Liens other
than Permitted Liens.

 

5.9           Taxes.

 

(a) All
Tax Returns required to have been filed by or with respect to each
of the Seller, INXL and INXH have been duly and timely filed with
the appropriate Tax Authority, and each such Tax Return correctly
and completely reflects liability for Taxes and all other
information required to be reported thereon. All Tax Returns have
been properly and accurately compiled and completed in all material
respects, fairly present the information purported to be shown
therein, and reflect in all material respects all liabilities for
the applicable Taxes for the periods covered by such Tax Returns.
All Taxes owed by Seller, INXL and INXH (whether or not shown on
any Tax Return) have been timely paid in full on or before their
due date. Each of the Seller, INXL and INXH has adequately provided
for, in its books of account and related records, liability for all
unpaid Taxes, including, but not limited to, current Taxes not yet
due and payable.

 

(b)           Except
as disclosed on Schedule, 5.9(b): (i) there is no Action currently
proposed, threatened or pending against, or with respect to,
Seller, INXL, the Assets or the INXL Assets or the assets of INXH
in respect of any Taxes or Tax Return; (ii). no material issue has
been raised in writing in any Tax examination with respect to
Seller, INXL or INXH which could result in liability for Taxes for
Seller, INXL or INXH for any period; (iii) no Seller nor INXL nor
INXH is the beneficiary of any extension of time within which to
file any Tax Return, nor has Seller, INXH nor INXL made (or caused
to be made on its behalf) any requests for such extensions; (iv) no
claim is pending or, to the knowledge of Seller, LD or the
Representing Party, threatened by a Governmental Entity in a
jurisdiction where Seller, INXL or INXH does not file Tax Returns
that Sellers is or may be subject to taxation by such jurisdiction
or that Seller, INXL or INXH must file Tax Returns; and (v) there
are no Liens encumbering any of the Assets of Seller, INXH or INXL
with respect to Taxes (except where such Lien arises as a matter of
Law prior to the due date for paying the related
Taxes).

 

(c)           Except
as set forth on Schedule
5.9 hereto, each of the Seller, INXL and INXH withheld and
timely paid all Taxes required to have been withheld and paid and
has complied with all information reporting and backup withholding
requirements, including maintenance of required records with
respect thereto.

 

(d)           Seller,
LD and the Representing Party have delivered to YGYI correct and
complete copies of all Tax Returns, examination reports and
statements of deficiencies assessed against or agreed to by Seller,
INXL or INXH during the past two years. None of the Seller, INXL or
INXH has waived (or is subject to a waiver of) any statute of
limitations in respect of Taxes or has agreed to (or is subject to)
any extension of time with respect to a Tax assessment or
deficiency.

 

(e)           None
of the Seller, INXL or INXH has received (and is not subject to)
any ruling from any Tax Authority nor have they entered into (or
are subject to) any agreement with a Tax Authority.

 

(f)           None
of the Seller, INXL or INXH is a party to any Tax allocation or
sharing agreement, or other agreement relating to the allocation or
sharing of, or liability or indemnification for, taxes between
Seller, INXL or INXH and any other Person. None ofSeller, INXL or
INXH has any liability for the Taxes of any other Person. None of
the Seller, INXL or INXH is a party to any joint venture,
partnership or other arrangement that is, or could be, treated as a
partnership for federal income tax purposes.

 

5.10           Compliance
with Law.

 

(a)           Each
of the Seller, INXL and INXH are in compliance and is not in
violation of any, applicable Law to which Seller, INXL, INXH, the
Business or the Assets or the INXL Assets or the assets of INXH are
or have been subject, except where the failure to be in compliance
would not have a Material Adverse Effect. No event has occurred and
no circumstances exist that (with or without the passage of time or
the giving of notice, or both) may result in a violation of,
conflict with or the failure on the part of Seller or any of its
Subsidiaries to comply with, any applicable Law, except where such
violation, conflict or failure would not have a Material Adverse
Effect. None of the Seller, LD, INXL, INXH nor the Representing
Party have received notice regarding any violation of, conflict
with or failure to comply with any applicable Law by, or which may
have a Material Adverse Effect on, Seller the Business or Assets,
the INXL Assets or the assets of INXH. No investigation or review
by any Governmental Entity with respect to Seller, LD, INXL or INXH
is pending or, to the knowledge of Seller, LD, INXL or the
Representing Party, threatened.

 

 

 

-14-

 

 

(b)           Neither
the Seller nor, to LD’s or the Representing Party’s
Knowledge, any director, officer, agent, employee, shareholder,
manager or other person acting on behalf of Seller has, in the
course of its or his actions for, or on behalf of, Seller and
neither LD,Representing Party INXL, INXH nor any director, officer,
agent, employee, shareholder, manager or other person acting on
behalf of INXL or INXH has, in the course of its or his actions
for, or on behalf of, INXL or INXH: (i) used any corporate funds
for any unlawful contribution, gift, entertainment or other
unlawful expenses relating to political activity or (ii) made any
direct or indirect unlawful payment to any foreign or domestic
government official or employee or Governmental Entity from
corporate funds. Each of Seller, INXLand INXH carries on and
conducts, and has carried on and conducted at all times the
Business in compliance with all Laws governing international
business activities, except where the failure would not have a
Material Adverse Effect. The Assets of Seller,the INXL Assets and
the assets of INXH have not been, are not, and will not be derived
from or commingled with proceeds of any activities that are
proscribed by the Foreign Corrupt Practices Act and other Laws
relating to bribery or corruption, and were not procured or
obtained through any payments to or for the benefit of officials of
any Governmental Entity or to any other Person, regardless of the
form, whether in money, property or services, to obtain favorable
treatment in obtaining, retaining or directing business or to
obtain special concessions or to pay for favorable treatment for
business secured or for special concessions already obtained.
NeitherSeller, INXL, INXH nor LD or Representing Party is currently
nor has it been within the past five years, the target of any
inquiry, investigation, settlement, plea agreement or enforcement
Action by any Governmental Entity involving an alleged or suspected
violation of any Laws governing international business activities,
including export control laws or trade and economic
sanctions.

 

(c)           No
“fair price,” “moratorium,” “control
share acquisition,” “interested stockholder,”
“business combination” or other similar anti-takeover
statute enacted under the Laws of any State is applicable to
Seller, INXH or INXL, or the Transactions.

 

 (d) Except as
could not reasonably be expected to have a Material Adverse (a)each
of the Seller, INXL and INXH is and has been in compliance with all
Environmental Laws; (b) there has been no release or to the
Seller’s INXL’s, INXH’s, LD’s or
Representing Party’s knowledge threatened release of any
Hazardous Substance, on,
upon, into or from any site currently or heretofore owned, leased
or otherwise used by the Seller, INXL or INXH; (c) there have been
no Hazardous Substances generated by the Seller, INXL or INXH that
have been disposed of or come to rest at any site that has been
included in any published U.S. federal, state or local
“superfund” site list or any other similar list of
hazardous or toxic waste sites published by any governmental
authority in the United States; and (d) there are no underground
storage tanks located on, no polychlorinated biphenyls
(“PCBs”) or
PCB-containing equipment used or stored on, and no hazardous waste
as defined by the Resource Conservation and Recovery Act, as
amended, stored on, any site owned or operated by the Seller, INXL
or INXH, except for the storage of hazardous waste in compliance
with Environmental Laws. The Seller, LD, INXH, INXL and
Representing Party has made available to YGYI and KII true and
complete copies of all material environmental records, reports,
notifications, certificates of need, permits, pending permit
applications, correspondence, engineering studies and environmental
studies or assessments.

 

(f)
Neither the Seller nor any of its officers, managers, employees or
agents nor INXLor INXH nor any of their officers, managers,
employees or agents have, directly or indirectly, made, offered,
promised or authorized any payment or gift of any money or anything
of value to or for the benefit of any “foreign
official” (as such term is defined in the U.S. Foreign
Corrupt Practices Act of 1977, as amended (the “FCPA”)), foreign political party
or official thereof or candidate for foreign political office for
the purpose of (i) influencing any official act or decision of such
official, party or candidate, (ii) inducing such official, party or
candidate to use his, her or its influence to affect any act or
decision of a foreign governmental authority, or (iii) securing any
improper advantage, in the case of (i), (ii) and (iii) above in
order to assist the Seller, INXL, INXH or any of its affiliates in
obtaining or retaining business for or with, or directing business
to, any person. Neither of the Seller nor any of its directors,
managers, officers, employees or agents nor INXL, INXH nor any of
their officers, managers, employees or agents have made or
authorized any bribe, rebate, payoff, influence payment, kickback
or other unlawful payment of funds or received or retained any
funds in violation of any law, rule or regulation. The Seller and
LD further represent that they each have maintained, and has caused
each of its subsidiaries and affiliates to maintain, systems of
internal controls (including, but not limited to, accounting
systems, purchasing systems and billing systems) and written
policies to ensure compliance with the U.S. Foreign Corrupt
Practices Act of 1977, as amended or any other applicable
anti-bribery or anti-corruption law, and to ensure that all books
and records of the Seller, INXL and INXH accurately and fairly
reflect, in reasonable detail, all transactions and dispositions of
funds and assets. Neither the Seller nor any of its officers or
employees nor INXL, INXH nor any of their officers, managers,or
employees are the subject of any allegation, voluntary disclosure,
investigation, prosecution or other enforcement action related to
the U.S. Foreign Corrupt Practices Act of 1977, as amended or any
other anti-corruption law.

 

 

 

-15-

 

 

(g) In
connection with its collection, storage, transfer (including,
without limitation, any transfer across national borders) and/or
use of any personally identifiable information from any
individuals, including, without limitation, any customers,
prospective customers, employees and/or other third parties
(collectively “Personal Information”), each of the
Seller, INXL and INXH has been, in compliance with all applicable
laws in all relevant jurisdictions, the Seller’s and
INXL’s privacy policies and the requirements of any contract
or codes of conduct to which each is a party. The Seller, INXL and
INXH have commercially reasonable physical, technical,
organizational and administrative security measures and policies in
place to protect all Personal Information collected by it or on its
behalf from and against unauthorized access, use and/or disclosure.
Each of the Seller, INXL and INXH is in compliance in all material
respects with all laws relating to data loss, theft and breach of
security notification obligations.

 

5.11           Licenses
and Permits.

 

(a)           Seller,
INXH and INXL own, hold or lawfully use in the operation of the
Business all licenses, permits, consents and authorizations
(international, federal, state and local) which are necessary for
Seller, INXL and INXH to conduct the Business as currently
conducted or for the ownership and use of the Assets owned or used
by Seller,the INXL Assets owned or used by INXL in the conduct of
the Business and the assets held by INXH or usedin the conduct of
the Business Of INXH, free and clear of all Liens, other than
Permitted Liens, except where the failure to obtain or hold such
Permits would not have a Material Adverse Effect. No Person owns or
has any proprietary, financial or other interest (direct or
indirect) in any such licenses, permits, consents and
authorizations (international, federal, state and local). All such
licenses, permits, consents and authorizations (international,
federal, state and local) are valid and in full force and effect,
except where the failure would not have a Material Adverse effect
and are listed on Schedule
5.11, and none will be terminated or impaired or become
terminable or impaired as a result of the
Transactions.

 

(b)           No
event has occurred and to the knowledge of Seller, LD or the
Representing Party no circumstances exist that (with or without the
passage of time or the giving of notice, or both) may result in a
violation of, conflict with, failure on the part of Seller, INXL or
INXH to comply with the terms of, or the revocation, withdrawal,
termination, cancellation, suspension or modification of, any
license, permit, consent or authorization (international, federal,
state and local). None of Seller, INXL nor INXH is in default or
violation of, and none of the Seller, LD, INXL, INXH nor the
Representing Party have received notice regarding any claim of
default or violation of, conflict with, failure to comply with the
terms of, or any revocation, withdrawal, termination, cancellation,
suspension or modification of, any license, permit, consent or
authorization (international, federal, state and local), except
where such default, violation, conflict, failure to comply,
revocation, withdrawal, termination, cancellation, suspension or
modification would not have a Material Adverse Effect.

 

5.12           Title
to Personal Properties.

 

(a)           Schedule
5.12 sets forth a true and complete list of all the personal
property, and assets owned, leased or used by Seller, INXL and INXH
as of the Closing Date with a current book value in excess of
$25,000, specifying whether and by whom each such asset is owned or
leased and, in the case of leased assets, indicating the parties
to, execution dates of, and annual payments under, such
lease.

 

(b)           With
respect to personal property Assets, INXL Assets and assets of INXH
that are owned, including all assets reflected as owned on the
Balance Sheet (other than inventory sold in the ordinary course of
business since the date thereof), Seller, INXL and INXH have good
and valid title to all such Assets,INXL Assets and assets of INXH,
free and clear of all Liens other than Permitted
Liens.

 

(c)           With
respect to personal property assets that are leased, to
Seller’s or LD’s Knowledge or Representing
Party’s knowledge, the Seller, INXL and INXH has a valid
leasehold interest in such leased assets and all such leases are in
full force and effect and constitute valid, binding and enforceable
obligations of the parties thereto, except as may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium or other similar
Laws affecting or relating to creditors’ rights generally and
(ii) the availability of injunctive relief and other equitable
remedies. Noner of the Seller,INXL nor INXH is in breach of any of
the terms of any such lease except as otherwise would not have a
Material Adverse Effect on Seller, INXL or INXH.

 

(d)           Other
than holders of Permitted Liens (solely to the extent of such
Permitted Liens) and lessors of leased assets(solely to the extent
of their interest in such leased assets), no Person has any
interest in any equipment or other tangible Assets, INXL Assets or
assets of INXH used in the Business.

 

 

 

-16-

 

 

5.13           Condition
and Sufficiency of Assetss. All buildings, plants, leasehold
improvements, structures, facilities, equipment and other items of
tangible property and Assets, INXL Assets and assets of INXH and
other assets which are owned, leased or used by the Seller, INXL
and INXH have been properly maintained and serviced, in all
material respect, are in good operating condition and repair
(subject to normal wear and tear given the use and age of such
assets), are usable in the ordinary course of business and conform
in all material respects to all Laws relating to their
construction, use and operation. The tangible and intangible
Assets, INXL Assets and other assets owned by Seller, INXL and INXH
constitute all the assets and properties necessary to permit KII,
from and after the Closing, to conduct in all material respects,
the Business in the same manner as Seller, INXL and INXH conducted
such Business in the past or as currently
contemplated.

 

5.14           Real
Property.

 

(a)           Schedule
5.14 contains a list of all Real Property currently leased
or owned by Seller, INXH and INXL and includes all interests in
Real Property used in or necessary for the conduct of the Business
and operations of Seller,INXL and INXH as currently
conducted.

 

(b)           With
respect to the leased Real Property, Seller, LD, INXL and the
Representing Party have delivered to YGYI true and complete copies
of all leases and subleases pursuant to which either of Seller,
INXL or INXH is a party or by which it is bound, and no party is in
default or received notice of default under such leases or
subleases. With respect to the Real Property owned by Seller, INXL
and INXH, Seller, INXL and INXH have good and marketable title to
the Real Property, free and clear of all Liens. Seller, LD, INXL
and the Representing Party have delivered to YGYI true and complete
copies of the following: (i) all deeds pursuant to which Seller,
INXL and INXH acquired title and (ii) all owner’s policies of
title insurance, together with copies of listed exceptions to
title, covering Real Property owned by Seller, INXL and INXH. Each
of the Seller, INXL and INXH has peaceful, undisturbed and
exclusive possession of the Real Property. None of the Seller, LD,
INXL nor the Representing Party has received notice of any
outstanding claims under any expired leases or subleases to which
the Seller is or was a party.

 

(c)           To
the Knowledge of Seller, LD and the Representing Party, the uses
for which the buildings, facilities and other improvements located
on the Real Property are zoned do not restrict or impair the use of
the Real Property for purposes of the Business of Seller, INXL and
INXH.

 

(d)           No
Governmental Entity having the power of eminent domain over the
Real Property has commenced or to the knowledge of Seller, LD or
the Representing Party threatened to exercise the power of eminent
domain or a similar power with respect to all or any part of the
Real Property. None of the Seller, LD, INXL nor the Representing
Party have received notice of any pending or threatened
condemnation, fire, health, safety, building, zoning or other land
use regulatory proceedings, lawsuits or administrative Actions
relating to any portion of the Real Property or any other matters
which materially adversely affect the current use, occupancy or
value thereof. None of the Sellers , LD, INXL nor the Representing
Party have received notice of any pending or threatened special
assessment proceedings affecting any portion of the Real
Property.

 

(e)           To
the Knowledge, of Seller, LD and the Representing Party :(i) the
Real Property and all present uses and operations of the Real
Property comply with all Laws, covenants, conditions, restrictions,
easements, disposition agreements and similar matters affecting the
Real Property; and (ii) the Real Property and the continued use,
occupancy and operation as used, occupied and operated in the
conduct of the Business, do not constitute nonconforming uses and
are not the subject of any special use permit under any
Law.

 

(f)           The
Real Property is in suitable condition for Seller’s and
INXL’s Business as currently conducted and as currently
contemplated.

 

(g)           Except
as otherwise set forth in leases to the contrary, no Person, is in
possession of any of the Real Property or any portion thereof, and
there are no leases, subleases, licenses, concessions or other
agreements, written or oral, granting to any Person, the right of
use or occupancy of the Real Property or any portion thereof. No
easement, utility transmission line or water main located on the
Real Property adversely affects the use of the Real Property or any
improvement on the Real Property.

 

5.15           Intellectual
Property

 

(a)           The
Seller, INXL and INXH own or possess sufficient legal rights to all
Intellectual Property without any known conflict with, or
infringement of, the rights of others, including prior employees or
consultants, with which any of them may be affiliated now or may
have been affiliated in the past. Except set forth in Schedule
5.15, other than trade names and website URL, none of the Seller,
INXL or INXH owns or licenses: (i) any Intellectual Property used
in or necessary for the Business as it is currently conducted
(except for software that is commercially available at retail to
consumers on nondiscriminatory pricing terms and is subject to
“shrink-wrap” or “click-through” license
agreements) other than Intellectual Property that is not material
to the operation of the Business. The Seller, INXL and INXH have
obtained and possesses valid licenses to use all of the software
programs present on the computers and other software-enabled
electronic devices that it owns or leases or that it has otherwise
provided to its employees for their use in connection with the
Seller’s , INXH’s and INXL’s business. The
Seller, INXL and INXH have not embedded any open source, copyleft
or community source code in any of their products generally
available or in development, including but not limited to any
libraries or code licensed under any General Public License, Lesser
General Public License or similar license arrangement.

 

 

 

-17-

 

 

(b)           To
the Knowledge of Seller, LD and the Representing Party, none of the
Products or services currently or formerly developed, manufactured,
sold, distributed, provided, shipped or licensed by Seller, INXL or
INXH, or which are currently under development, infringes upon, or
otherwise unlawfully used or uses, the Intellectual Property rights
of any third party. To the Knowledge of Seller, LD and the
Representing Party, neither Seller’s Intellectual Property,
INXH’s Intellectual Property nor INXL’s Intellectual
Property has infringed or infringes or will infringe upon, or
otherwise unlawfully used or uses, any Intellectual Property of a
third party. None of the Sellers, INXL, INXH, LD nor the
Representing Party have received any communication alleging that
Seller, INXL, INXH or any of their Products, services, activities
or operations infringe upon or otherwise unlawfully uses any
Intellectual Property of a third party nor to the Knowledge of
Seller, is there any basis for any claim of infringement or
unlawful use. No Action has been instituted or threatened relating
to any Intellectual Property formerly or currently used by Seller,
INXL or INXH. To the Knowledge of Seller, LD, and the Representing
Party, no Person has infringed or is infringing any Intellectual
Property rights of Sellers or has otherwise misappropriated or is
otherwise misappropriating or unlawfully using Seller’ss
Intellectual Property or INXL’s Intellectual Property, except
where such infringement or unlawful use would not have a Material
Adverse Effect.

 

(c)           With
respect to Seller’s Proprietary Information, INXH’s
Proprietary Information and INXL’s Proprietary Information,
the documentation relating thereto 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 special
knowledge or memory of others. Each of the Seller, INXL and INXH
has taken commercially reasonable steps to protect and preserve the
confidentiality of all Proprietary Information owned by the Seller
and INXL. Each employee and consultant has executed confidentiality
agreements with the Seller, INXL and INXH and assigned to the
Seller, INXL and INXH all intellectual property rights he or she
owns that are related to the Business as now conducted and as
presently proposed to be conducted and all intellectual property
rights that he, she or it solely or jointly conceived, reduced to
practice, developed or made during the period of his, her or its
employment or consulting relationship with the Seller, INXL and
INXH that (a) relate, at the time of conception, reduction to
practice, development, or making of such intellectual property
right, to the Business as then conducted or as then proposed to be
conducted, (b) were developed on any amount of the Seller’s,
INXH’s or INXL’s time or with the use of any of the
Seller’s , INXH’s or INXL’s equipment, supplies,
facilities or information or (c) resulted from the performance of
services for the Seller, INXL or INXH. Schedule 5.15 lists all
patents, patent applications, registered trademarks, trademark
applications, service marks, service mark applications, tradenames,
registered copyrights, and licenses to and under any of the
foregoing, in each case owned by the Seller, INXL and
INXH.

 

(d)           Except
as would have a Material Adverse Effect, the execution and delivery
by Seller, LD and the Representing Party of this Agreement does
not, and the consummation by Seller, LD and the Representing Party
of the Transactions (in each case, with or without the giving of
notice or lapse of time, or both), will not, directly or
indirectly, result in the loss or impairment of Seller’s
Intellectual Property, INXH’s Intellectual Property or
INXL’s Intellectual Property, or give rise to any right of
any party to terminate or reprise or otherwise renegotiate
Sellers’, INXH’sor INXL’s rights to own any of
its Intellectual Property or its rights under any license, nor
require the consent of any Governmental Entity or other third party
in respect of any such Intellectual Property.

 

5.16           Absence
of Certain Changes or Events. Except as otherwise set forth
on the Schedule
5.16 since the date of the Balance Sheet:

 

(a)           There
has been no event, occurrence, or fact, or any series of events,
occurrences, or facts that could reasonably be expected to have,
individually or in the aggregate, a Material Adverse
Effect;

 

(b)           Neither
the Seller, INXL nor INXH has amended or changed its Charter
Documents;

 

(c)           Neither
the Seller, INXL nor INXH has declared, set aside or paid any
dividend or other distribution (whether in cash, stock or property)
with respect to any Equity Securities or any other
security;

 

(d)           Neither
the Seller, INXL nor INXH has split, combined or reclassified any
Equity Securities or other security, or issued, or authorized for
issuance, any Equity Securities or other security;

 

(e)           Neither
the Seller, INXL nor INXH has altered any term of any outstanding
Equity Securities or other security;

 

(f)           Neither
the Seller, INXL nor INXH has: (i) increased or modified the
compensation, including salary, bonuses, royalty, commissions or
deferred compensation or benefits payable or to become payable by
Seller,INXL or INXH to any of its current or former directors,
officers, key employees, contractors or consultants; (ii) increased
or modified any Benefit Plan, payment or arrangement made to, for
or with any current or former directors, officers, employees,
contractors or consultants of Seller, INXL or INXH; (iii) entered
into any employment, severance or termination agreement; or (iv)
entered into any agreement or arrangement with any of its current
or former directors, officers, employees, contractors or
consultants providing any form of signing or stay on bonus or
compensation;

 

 

 

-18-

 

 

(g)           Other
than the sale of inventory in the ordinary course of business,
neither the Seller, INXL nor INXH has sold, leased, transferred or
assigned any of its Assets, INXL Assets or any assets of
INXH;

 

(h)           Except
as may otherwise be set forth on Schedule 5.16, neither the
Seller,INXL or INXH has incurred, assumed or guaranteed any
Indebtedness;

 

(i)      Neither
the Seller, INXL nor INXH has created or assumed any Lien on any
Asset or INXL Assets, except for Permitted Liens;

 

(j)      Neither
the Seller, INXL nor INXH has made any loan, advance or capital
contribution to, or investment in, any Person;

 

(k)           Neither
the Seller, INXL nor INXH has entered into any Contract other than
in the ordinary course of business;

 

(l)      Other
than in the ordinary course of business (i) no Contract has been
terminated or cancelled or not renewed; the Seller, LD and
Representing party have not been informed of any potential Contract
termination, cancellation or non-renewal(ii) no rights under any
Contract have been waived or accelerated; and (iii) no Contract
that would be required to be listed as a Contract pursuant to
Section 5.17 if
such Contract were in effect on the Closing Date, has been
terminated or cancelled;

 

(m)           Neither
the Seller, INXL nor INXH has sold, transferred, pledged or
assigned any of its Intellectual Property;

 

(n)           There
has not been any labor dispute or any activity or proceeding by a
labor union or representative thereof to organize any employees of
the Seller, INXH or INXL;

 

(o)           There
has not been any violation of or conflict with any Law to which the
Business or Assets of Seller, INXL Assets or assets of INXH are
subject;

 

(p)           None
of the Seller, LD, INX, INXHL nor the Representing Party have
agreed or entered into any arrangement to take any action which
will result in any representation or warranty set forth in this
Article V being
untrue or incorrect on the Closing Date;

 

(q)           There
has not been any material damage, destruction or loss with respect
to the material Assets of Sellers, material assets of INXH or
material INXL Assets, whether or not covered by
insurance;

 

(r)           Neither
the Seller, INXL, INXH, LD nor the Representing Party have made any
change in accounting policies or practices;

 

(s)           Neither
of the Seller, INXL, INXH nor the Representing Party have made any
Tax election, changed its method of Tax accounting or settled any
claim for Taxes;

 

(t)      Except
as may be set forth on Schedule 5.16, neither the
Seller, INXL, INXH nor the Representing Party have settled any
Action; and

 

(u)           Neither
the Seller, INXL nor the Representing Party have agreed, whether in
writing or otherwise, to do any of the foregoing.

 

5.17           Contracts.

 

(a)                 Schedule
5.17(a) lists each of the following Contracts that will be
acquired as part of the Assets and INXL Assets (x) by which any of
the Assets or INXL Assets are bound or affected or (y) to which
Seller, INXL or INXH is a party or by which it is bound in
connection with the Business or the Assets or INXL Assets
(collectively, the “Contracts”):

 

(i)          all
Contracts involving aggregate consideration in excess of $10,000 or
requiring performance by any party more than one year from the date
hereof, which, in each case, cannot be cancelled without penalty or
without more than 180 days’ notice;

 

 

 

-19-

 

 

(ii)          all
Contracts that relate to the sale of any of the Assets or the INXL
Assets, other than in the ordinary course of business, for
consideration in excess of $10,000;

 

(iii)          all
Contracts that relate to the acquisition of any business, a
material amount of stock, other securities or assets of any other
Person or any real property (whether by merger, sale of stock, sale
of assets or otherwise);

 

(iv)          except
for agreements relating to trade receivables, all Contracts
relating to indebtedness (including, without limitation,
guarantees), in each case having an outstanding principal amount in
excess of $10,000;

 

(v)          Contracts
containing noncompetition, non-solicitation or confidentiality
covenants restricting Seller, LD, INXL, INXH or the Representing
Party; and

 

(vi)          all
collective bargaining agreements or Contracts with any labor
organization, union or association.

 

(b)            The
Contracts that are part of the Assets being sold represent all
necessary contract to operate the Business and are in full force
and effect and are in all material respects valid and binding
obligations of the parties thereto, enforceable in accordance with
their terms, except as such enforceability may be limited by: (i)
bankruptcy, insolvency, reorganization, moratorium or other similar
Laws affecting or relating to creditors’ rights generally and
(ii) the availability of injunctive relief and other equitable
remedies, and no defenses, off sets or counterclaims have been
asserted or, to the knowledge of Seller, Representing Party or LD,
may be made by any party thereto, nor has Seller, Representing
Party or LD waived any right thereunder. Seller’s,
INXL’s and INXH’s rights and obligations under all
Contracts set forth in Schedule 5.17(a) to this
Agreement to be assigned hereby to KII and assumed hereby by KII
are assignable as contemplated by this Agreement and will be duly
and validly assigned to KII on the Closing Date; such assignment
will not give rise to the ability of any other party to such
agreements to terminate such agreements or to otherwise modify the
rights and obligations thereunder; and such assignments will not
result in any liability being imposed on YGYI or KII other than to
perform its assumed obligations under such agreements after the
Closing. Except as set forth on Schedule 5.17(b), Neither
Seller, INXL nor INXH is in breach of, or default under, any
Contract, except for such breaches or defaults that would not have
a Material Adverse Effect.

 

(c)            None
of the Seller, INXL or INXH nor, to the Knowledge of Sellers,
Representing Party or LD, other party thereto, is in default in the
performance, observance or fulfillment of any obligation, covenant,
condition or other term contained in any Contract, and none of the
Seller, INXL or INXH has given or received notice to or from any
Person relating to any such alleged or potential default that has
not been fully cured. No event has occurred which (with or without
the giving of notice or lapse of time, or both) may conflict with
or result in a violation or breach of, or give any Person the right
to exercise any remedy under or accelerate the maturity or
performance of, or cancel, terminate or modify, any
Contract.

 

(d)           Except
as set forth in the Schedule 5.17(d), none of the
Seller, LD, INXH INXL nor the Representing Party is required to
obtain any Consent under any of the Contracts in connection with
the execution and delivery by Seller or LD of this Agreement or the
consummation of the Transactions.

 

(e)           Seller,
LD and the Representing Party have delivered true and complete
copies of each applicable Seller’s Contract to
YGYI.

 

5.18           Litigation.
Except as set forth on Schedule 5.18, there is no
Action relating to Seller, INXL, INXH, LD, the Representing Party,
the Business, the Assets, the INXL Assets, the assets of INXH or
the Transactions by any Person or Government Authority pending, or
to the knowledge of Seller, LD or the Representing Party,
threatened: (i) against or affecting Seller, INXL, INXH, LD, the
INXL Assets, the Assets, the assets of INXH or the Representing
Party; (ii) that challenges or seeks to prevent, enjoin or
otherwise delay the Transaction; (iii) that could have the effect
of restraining or prohibiting YGYI’s or KII’s ownership
or operation (or that of the Affiliates) of all or any portion of
the Business, the Assets, the assets of INXH, the INXL Assets or
the Capital Stock of INXL or INXH or (v) that could compel YGYI,
KII or the Affiliates to dispose of or hold separate all or any
material portion of the Business, the Assets, the INXL Assets, the
assets of INXH or the Capital Stock of INXL or INXH. No event has
occurred or circumstances exist that may give rise or serve as a
basis for any such Action. There is no Action against any current
or former director, officer or employee of Seller, INXL or INXH
with respect to which Seller, INXL or INXH has or is reasonably
likely to have an indemnification obligation. There is no
unsatisfied order, judgment, penalty or award against or affecting
Sellersor any of its Assets, or INXL, the INXL Assets or
INXH.

 

 

 

 

-20-

 

 

5.19           Employee
Benefits.

 

(a)           Schedule
5.19(a) sets forth a true and complete list of all Benefit
Plans sponsored, maintained or contributed to or required to be
contributed to the Seller for the benefit of any present or former
directors, managers, employees, contractors or consultants of
Seller, INXL or INXH(each a “Benefit Plan”). Neither the
Seller, INXL nor INXH has any intent or commitment to create any
additional Benefit Plans or amend any of its Benefit
Plans.

 

(b)           Seller,
LD and the Representing Party have delivered to YGYI a true and
complete set of copies of (i) all material Benefit Plans and
related trust agreements, annuity contracts, other funding
instruments, and all other material Contracts and agreements,
including third party administration agreements and service
agreements, maintained in connection with the operation of such
material Benefit Plans; and (ii) any summaries of material
modification, if any, concerning such material Benefit
Plans.

 

(c)           Each
Benefit Plan has been maintained, operated and administered in all
material respects in accordance with such Benefit Plan’s
respective terms, and in compliance with all applicable
laws.

 

(d)           With
respect to each Benefit Plan, there are no Actions, (other than
routine claims for benefits in the ordinary course) pending or
threatened against any such Benefit Plan, Seller, INXL, INXH or any
trustee or agent of any such Benefit Plan.

 

(e)           Full
payment has been made of all amounts which Seller, INXL or INXH was
required to have paid as a contribution to any Benefit Plan as of
the last day of the most recent fiscal year of each s Benefit Plan
ended prior to the Closing Date.

 

(f)           Each
Benefit Plan is, and its administration is and has been during the
six-year period preceding the Closing Date, in compliance with, and
Seller has not received any claim or notice that any such Benefit
Plan is not in compliance with, all applicable Laws.

 

(g)           None
of the Seller, INXL or INXH is in default in performing any of its
contractual obligations under any of Benefit Plans or any related
trust agreement or insurance contract.

 

(h)           There
are no outstanding liabilities of any Benefit Plan other than
liabilities for benefits to be paid to participants in any Benefit
Plan and their beneficiaries in accordance with the terms of such
Benefit Plan.

 

(i)      Each
of the Seller,INXL and INXH has the right under the terms of each
Benefit Plan and under applicable Law to amend, revise, merge or
terminate such plan (or its participation in such plan) or transfer
the Assets of such plan to another arrangement, plan or fund at any
time exclusively by action of Seller,INXL or INXH, and no
additional contributions would be required to properly effect such
termination.

 

(j)      No
Benefit Plan provides benefits to any individual after termination
of employment.

 

(k)           The
consummation of the Transactions will not (either alone or in
conjunction with any other event) (i) entitle any current or former
director, employee, contractor, member, manager or consultant of
the Seller,INXLor INXH to severance pay, unemployment compensation
or any other payment; or (ii) accelerate the time of payment or
vesting or increase the amount of compensation due to any such
director, employee, contractor or consultant or result in the
payment of any other benefits to any Person or the forgiveness of
any Indebtedness of any Person.

 

(l)      With
respect to each Benefit Plan that is funded wholly or partially
through an insurance policy, all premiums required to have been
paid as of the Closing Date under such insurance policy have been
paid, and, as of the Closing Date, there are no liabilities of the
Seller,INXL or INXH under any insurance policy or ancillary
agreement with respect to such insurance policy in the nature of a
retroactive rate adjustment, loss sharing arrangement or other
actual or contingent liability arising wholly or partially out of
events occurring prior to the Closing Date.

 

(m)           Neither
the Seller, INXL nor INXH has any duty or obligation to indemnify
or hold another Person harmless for any liability attributable to
any acts or omissions by such Person with respect to any Benefit
Plan.

 

 

 

-21-

 

 

5.20           Labor
and Employment Matters.

 

(a)           Except
as would not have a Material Adverse Effect, all employees of the
Seller, INXL and INXH have been paid in full all salary, vacation
pay and sick pay that is owed to them. All directors, officers,
employees, contractors and consultants of the Seller, INXL and INXH
may be removed or terminated by Seller, INXL or INXH at any time
with or without cause, but only for reasons not prohibited by and
otherwise consistent with federal, state and local Law and without
any severance or other liability to Sellers, INXL or
YGYI.

 

(b)           None
of the Seller, INXL or INXH is a party or subject to any labor
union or collective bargaining agreement. There are no pending or
threatened labor disputes, work stoppages, requests for
representation, pickets, work slow-downs due to labor disagreements
or any Actions which involve the labor or employment relations of
Seller, INXL or INXH. There is no unfair labor practice, charge or
complaint pending, unresolved or, threatened before any
governmental agency. No event has occurred or circumstance exists
that may provide the basis of any work stoppage or other labor
dispute.

 

(c)           Except
as would not have a Material Adverse Effect, each of the Seller,
INXL and INXH has complied with each, and is not knowingly in
violation of any, Law relating to anti-discrimination and equal
employment opportunities and there are, and have been, no
violations of any other Law with respect to the hiring, hours,
wages, occupational safety and health, employment, promotion,
termination or benefits of any employee or other Person. Except as
would not have a Material Adverse Effect, the Seller, INXL and INXH
each have filed and/or posted all reports, information and notices
required under any Law with respect to the hiring, hours, wages,
occupational safety and health, employment, promotion, termination
or benefits of any employee or other Person, and will timely file
all such reports, information and notices required by any Law to be
given prior to the Closing. Seller, INXL and INXH each have
maintained all records required by any applicable Law.

 

(d)           Except
as would not have a Material Adverse effect, Seller, INXL and INXH
each have paid or properly accrued in the ordinary course of
business all wages and compensation due to employees, including all
vacations or vacation pay, holidays or holiday pay, sick days or
sick pay and bonuses.

 

(e)           Neither
the Seller, INXL nor INXH is a party to any Contract which
restricts it from relocating, closing or terminating any of its
operations or facilities or any portion thereof. The consummation
of the Transactions will not create liability for any act by
Sellers on or prior to the Closing under any other Law respecting
reductions in force or the impact on employees of plant closings or
sales of businesses.

 

(f)           Except
as would not have a Material Adverse Effect no Person that was
engaged by the Seller,INXL or INXH as an independent contractor or
in any other non-employee capacity can or will be characterized or
deemed to be an employee of the Seller, INXL or INXH under
applicable Law for any purpose whatsoever including, without
limitation, for purposes of federal, state and local income
taxation, workers’ compensation, unemployment insurance and
eligibility for Seller’s,INXL’s or INXH’s group
benefit.

 

(g)           There
are no covenants, agreements or restrictions, including but not
limited to, employment agreements not to compete, prohibiting,
limiting or in any way restricting any employee of the Seller, INXL
or INXH from engaging in any type of business activity in any
location. To the knowledge of Seller and the Representing Party, no
employee, consultant or contractor of Seller, INXL or INXH has
been, is or will be, by performing services for Seller, INXL or
INXH in violation of any term of any employment, invention
disclosure or assignment, confidentiality, noncompetition or other
restrictive covenant or agreement as a result of such
employee’s, consultant’s or independent
contractor’s employment by or contract with Seller, INXL or
INXH any services rendered by such employee, consultant or
independent contractor.

 

5.21           Product
Warranty.

 

(a)           Except
as disclosed on Schedule 5.21(a), there are no warranties (express
or implied) outstanding with respect to any products currently or
formerly manufactured, sold, distributed, provided, shipped or
licensed (“Products”).

 

(b)           To
Seller’s, LD’s and the Representing Party’s
knowledge, all Products that have been or are being tested,
developed, labeled, stored, promoted, distributed, manufactured,
sold and/or marketed by Seller, INXL and INXH have been and are
being tested, developed, labeled, stored, promoted, distributed,
manufactured, sold and/or marketed in compliance with all Product
specifications, all express and implied warranties and all
requirements under applicable Law.

 

 

 

-22-

 

 

(c)           To
the Knowledge of Seller, LD and the Representing Party, there are
no material design, manufacturing or other defects, latent or
otherwise, with respect to any Product and such Products are not
toxic when used in accordance with their intended use. To the
Knowledge of Sellers, Representing Party and LD, each Product that
has been manufactured, sold, distributed, provided, shipped or
licensed contained all warnings required by applicable Law and such
warnings have been in accordance with reasonable industry
practice.

 

(d)           To
the Knowledge of Seller, LD and the Representing Party, there are
no material liability arising out of any injury to individuals or
property as a result of the ownership, possession or use of any
Product. Neither the Seller,. INXLnor INXH, nor to the knowledge of
Seller, LD or the Representing Party and the Representing Party,
any of its suppliers have committed any act or failed to commit any
act, which would result in, and there has been no occurrence which
would give rise to or form the basis of, any product liability,
product defect or liability for breach of warranty in excess of
$5,000 (whether covered by insurance or not) on the part of Seller
with respect to any Product.

 

(e)           Neither
the Seller, INXL nor any of their suppliers has voluntarily made,
or been required by any Governmental Entity to make, any recall of,
or suspend or discontinue, any Product, and to the knowledge of
Seller, LD and the Representing Party, there are no facts,
circumstances or conditions that would reasonably be expected to
form the basis for any Action with respect to a recall, suspension
or discontinuance of any Product.Since

 

December
31, 2011, there has been no inspections, inspection reports or
other written correspondence from any Governmental Entity that
asserts or alleges that the operation of Seller, INXL or INXH is or
was not or may not be in compliance with any applicable Laws or
regulatory requirement.

 

(f)           Neither
the Seller, INXL or INXH has in the past had any Product design and
warranty claims or other damages in connection with any Product
manufactured, sold, distributed, shipped or licensed, or service
rendered, by it on or prior to date of the Closing.

 

5.22           Books
and Records. Except as disclosed on Schedule 5.22, the
bylaws, operating agreements and all documents evidencing action
taken by the officers and/or directors or managers of each of the
Seller, INXL and INXH, if any, have been provided to YGYI and no
meeting or action by written consent in lieu of such meeting, of
any such officers and/or directors or managers, has been held for
which minutes have not been prepared and not contained in the
minute books. All of the books and records of Seller, INXL and
INXH, including minute books, are in the possession of Seller, INXL
and INXH.

 

5.23           Suppliers
and Customers. Schedule 5.23 sets forth: (i)
each supplier of material or manufacturing to Sellers and INXLand
(ii) each supplier who constitutes a sole source of supply to
Seller and INXLfor the most recent completed fiscal year. The
relationships of Seller, INXL and INXH with each such supplier,
manufacturer, and customer are good commercial working
relationships. No such supplier or customer has canceled or
otherwise terminated or materially modified, or threatened to
cancel, not renew or otherwise terminate or materially modify, its
relationship with Seller, INXL or INXH. Neither the Seller, INXL,
INXH, LD nor the Representing Party have received notice or has
reason to believe that any such supplier or customer may cancel or
otherwise materially modify its relationship with Seller, INXL or
INXH or limit or reduce its supply of services, supplies or
materials to, or its purchases of products, materials, goods or
services from, Seller, INXH or INXL, either as a result of the
Transactions or otherwise. Except as set forth on Schedule 5.23 hereto, no
supplier or customer of Seller, INXL or INXH which was a material
customer of or supplier to Seller during the prior fiscal year has
terminated its relationship with Seller, INXL or INXH or been
terminated by Seller, INXL or INXH .

 

5.24           Bank
Accounts. All payments made by Seller, INXL and INXH have
been made in the ordinary course through banking
channels.

 

5.25           Powers
of Attorney. Except as disclosed on Schedule 5.26, there are
no outstanding powers of attorney executed by or on behalf of
Seller, INXL, INXH, their Subsidiaries, LD or the Representing
Party in favor of any Person.

 

5.26           Loans
to or from Directors, Officers, Employees, or Consultants.
Except as set forth on Schedule 5.27, Neither the
Seller, INXL nor INXH has loaned any monies to or borrowed any
monies from, any director, manager or employee of, or consultant
to.

 

5.27           Accredited
Investor Representations.

 

a.           The
Seller, and each of their equity owners, LD and the Representing
Party is: (i) an “accredited investor” as that term is
defined in Rule 501 of the General Rules and Regulations under the
1933 Act by reason of Rule 501(a)(3), and (ii) experienced in
making investments of the kind described in this Agreement and the
related documents, (iii) able, by reason of the business and
financial experience of its officers (if an entity) and
professional advisors (who are not affiliated with or compensated
in any way by YGYI or any of its Affiliates), to protect its own
interests in connection with the transactions described in this
Agreement, and the related documents, and (iv) able to afford the
entire loss of its investment in the Shares and the Contingent
Consideration Warrants;

 

 

 

-23-

 

 

b.           Each
of the Seller, LD and the Representing Party are acquiring the
Shares and the Contingent Consideration Warrants for their own
account for investment only and not with a view towards the public
sale or distribution thereof and not with a view to or for sale in
connection with any distribution thereof;

 

c.           All
subsequent offers and sales of the Shares and the Contingent
Consideration Warrants by the Seller, LD and the Representing Party
shall be made pursuant to registration under the 1933 Act or
pursuant to an exemption from registration;

 

d.           Each
of the Seller, LD and the Representing Party understand that the
Shares and the Contingent Consideration Warrants are being offered
and sold to them in reliance on specific exemptions from the
registration requirements of United States federal and state
securities laws and that YGYI is relying upon the truth and
accuracy of, and the Seller’s, LD’s and the
Representing Party’s compliance with, the representations,
warranties, agreements, acknowledgements and understandings of the
Seller, LD and the Representing Party set forth herein in order to
determine the availability of such exemptions and the eligibility
of the Seller, LD and the Representing Party to acquire the Shares
and the Contingent Consideration Warrants;

 

e.           Each
of the Seller and its advisors, if any, LD and the Representing
Party have been furnished with all materials relating to the
business, finances and operations of YGYI and materials relating to
the offer and sale of the Shares and the Contingent Consideration
Warrants which have been requested by the Seller, the Representin
Party and LD. The Seller and its advisors, if any, LD and the
Representing Party have been afforded the opportunity to ask
questions of YGYI and have received complete and satisfactory
answers to any such inquiries. Without limiting the generality of
the foregoing, the Seller, LD and the Representing Party have also
had the opportunity to obtain and to review YGYI’s Current
Reports on Form 8-K filed April 2, 2018, May 14, 2018, June 26,
2018, July 17, 2018, July 25, 2018, July 31, 2018, August 14, 2018,
August 21, 2018, September 7, 2018, September 13, 2018, September
21, 2018, September 21, 2018, October 4, 2018, October 5, 2018,
October 29, 2018, October 31, 2018, November 13, 2018, November 29,
2018, December 6, 2018, December 19, 2018, January 7, 2019, January
11, 2019, January 11, 2019, January 11, 2019 and January 18, 2019,
Quarterly Reports on Form 10-Q for the fiscal quarters ended March
31, 2018, June 30, 2018 and September 30, 2018 and Annual Report on
Form 10-K for the fiscal year ended December 31, 2018 (the
“SEC Documents”).

 

f.           Each
of the Seller, LD and the Representing Party understand that their
investment in the Shares and the Contingent Consideration Warrants
involves a high degree of risk;

 

g.           Each
of the Seller, LD and the Representing Party understand that no
United States federal or state agency or any other government or
governmental agency has passed on or made any recommendation or
endorsement of the Shares and the Contingent Consideration
Warrants;

 

h.           Each
of the Seller, LD and the Representing Party acknowledge that (1)
the Shares and the Contingent Consideration Warrants have not been
registered under the provisions of the 1933 Act and may not be
transferred unless (A) subsequently registered thereunder, as
provided for herein, or (B) the Seller, LD and the Representing
Party shall have delivered to YGYI an opinion of counsel,
reasonably satisfactory in form, scope and substance to YGYI, to
the effect that the Shares and the Contingent Consideration
Warrants and the shares of common stock underlying the Contingent
Consideration Warrants to be sold or transferred may be sold or
transferred pursuant to an exemption from such registration; and
(2) any sale of any Security made in reliance on Rule 144
promulgated under the 1933 Act may be made only in accordance with
the terms of said Rule and further, if said Rule is not applicable,
any resale of that Security under circumstances in which the
seller, or the person through whom the sale is made, may be deemed
to be an underwriter, as that term is used in the 1933 Act, may
require compliance with some other exemption under the 1933 Act or
the rules and regulations of the SEC thereunder.

 

i.           Each
of the Seller, LD and the Representing Party acknowledge and agree
that the Shares and the Contingent Consideration Warrants and the
shares of common stock underlying the Contingent Consideration
Warrants shall bear a restrictive legend in substantially the
following form (and a stop-transfer order may be placed against
transfer thereof):

 

THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), OR THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OFFERED FOR
SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT OR AN
OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE CORPORATION
THAT SUCH REGISTRATION IS NOT REQUIRED.

 

 

 

-24-

 

 

5.28           Solvency.
Immediately after the Closing (i) each of the Seller, LD, INXL,
INXH and the Representing Party expects to be able to pay all
creditors in a timely manner; and (ii) no solvency proceeding of
any character, including bankruptcy, receivership, reorganization,
composition or arrangement with creditors (including any assignment
for the benefit of creditors), voluntary or involuntary, affecting
the Business or the Representing Party (other than as a creditor)
is pending or is currently being contemplated by Seller, LD, INXL,
INXH or the Representing Party or, to the knowledge of Seller, LD
and the Representing Party, is being threatened against the
Representing Party, LD, INXL or Sellers by any other Person. None
of the Sellers LD, INXL, INXH or the Representing Party has made
any assignment for the benefit of creditors or taken any action in
contemplation of, or which would constitute the basis for, the
institution of any such insolvency proceedings.

 

5.30           No
Other Representations and Warranties. Except for the
representations and warranties contained in this Article V (including the
related portions of the Disclosure Schedule), none of the Seller,
LD nor the Representing Party has made or makes any other express
or implied representation or warranty, either written or oral, on
behalf of Seller and the Representing Party, including any
representation or warranty as to the accuracy or completeness of
any information regarding the Business, Capital Stock of INXL and
INXH, and the Assets, assets of INXH and the INXL Assets furnished
or made available to YGYI (including any information, documents or
material delivered to YGYI in management presentations or in any
other form in expectation of the transactions contemplated hereby)
or as to the future revenue, profitability or success of the
Business, or any representation or warranty arising from statute or
otherwise in Law.

 

5.31           Brokers
or Finders. No broker, finder or investment banker is
entitled to any brokerage, finder’s or other fee or
commission in connection with the Transactions based upon
arrangements made by or on behalf of Seller, LD or the Representing
Party.

 

5.32           Representations
and Warranties True and Correct. No representation or
warranty by Seller, LD or the Representing Party in this Agreement,
and no statement made by Seller, the Representing Party or LD in
the Seller Disclosure Schedule furnished or to be furnished to YGYI
or KII pursuant hereto contains any untrue statement of a material
fact.

 

5.33           Independent
Investigation. Seller, LD and the Representing Party have
conducted their own independent investigation, review its assets,
and acknowledge that they have been provided adequate access to the
personal, properties, assets and documents and data of YGYI and its
business for such purpose. Seller, LD and the Representing Party
have relied solely upon their own investigations and the express
representations and warranties of YGYI set forth in Article V of
this Agreement (including the relevant portions of the Disclosure
Schedules) in making its decision to enter into the Agreement, and
YGYI has not made any representation or warranty except as set
forth in Article.

 

 

 

ARTICLE VI

 

CONDITIONS TO CONSUMMATION OF THE SALE

 

6.1         
Conditions to Obligations
of Seller and the Representing Party. The obligations of
Seller, LD and the Representing Party to consummate the
Transactions shall be subject to the fulfillment, or written waiver
by Seller, LD and the Representing Party at or prior to the
Closing, of each of the following conditions:

 

(a)           The
representations and warranties of YGYI set out in this Agreement
shall be true and correct in all material respects at and as of the
time of the Closing as though such representations and warranties
were made at and as of such time, except those that speak as of the
date of this Agreement shall be updated;

 

(b)           YGYI
shall have performed and complied in all material respects with all
covenants, conditions, obligations and agreements required by this
Agreement to be performed or complied with by YGYI on or prior to
the Closing Date; and

 

 (c)           YGYI
shall have delivered to Seller, LD and the Representing Party an
officer’s certificate of YGYI to the effect that the
conditions set forth in Section 6.1(a) and (b) have been satisfied;
and

 

(d)           YGYI
shall have delivered to Sellers and LD the items described in
Section 3.4.

 

 

 

-25-

 

 

6.2         
Conditions to Obligations
of YGYI. The obligations of YGYI and KII to consummate the
Transactions shall be subject to the fulfillment or written waiver
by YGYI and KII, at or prior to the Closing, of each of the
following conditions:

 

(a)           The
representations and warranties of Seller, LD and the Representing
Party set out in this Agreement shall be true and correct in all
material respects at and as of the time of the Closing as though
such representations and warranties were made at and as of such
time, except that those that speak as of the date of this Agreement
shall be updated;

 

(b)           Seller
and LD shall have performed and complied in all material respects
with all covenants, conditions, obligations and agreements required
by this Agreement to be performed or complied with by Sellers and
LD on or prior to the Closing Date;

 

(c)
          YGYI shall have
completed its due diligence review of the Seller and the Business
and resolved to its complete satisfaction any outstanding issues
related thereto;

 

(d)           Seller
and LD shall have delivered to YGYI a certificate of an officer of
Seller, INXL and INXH to the effect that the conditions set forth
in Section 6.2(a)
and (b) hereof have
been satisfied;

 

(e)           Seller
and LD shall have delivered to YGYI the items described in
Section 3.5;
and

 

(f)           Seller’s
Board of Directors shall have approved the transactions in
accordance with the laws of its state of organization and
Seller’sbylaws, and evidence thereof shall have been provided
to YGYI.

 

6.3       Other
Conditions to Obligations. The obligations of the Parties to
consummate the Transactions shall be subject to the fulfillment, or
written waiver by each of YGYI and Seller, LD and the Representing
Party, at or prior to the Closing, of each of the following
conditions:

 

(a)           All
director, stockholder, members, manager lender, lessor, creditor
and other parties’ consents and approvals, as well as all
filings with, and all necessary consents or approvals of, all
federal, state and local governmental authorities and agencies, as
are required under this Agreement, applicable law or any applicable
contract or agreement (other than as contemplated by this
Agreement) to complete the Transactions shall have been secured;
and no other approvals shall be necessary to consummate the
transaction.

 

(b)           No
statute, rule, regulation, executive order, decree, preliminary or
permanent injunction, or restraining order shall have been enacted,
entered, promulgated or enforced by any Governmental Entity that
prohibits or restricts the consummation of the
Transactions.

 

 

 

ARTICLE VII

 

COVENANTS OF THE PARTIES

 

7.1           Consents.
Seller, LD and the Representing Party will use commercially
reasonable efforts to obtain all consents and approvals required
under any Contract to which the Seller, LD, INXL is a party or are
bound to enable Seller, LD and the Representing Party to effect the
sale of the Assets and Capital Stock of INXL pursuant hereto.
Seller, LD and the Representing Party shall promptly notify YGYI of
any failure or prospective failure to obtain any such Consent and,
if requested, shall provide to YGYI copies of the Consents obtained
by Seller, LD and the Representing Party. Anything in this
Agreement to the contrary notwithstanding, this Agreement shall not
constitute an agreement to assign any contract, or any claim or
right or any benefit arising thereunder or resulting therefrom, if
an attempted assignment thereof, without the consent of a third
party thereto, would constitute a breach thereof or in any way
affect the rights of YGYI or Seller, LD or the Representing Party
thereunder. If such consent is not obtained, or if an attempted
assignment thereof would be ineffective or would affect the rights
of Seller,LD or the Representing Party thereunder so that YGYI
would not in fact receive all such rights, Seller,LD and the
Representing Party will reasonably cooperate with YGYI in any
arrangement designed to provide for YGYI the benefits under any of
such contracts, including, without limitation, enforcement for the
benefit of YGYI of any and all rights of Seller, LD and the
Representing Party against a third party thereto arising out of the
breach or cancellation by such third party or otherwise; and any
transfer or assignment to YGYI by Seller,LD the Representing Party
of any contract which shall require the consent or approval of any
third party, shall be made subject to such consent or approval
being obtained.

 

 

 

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7.2           Regulatory
Approvals and Filings. Each Party covenants and agrees to
use commercially reasonable efforts to promptly prepare and file
all necessary permits, consents, approvals, and authorizations, and
make all filings, with all Governmental Entities and all other
Persons necessary or advisable to consummate the Transactions. The
Parties will cooperate with each other and their Representatives in
the preparation of any documents or other materials that may be
required by any Government Entity to consummate the
Transaction.

 

7.3           Cooperation.
Seller, LD, the Representing Party, and YGYI shall consult with
each other prior to making any filing with any Governmental Entity
in connection with the Transactions and promptly after each such
filing provide the other with a copy thereof.

 

7.4           Public
Announcements. Neither YGYI, Seller, LD nor the Representing
Party nor any of their respective Affiliates or Representatives,
shall issue any press releases or otherwise make any public
statements with respect to this Agreement and the Transactions
without the prior written consent of YGYI and Sellers (such consent
not to be unreasonably conditioned, withheld or delayed);
provided that YGYI
may, without such approval, make such press releases or other
public announcement, including, but not limited to, oral
statements, as it believes are required pursuant to any listing
agreement with any national securities exchange or stock market or
applicable securities or other Laws, provided that the Parties
collaborate in good faith as to the process and timing of such
announcements; provided, further, that each of
the Parties may make internal announcements to their respective
employees and distributors that are consistent with the
Parties’ prior public disclosures regarding the
Transactions.

 

7.5           Employees
and Employee Benefits.

 

(a)           Seller,
LD and the Representing Party shall be solely responsible, and YGYI
shall have no obligations whatsoever for, any compensation or other
amounts due and payable to any Employee (or former Employee) of
Seller, INXL or INXH, including, without limitation, hourly pay,
commission, bonus, salary, accrued vacation, fringe, pension or
profit sharing benefits, or severance pay payable to any Employee
(or former Employee) of Seller, INXL and INXH for any period
relating to the service with Seller, INXL and INXH and Seller, INXL
and INXH and LD shall pay all such amounts to all entitled
Employees on or prior to the Closing Date.

 

(b)           Seller,
the Representing Party and LD shall remain solely responsible for
the satisfaction of all claims for medical, dental, life insurance,
health, accident or disability benefits brought by or in respect of
Employees (or former Employees) or agents of Seller, INXL and INXH
that were incurred or made prior to the Closing Date. Seller, the
Representing Party and LD shall remain solely responsible for all
worker’s compensation claims of any Employees (or former
Employees) that relate to events occurring prior to the Closing
Date or that were incurred or made prior to the Closing Date.
Seller, the Representing Party and LD shall pay, or cause to be
paid, all such amounts to the appropriate persons as and when
due.

 

7.6           Additional
Working Capital. YGYI’s intends to invest up to
$25,000,000 in KII, if YGYI and Seller and the Representing
Partymutually determine that the cash flow of KII is insufficient
and such capital is needed for additional working capital to be
provided on an agreed upon schedule. Of this $25,000,000, a total
of $2,000,000 shall be invested at the time of Closing. The Seller,
the Representing Party and YGYI agree to meet within sixty (60)
days of the Closing to determine the financing needs of KII and if
the Sellers, the Representing Partyand YGYI mutually determine that
that the cash flow of KII is insufficient and additional capital is
needed, YGYI shall invest up to an additional $13,000,000 (subject
to market conditions and availability of funds) within ninety (90)
days of the Closing, and up to an additional $10,000,000 if the
Seller, the Representing Party and YGYI mutually determine that
that the cash flow of KII is insufficient and additional capital is
needed, such $10,000,000 to be invested on a schedule to be
determined.

 

 

ARTICLE VIII

 

COVENANTS OF SELLERS AND THE REPRESENTING PARTY

 

8.1           Covenant
to Satisfy Conditions. Seller, LD and the Representing Party
shall use commercially reasonable efforts to take or cause to be
taken all actions, and to do or cause to be done all things,
necessary, proper, and advisable under Laws to consummate and make
effective the Transactions.

 

 

 

-27-

 

 

8.2           No
Shop. Seller, LD and the Representing Party covenant and
agree to, not indirectly, directly or through any Affiliate or
representative, solicit or respond favorably to any solicitation
from or otherwise enter into negotiations or reach any agreement
with any person or entity regarding: (i) the merger or
consolidation of Seller; (ii) the sale of any of the Assets of
Seller or the INXL Assets (other than sales of inventory in the
ordinary course of business consistent with past practices); or
(iii) the sale of any of the equity of Seller, or any options,
convertible securities, convertible debt, or other rights to
acquire any equity of Seller, INXL or INXH, and to promptly (within
one (1) Business Day) furnish YGYI copies of any proposals received
from any Person proposing a transaction contemplated by this
Section 8.2.
Seller, LD and the Representing Party, agree that the provisions of
this Section 8.2
shall be binding on Seller, LD and the Representing Party through
and including the earlier of (a) the Closing Date, or (b) April 30,
2019.

 

8.3           
Third Party
Consents. If any required Consent cannot be obtained prior
to the Closing Date and such requirement has not been waived by
YGYI, Seller, LD and the Representing Party will cooperate as
reasonably necessary with YGYI to obtain such Consent as soon as
practical following the Closing.

 

8.4           
Taxes. Seller and
LD shall make all federal and tax filings, and pay all taxes of any
kind then due, for all periods up to the Closing Date, except
for such sales taxes and payroll taxes that have been accrued for
and reflected on the Balance Sheet.

 

 

 

 

ARTICLE IX

 

INDEMNIFICATION

 

9.1           Indemnification.

 

(a)           By
Seller, LD and the Representing Party. Subject to the other
terms and conditions of this Article IX, Seller, LD and the
Representing Party (collectively, the “Sellers Indemnifying
Parties”), jointly and severally, shall indemnify and hold
harmless YGYI and its officers, directors and stockholders (each an
“YGYI Indemnified
Party”), from and against any and all demands, claims,
actions or causes of action, judgments, assessments, losses,
liabilities, damages or penalties and reasonable attorneys’
fees and related disbursements (collectively, “Claims”) suffered by such YGYI
Indemnified Party resulting from or arising out of any: (i)
inaccuracy in or breach of any of the representations or warranties
made by Seller, Representing Party or LD; or (ii) breach or
nonfulfillment of any covenants or agreements made by Seller, LD or
the Representing Party in this Agreement, the Schedules or
Ancillary Documents.

 

(b)           By
YGYI. Subject to the other terms and conditions of this
Article IX, YGYI
shall indemnify and hold harmless the Representing Party and
Seller, its officers, directors and stockholders and LD (each an
“Sellers Indemnified
Party”), from and against any and all Claims suffered
by such Sellers Indemnified Party resulting from or arising out of
any: (i) inaccuracy in or breach of any of the representations or
warranties made by YGYI or KII; or (ii) breach or nonfulfillment of
any covenants or agreements made by YGYI or KII in this Agreement,
the Schedules or Ancillary Documents;

 

9.2           Indemnification
Procedures for Third-Party Claims. In making a claim under
this Article IX,
the party making a claim is referred to as the “Indemnified Party,” and the party
against whom such claims are asserted is referred to as the
“Indemnifying
Party.”

 

(a)           Upon
obtaining knowledge of any Claim by a third party that has given
rise to, or is expected to give rise to, a claim for
indemnification hereunder, the Indemnified Party shall give prompt
written notice (“Notice of
Claim”) of such claim or demand to the Indemnifying
Party, specifying in reasonable detail such information as the
Indemnified Party may have with respect to such indemnification
claim (including copies of any summons, complaint or other pleading
that may have been served on it and any written claim, demand,
invoice, billing or other document evidencing or asserting the
same). Subject to the limitations set forth in Section 9.2 hereof, no failure
or delay by an Indemnified Party in the performance of the
foregoing shall reduce or otherwise affect the obligation of the
Indemnifying Party to indemnify and hold the Indemnified Party
harmless, except to the extent that such failure or delay shall
have actually adversely affected the Indemnifying Party’s
ability to defend against, settle or satisfy any Claims for which
the Indemnified Party is entitled to indemnification
hereunder.

 

 

 

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(b)           If
the claim or demand set forth in the Notice of Claim given by an
Indemnified Party pursuant to Section 9.2(a) hereof is a
claim or demand asserted by a third party, the Indemnifying Party
shall have fifteen (15) Business Days after the date on which the
Notice of Claim is delivered to notify the Indemnified Party in
writing of its election to defend such third party claim or demand
on behalf of the Indemnified Party. If the Indemnifying Party
elects to defend such third party claim or demand, the Indemnified
Party shall make available to the Indemnifying Party and its agents
and representatives all records and other materials that are
reasonably required in the defense of such third party claim or
demand and shall otherwise cooperate with, and assist the
Indemnifying Party in the defense of, such third party claim or
demand, and so long as the Indemnifying Party is defending such
third party claim in good faith, the Indemnified Party shall not
pay, settle or compromise such third party claim or demand. If the
Indemnifying Party elects to defend such third party claim or
demand the Indemnified Party shall have the right to participate in
the defense of such third party claim or demand at the Indemnified
Party’s expense. In the event, however, that such Indemnified
Party reasonably determines that representation by counsel to the
Indemnifying Party of both the Indemnifying Party and such
Indemnified Party could reasonably be expected to present counsel
with a conflict of interest, then the Indemnified Party may employ
separate counsel to represent or defend it in any such action or
proceeding and the Indemnifying Party shall be liable for the
reasonable fees and expenses of such counsel. If the Indemnifying
Party does not elect to defend such third party claim or demand or
does not defend such third party claim or demand in good faith, the
Indemnified Party shall have the right, in addition to any other
right or remedy it may have hereunder, at the Indemnifying
Party’s expense, to defend such third party claim or demand;
provided,
however, that: (i)
such Indemnified Party shall not have any obligation to participate
in the defense of or defend any such third party claim or demand;
(ii) such Indemnified Party’s defense of or its participation
in the defense of any such third party claim or demand shall not in
any way diminish or lessen the obligations of the Indemnifying
Party under the agreements of indemnification set forth in this
Article IX; and
(iii) such Indemnified Party may not settle any claim without the
consent of the Indemnifying Party, which consent shall not be
unreasonably withheld or delayed.

 

(c)           Except
for third party claims being defended in good faith, the
Indemnifying Party shall satisfy its obligations under this
Article IX in
respect of a valid claim for indemnification hereunder that is not
contested by the Indemnified Party in good faith by wire transfer
of immediately available funds to the Indemnified Party within
thirty (30) days after the date on which Notice of Claim is
delivered to the Indemnified Party, subject to the provisions of
Section 9.7 below.

 

9.3           Indemnification
Procedures for Non-Third Party Claims. In the event any
Indemnified Party should have an indemnification claim against the
Indemnifying Party under this Agreement that does not involve a
claim by a third party, the Indemnified Party shall promptly
deliver notice of such claim to the Indemnifying Party in writing
and in reasonable detail and shall cooperate with, answers
questions and make available to the Indemnifying Party the
information relied upon by the Indemnified Party to substantiate
the claim. The failure by any Indemnified Party to so notify the
Indemnifying Party shall not relieve the Indemnifying Party from
any liability that it may have to such Indemnified Party, except to
the extent that Indemnifying Party have been actually prejudiced by
such failure. If the Indemnifying Party does not notify the
Indemnified Party within fifteen (15) Business Days following its
receipt of such notice that the Indemnifying Party dispute such
claim, such claim specified by the Indemnified Party in such notice
shall be conclusively deemed a liability of the Indemnifying Party
under this Article
IX and the Indemnifying Party shall pay the amount of such
liability to the Indemnified Party on demand, or in the case of any
notice in which the amount of the claim is estimated, on such later
date when the amount of such claim is finally determined. If the
Indemnifying Party disputes its liability with respect to such
claim in a timely manner, the Indemnifying Party and the
Indemnified Party shall proceed in good faith to negotiate a
resolution of such dispute and, if not resolved through
negotiations, such dispute shall be submitted to a court of
law.

 

9.4           Exclusive
Remedy. The parties acknowledge and agree that their sole
and exclusive remedy with respect to any and all claims (other than
claims arising from fraud on the party of a party hereto in
connection with the transactions contemplated by this Agreement)
for any breach of any representation, warranty, covenant, agreement
or obligation set forth herein or otherwise relating to the subject
matter of this Agreement shall be pursuant to the indemnification
provisions set forth in Article IX. In furtherance of the
foregoing, each party hereby waives, to the fullest extent
permitted under Law, any and all rights, claims and causes of
action for any breach of any representation, warranty, covenant,
agreement or obligation set forth herein or otherwise relating to
the subject matter of this Agreement it may have against the other
parties hereto and their affiliates, and each of their respective
representatives; provided, however, that nothing in this
Section 9.4 shall limit any person’s right to obtain any
equitable remedy to which such person may be entitled, including
with respect to Article
XI.

 

 

 

-29-

 

 

9.5           Survival.
Subject to the limitations and other provisions of this Agreement,
the representations and warranties set forth in Sections 5.1, 5.2, 5.3, 5.6, 5.9, 5.15, 5.21 and 5.27 shall survive and remain
in effect until the expiration of the applicable statute of
limitations period; all other representations and warranties set
forth in Article V
of this Agreement shall survive and remain in effect through and
until the date which is one year after the Closing. Any claims made
for indemnification by YGYI must be made prior to the expiration of
the time periods set forth in this Section 9.5.

 

9.6           Damages.
Notwithstanding anything to the contrary in this Agreement, neither
party shall be liable to the other for any consequential, indirect,
exemplary or punitive damages.

 

9.7           Cap.
The aggregate amount required to be paid by the Sellers
Indemnifying Parties pursuant to the indemnification provisions set
forth in Article IX shall not exceed $8,000,000 (the
“Cap”);
provided, that the Cap shall not apply to indemnification claims
directly relating to Sections 5.10(e), 5.15 or 5.21 or indemnification claims
for fraud or any intentional breach of a representation or
warranty.

 

 

 

ARTICLE X

 

TERMINATION; EXCLUSIVE REMEDY

 

10.1         
Termination. This
Agreement may be terminated at any time prior to the
Closing:

 

(a)           by
mutual consent of YGYI, Seller, LD and the Representing
Party;

 

(b)           by
YGYI or Seller, LD and the Representing Party if the Closing shall
not have occurred on or before April 30, 2019;

 

(c)           by
YGYI, Seller, LD or the Representing Party if any Governmental
Entity shall have issued an injunction, order, decree or ruling or
taken any other action restraining, enjoining or otherwise
prohibiting any material portion of the Transactions and such
injunction, order, decree, ruling or other action shall have become
final and non-appealable;

 

(d)           by
YGYI if any of the conditions to the Closing set forth in
Section 6.2 shall
not have been fulfilled by April 30, 2019 due to no fault of YGYI
and shall not have been waived in writing by YGYI; and

 

(e)           by
Seller, LD the Representing Party if any of the conditions to the
Closing set forth in Section 6.1 shall not have been
fulfilled by April 30, 2019 due to no fault of Seller, LD or any
Representing Party and shall not have been waived in writing by
Seller.

 

10.2           Procedure
and Effect of Termination. In the event of termination of
this Agreement pursuant to Section 10.1 hereof, written
notice thereof shall forthwith be given by the terminating party to
the other party, and, except as set forth below, this Agreement
shall terminate and be void and have no effect and the Transactions
shall be abandoned without any further action by the parties
hereto. Notwithstanding the foregoing, if this Agreement is
terminated other than pursuant to Section 10.1(a), such
termination will not affect any right or remedy which accrued
hereunder or under applicable Laws prior to or on account of such
termination, and the provisions of this Agreement shall survive
such termination to the extent required so that each party may
enforce all rights and remedies available to such party hereunder
or under applicable Laws in respect of such termination and so that
any party responsible for any breach or nonperformance of its
obligations hereunder prior to termination shall remain liable for
the consequences thereof. If this Agreement is terminated as
provided herein, each party hereto shall redeliver, and shall cause
its agents (including, without limitation, attorneys and
accountants) to redeliver, all documents, work papers and other
material of each party hereto relating to the Transactions, whether
obtained before or after the date hereof.

 

 

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ARTICLE XI

 

CONFIDENTIALITY AND NON-COMPETITION

 

11.1           Confidentiality.
At all times beginning on the Closing Date, Seller, LD and the
Representing Party shall retain in strictest confidence, and shall
not use for either of their benefits or for the benefit of others
any confidential information comprising or related to the Assets
described in this Agreement including, without limitation, the
technology, trade secrets, customer lists transferred hereby to
YGYI, pricing policies, marketing plans or strategies, product
development techniques or plans, or technical processes, designs
and design projects respecting the Business, except as may be
reasonably required by Seller and LD in filing its taxes, defending
against claims or similar reasons.

 

11.2           Non-Solicitation.

 

(a) For a period of
twelve (12) years from and after the Closing Date, none of the
Seller, LD nor the Representing Party shall directly or indirectly
engage in a business or enterprise (either as proprietor, partner,
employee, agent, consultant, or controlling stockholder) related to
Business or the extraction of CBD, CBN or THC from hemp or cannabis
respectively (a "competing business").

 

(b) The provisions of
this Section 11.2 shall not prevent Seller, LD or the Representing
Party from investing its assets in securities of any corporation,
or otherwise acquiring an equity interest in any enterprise, equity
securities of which are publicly owned and traded, provided that
such investments or interests shall not result in (i) Seller, LD or
the Representing Party owning beneficially, in the aggregate, five
percent (5%) or more of the equity securities of any enterprise
engaged in a competing business or (ii) Selle, LD the Representing
Party being able to control or actively participate in the policy
decisions of such competing business.

 

(c)  It is the
desire and intent of the parties that the provisions of this
Section 11.2 shall
be enforced to the fullest extent permissible under the laws and
public policies applied in each jurisdiction in which enforcement
is sought. If any particular provision or portion of this
Section 11.2 shall
be adjudicated to be invalid or unenforceable in any jurisdiction,
this Section 11.2
shall be deemed amended to delete there from such provision or
portion adjudicated to be invalid or unenforceable, such amendment
to apply only with respect to the operation of this subsection (e)
in the particular jurisdiction in which such adjudication is made.
Seller, LD and the Representing Party agree that it would be
difficult to measure the damages to YGYI from the breach by of the
provisions of this Section
11.2, that injury to YGYI from such breach may be impossible
to calculate, and that monetary damages may therefore be an
inadequate remedy; accordingly, Seller, LD and the Representing
Party agree that YGYI shall be entitled, in addition to all other
remedies it might have, to seek injunctions or other appropriate
orders to restrain any such breach without showing or proving any
actual damages. Nothing herein shall be construed as prohibiting
YGYI from pursuing any other remedies for such breach or threatened
breach.

 

(d) The undertakings
and covenants of Seller, LD and the Representing Party contained in
this Section 11.2
are an integral part of the transactions set forth in this
Agreement and the consideration paid by YGYI pursuant to this
Agreement shall be consideration not only for the Assets but also
for such undertakings and covenants.

 

 

 

ARTICLE XII

 

MISCELLANEOUS

 

12.1          
Reasonable Efforts.
Subject to the conditions of this Agreement, each of the Parties
shall use the efforts that a reasonable person would make so as to
achieve that goal as expeditiously as possible to take, or cause to
be taken, all actions, and to do, or cause to be done, all things
necessary or advisable under applicable laws to consummate the
Transactions contemplated by this Agreement as promptly as
practicable including but not limited to: (i) taking such
actions as are necessary to obtain any required approval, consent,
ratification, filing, declaration, registration, waiver, or other
authorization and (ii) satisfying all conditions to Closing at
the earliest possible time.

 

12.2          
Transaction Costs.
Each Party shall pay its own fees and expenses (including without
limitation the fees and expenses of its representatives, attorneys,
and accountants) incurred in connection with negotiation, drafting,
execution, and delivery of this Agreement.

 

 

 

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12.3          
Assignment. No
Party may assign any of its rights or delegate any performance
under this Agreement except with the prior written consent of the
other Parties; provided, however, the Seller may assign
its rights to receipt of the purchase price under this agreement to
the Representing Party or an affiliate.

 

12.4           Binding.
This Agreement binds, and inures to the benefit of, the Parties and
their respective permitted successors and assigns.

 

12.5          
Governing Law. The
laws of the State of Florida (without giving effect to its conflict
of laws principles) govern all matters arising out of this
Agreement, including without limitation tort claims.

 

12.6           Entirety
of Agreement. This Agreement together with the agreements
contemplated hereby and any other agreements between YGYI, KII and
the Representing Party constitutes the entire agreement of the
parties concerning the subject matter hereof and supersedes all
prior agreements, if any.

 

12.7           Further
Assurances. Seller, LD, the Representing Party and YGYI
shall each execute and deliver such additional documents and
instruments, including, but not limited to, any Deeds of Sale of
Certificate of Registration, any filings with any patent or
trademark office which may be necessary to effectuate the terms of
this Agreement and the Transactions contemplated hereby, and
perform such additional acts as the other party may reasonably
request to effectuate or carry out and perform all the terms of
this Agreement and the Transactions contemplated hereby, and to
effectuate the intent of this Agreement. In this regard, to the
extent all consents and approvals required under any Contract to
which any Seller, INXL or INXH is a party or by which Seller, INXL
or INXH is bound to enable Sellers and LD to effect the sale of the
Assets and Capital Stock of INXL pursuant hereto are not obtained
on or before the Closing Date as contemplated by Section 7.3 above, and YGYI
consents to same, within the thirty (30) day period after the date
of this Agreement, Sellers will obtain all consents and approvals
required under any Contract to which any Seller, LD or INXL is a
party or by which Seller, LD or INXL is bound to enable Sellers and
LD to effect the sale of the Assets and Capital Stock of
INXLpursuant hereto. Seller and INXL shall provide YGYI with
immediate access to its Inventory and its books and records and any
additional information required in order for YGYI to verify the
value of the Inventory being acquired by it as part of the Assets
and INXL Assets.

 

12.8           Jurisdiction;
Service of Process. Any action or proceeding seeking to
enforce any provision of, or based on any right arising out of, any
of this Agreement must be brought against any of the parties in the
courts of the State of Florida, or, if it has or can acquire
jurisdiction, in the United States District Court for Florida, and
each of the parties consents to the jurisdiction of those courts
(and of the appropriate appellate courts) in any such action or
proceeding and waives any objection to venue laid therein. Nothing
in this Section 12.8, however, affects the right of
any party to serve legal process in any other manner permitted by
law. All references to a time of day in this Agreement are
references to the time in the State of Florida.

 

12.9           Amendment.
This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the Parties.

 

12.10           Counterparts.
This Agreement may be executed in several counterparts, each of
which is an original and all of which together constitute one and
the same instrument.

 

12.11           No
Third-Party Rights. Nothing expressed or referred to in this
Agreement gives 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, and
this Agreement and all of its provisions are for the sole and
exclusive benefit of the parties to this Agreement and their
successors and permitted assigns. The undersigned are signing this
Agreement on the date stated in the introductory
clause.

 

12.12           Headings.
The headings in this Agreement are for reference only and shall not
affect the interpretation of this Agreement.

 

 

-32-

 

 

 

12.13           Severability.
If any term or provision of this Agreement is invalid, illegal or
unenforceable in any jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other term or provision of
this Agreement or invalidate or render unenforceable such term or
provision in any other jurisdiction. Upon such determination that
any term or other provision is invalid, illegal or unenforceable,
the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as
closely as possible in a mutually acceptable manner in order that
the transactions contemplated hereby be consummated as originally
contemplated to the greatest extent possible.

 

12.14           Notices.
All notices, requests, consents, claims, demands, waivers and other
communications hereunder shall be in writing and shall be deemed to
have been given (a) when delivered by hand (with written
confirmation of receipt); (b) when received by the addressee if
sent by a nationally recognized overnight courier (receipt
requested); or (c) on the fourth day after the date mailed, by
certified or registered mail, return receipt requested, postage
prepaid. Such communications must be sent to the respective Parties
at the addresses set forth in the first paragraph of this Agreement
or such other address as the Parties designate for purposes of
notice in accordance with the provisions of this
Section.

 

 

 

[SIGNATURE PAGE FOLLOWS.]

 

 

 

 

 

-33-

 

 

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

 

YOUNGEVITY
INTERNATIONAL, INC.

 

 

 

By:
/s/ Stephan
Wallach                                                      

Name:
Stephan Wallach

Title:
Chief Executive Officer

 

 

KHRYSOS
INDUSTRIES, INC.

 

 

 

By:
/s/ David
Briskie                                                      

Name
David Briskie

Title:
President

 

 

KHRYSOS
GLOBAL, INC.

 

 

 

By:
/s/Dwayne
Dundore                                                      

Name:
Dwayne Dundore

Title:
President

 

 

 

 

/s/ Leigh Dundore

Leigh
Dundore

 

 

 

REPRESENTING
PARTY:

 

 

 

/s/ Dwayne Dundore

Dwayne
Dundore

 

 

 

Signature page to Asset Purchase Agreement

 

 

 

-34-AMENDMENT
TO PROMISSORY NOTE

 

This
Amendment (this “Amendment”) to the promissory note dated January 26, 2019 is by and between Verus International,
Inc., a Delaware corporation (the “Company”) and Donald P. Monaco Insurance Trust (the “Holder”).

 

RECITALS

 

WHEREAS,
the Company issued the Holder a promissory note dated January 26, 2018 in the original principal amount of $530,000 (the “Note”);

 

WHEREAS,
the Maturity Date (as defined in the Note) is January 26, 2019; and

 

WHEREAS,
the Company and the Holder desire to extend the Maturity Date of the Note until January 26, 2020.

 

AGREEMENT

 

NOW,
THEREFORE, in consideration of the foregoing and the promises and covenants contained herein, and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties hereto agree as follows:

 

1.
Amendment to Definition of Maturity Date. The definition of Maturity Date contained in the preamble of the Note shall be
amended and restated in its entirety as follows:

 

“Maturity
Date means the January 26, 2020.”

 

2.
Amendment to Optional Prepayments. The following sentence shall be added to the end of paragraph 1(e) - Optional Prepayments:

 

“Maker
shall use its best efforts to prepay the unpaid principal amount of the Note together with all accrued but unpaid interest thereon
on or prior to March 31, 2019; provided, however, that the failure by Maker to prepay such amount by March 31, 2019 shall not
result in an event of default pursuant to the terms of the Note.

 

3.
Miscellaneous. Except as expressly modified by this Amendment, all terms, conditions and provisions of the Note shall continue
in full force and effect as set forth therein. Each party represents and warrants to the other party that this Amendment has been
duly authorized, executed and delivered by it and constitutes a valid and legally binding agreement with respect to the subject
matter contained herein. Each party agrees that the Note, as amended by this Amendment, constitutes the complete and exclusive
statement of the agreement between the parties, and supersedes all prior proposals and understandings, oral and written, relating
to the subject matter contained herein. This Amendment may be executed in any number of counterparts, each of which shall be deemed
an original and all of which together shall constitute one instrument. In the event that any signature is delivered by facsimile
transmission, or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding
obligation of the party executive (or on whose behalf such signature is executed) with the same force and effect as if such facsimile
or “.pdf” signature page were an original thereof.

 

    	 	- 1 -	 

     

    

 

IN
WITNESS HEREOF, the parties hereto have executed this Amendment as of the date first written above.

 

	 	VERUS
    INTERNATIONAL, INC.
	 	 	 
	 	 	 
	 	By:
    	Anshu
    Bhatnagar
	 	Title:	Chief Executive
    Officer
	 	 	 
	 	HOLDER
	 	 	 
	 	DONALD
    P. MONACO INSURANCE TRUST
	 	 	 
	 	 	 
	 	By:
    	Donald
    P. Monaco
	 	Title:
    	Trustee

 

    	 	- 2 -

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