ASSET PURCHASE AGREEMENT
Exhibit 10.3
This Asset Acquisition Agreement (the “Agreement”) is made as of August 13, 2021 by and between, Can B̅ Corp., a Florida corporation (the “CANB”), TN Botanicals, LLC, a Nevada limited liability company and wholly owned subsidiary of CANB (“Buyer”), and Music City Botanicals, LLC, a Wisconsin limited liability company (“Seller”).
WHEREAS, Buyer desires to acquire certain equipment, raw materials and inventory of Seller.
(a) | All equipment, tools, furniture, and fixtures listed on attached Schedule 1.01(a), together with any replacements or additions to the equipment made before the Closing; | |
(b) | All inventories of supplies, raw materials, parts, works in progress, and finished goods owned by Seller, together with any replacements or additions to the inventories made before the Closing, including without limitation those items listed on Schedule 1.01(b) but excluding inventory disposed of in the ordinary course of Seller’s business; | |
(c) | Leasehold interests and leasehold improvements installed by Seller on the premises located at 000 Xxx Xxxx, Xxxxx 000, XxXxxxxxxxx, XX 00000; | |
(d) | All of Seller’s rights under purchase orders, including those entered into in the ordinary course of business before the Closing; | |
(e) | Seller’s goodwill; | |
(f) | All patents, trademarks, trade names, copyrights, service marks, and domain names of Seller, all registrations for them, all applications pending for them, and all other proprietary rights and intangible property of Seller, including trade secrets, inventions, technology, software, operating systems, customer lists, customer relationships, customer agreements, customer understandings, drawings, blueprints, know-how, formulae, slogans, processes, and operating rights and all other similar items and all such items acquired by Seller or coming into existence on or before the Closing Date, including without limitation the Intellectual Property relating to the products listed on Schedule 1.01(f); |
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(g) | To the extent transferable, all approvals, authorizations, consents, licenses, permits, franchises, tariffs, orders, and other registrations of any federal, state, or local court or other governmental department, commission, board, bureau, agency, or instrumentality held by Seller and required or appropriate for the conduct of the business of Seller, including without limitation all such items granted or received on or before the Closing Date; and | |
(h) | All choses in action, causes of action, rights of recovery and setoff, warranty rights, and other similar rights of Seller relating to the Assets, including without limitation all such items arising or acquired on or before the Closing Date. |
(a) | Liabilities, obligations, or debts of Seller, whether fixed, contingent, or mixed, and whether based on events occurring before or after the Closing, including without limitation those based on tort, contract, statutory, or other claims or involving fines or penalties payable to any governmental authority; | |
(b) | Liabilities, obligations, or debts of Seller for any federal, state, or local tax, including without limitation federal income taxes, state income and excise taxes, state and local real and personal property taxes, and federal, state, and local withholding and payroll taxes; | |
(c) | Liabilities or obligations of Seller to employees for salaries, bonuses, or health and welfare benefits or with respect to any profit-sharing, stock bonus, pension, retirement, stock purchase, option, bonus, or deferred compensation plan or for any other benefits or compensation (including without limitation accrued vacation); | |
(d) | Liabilities or obligations of Seller for employee severance payments or arrangements resulting from termination of Seller’s employees; |
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(e) | Liabilities or obligations of Seller relating to issuances of securities; | |
(f) | Liabilities or obligations of Seller relating to any violation of state, local or federal law; | |
(g) | Liabilities or obligations of Seller incurred in connection with distributions to members or any corporate dissolution; and | |
(h) | Liabilities or obligations of Seller under any environmental law. |
Seller hereby represents and warrants to CANB and Buyer as follows:
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2.06. ABSENCE OF UNDISCLOSED LIABILITIES. Seller has disclosed to CANB in Schedule 2.06 all liabilities relating to or affecting the Assets or their use. or Seller’s business Seller shall retain any and all liability and/or obligation, secured or unsecured whether accrued, absolute, contingent, unasserted or otherwise, except as expressly set forth herein.
(a) there is no action, suit or proceeding to which Seller is a party (either as a plaintiff or defendant) pending or to Seller’s actual knowledge, threatened before any court or governmental agency, authority, body or arbitrator and, to the actual knowledge of Seller, there is no basis for any such action, suit or proceeding;
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(b) neither Seller nor, to the actual knowledge of Seller, any officer, director or representative of Seller, have been permanently or temporarily enjoined by any order, judgment or decree of any court or any governmental agency, authority or body from engaging in or continuing any conduct or practice in connection with the businesses, assets, or properties of Seller; and
(c) to Seller’s actual knowledge, there is not in existence on the date hereof any order, judgment or decree of any court, tribunal or agency enjoining or requiring Seller to take any action of any kind with respect to its business, assets or properties.
(a) Seller is the sole and exclusive owner of all right, title and interest in and to the Intellectual Property;
(b) Seller has the right and authority to use, and Buyer shall have the right to continue to use immediately after the Closing (in a manner consistent with current use), the Intellectual Property in connection with the conduct of Seller’s business in the manner presently conducted, and to the actual knowledge of Seller, such use or continuing use does not and will not conflict with, infringe upon or violate any rights of any other person, corporation or entity;
(c) Seller has received notice of, and does not have actual knowledge of any basis for, a pleading or threatened claim, interference action or other judicial or adversarial proceeding against Seller that any of the operations, activities, products, services or publications of Seller or any of its customers or distributors infringes or will infringe any patent, trademark, trade name, copyright, trade secret or other property right of a third party, or that it is illegally or otherwise using the trade secrets, formulae or property rights of others;
(d) there are no outstanding nor, to the actual knowledge of Seller, any threatened disputes or other disagreements with respect to any research and development in process or licenses or similar agreements or arrangements or with respect to infringement by a third party of any of the Intellectual Property;
(e) no officer or director of Seller nor, to the actual knowledge of Seller, any member or manager of Seller, or any spouse, child or other relative or affiliate thereof, owns directly or indirectly, in whole or in part, any of the Intellectual Property;
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(f) Seller does not have any knowledge that any third party is infringing, or has threatened to infringe upon or otherwise violate, any of the Intellectual Property in which Seller has ownership rights;
(g) All key employees and consultants of Seller who are involved in the design, review, evaluation or development of the Intellectual Property have executed a nondisclosure and assignment of inventions agreement (a “Confidentiality Agreement”);
(h) None of the employees or consultants of Seller are subject to any contractual or legal restrictions that might interfere with the use of his or her best efforts to promote the interests of Seller’s business. No employee of Seller has entered into any Contract that restricts or limits in any way the scope or type of work in which the employee may be engaged or requires the employee to transfer, assign or disclose information concerning his or her work to anyone other than Seller; and
(i) To the knowledge of Seller, no employee or consultant of Seller (1) has used any other person or entity’s trade secrets or other information that is confidential in the course of his or her work or (2) is, or is currently expected to be, in default under any term of any Contract relating to the Intellectual Property, or any Confidentiality Agreement or any other Contract or any restrictive covenant relating to the Intellectual Property, or the development or exploitation thereof.
2.09. CONTRACTS AND COMMITMENTS.
(a) Schedule 2.09 attached hereto contains a true, complete and correct list of the following contracts, agreements, arrangements or other understandings, whether written or oral (collectively, the “Contracts”) which relate to the Assets being sold:
(i) all Contracts, agreements, commitments, purchase orders or other understandings or arrangements to which Seller or any of its property is bound which (A) involve payments or receipts by Seller of more than $5,000 in the case of any single contract, agreement, commitment, understanding or arrangement under which full performance (including payment) has not been rendered by all parties thereto or (B) under which the consequences of a default or termination would reasonably be expected to have a material adverse effect;
(ii) all material agency, distributor, sales representative, franchise or similar agreements to which Seller is a party or by which Seller or any of its property is bound;
(iii) all Contracts imposing a non-competition or non-solicitation obligation on Seller; and
(iv) any other material agreements or contracts entered into by Seller, excluding all non-disclosure agreements between a Seller and third parties.
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(b) Except as set forth on Schedule 2.09:
(i) each Contract is a valid and binding agreement of Seller, enforceable against Seller in accordance with its terms, and Seller does not have any actual knowledge that any Contract is not a valid and binding agreement of the other parties thereto, except where the failure to be a valid and binding Agreement would not reasonably be expected to result in a Material Adverse Effect.
(ii) Seller has fulfilled all material obligations required pursuant to the Contracts to have been performed by Seller, on its part prior to the date hereof, and Seller has no reason to believe that Seller will not be able to fulfill, when due, all of its obligations under the Contracts which remain to be performed after the date hereof, except where the failure to fulfill all material obligations required pursuant the contract would not reasonably be expected to result in a Material Adverse Effect;
(iii) Seller is not in breach of or default under any Contract, and no event has occurred which with the passage of time or giving of notice or both would constitute such a default, result in a loss of rights or result in the creation of any lien, charge or encumbrance, thereunder or pursuant thereto, except for such breach, default or events that would not reasonably be expected to result in a Material Adverse Effect; and
(iv) to the actual knowledge of Seller, there is no existing breach or default by any other party to any Contract, and no event has occurred which with the passage of time or giving of notice or both would constitute a default by such other party, result in a loss of rights or result in the creation of any lien, charge or encumbrance thereunder or pursuant thereto, except for such breach, default or events that would not reasonably be expected to result in a Material Adverse Effect.
2.12 CUSTOMERS AND SUPPLIERS. With respect to the Assets, Schedule 2.12 attached hereto sets forth a true, correct and complete list of (a) the name of each customer of Seller, and (b) the names of suppliers (by dollar volume) of Seller. Except as otherwise set forth on Schedule 2.12 Seller has good customer and supplier relations and none of the customers or suppliers of Seller has notified Seller that it intends to discontinue or materially diminish its relationship with Seller.
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“SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY OTHER SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED, ASSIGNED, HYPOTHECATED OR OTHERWISE DISPOSED EXCEPT (I) UPON EFFECTIVE REGISTRATION OF THE SECURITIES UNDER THE ACT AND OTHER APPLICABLE SECURITIES LAWS COVERING SUCH SECURITIES, OR (II) UPON ACCEPTANCE BY THE COMPANY OF AN OPINION OF COUNSEL IN SUCH FORM AND BY SUCH COUNSEL, OR OTHER DOCUMENTATION, AS IS SATISFACTORY TO COUNSEL FOR THE COMPANY TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED..”
Buyer represents and warrants to Seller that:
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From the date of this Agreement until the Closing Date, Seller shall afford the officers, manager, attorneys, accountants and other authorized representatives of Buyer reasonable access upon reasonable notice and during normal business hours to inspect the Assets, so that the examining party may have an opportunity to make such inspection as it shall desire.
5. CONDITIONS TO OBLIGATIONS OF CANB
The obligations of CANB and Buyer under this Agreement are subject to the fulfillment, at the Closing Date, of the following conditions precedent, each of which may be waived in writing in the sole discretion of CANB and Buyer:
5.03. Corporate Proceedings. all consents required to be taken on the part of Seller to authorize or carry out this Agreement shall have been taken and Seller shall have delivered to Buyer a copy of the resolutions of its managers and members authorizing the execution, delivery and performance of this Agreement and the transactions contemplated hereby.
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(a) Joint venture processing agreement with Botanix Equities, LLC;
(b) Leases for CANB’s lease of space in Xxxx and Fort Xxxxxx, CO and Tennessee processing facility; and
(c) Purchase of assets from TWS Pharma LLC and L7 TWS Pharma LLC.
5.07. CLOSING DELIVERIES. At the Closing:
(a) Seller shall deliver to Buyer, or shall otherwise put Buyer in sole and exclusive control of, all Assets free and clear all Liens or encumbrances;
(b) Seller shall deliver to CANB a certificate of the applicable secretary of the State as to the legal existence and good standing of such Seller in such state within three prior days of Closing; and
(c) Seller shall deliver to Buyer one or more bills of sale or assignments of Assets to Buyer in such forms as approved by Buyer, duly executed by the applicable Seller or an authorized officer of Seller, as applicable.
6. CONDITIONS TO OBLIGATIONS OF SELLER
The obligations of Seller under this Agreement are subject to the fulfillment, at the Closing Date, of the following conditions precedent, each of which may be waived in writing in the sole discretion of Seller:
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(i) any misrepresentation or breach of any representation or warranty made by Seller in this Agreement;
(ii) any breach of any covenant, agreement or obligation of Seller contained in this Agreement or any other agreement, instrument or document contemplated by this Agreement;
(iii) any liability of Seller;
(iv) any claims, suits, actions, proceedings (formal and informal), investigations, judgments, deficiencies, damages, settlements, liabilities, losses, costs and legal and other expenses arising out of or based upon the use of the Assets prior to Closing; and
(v) any claims made by third parties against Seller as a result of the transactions contemplated hereby, including but not limited to any labor/employment and tax related claims.
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(i) any misrepresentation or breach of any representation or warranty made by Buyer in this Agreement; and
(ii) any breach of any covenant, agreement or obligation of Buyer contained in this Agreement or any other agreement, instrument or document contemplated by this Agreement.
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10. NOTICES
All notices, requests, consents, instructions and other communications required or permitted to be given hereunder shall be in writing and sent by nationally-recognized, next-day delivery service or mailed by certified or registered mail, return receipt requested, postage prepaid, or by facsimile transmission confirmed in writing by next-day delivery service or by e-mail, to the address, facsimile number, or e-mail address as set forth next to each party’s name of the signature page hereof, as the same may be amended by any party by providing written notice of the same to the other parties. Receipt of such notices shall be deemed to occur on the date of actual receipt if delivered by registered or certified mail, if sent by facsimile or e-mail six (6) hours from the time of transmission (provided such facsimile or E-mail is sent within two hours prior to the end of normal business hours on a business day or, if not, on the next business day) and confirmed in writing by next-day delivery service, or one (1) business day after it is sent by nationally-recognized, next-day delivery service.
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Neither this Agreement nor any of the rights or obligations under this Agreement, may be assigned or delegated, in whole or in part, by operation of law or otherwise, by any Party hereto without the prior written consent of the other Party hereto, and any such assignment without such prior written consent shall be null and void; provided, however, that Buyer may, without the prior written consent of Seller, assign all or any portion of its rights and obligations under this Agreement to one (1) or more of its direct or indirect wholly-owned subsidiaries. Subject to the preceding sentence, this Agreement shall be binding upon, shall inure to the benefit of, and shall be enforceable by the Parties hereto and their permitted successors and assigns. No assignment shall relieve the assigning Party of any of its obligations hereunder.
12. ENTIRE AGREEMENT; AMENDMENTS; ATTACHMENTS
(a) This Agreement, all Schedules and Exhibits hereto, and all agreements and instruments to be delivered by the parties pursuant hereto represent the entire understanding and agreement between the parties hereto with respect to the subject matter hereof and supersede all prior oral and written and all contemporaneous oral negotiations, commitments and understandings between such parties. This Agreement may only be modified or amended by a written instrument executed by the parties hereto.
(b) If the provisions of any Exhibit or Schedule to this Agreement are inconsistent with the provisions of this Agreement, the provisions of the Agreement shall prevail. The Exhibits and Schedules attached hereto are hereby incorporated as integral parts of this Agreement.
13. SEVERABILITY
Any provision of this Agreement which is invalid, illegal or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability, without affecting in any way the remaining provisions hereof in such jurisdiction or rendering that or any other provision of this Agreement invalid, illegal or unenforceable in any other jurisdiction.
14. EXPENSES
Except as otherwise expressly provided herein, each party will pay all their respective fees and expenses (including, without limitation, legal and accounting fees and expenses) incurred by them in connection with the transactions contemplated hereby. Seller shall be responsible for payment of all sales or transfer taxes arising out of the conveyance of the Assets.
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15. GOVERNING LAW/JURISDICTION
This Agreement shall be governed by and construed in accordance with the laws of the State of New York. Each of the parties hereto (a) submits to the exclusive jurisdiction of any state or federal court sitting in the State of New York in any action or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby, (b) agrees that all claims in respect of such action or proceeding may be heard and determined in any such court, (c) waives any claim of inconvenient forum or other challenge to venue in such court, (d) agrees not to bring any action or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby in any other court and (e) waives any right it may have to a trial by jury with respect to any action or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. Each party is entitled to bring an action for temporary or preliminary injunctive relief at any time in any court of competent jurisdiction in order to prevent irreparable injury that might result from a breach of this Agreement.
16. SECTION HEADINGS
The section headings are for the convenience of the parties and in no way alter, modify, amend, limit, or restrict the contractual obligations of the Parties.
17. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which shall be one and the same document. Counterparts may be executed and delivered using electronic means, which in each case will have the same effect as a counterpart manually signed and delivered.
18. PREVAILING PARTY
If either Party brings a claim or lawsuit against the other party to this Agreement to interpret or enforce any of the terms of this Agreement, the prevailing party shall, in addition to all other damages, be entitled to reasonable attorneys’ fees and costs, costs of witnesses, and costs of investigation from the non-prevailing Party.
This Agreement is not intended to and shall not be construed to give any third party any interest or rights (including, without limitation, any third-party beneficiary rights) with respect to or in connection with any agreement or provision contained herein or contemplated hereby.
Each of the Parties hereto shall from time to time at the request of the other Party hereto, and without further consideration, execute and deliver to such other Party such further instruments of assignment, transfer, conveyance and confirmation and take such other action as the other party may reasonably request in order to more effectively fulfill the purposes of this Agreement.
21. CONSULTATION WITH INDEPENDENT COUNSEL
The Parties have had the opportunity to consult with their own legal counsel and other advisors and are entering into this Agreement voluntarily and with a full understanding of the meaning and legal effects of each provision contained in this Agreement. In the event of any dispute regarding the interpretation of any provision of this Agreement, the Parties agree that this Agreement and the provisions hereof shall not be construed against any one party as the drafter of this Agreement.
[Signature Page Follows]
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CANB: | Can B̅ Corp. | |
By: | ||
Name: | Xxxxx Xxxxxxx, CEO | |
BUYER: | TN Botanicals, LLC | |
Can B̅ Corp., its Manager | ||
By: | ||
Name: | Xxxxx Xxxxxxx, CEO | |
SELLER: | Music City Botanicals, LLC | |
By: | ||
Name: | Xxxxxx Xxxxxx | |
Title: | Manager | |
By: | ||
Name: | Xxxxx Xxxxx | |
Title: | Manager | |
By: | ||
Name: | Xxxxx Xxx | |
Title: | Manager |
Schedule 1.01(a)
Equipment
Schedule 1.01(b)
Inventory
Schedule 1.01(f)
Products
All products produced or sold by Seller as of August 11, 2021, including but not limited to the following:
DELTA8 & SPRAY
BAMM! DELTA8 SPRAY – 1OZ DOSI MANGO
BODY BALM & CBD & SKIN CARE
BODY BALM – CUCUMBER- 2500MG
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BODY BALM & CBD & SKIN CARE
BODY BALM – CUCUMBER- 5000MG
BODY BALM & CBD & SKIN CARE
BODY BALM – ORANGE EUCALYPTUS- 2500MG
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BODY BALM & CBD & SKIN CARE
BODY BALM – PEPPERMINT – 2500MG
CBD & GUMMIES
CBD GUMMIES – 10CT – 25MGS
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CBD & COFFEE
COFFEE BEANS 2LB – DARK ROAST – 900MG
CBD & COFFEE
COFFEE BEANS 2LB – DONUT SHOP – 900MG
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CBD & COFFEE
COFFEE BEANS 2LB – FRENCH VANILLA – 900MG
CBD & COFFEE
COFFEE BEANS 2LB – HOUSE BLEND – 900MG
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CBD & COFFEE
COFFEE BEANS 2LB – HOUSE BLEND – 900MG
CBD & COFFEE
COFFEE PODS 12CT – DARK ROAST – 120MG
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CBD & COFFEE
COFFEE PODS 12CT – DONUT SHOP – 120MG
CBD & COFFEE
COFFEE PODS 12CT – FRENCH VANILLA – 120MG
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CBD & COFFEE
COFFEE PODS 12CT – HOUSE BLEND – 120MG
CBD & GUMMIES
D8 GUMMIES – 10CT – 25MGS
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DELTA8 & SHATTER
DELTA 8 SHATTER – GELATO
CBD & DELTA8 & SHATTER
DELTA8 SHATTER – BANANA MIMOSA
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DELTA8 & SHATTER
DELTA8 SHATTER – DOSI MANGO
DELTA8 & SHATTER
DELTA8 SHATTER – GLUE
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DELTA8 & SHATTER
DELTA8 SHATTER – OG WIFI
DELTA8 & VAPE
DELTA8 VAPE CARTRIDGE – BANANA MIMOSA
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DELTA8 & VAPE
DELTA8 VAPE CARTRIDGE – DOSI MANGO
DELTA8 & VAPE
DELTA8 VAPE CARTRIDGE – GLUE
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DELTA8 & VAPE
DELTA8 VAPE CARTRIDGE – WIFI OG
CAPSULES & CBD
GEL CAPSULES – 900MG
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CBD & FLOWER
HEMP PRE-ROLL – 5 PACK
CBD & FLOWER
HEMP PRE-ROLL – SINGLE
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CBD & TINCTURE
TINCTURE – FRENCH VANILLA- 1000MG
CBD & TINCTURE
TINCTURE – FRENCH VANILLA- 3000MG
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CBD & TINCTURE
TINCTURE – LEMON TWIST- 1000MG
CBD & TINCTURE
TINCTURE – LEMON TWIST- 3000MG
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CBD & TINCTURE
TINCTURE – ORANGE BLOSSOM – 3000MG
CBD & TINCTURE
TINCTURE – ORANGE BLOSSOM- 1000MG
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CBD & TINCTURE
TINCTURE – PEPPERMINT – 1000MG
CBD & TINCTURE
TINCTURE – PEPPERMINT – 3000MG
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CBD & CBN & TINCTURE
TINCTURE – PM/SLEEP – LEMON HONEY- 1000MG
CBD & VAPE
VAPE CARTRIDGE – BANANA MIMOSA
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CBD & VAPE
VAPE CARTRIDGE – DOSI MANGO
CBD & VAPE
VAPE CARTRIDGE – GELATO
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CBD & VAPE
VAPE CARTRIDGE – GG4 GLUE
CBD & VAPE
VAPE CARTRIDGE – WIFI
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Schedule 2.06
Liabilities
Schedule 2.08
Intellectual Property
Trademarks/Tradenames:
Music City Botanicals, and all those contained on Schedule 1.01(f).
xxx.xxxxxxxxxxxxxxxxxxx.xxx
Other:
All apps for smartphones or tablets owned, controlled, or maintained by Seller, whether on the Android, iOS, or other markets.
All social media accounts and webpages owned, controlled, or maintained by Seller.
All product formulas and production processes, research and development and work in progress, trade secrets, know-how, standard operating procedures, any other information relating to Seller’s products.
Schedule 2.09
Contracts
Schedule 2.12
Customers and Suppliers