ASSET PURCHASE AGREEMENT
Exhibit 2.1
ASSET PURCHASE AGREEMENT (the
“Agreement”)
dated as of July 10, 2019 by and between Driven Deliveries, Inc., a
Delaware corporation (the “Purchaser”) and Mountain High
Recreation, Inc., a California corporation (the “Mountain High”). The Purchaser and
Mountain High are sometimes referred to herein individually as
“Party” and
collectively as the “Parties”.
RECITALS
WHEREAS, the Purchaser and Mountain High
are both in the business of providing applications and services
with respect to delivery of cannabis products sold by third parties
to customers of those third parties (the “Business”); and
WHEREAS, Mountain High wishes to sell,
and the Purchaser wishes to purchase and/or obtain the right to use
certain assets of Mountain High, subject to certain disclosed
liabilities, upon the terms and subject to the conditions of this
Agreement (the “Transaction”).
NOW, THEREFORE, in consideration of the
mutual covenants and agreements set forth in this Agreement, and
for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties do hereby
agree as follows:
AGREEMENT
ARTICLE I
SALE OF
ASSETS
Section 1.1. Assets
Transferred. On the
terms and subject to the conditions set forth in this Agreement,
Mountain High hereby sells, transfers, conveys, assigns and
delivers to the Purchaser, and the Purchaser hereby purchases, or
has the option to purchase, all of Mountain High’s right,
title and interest in, to and under the following listed assets,
listed properties and rights of Mountain High and used by Mountain
High in connection with its Business (collectively, the
“Assets”), free
and clear of all mortgages, liens, security interests,
encumbrances, claims, charges and restrictions of any kind or
character (collectively, “Liens”). Assets. Certain assets,
properties and rights of Mountain High as follows:
(i)
The option to
purchase the lease at 8 Light Sky Ct Xxxxxxxxxx, XX 00000
associated with BCC License Number C9-0000042-LIC;
(ii)
Intangible Personal Property as
follows:
(a)
The right to use
all trademarks and Intellectual property associated with Mountain
High brand name
(b)
Licenses.
(1)
The option to
purchase the right to operate under Mountain High non-storefront
retail license (BCC License Number C9-0000042-LIC) subject to all
California state regulatory requirements and perfected disclosure
to the State under 16 CCR 5023 and pursuant with 16 CCR
5032.
Section
1.2. Excluded
Assets. Purchaser is not acquiring any Excluded Assets
detailed in this Section 1.2, including but not limited to the
following:
(i)
Mountain
High’s current cannabis inventory;
(ii)
Mountain
High’s Webpage and e-commerce store
(iii)
Mountain
High’s previous retail customer list and order
history
(iv)
Mountain
High’s current contracts with vendors and
suppliers
(v)
Mountain
High’s technology platform currently used to fulfill
deliveries
(vi)
Mountain
High’s infrastructure or fulfillment processes.
(vii)
Mountain
High’s vehicles that are currently utilized in their
fulfillment process.
(viii)
Mountain
High’s other intellectual property, including but not limited
to recipes, processes, and procedures associated with Mountain High
delivery operations, the production of Mountain High edibles and
other cannabis products.
Section 1.3. Assumed
Liabilities. None.
Section 1.4. Retained
Liabilities. The Purchaser shall not assume by virtue of
this Agreement or the transactions contemplated hereby, and shall
have no liability for, any liabilities of Mountain High with
respect to any action or inaction of Mountain High prior to the
Closing, whether known or unknown, contingent or otherwise and of
any kind, character or description whatsoever (the
“Retained
Liabilities”). Without limiting the generality of the
foregoing, the Purchaser shall not assume the
following:
(i) any
liability or obligation of Mountain High arising out of or in
connection with the negotiation and preparation of this Agreement
and consummation and performance of the transactions contemplated
hereby, including without limitation, legal and accounting fees,
brokerage commissions, finder’s fees or similar fees or
commissions, and income, sales or other tax liability so
arising,
(ii)
any liability or obligation of Mountain High arising from the
failure of Mountain High to perform or discharge any of its
agreements contained herein;
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(iii) any
liability or obligation of Mountain High which was required to be
disclosed to the Purchaser pursuant to this Agreement and which was
not so disclosed;
(iv) any
liability or obligation of Mountain High with respect to any
insurance policies;
(v)
any obligation of Mountain High for Taxes (as defined
in Section 3.10) with respect to Mountain High or
otherwise;
(vi)
any liability or obligation of Mountain High with respect to any
payroll, bonuses, commissions, vacation time, sick time, holiday
time comp time or any other time off in regard to its employees,
contractors and freelancers or former employees, contractors and
freelancers;
(vii)
any liability or obligation of Mountain High to any of
Mountain High’s employees or any former employees of Mountain
High inclusive of any liability arising with respect to accrued
vacation pay or any other payments due such employees prior to
Closing as a result of any acts or things done by such employees
prior to Closing;
(viii)
any claim, cause of action, proceeding or other
litigation pending or threatened on the Closing Date or which is
initiated at any time thereafter against Mountain High and which is
based on acts, facts, circumstances, events or conditions occurring
or existing prior to the Closing whether known or unknown,
contingent or otherwise; and
(ix) any
liability or obligation of Mountain High incurred by or accruing to
Mountain High after the Closing Date unless specifically assumed by
the Purchaser under this Agreement.
Mountain High shall
discharge in a timely manner all of the Retained Liabilities,
provided that Mountain High shall have the ability to contest, in
good faith, any such claim of liability asserted in respect thereof
by any Person.
Section 1.5. Reversion and Right
of First Refusal. In
the event that Purchaser is liquidated (either voluntarily or
otherwise) or files for protection under any applicable Bankruptcy
statute during the period of time when any portion of the Purchase
Price is still outstanding, then Mountain High shall have the
right, but not the obligation to re-purchase the Assets for their
then fair market value within sixty (60) days of the occurrence of
either the liquidation or Bankruptcy filing. If the parties are
unable to negotiate a mutually-agreed re-purchase price in good
faith or through mediation, then they will appoint a
mutually-agreed third-party valuation expert to determine such fair
market value.
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ARTICLE II
PURCHASE PRICE AND
CLOSING
Section 2.1 Purchase
Consideration. In full consideration for the purchase by the
Purchaser of the Assets, the purchase price (the
“Purchase
Price”) shall comprise the following:
(i) Cash
Consideration.
(a)
Subject to the
satisfaction of the conditions described in this Agreement,
Purchaser shall make cash payments to Mountain High’s
shareholders (in the aggregate and as designated by such
shareholders):
(1)
At the Closing,
$200,000 by wire transfer or certified check;
(2)
On or before
December 20, 2019, $150,000 by wire transfer or certified
check;
(3)
On or before March
31, 2020, $150,000 by wire transfer or certified
check;
(4)
$250,000 at the end
of the twelfth (12th) month (on a
rolling basis) following the Closing Date;
(5)
$250,000 at the end
of the twenty-fourth (24th) month (on a
rolling basis) following the Closing Date;
(ii) Share
Issuance.
(a)
At the Closing, the
Purchaser shall issue to Mountain High the greater of 1,000,000
shares of Purchaser Common Stock or $1,710,000 worth of Purchaser
Common Stock based on the Volume Weighted Average Price
(“VWAP”) of Purchaser Common Stock during the five (5)
trading days prior to the Closing Date (i.e. 1,000,000 shares based
on a share price of $1.71 per share.
(b)
At the end of the
twelfth month (on a rolling basis) from the Closing Date, the
Purchaser shall issue to Mountain High, an additional 2,000,000 in
Warrants of Purchaser Common Stock at a price based upon
Purchaser’s then most recent private placement price,
exercisable for a period of three (3) years from the date of
issuance;
(c)
At the end of the
twenty-fourth month (on a rolling basis) from the Closing Date, the
Purchaser shall issue to Mountain High, an additional 2,000,000 in
Warrants of Purchaser Common Stock at a price based upon
Purchaser’s then most recent private placement price,
exercisable for a period of three (3) years from the date of
issuance;
(d)
Issuance of
Warrants pursuant to Paragraph (b), above shall be subject to
recognition of actual gross revenues of $4,000,000 from Mountain
High’s assets during the first 12 months following the
Closing Date. In the event gross revenues are more or less that
$4,000,000 for such period, the number of Warrants to be issued
will be adjusted proportionately. Notwithstanding the foregoing, no
Warrants shall be issued if the actual gross revenues for such
period is less than $2,000,000;
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(e)
Issuance of
Warrants pursuant to Paragraph (c), above shall be subject to
recognition of actual gross revenues of $6,000,000 from Mountain
High’s assets during the second 12 months following the
Closing Date. In the event gross revenues are more or less that
$6,000,000 for such period, the number of Warrants to be issued
will be adjusted proportionately. Notwithstanding the foregoing, no
Warrants shall be issued if the actual gross revenues for such
period is less than $4,000,000;
(f)
Upon Mountain
High's exercise of any and/or all issued warrants, Purchaser shall
grant the shares, fully vested, to Mountain High, or in the
alternative, Purchaser shall pay the purchase cost of the shares,
as described above in subsections b and c, and issue the shares,
fully vested, to Mountain High. Mountain High shall be responsible
for any gains tax accrued by Mountain High upon grant and/or
issuance of fully vested shares.
(iii) Assumption
of Liabilities. Purchaser shall assume no liabilities in
conjunction with this transaction.
(iv) Option
to buy License: At each one of the payment deadlines
detailed in Section 2.1. above, Purchaser shall have the right, but
not the obligation, to assume ownership, to the maximum extent
permitted by law, of the license and lease located at Lease at 8
Light Sky Ct Xxxxxxxxxx, XX 00000 associated with BCC License
Number C9-0000042-LIC, without further consideration. Purchaser
will ensure that all state and local regulatory bodies have
approved or be in the process of approval prior to the time this
option is exercised. At Mountain High’s request, Purchaser
shall reimburse Mountain High the actual cost of maintaining the
license, including but not limited to any licensing fees, and lease
minus any revenue Mountain High earns from the sale or rental of
the license and lease.
Section 2.2. Closing; Effective
Date. The closing of the transactions contemplated by this
Agreement (the “Closing”) shall take place
simultaneously with the execution and delivery of this Agreement,
at the offices of Driven Deliveries, Inc. not later than July 31,
2019. Notwithstanding, for all purposes, the effective date of this
Agreement shall be July 10 (“Effective
Date”).
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Section 2.3. Further Assurance;
Post Closing Cooperation. All transactions at the Closing
shall be deemed to have taken place simultaneously. At the Closing,
the Purchaser shall deliver to Mountain High the Purchase Price.
Mountain High will, from time to time, at the request of the
Purchaser, whether at or after the Closing Date, execute and
deliver such other and further instruments of conveyance,
assignment, transfer and consent as the Purchaser or its counsel
may reasonably require for the most effectual conveyance and
transfer of the Assets to the Purchaser, and Mountain High will
assist the Purchaser, including taking all necessary action in
reducing to possession the Assets. Following the Closing, each
Party will afford the other Party, its counsel and its accountants,
during normal business hours, reasonable access to the books,
records and other data relating to the Business in its possession
with respect to periods prior to the Closing and the right to make
copies and extracts therefrom, to the extent that such access may
be reasonably required by the requesting party in connection with
(a) the preparation of tax returns, (b) the determination or
enforcement of rights and obligations under this Agreement, (c)
compliance with the requirements of any Governmental or Regulatory
Authority (as defined in Section 3.7), (d) the determination or
enforcement of the rights and obligations of any Indemnified Party
(as defined in Section 8.2 or 8.3) or (e) in connection with any
actual or threatened action or proceeding.
Section 2.4. Third-Party
Consents. Anything in this Agreement to the contrary
notwithstanding, in the event an assignment or purported assignment
to the Purchaser of any of the agreements, contracts or commitments
of Mountain High (sometimes collectively referred to as a
“contract” or
the “contracts”), or any claim, right
or benefit arising thereunder or resulting therefrom, without the
consent of other parties thereto, would constitute a breach thereof
or would not result in the Purchaser receiving all of the rights of
Mountain High thereunder, such contract shall be deemed not to have
been assigned by Mountain High to the Purchaser. In those
circumstances, if requested by the Purchaser, after the Closing,
Mountain High will use its reasonable commercial efforts to obtain
any such consent. If such consent is not obtained and is required
to effectively assign a contract to the Purchaser, Mountain High
will cooperate with the Purchaser in any reasonable arrangement to
provide the Purchaser with the full claims, rights and benefits
under any such contract, including enforcement at the cost and for
the benefit of the Purchaser of any and all rights of Mountain
High, as the case may be, against a third party thereto arising out
of the breach or cancellation by such third party or otherwise, and
any amount received by Mountain High in respect thereof shall be
held for and paid over to the Purchaser.
ARTICLE III
REPRESENTATIONS AND
WARRANTIES OF MOUNTAIN HIGH
Mountain High
represents and warrants and agrees to and with the Purchaser, as
follows:
Section 3.1 Execution and
Validity of Agreement; Existence and Good Standing. Mountain
High has the full power and authority to enter into this Agreement
and to perform its obligations hereunder. The execution and
delivery of this Agreement by Mountain High and the consummation by
Mountain High of the transactions contemplated hereby have been
duly authorized by all required action on behalf of Mountain High.
This Agreement has been duly and validly executed and delivered by
Mountain High and, assuming due authorization, execution and
delivery by the Purchaser, constitute legal, valid and binding
obligations of Mountain High enforceable against it in accordance
with its terms except as enforceability may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting the
enforcement of creditors’ rights generally, general equitable
principles (regardless of whether such enforceability is considered
in a proceeding in equity or at law) and an implied covenant of
good faith and fair dealing. Mountain High is a duly organized and
validly existing corporation in good standing under the laws of the
State of California with the full power and authority to own its
property and to carry on its business in the places where such
properties are now owned or operated or such business is now being
conducted.
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Section 3.4 Title to
Properties; Encumbrances. Mountain High has good and valid
title to, or enforceable leasehold interests in or valid rights
under contract to use the Assets which are transferred pursuant to
this Agreement. The Assets constitute all of the property and
assets which Mountain High presently utilizes to conduct the
Business.
Section 3.5. Contracts.
Schedule 3.5 hereto contains
an accurate and complete list of the following agreements to which
Mountain High is a party and which relate to the Assets: (a) any
personal property lease, (b) any agreement, contract or commitment
relating to capital expenditures, (c) any agreement, contract or
commitment relating to the making of a loan or advance to or
investment in, any other Person, (d) any agreement, instrument or
arrangement evidencing or relating in any way to indebtedness for
money borrowed or to be borrowed, whether directly or indirectly,
by way of loan, purchase money obligation, guarantee (other than
the endorsement of negotiable instruments for collection in the
ordinary course of business), conditional sale, purchase or
otherwise, (e) any management service, employment, consulting or
similar type of contract, (f) any agreement, contract or commitment
limiting Mountain High’s freedom to engage in any line of
business or to compete with any other Person, including agreements
limiting its ability to take on competitive accounts, but excluding
standard exclusivity requirements in agreements with clients which
do not extend beyond the term thereof entered into in the ordinary
course of business, (g) any secrecy or confidentiality agreement
(other than standard confidentiality agreements in computer
software license agreements or agreements with clients entered into
in the ordinary course of business) and (h) any licensing or
franchise agreement (other than license agreements for
“off-the-shelf” third party computer software not
included within Mountain High’s products or services). Each
agreement, contract and commitment of Mountain High, including, but
not limited to those set forth on Schedule 3.5 is in full force and
effect, and there exists no default or event of default by Mountain
High or to the best knowledge, information and belief of Mountain
High and, by any other party, or occurrence, condition, or act
(including the purchase of the Assets hereunder) which, with the
giving of notice, the lapse of time or the happening of any other
event or condition, would become a default or event of default
thereunder by Mountain High, and there are no outstanding claims of
breach or indemnification or notice of default or notice of
termination of any such agreement, contract and
commitment.
Section 3.6. Non-Contravention.
The execution, delivery and performance by Mountain High of its
obligations hereunder and the consummation of the transactions
contemplated hereby, will not (a) result in the violation by
Mountain High of any statute, law, rule, regulation or ordinance
(collectively “Laws”), or any judgment, decree, order,
with, permit or license (collectively “Orders”) of any
court, tribunal, arbitrator, authority, agency, commission,
official or other instrumentality of the United States, county,
city or other political subdivision (a “Governmental or
Regulatory Authority”) applicable to Mountain High or any of
its assets or properties.
Section 3.7. Approvals and
Consents. Except as disclosed on Schedule 3.7., no consent, approval or
action of, filing with or notice to any Governmental or Regulatory
Authority or other public or private third Person is necessary or
required under any of the terms, conditions or provisions of any
Law or Order of any Governmental or Regulatory Authority or any
Instrument to which Mountain High is a party or by which its assets
or properties are bound for the execution and delivery of this
Agreement by Mountain High, the performance by Mountain High of its
obligations hereunder or the consummation of the transactions
contemplated hereby.
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Section 3.8 Litigation.
Except as set forth on Schedule
3.8, there is no action, suit, proceeding at law or in
equity by any Person, or any arbitration or any administrative or
other proceeding by or before (or to the best knowledge,
information and belief of Mountain High, any investigation by) any
Governmental or Regulatory Authority, pending or, to the best
knowledge, information and belief of Mountain High, threatened,
against Mountain High with respect to this Agreement or the
transactions contemplated hereby, or against or affecting Mountain
High or its properties or rights; and to the best knowledge,
information and belief of Mountain High, no acts, facts,
circumstances, events or conditions occurred or exist which are a
basis for any such action, proceeding or investigation.
Schedule 3.8 also sets forth
with respect to each pending or threatened action, suit or
proceeding listed thereon, the amount of costs, expenses or damages
Mountain High has incurred to date and reasonably expects to incur
through conclusion thereof. Neither Mountain High is subject to any
judgment, order or decree entered in any lawsuit or
proceeding.
Section 3.9 Taxes.
Mountain High has timely filed, or caused to be filed, taking into
account any valid extensions of due dates, completely and
accurately, all federal, state, local and foreign tax or
information returns (including estimated tax returns) required
under the statutes, rules or regulations of such jurisdictions to
be filed by Mountain High. The term “Taxes” means taxes, duties,
charges or levies of any nature imposed by any taxing or other
governmental authority, including without limitation income, gains,
capital gains, surtax, capital, franchise, capital stock,
value-added taxes, taxes required to be deducted from payments made
by the payor and accounted for to any tax authority,
employees’ income withholding, back-up withholding,
withholding on payments to foreign Persons, social security,
national insurance, unemployment, worker’s compensation,
payroll, disability, real property, personal property, sales, use,
goods and services or other commodity taxes, business, occupancy,
excise, customs and import duties, transfer, stamp, and other taxes
(including interest, penalties or additions to tax in respect of
the foregoing), and includes all taxes payable by Mountain High
pursuant to Treasury Regulations § 1.1502-6 or any similar
provision of state, local or foreign law. All Taxes shown on said
returns to be due and all additional assessments received prior to
the date hereof have been paid or are being contested in good
faith, in which case, such contested assessments are set forth on
Schedule 3.9.
Section 3.10. Reserved.
Section 3.11. Insurance.
Schedule 3.11 is a schedule
of all insurance policies (including life insurance) or binders
maintained by or on behalf of Mountain High which relate to the
Assets. All such policies are in full force and effect and all
premiums that have become due have been currently paid. None of
such policies shall lapse or terminate by reason of the
transactions contemplated hereby. Neither Mountain High has
received any notice of cancellation or non-renewal of any such
policy or binder. Except as set forth on Schedule 3.11, within the last two years
neither Mountain High has filed for any claims against any
insurance policies, exclusive of automobile policies.
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Section 3.12. Intellectual
Properties. Schedule
3.12 hereto sets forth a list of all Intellectual Property
(as defined below) owned by Mountain High which relate to the
Business and is to be purchased by Purchaser pursuant to this
Agreement. Except as set forth on Schedule 3.12, no claim of infringement
or misappropriation of these Intellectual Property assets is
pending or, to the best knowledge, information and belief of
Mountain High, threatened against Mountain High and, to the best
knowledge, information and belief of Mountain High, neither
Mountain High is infringing or misappropriating any Intellectual
Property of any Person. Neither Mountain High has granted any
license, franchise or permit in effect on the date hereof to any
Person to use any of the Intellectual Property included on Schedule
3.12. The term “Intellectual
Property” means patents and patent rights, trademarks
and trademark rights, tradenames and tradename rights, service
marks and service xxxx rights, service names and service name
rights, copyright and copyright rights, trade secrets and trade
secret rights, rights of privacy and publicity, and other
proprietary intellectual property rights and all pending
applications for and registrations of any of the
foregoing.
Section
3.13. Compliance
with Laws; Licenses and Permits.
(i) Compliance.
Mountain High is, and the Business has been conducted, in
compliance with all applicable Laws and Orders, except in each case
(other than with respect to compliance with environmental Laws and
Orders) where the failure to so comply would not reasonably be
expected to have a Material Adverse Effect (as defined below).
Notwithstanding the foregoing, the Parties acknowledge that the
sale of cannabis-related products is illegal under applicable U.S.
Federal law and the Parties and each of them shall jointly bear the
risk of any potential legal exposure for the violation of
applicable Federal law. Mountain High has neither been charged
with, nor, to the best information, knowledge and belief of
Mountain High threatened with or under any investigation with
respect to, any charge concerning any violation of any Laws or
Orders. For purposes of this Agreement, “Material Adverse Effect” shall
mean any material and adverse effect on the financial condition,
results of operations, assets, properties or business of Mountain
High or the Purchaser, as applicable, resulting in individual
payments or payments in the aggregate in excess of
$50,000.
(ii) Licenses.
Mountain High has all Licenses required by any Governmental or
Regulatory Authority for the operation of the Business and the use
of the Assets as presently operated or used, except where the
failure to have such Licenses would not reasonably be expected to
have a Material Adverse Effect. All of the Licenses are in full
force and effect and no action or claim is pending, nor to the best
knowledge, information and belief of Mountain High is threatened,
to revoke or terminate any of such Licenses or declare any such
License invalid in any material respect.
Section 3.14. Disclosure.
All material facts relating to the Assets or condition of Mountain
High have been disclosed to the Purchaser by Mountain High in or in
connection with this Agreement. No representation or warranty of
Mountain High contained in this Agreement, and no statement
contained in any Schedule or in any certificate, list or other
writing furnished to the Purchaser by Mountain High pursuant to any
provision of this Agreement (including without limitation any
financial statements), contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make
the statements herein or therein, in the light of the circumstances
under which they were made, not misleading.
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Section 3.15. Brokers.
Except as set forth on Schedule
3.15, no broker, finder, agent or similar intermediary has
acted on behalf of Mountain High, any affiliate thereof, or
Mountain High in connection with this Agreement or the transactions
contemplated hereby, and no brokerage commissions, finder’s
fees or similar fees or commissions are payable by Mountain High,
any affiliate thereof, or Mountain High in connection therewith
based on any agreement, arrangement or understanding with any of
them.
Section 3.16. Copies of
Documents. Mountain High has caused to be made available for
inspection and copying by the Purchaser and its advisers, true,
complete and correct copies of all documents referred to in this
Article III or in any Schedule.
ARTICLE IV
REPRESENTATIONS OF
THE PURCHASER
The
Purchaser represents, warrants and agrees to and with Mountain High
as follows:
Section 4.1 Existence and Good
Standing. The Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Delaware with full power and authority to own its property and
to carry on its business all as and in the places where such
properties are now owned or operated or such business is now being
conducted.
Section 4.2. Execution and
Validity of Agreements. The Purchaser has the full power and
authority to make, execute, deliver and perform this Agreement and
the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement by the Purchaser and the consummation of
the transactions contemplated hereby have been duly authorized by
all required corporate action on behalf of the Purchaser and this
Agreement has been duly and validly executed and delivered by the
Purchaser and assuming due authorization, execution and delivery by
Mountain High, constitute legal, valid and binding obligations of
the Purchaser, enforceable against it in accordance with their
terms.
Section 4.3. Non-Contravention;
Approvals and Consents.
(i) Non-Contravention.
The execution, delivery and performance by the Purchaser of its
obligations hereunder and the consummation of the transactions
contemplated hereby and thereby, will not (a) violate, conflict
with or result in the breach of any provision of the Certificate of
Formation (or other comparable charter documents) of the Purchaser,
or (b) result in the violation by the Purchaser of any Laws or
Orders of any Governmental or Regulatory Authority, applicable to
the Purchaser or any of its assets or properties, or (c) if the
consents and notice set forth in Schedule 4.3 are obtained, given or
waived conflict with, result in a violation or breach of,
constitute (with or without notice or lapse of time or both) a
default under, or (except as set forth on Schedule 4.3) require the Purchaser to
obtain any consent, approval or action of, make any filing with or
give any notice to, or result in or give to any Person any right of
payment or reimbursement, termination, cancellation, modification
or acceleration of, or result in the creation or imposition of any
Lien upon any of the assets or properties of the Purchaser, under
any of the terms, conditions or provisions of any Instruments to
which the Purchaser is a party or by which the Purchaser or any of
its assets or properties are bound.
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(ii) Approvals
and Consents. Except
as disclosed on Schedule
4.3, no consent, approval or action of, filing with or
notice to any Governmental or Regulatory Authority or other public
or private third party is necessary or required under any of the
terms, conditions or provisions of any Law or Order of any
Governmental or Regulatory Authority or any Instrument to which the
Purchaser is a party or by which the Purchaser or any of its assets
or properties is bound for the execution and delivery of this
Agreement by the Purchaser, the performance by the Purchaser of its
obligations hereunder or the consummation of the transactions
contemplated hereby.
Section 4.4. Brokers.
Except as disclosed on Schedule
4.4 hereto, no broker, finder, agent or similar intermediary
has acted on behalf of the Purchaser or its affiliates in
connection with this Agreement or the transactions contemplated
hereby, and no brokerage commissions, finder’s fees or
similar fees or commissions are payable by the Purchaser or its
affiliates in connection therewith based on any agreement,
arrangement or understanding with any of them.
Section 4.5. Disclosure.
No representation or warranty contained in this Agreement, and no
statement contained in any Schedule or in any certificate, list or
other writing furnished to Mountain High pursuant to any provision
of this Agreement, contains any untrue statement of a material fact
or omits to state a material fact necessary in order to make the
statements herein or therein, in the light of the circumstances
under which they were made, not misleading.
ARTICLE V
ACTIONS AT CLOSING
BY MOUNTAIN HIGH
Simultaneously
herewith:
Section 5.1. Required Approvals,
Notices and Consents. Except as set forth on Schedule 5.1, Mountain High shall have
obtained or given, at no expense to the Purchaser and there shall
not have been withdrawn or modified any notices, consents,
approvals or other actions listed on Schedules 3.7 or 3.8 hereof (including without
limitation, obtaining all consents, approvals and/or waivers
required under the contracts listed on Schedule 3.6 in order to permit the
consummation of the transactions contemplated by this Agreement
without causing or resulting in a default, event of default,
acceleration event or termination event under any of such documents
and without entitling any party to any of such documents to
exercise any other right or remedy adverse to the interests of the
Purchaser or Mountain High thereunder). Each such consent or
approval shall be in form satisfactory to counsel for the
Purchaser.
Section 5.2. Xxxx of Sale and
Assignments. Mountain
High is delivering to Purchaser appropriate Bills of Sale and
Assignments relating to the tangible and intangible assets
described in Section 1.1, all in form and substance reasonably
satisfactory to Purchaser and its counsel.
Section 5.3. Proceedings.
All proceedings taken in connection with the transactions
contemplated by this Agreement and all documents incident thereto
were reasonably satisfactory in form and substance to the Purchaser
and its counsel, and the Purchaser received copies of all such
documents and other evidences as it or its counsel reasonably
requested in order to establish the consummation of such
transactions and the taking of all proceedings in connection
therewith.
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ARTICLE VI
ACTIONS AT CLOSING
BY THE PURCHASER
Simultaneously
herewith:
Section 6.1. Required Approvals,
Notices and Consents. The Purchaser shall have obtained or
given, at no expense to Mountain High, and there shall not have
been withdrawn or modified any notices, consents, approvals or
other actions listed on Schedule
4.3 hereof. Each such consent or approval shall be in form
reasonably satisfactory to counsel for Mountain High.
Section 6.2. Proceedings.
All proceedings taken in connection with the transactions
contemplated by this Agreement, and all documents incident thereto
were reasonably satisfactory in form and substance to Mountain High
and its counsel and Mountain High received copies of all such
documents and other evidences as it or its counsel may reasonably
request in order to establish the consummation of such transaction
and the taking of all proceedings in connection
therewith.
ARTICLE VII
OTHER
AGREEMENTS
Section 7.1. Taxes.
Mountain High shall be fully responsible for and shall pay any and
all Taxes relating to the Business and employees of Mountain High
including taxes arising from all periods prior to Closing Date as
well as capital gains arising from the transfer and sale of the
Assets to the Purchaser hereunder and the transactions contemplated
by this Agreement.
Section 7.2 Conditions.
The Closing will be subject to customary conditions, including but
not limited to the following:
(a)
Each Party's
satisfactory completion of due diligence;
(b)
the Board of
Directors (or Managing Members, as the case may be) of the Parties
approving the Proposed Transaction;
(c)
the Parties'
execution of all required Definitive Agreements;
(d)
the receipt of any
regulatory approvals and any required third-party consents, on
terms satisfactory to the Parties;
Section 7.4 Due Diligence and
Access.
Each
Party will authorize its management to allow the other Party and
such other Party's advisors access to its personnel, facilities,
contracts, books, and records, in each case to the extent relating
to its participation in the Transaction, for the purpose of
conducting such other Party's due diligence with respect to the
Transaction, subject to an appropriate Confidentiality
Agreement.
The
Parties will have 30 days from the mutual execution of the Term
Sheet with respect to this Transaction to complete their respective
due diligence regarding the Transaction.
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In
carrying out its due diligence, (i) Purchaser agrees that it will
direct all requests for any information concerning Mountain High
and/or its affiliates to Xxxxxxx Xxxxxxx, (ii) Mountain High agrees
that it will direct all requests for any information concerning
Purchaser and/or its affiliates to Xxxxx Xxxxx; and (iii) neither
Party will make any inquiries of the other Party's and/or its
affiliates' customers, suppliers, lenders, employees or other
service providers with respect to the other Party or the
Transaction without the prior written consent of the other Party's
Diligence Contact (which consent may be withheld for any reason or
no reason in the sole discretion of the other Party).
Section 7.5 Covenants of the
Parties.
(a)
During the period
from the signing of the Letter of Intent regarding this Transaction
through a Termination (as defined below), each Party will:
(i)conduct its business in the ordinary course in a manner
consistent with past practice, (ii) maintain the Assets to be the
subject of the Transaction in good working condition (normal wear
and tear excepted) and (iii) not incur any material liabilities or
commitments to engage in any transactions which would affect its
ability to complete the Transaction other than in the ordinary
course in a manner consistent with past practice.
(b)
Each Party will be
responsible for obtaining all regulatory approvals or other
consents necessary to consummate the Transaction that are
applicable to it or the Transaction. The Parties will, to the
extent such cooperation is reasonably required, cooperate to obtain
such approvals promptly.
Section 7.6 Exclusivity.
In
consideration of the expenses that the other Party has incurred and
will incur in connection with the Transaction and such other
Party's agreement set forth in this Section 7.6, each Party agrees
that until such time as the Transaction has been terminated has
terminated in accordance with the provisions of Section 9.1 (such
period, the "Exclusivity
Period"), neither it nor any of its representatives,
officers, employees, directors, agents, stockholders, subsidiaries
or affiliates (collectively with respect to such Party, the
"Group") shall initiate,
solicit, entertain, negotiate, accept or discuss, directly or
indirectly, any proposal or offer from any person or group of
persons (including members of its Group) other than the other Party
(an "Acquisition Proposal")
regarding (i) and merger, asset purchase or securities purchase,
the formation of a joint venture, strategic alliance or similar
arrangement for the purpose of engaging in a business which is
inconsistent with the Transaction, (ii) any transaction that could
be preclusive of the Transaction, (iii) the acquisition of all or
any portion of its Assets of Mountain High, whether by merger,
purchase of stock, purchase of assets, tender offer or otherwise,
or (iv) provide any non-public information to any third party in
connection with an Acquisition Proposal or enter into any
agreement, arrangement or understanding requiring it to abandon,
terminate or fail to consummate the Transaction. Each Party agrees
to immediately notify the other Party if any member of its Group
receives any indications of interest, requests for information or
offers in respect of an Acquisition Proposal, and will communicate
to such other Party in reasonable detail the terms of any such
indication, request or offer, and will provide it with copies of
all written communications relating to any such indication, request
or offer. Immediately upon execution of this Letter, each Party
shall, and shall cause its Group to, terminate any and all existing
discussions or negotiations with any person or group of persons
other than the other Party and its affiliates regarding an
Acquisition Proposal. Each Party represents that no member of its
Group is party to or bound by any agreement with respect to an
Acquisition Proposal other than under this Letter.
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Each
Party acknowledges that the other Party will incur significant
fees, expenses and costs in reliance on its agreement set forth in
Section 7.6. Accordingly, if it or any other member of its Group
breaches any provision of Section 7.6 during the Exclusivity
Period, it will indemnify the other Party for an amount equal to
all reasonable fees, expenses and costs incurred by such other
Party in connection with the Transaction (whether incurred before
or after the date of this Agreement).
ARTICLE VIII
SURVIVAL;
INDEMNITY
Section 8.1. Survival.
Notwithstanding any right of any party hereto fully to investigate
the affairs of any other Party, and notwithstanding any knowledge
of facts determined or determinable pursuant to such investigation
or right of investigation, each Party hereto shall have the right
to rely fully upon the representations, warranties, covenants and
agreements of the other Parties contained in this Agreement and the
Schedules, if any, furnished by any other Party pursuant to this
Agreement, or in any certificate delivered at the Closing by any
other Party. The respective representations, warranties, covenants
and agreements of Mountain High and the Purchaser contained in this
Agreement shall survive the Closing.
Section 8.2. Obligation of
Mountain High to Indemnify. Mountain High hereby agrees to
indemnify the Purchaser and its affiliates (individually a
“Purchaser Indemnified
Party” and collectively, the “Purchaser Indemnified Parties”)
against, and to protect, save and keep harmless the Purchaser
Indemnified Parties from, and to assume liability for, payments of
all liabilities (including liabilities for Taxes, obligations,
losses, damages, penalties, claims, actions, suits, judgments,
settlements, out-of-pocket costs, expenses and disbursements
(including reasonable costs of investigation, and reasonable
attorneys’, accountants’ and expert witnesses’
fees) of whatever kind and nature (collectively,
“Losses”)), that
may be imposed on or incurred by the Purchaser Indemnified Parties
as a consequence of or in connection with (a) any
misrepresentation, inaccuracy or breach of any warranty or
representation contained in Article III hereof, (b) any breach or
failure by Mountain High to comply with perform or discharge any
obligation, agreement or covenant by Mountain High contained in
this Agreement; or (c) the assertion by any third party of any
claim or cause of action relating to any Retained Liability. The
term “Losses” as used herein is not limited to matters
asserted by third parties against a Purchaser Indemnified Party but
includes Losses incurred or sustained by a Purchaser Indemnified
Party in the absence of third-party claims.
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Section 8.3. Obligation of the
Purchaser to Indemnify. Purchaser hereby agrees to indemnify
Mountain High and its affiliates (collectively, the
“Mountain High Indemnified
Parties”; the Purchaser Indemnified Parties and
Mountain High Indemnified Parties, collectively, the
“Indemnified
Parties”) against, and to protect, save and keep
harmless Mountain High Indemnified Parties from and to assume
liability for any and all Losses, damages, penalties, claims,
actions, suits, judgments, settlements, out-of-pocket costs,
expenses and disbursements (including reasonable costs of
investigation, and reasonable attorneys’, accountants’
and expert witnesses’ fees) of whatever kind and nature
(collectively, “Losses”) that may be imposed on or
incurred by Mountain High Indemnified Parties as a consequence of
or in connection with (a) any misrepresentation, inaccuracy or
breach of any warranty or representation contained in Article IV
hereof (b) any breach or failure by the Purchaser to comply with,
perform or discharge any obligation, agreement or covenant by the
Purchaser contained in this Agreement or (c) the assertion by any
third party of any claim or cause of action relating to any Assumed
Liability. Further, If Purchaser options to purchase the right to
operate under Mountain High's license, as provided for in
Section 2.1, Purchaser shall
indemnify Mountain High for any damage or harm to the license
resulting from any act, omission or failure by Purchaser (including
any officer, shareholder, agent, employee or affiliate of
Purchaser) to comply with applicable CA state cannabis law pursuant
to 16 CCR 5030.
ARTICLE IX
TERMINATION
Section 9.1 Termination.
This Agreement may be terminated at any time prior to the
Closing:
(a)
by mutual written
consent duly authorized by the Boards of Director of Purchaser and
Mountain High; or
(b)
by either Purchaser
or Mountain High if the Transaction shall not have been consummated
by 8/1/2019 (such date, being the “Outside Date”) for any
reason; provided, however, that the right to terminate this
Agreement under this Section 9.1 shall not be available to any
party whose action or failure to act has been a principal cause of,
or resulted in the failure of, the Transaction to occur on or
before such date if such action or failure to act constitutes a
breach of this Agreement;
or
(c)
by either Purchaser
or Mountain High if a Governmental Entity shall have issued an
order, decree or ruling or taken any other action, in any case
having the effect of permanently restraining, enjoining or
otherwise prohibiting the Transaction, which order, decree, ruling
or other action shall have become final and non-appealable or any
law, order, rule or regulation is in effect or is adopted or
issued, which has the effect of prohibiting the Transaction;
or
(d)
by Purchaser, on
the one hand, or Mountain High, on the other, if any condition to
the obligation of any such party to consummate the Transaction
becomes incapable of satisfaction prior to the Outside Date;
provided, however, that the failure of such condition is not the
result of a breach of this Agreement by the Party seeking to
terminate this Agreement.
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(e)
by Mountain High if
any representation and warranty of Purchaser is determined to be
false or inaccurate.
(f)
by Purchaser if any
representation and warranty of Mountain High is determined to be
false or inaccurate.
ARTICLE X
MISCELLANEOUS
Section 10.1. Expenses.
The parties hereto shall pay all of their own expenses relating to
the transactions contemplated by this Agreement, including, without
limitation, the fees and expenses of their respective counsel and
financial advisers.
Section 10.2. Governing
Law. The interpretation and construction of this Agreement,
and all matters relating hereto, shall be governed by the laws of
the State of California without reference to its conflict of law
provisions.
Section 10.3. Captions.
The Article and Section captions used herein are for reference
purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
Section 10.4 Notices.
Unless otherwise provided herein, any notice, request, instruction
or other document to be given hereunder by any Party to any other
Party shall be in writing and shall be deemed to have been given
(a) upon personal delivery, if delivered by hand, (b) three days
after the date of deposit in the mails, postage prepaid, if mailed
by certified or registered mail, or (c) the next business day if
sent by facsimile transmission (if receipt is electronically
confirmed) or by a prepaid overnight courier service, and in each
case at the respective addresses or numbers set forth below or such
other address or number as such party may have fixed by
notice:
If to
Mountain High, addressed to:
Mountain High
Recreation, Inc.
0 Xxxxx
Xxx Xx
Xxxxxxxxxx, XX
00000
Attn:
Chelsea & Xxx Xxxxxxx
with a
copy to:
Xxxxx
Xxxxxxxxx, Esq.
Xxxxxx
Xxxxxxxx
0000 X.
Xxxxxxxxxx Xxxx #000
Xxxxxx
Xxxxx, XX 00000]
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If to
the Purchaser, addressed to:
Driven
Deliveries, Inc., a Nevada corporation
0000
Xxxxxx Xxxxx Xxxx, Xxx 000
Xxx
Xxxxx, XX 00000
Attn:
Xxxxx Xxxxx
with a
copy to:
Xxxxxx
Xxxxxx
00 Xxxx
Xxxxx
Xxxxx,
XX 00000
Section 10.5. Parties in
Interest. This Agreement may not be transferred, assigned,
pledged or hypothecated by any party hereto, other than by
operation of law. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective
heirs, executors, administrators, successors and
assigns.
Section 10.6. Severability.
In the event any provision of this Agreement is found to be void
and unenforceable by a court of competent jurisdiction, the
remaining provisions of this Agreement shall nevertheless be
binding upon the parties with the same effect as though the void or
unenforceable part had been severed and deleted.
Section 10.7. Counterparts.
This Agreement may be executed in two or more counterparts, all of
which taken together shall constitute one instrument.
Section 10.8. Entire
Agreement. This Agreement, including the other documents
referred to herein and the Exhibits and Schedules hereto which form
a part hereof, contains the entire understanding of the parties
hereto with respect to the subject matter contained herein and
therein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject
matter.
Section 10.9. Amendments.
This Agreement may not be amended, supplemented or modified orally,
but only by an agreement in writing signed by the Purchaser and
Mountain High.
Section 10.10. Third Party
Beneficiaries. Each party hereto intends that this Agreement
shall not benefit or create any right or cause of action in or on
behalf of any Person other than the parties hereto and their
respective successors and assigns as permitted under Section
9.9.
[SIGNATURES ARE ON THE NEXT PAGE]
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the Execution Date effective as of the Closing
Date.
DRIVEN
DELIVERIES, INC., a Delaware corporation
By:
/s/Xxxxx
Xxxxx
Name:
Xxxxx Xxxxx
Title:
President
MOUNTAIN
HIGH RECREATION, INC., a California corporation
By:
/s/ Xxxxxxx Xxxxxxx
Name: Xxxxxxx
Xxxxxxx
Title:
President/Owner
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