CNFN CFN Enterprises Inc (QB)

ASSET PURCHASE AGREEMENT

by and among

RAN COPACKING SOLUTIONS LLC

ALLEN PARK

RAMI ABI

ANNESS ZIADEH

RANCO, LLC

And

CFN ENTERPRISES, INC.

dated as of

July 1, 2023

1 

ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement (this “Agreement”), dated as of July 1, 2023 (the “Effective Date”), is entered into among Allen Park, Rami Abi, and Anness Ziadeh (collectively the “Founders”) and RAN CoPacking Solutions LLC, a California limited liability company (“Seller” and, together with Founders, the “Seller Group Parties”), RANCO, LLC, a Delaware limited liability company (“Buyer”), and CFN Enterprises, Inc., a Delaware corporation (“Buyer Parent” and, together with Buyer, the “Buyer Group Parties”) on the other hand (Buyer, Buyer Parent, Seller, and Founders may be individually referred to as a “Party” and collectively as the “Parties”).

RECITALS

WHEREAS, Seller wishes to sell and assign to Buyer, and Buyer wishes to purchase and assume from Seller, the rights and obligations of Seller to the Purchased Assets and the Assumed Liabilities (each as defined herein), subject to the terms and conditions set forth herein (the “Transaction”); and

WHEREAS, Founders are the sole owners of Seller and expect to receive significant direct and indirect benefits as a result of the Transaction.

NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows:

ARTICLE I
PURCHASE AND SALE

Section 1.1.Closing. The closing of the Transaction (the “Closing”) shall take place remotely on the Effective Date via the exchange of closing documents in PDF or other electronic format,  The consummation of the Transaction shall be deemed to occur at 12:01 a.m. on the Effective Date. 

Section 1.2.Closing Deliverables. 

(i)evidence, in form and substance reasonably acceptable to Seller, that Buyer has the ability to access sources of liquidity sufficient to support its ongoing operations in a manner that is not significantly detrimental to the Business; 

(ii)a counterpart signature page to an assumption agreement among Buyer, Seller and the landlord (“Landlord”) of Seller’s facility at 2025 Long Beach Avenue, Los Angeles, CA 90058 (the “Facility”); 

(iii)a counterpart signature page to the Assignment of Assets/Liabilities and Contracts and Bill of Sale in the form of Exhibit A hereto (the “Assignment”), duly executed by Buyer;  

2 

(iv)a counterpart signature page to the Indemnification Agreement (the “Indemnification Agreement”), duly executed by Buyer;  

(v)a stock issuance agreement in Parent’s standard form, duly executed by Parent, evidencing the Closing Shares of Buyer Parent Common Stock; and 

(vi)a certified copy of the resolutions (or written consent) of Buyer and Buyer Parent’s boards of directors (or other governing body) authorizing the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, including, but not limited to the issuance of the Closing Shares and Earnout Shares.   

(i)a counterpart signature page to the Assignment, duly executed by Seller;  

(ii)a counterpart signature page to the assumption agreement for the Facility, signed by Seller and Landlord; 

(iii)a counterpart signature page to the Indemnification Agreement, duly executed by Allen Park; 

(iv)a certificate pursuant to Treasury Regulations Section 1.1445-2(b) that Seller is not a foreign person within the meaning of Section 1445 of the Internal Revenue Code duly executed by Seller;  

(v)copies of the executive employment agreements, duly executed by each Founder on Buyer Parent’s standard form (the “Executive Employment Agreements”); and 

(vi)all consents and approvals from governmental authorities and third parties under Assigned Contracts, necessary to ensure that Buyer will continue to have the same full rights with respect to the Purchased Assets as Seller had immediately prior to the Closing. 

Section 1.3.Purchase and Sale of Assets.  

(a)Purchased Assets. Subject to the terms and conditions set forth herein, at the Closing, Seller hereby sells, assigns, transfers, conveys and delivers to Buyer, and Buyer hereby purchases from Seller, all of Seller’s right, title and interest in the assets set forth on Schedule 1.3 (the “Purchased Assets”), free and clear of any mortgage, pledge, lien, charge, security interest, claim or other encumbrance (“Encumbrance”). 

3 

Section 1.4.Assumption of Liabilities.  

(a)Buyer hereby assumes and agrees to pay, perform and discharge the liabilities and obligations under the Purchased Assets, but only to the extent that such liabilities and obligations do not relate to any breach, default or violation by Seller on or prior to the Closing (collectively, the “Assumed Liabilities”).  

(b)Notwithstanding anything in this Agreement to the contrary, Buyer is not assuming any liabilities of Seller, whether or not incurred in connection with the conduct of the Business, other than the Assumed Liabilities, and all such liabilities (the “Excluded Liabilities”) shall remain the sole responsibility of and shall be retained, paid, performed and discharged solely by Seller. For the sake of clarity, except to the extent specifically set forth above, the Excluded Liabilities shall include, and Buyer shall not be the successor to, and does not and will not assume or be responsible for, (i) any liability accruing, related to or otherwise arising out of the conduct or operation of the Business or the ownership, leasing or use of the Purchased Assets on or prior to the Closing (excluding, for the avoidance of doubt, Assumed Liabilities), (ii) any liability arising in respect of or relating to the employment of the present or former employees, officers, directors, retirees, independent contractors or consultants of Seller, or any liability to indemnify, reimburse or advance amounts to any present or former officer, director, member, shareholder, manager, general partner, limited partner, employee or agent of Seller (including with respect to any breach of fiduciary obligations by any such party) arising on or prior to the Closing or in connection with this Agreement, or any liability arising in respect of or relating to any employee benefit plan (including any salary, vacation pay, severance pay, bonus or other similar liabilities), (iii) occupation of any currently or formerly leased or owned real property or personal property, (iv) any liability of Seller or Founders for federal, state, local and foreign taxes or similar charges of any kind whatsoever, including income, gross receipts, profits, estimated, excise, custom, duty, property, sales, use (or any similar taxes), value added, transfer, stamp, margin, franchise, payroll, withholding, social security and municipal taxes of any kind or other taxes, including any interest, penalties and additions imposed with respect to such amounts, whether disputed or not (“Taxes”), (v) performance prior to the Closing under the Assigned Contracts (including Seller’s use of any items of personal property leased pursuant thereto), and (vi) any liability in respect of any pending or threatened Action arising out of, relating to or otherwise in respect of the operation of the Business or the Purchased Assets, to the extent such Action relates to such operation on or prior to the Closing, in each case whether absolute or contingent, accrued or unaccrued, asserted or unasserted, known or unknown, liquidated or unliquidated, due or to become due, or otherwise, and whenever and wherever arising, and any such succession, assumption, responsibility, liability or obligation is expressly disclaimed. 

Section 1.5.Consideration. Upon the terms and subject to the conditions of this Agreement, in consideration for the purchase of the Purchased Assets, Buyer shall pay or issue (or cause to be issued) to Seller the following aggregate consideration (the “Purchase Price”): 

(a)At the Closing, Buyer Parent shall issue to Seller, or at Seller’s direction, forty million (40,000,000) shares (the “Closing Shares”) of Buyer Parent’s common stock, par value $0.001, transfer or assignment of which shall be restricted pursuant to applicable securities laws (the “Buyer Parent Common Stock”). At the Closing, Founders shall have the right to  

4 

nominate one (1) candidate for election to Buyer Parent’s Board of Directors in accordance with Buyer Parent’s bylaws.

(b)Following the Closing, in cash, by wire transfer of immediately available funds to the account designated by Seller in writing, the aggregate amount of One Million Dollars ($1,000,000) (the “Deferred Cash Consideration”), payable in quarterly installments in an amount equal to the lesser of (i) Buyer’s gross revenues attributable to the Business from and after the Closing, net of all accrued debts, liabilities, and obligations of the Buyer and all amounts necessary or advisable to reserve, designate, or set aside for actual or anticipated costs, payments, liabilities, obligations, and claims with respect to the Business, all as determined in good faith by Buyer, and (ii) Two Hundred Fifty Thousand Dollars ($250,000), until paid in full.  

Section 1.6.Earn Out Shares. Following the Closing, and as additional consideration for the Transaction, Buyer shall cause shares (the “EarnOut Shares”) of Buyer Parent Common Stock (which shall be equitably adjusted for stock splits, reverse stock splits, stock dividends, reorganizations, recapitalizations, reclassifications, combination, exchange of shares or other like change or transaction with respect to Buyer Parent Common Stock occurring after the Closing) to be issued to Seller, or at Seller’s direction, upon the following terms and conditions: 

(a)Eight Million (8,000,000) shares of Buyer Parent Common Stock to be issued upon Buyer achieving $19,000,000 in gross revenue attributable to the Business and a net profit of $3,900,000 within the twelve (12) month period beginning on the date that is three (3) months after the Effective Date (the “First Earnout Period”); and 

(b)Eight Million (8,000,000) shares of Buyer Parent Common Stock to be issued upon Buyer achieving $29,000,000 in gross revenue attributable to the Business and a net profit of $5,900,000 within the twelve month period beginning on the day immediately following the end of the First Earnout Period. 

Section 1.7.Reservation of Shares. Buyer Parent shall at all times prior to the full issuance of the EarnOut Shares, reserve and keep available out of its authorized but unissued capital stock, for the purpose of issuing the EarnOut Shares, such number of its duly authorized shares of Buyer Parent Common Stock as shall from time to time be sufficient to effect the issuance of the EarnOut Shares; and if at any time the number of authorized but unissued shares of Buyer Parent Common Stock shall not be sufficient to effect the issuance of the EarnOut Shares, the Buyer Parent shall take such corporate action as may be necessary to increase its authorized but unissued shares of Buyer Parent Common Stock to such number of shares as shall be sufficient for such purposes, including, without limitation, engaging in best efforts to obtain the requisite stockholder approval of any necessary amendment to Buyer Parent’s Certificate of Incorporation. 

Section 1.8.Allocation of Purchase Price. Seller and Buyer agree to allocate the Purchase Price among the Purchased Assets for all purposes (including Tax and financial accounting) as agreed by their respective accountants, negotiating in good faith on their behalf. Buyer and Seller shall file all Tax returns (including amended returns and claims for refund) and information reports in a manner consistent with such allocation. 

5 

Section 1.9.Taxes.  

(a)Buyer shall be entitled to deduct and withhold from the Purchase Price all Taxes that Buyer may be required to deduct and withhold under any applicable Tax law. All such withheld amounts shall be treated as delivered to Seller hereunder. 

(b)Seller shall be responsible for timely reporting, filing and paying all Taxes resulting from or payable in connection with the sale of the Purchased Assets pursuant to this Agreement, regardless of the Person on whom such Taxes are imposed by applicable law, except that any transfer fee or other charge incurred by Buyer to effect the transfer or assignment of title or other record ownership of any of the Purchased Assets shall be the sole responsibility of Buyer.  

Section 1.10.Proration. The Parties shall allocate costs and payments of the Business as of the Closing, with all costs and payments of the Business prior to the Closing allocated to Seller and all costs and payments of the Business subsequent to the Closing allocated to Buyer. Except as otherwise set forth herein, each Party shall pay its own costs and expenses related to the Transaction. To the extent feasible, at the Closing, Buyer and Seller shall prorate as of the Closing, in accordance with their respective obligations herein, any costs or payments relating to the Purchased Assets that relate to periods both before and after Closing which become due and payable after the Closing with respect to (i) the Purchased Assets, and (ii) the Assigned Contracts (as defined below).  

Section 2.2.No Conflicts; Consents. The execution, delivery and performance by Seller of this Agreement and the documents to be delivered hereunder, and the consummation of the Transaction, do not and will not: (a) violate or conflict with the certificate of formation, operating agreement or other organizational documents of Seller; (b) violate or conflict with any judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Seller or the  

6 

Purchased Assets; (c) conflict with, or result in (with or without notice or lapse of time or both) any violation of, or default under, or give rise to a right of termination, acceleration or modification of any obligation or loss of any benefit under any contract or other instrument to which Seller is a party or to which any of the Purchased Assets are subject; or (d) result in the creation or imposition of any Encumbrance on the Purchased Assets. Except as set forth on Schedule 3.2, no consent, approval, waiver or authorization is required to be obtained by Seller from any person or entity (including any governmental authority) in connection with the execution, delivery and performance by Seller of this Agreement and the consummation of the Transaction, including the assignment of any of the Assigned Contracts (as hereinafter defined).

Section 2.4.Sufficiency of Assets. The Purchased Assets constitute all the properties, assets, contracts and rights whether tangible or intangible which are used or necessary to operate the business of the Seller in the manner presently conducted (the “Business”). 

Section 2.5.Assigned Contracts. Schedule 2.5 includes each contract included in the Purchased Assets and being assigned to and assumed by Buyer (the “Assigned Contracts”). Each Assigned Contract is valid and binding on Seller in accordance with its terms. None of Seller or, to Seller’s knowledge, any other party thereto is in breach of or default under (or is alleged to be in breach of or default under), or has provided or received any notice of any intention to terminate, any Assigned Contract. There are no setoffs, counterclaims or disputes existing or asserted with respect to any such Assigned Contract, and Seller has not made any agreement with any other party thereto for any deduction from or increase to any amount payable thereunder. There are no facts, events or occurrences which in any way impair the validity or enforcement of any Assigned Contract or tend to reduce or increase the amounts payable thereunder. Seller has not, directly or indirectly, by operation of law or otherwise, transferred or assigned all or any part of its right, title or interest in and to any Assigned Contract to any other Person. No Assigned Contract automatically terminates or allows termination by the other party thereto as a result of the completion of the Transaction. At and after the Closing, Buyer shall have and shall be entitled to exercise all of its rights under each Assigned Contract, without the payment of any additional amounts or consideration other than ongoing fees, royalties or payments that Seller would otherwise be required to pay had the Transaction not occurred. There is no contract of service in force between Seller and any of its directors, shareholders, officers or employees which is not terminable by Seller without compensation on less than three (3) months’ notice given at any time or which provides for compensation specifically in connection with the Transaction. There are no  

7 

consultancy or management services agreements in existence between Seller and any other Person with respect to the Business.

Section 2.6.No Undisclosed Liabilities. Seller does not directly or indirectly own or have any capital stock or other equity interest in any Person. Except (a) to the extent and for the amount reflected as a liability on the balance sheet included in the financial statements provided to Buyer, or (b) liabilities incurred in the ordinary course of business since the date of the balance sheet included in such financial statements (none of which will or may reasonably be expected to have an adverse effect upon the Business), Seller does not have any liabilities whatsoever, known or unknown, asserted or unasserted, liquidated or unliquidated, accrued, absolute, contingent, or otherwise, there is no basis for any claim against Seller or any of the Purchased Assets for any such liability and there is no basis for any such liability to become the liability of Buyer from and after the Closing. No representation or warranty of the Seller contained in this Agreement, and no certificate furnished or to be furnished to Buyer at the Closing contains any untrue statement of a material fact or, to Seller’s knowledge, omits to state a material fact necessary in order to make the statements contained herein or therein not misleading in light of the circumstances under which they were made. 

Section 2.7.Tax Matters. Seller has timely and properly filed all Tax returns that it was required to file. All such Tax returns were complete and correct in all respects and were prepared in compliance with all applicable laws. All Taxes owed by Seller have been paid. Other than a filing extension until October 2023 with respect to its Tax return for 2022, Seller is not the beneficiary of any extensions of time within which to file any Tax return. No claim has ever been made by an authority in a jurisdiction where Seller does not file Tax returns that Seller is or may be subject to taxation by that jurisdiction. There are no Encumbrances on any of the Purchased Assets that arose in connection with any failure (or alleged failure) to pay any Tax. 

Section 2.9.Non-foreign Status. Seller is not a “foreign person” as that term is used in Treasury Regulations Section 1.1445-2. 

Section 2.10.Legal Proceedings. Except as set forth on Schedule 2.10, there is no claim, action, suit, proceeding or governmental investigation (“Action”) of any nature pending or, to Seller’s knowledge, threatened against or by Seller (a) relating to or affecting the Purchased Assets or the Assumed Liabilities; or (b) that challenges or seeks to prevent, enjoin or otherwise delay the Transaction. No event has occurred or circumstances exist that may give rise to, or serve as a basis for, any such Action. Seller is in compliance with all laws, permits, orders, ordinances, rules and  

8 

regulations, whether civil or criminal, of any federal, state, local or foreign governmental authority applicable to the Business and has not committed any violation of any law applicable to the Purchased Assets and/or the operation of the Business.

Section 2.11.Insolvency. No order has been made or petition presented or resolution passed for the winding up of Seller, nor has any distress execution or other process been levied against Seller or action taken to repossess goods in the possession of Seller. Seller has not made or proposed any arrangement or composition with creditors or any class of its creditors. Seller will be solvent upon the consummation of the Transaction. 

Section 2.12.Investment Intent. To the extent applicable, each Seller Group Party is acquiring the Buyer Parent Common Stock for investment for its own account for investment only, and not with a view to any resale or public distribution thereof. Each Seller Group Party, as applicable, shall not offer to sell or otherwise dispose of such Seller Group Party’s Buyer Parent Common Stock in violation of any applicable laws to any such offer, sale or other disposition. Such Seller Group Party acknowledges that (a) the equity interests represented by the Buyer Parent Common Stock have not been registered under the Securities Act of 1933, or any state securities laws, and neither Buyer nor Buyer Parent will be obligated to register any such equity interests; and (b) such Seller Group Party must bear the economic risk of its investment in such equity interests for an indefinite period of time. Such Seller Group Party has knowledge and experience in financial and business matters such that it is capable of evaluating the merits and risks of acquiring and holding such equity interests. 

9 

Section 3.1.Organization and Authority of Buyer; Enforceability. Buyer is a limited liability company duly organized, validly existing and in good standing under the laws of the state of Delaware. Buyer has full limited liability company power and authority to enter into this Agreement and the documents to be delivered hereunder, to carry out its obligations hereunder and to consummate the Transaction. The execution, delivery and performance by Buyer of this Agreement and the documents to be delivered hereunder and the consummation of the Transaction have been duly authorized by all requisite action on the part of Buyer. This Agreement and the documents to be delivered hereunder have been duly executed and delivered by Buyer, and (assuming due authorization, execution and delivery by Seller) this Agreement and the documents to be delivered hereunder constitute legal, valid and binding obligations of Buyer enforceable against Buyer in accordance with their respective terms. 

Section 3.2.No Conflicts; Consents. The execution, delivery and performance by Buyer of this Agreement and the documents to be delivered hereunder, and the consummation of the Transaction, do not and will not: (a) violate or conflict with the certificate of incorporation, bylaws or other organizational documents of Buyer; or (b) violate or conflict with any judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Buyer. No consent, approval, waiver or authorization is required to be obtained by Buyer from any person or entity (including any governmental authority) in connection with the execution, delivery and performance by Buyer of this Agreement and the consummation of the Transaction. 

Section 3.3.Legal Proceedings. There is no Action of any nature pending or, to Buyer’s knowledge, threatened against or by Buyer that would or would reasonably expected to impede the ability of the Buyer Group Parties to consummate the transactions contemplated by this Agreement. No event has occurred or circumstances exist that may give rise to, or serve as a basis for, any such Action. 

Section 3.5.Brokers. No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the Transaction based upon arrangements made by or on behalf of Buyer. 

10 

Section 3.6.Independent Investigation. Buyer has conducted its own independent investigation, review and analysis of the Purchased Assets, and acknowledges that it has been provided adequate access to the personnel, properties, assets, premises, books and records, and other documents and data of Seller for such purpose. Buyer acknowledges and agrees that: (a) in making its decision to enter into this Agreement and to consummate the Transaction, Buyer has relied solely upon its own investigation and the express representations and warranties of Seller set forth in this Agreement; and (b) neither Seller nor any other Person has made any representation or warranty as to the Purchased Assets or this Agreement, except as expressly set forth in this Agreement. 

Section 4.2.Confidentiality. Each Party shall ensure that all (i) information not available to the general public concerning the Business and financial affairs with respect to a Party hereto, (ii) analyses, compilations, forecasts, studies and other documents prepared on the basis of such information by the Parties or their agents, representatives, any related Person, employees or consultants, and (iii) any information clearly marked as “Confidential” by the disclosing Party (the  

11 

“Confidential Information”) which such Party or any of its respective officers, directors, employees, counsel, agents, or accountants may have obtained, or may hereafter obtain, from the other Party (or create using any such information) relating to the financial condition, results of operations, Business, properties, assets, liabilities or future prospects of the other Party, any related person of the other Party or any customer or supplier of such other Party or any such related person shall not be published, disclosed or made accessible by any of them to any other Person at any time or used by any of them, in each case without the prior written consent of the other Party; provided, however, that the restrictions of this sentence shall not apply (A) as may otherwise be required by applicable law, (B) to the extent such Confidential Information shall have otherwise become publicly available, and (C) as to Buyer, to disclosure by or on its behalf to regulatory authorities or other third parties whose consent or approval may be required to consummate the Transaction and to its lenders and professionals for the purpose of obtaining financing of such Transaction. Seller shall ensure that all Confidential Information relating to the financial condition, results of operations, Business, properties, assets, liabilities or future prospects of the Buyer, any related person of the Buyer or any customer or supplier of the Buyer or any such related person shall not be published, disclosed or made accessible by any of them to any other Person at any time or used by any of them, in each case without the prior written consent of the Buyer; provided, however, that the restrictions of this sentence shall not apply (1) as may otherwise be required by applicable law, (2) to the extent such Confidential Information shall have otherwise become publicly available, and (3) as to Buyer, to disclosure by or on its behalf to regulatory authorities or other third parties whose consent or approval may be required to consummate the Transaction and to its lenders and professionals for the purpose of obtaining financing of such Transaction.

Section 4.4.Transfer Taxes. All transfer, documentary, sales, use, stamp, registration, value added and other such Taxes and fees (including any penalties and interest) incurred in connection with this Agreement and the documents to be delivered hereunder shall be borne and paid by Seller when due. Seller shall, at its own expense, timely file any Tax return or other document with respect to such Taxes or fees (and Buyer shall cooperate with respect thereto as necessary). 

Section 4.5.Name Change. Seller agrees that from and after the Closing, Seller shall cease, and shall cause any of its affiliates to cease, using the names “RAN”, “RAN CoPacking”, and “RANCO” and any substantially similar names which would reasonably be likely to lead to consumer confusion of an affiliation with Buyer, any of its affiliates, the Business, or activities engaged in by Buyer or any of its affiliates. Seller further agree that as soon as practicable, but in no event later than five (5) days after the Closing, Seller shall take all such action as may be necessary to amend its articles of organization and operating agreement to change the name of Seller such that it ceases to refer to the name “RAN”, “RAN CoPacking”, or “RANCO”.  

Section 4.6.Cooperation. Subject to the terms and conditions of this Agreement, the Parties shall cooperate fully with each other and their respective counsel and accountants in connection with, and take or cause to be taken and do or cause to be done, any actions required to  

12 

be taken under applicable law to make effective the Transaction. On or after the Closing, the Parties shall, on request, cooperate with one another by furnishing any additional information, executing and delivering any additional documents and instruments, including contract assignments, and doing any and all such other things as may be reasonably required by the Parties or their counsel to consummate or otherwise implement the transactions contemplated by this Agreement. Should Seller, in its reasonable discretion, determine after the Closing that books, records or other materials constituting Purchased Assets are still in the possession of Seller, Seller shall promptly deliver them to Buyer at no cost to Buyer. Seller hereby agrees to cooperate with Buyer to ensure a proper transition of all customers with respect to billing and customer service activities.

(a)Undertaking any activities at the direction of, or otherwise on behalf of Buyer Parent or any of its subsidiaries (including Buyer) or affiliates as an employee or consultant of Buyer or any affiliate of Buyer; or 

(b)Owning (other than through a trust over which the Seller Group Party does not have control) capital stock or other equity interests of any Person whose securities are listed on a national securities exchange so long as (i) such Seller Group Party, together with its affiliates, and any member of a group in which such Seller Group Party or any of its affiliates is a party, do not own more than one percent (1%) of the outstanding voting power of such Person and (ii) such capital stock or other equity interests of such Person are held by such Seller Group Party solely as a passive investment. 

13 

restrictions set forth in this subclause (a) shall not limit any party’s ability to engage in any general advertising or general solicitation (in whatever form or medium) not targeted at the employees of Buyer Parent or any subsidiary of Buyer Parent (including Buyer) or apply in respect of any Person (i) who responds to general advertising or general solicitation (in whatever form or medium) not targeted at employees of Buyer Parent or any subsidiary of Buyer Parent (including Buyer), or (ii) whose employment or engagement with Buyer Parent or any subsidiary of Buyer Parent (including Buyer) was terminated by Buyer Parent or any subsidiary of Buyer Parent (including Buyer), as the case may be, (b) hire any individual who was known, after reasonable inquiry, to have been employed by Buyer Parent or any subsidiary of Buyer Parent (including Buyer), within the six (6) month period prior to the date of such hiring (provided that the restrictions set forth in this subsection (b) shall not apply in respect of any Person whose employment or engagement with Buyer Parent or any subsidiary of Buyer Parent (including Buyer) was terminated by Buyer Parent or any subsidiary of Buyer Parent (including Buyer), as the case may be) or (c) encourage, solicit or induce, or attempt to encourage, solicit or induce, any customer, client or business partner of Buyer Parent or any subsidiary of Buyer Parent (including Buyer) to terminate or materially reduce such person’s or entity’s relationship with or services to Buyer Parent or any subsidiary of Buyer Parent (including Buyer), as applicable.

Section 4.9.Restrictions on Disparagement. Subject to any permissible disclosures under applicable laws, each Seller Group Party agrees, for itself and not for any other Seller Group Party, that contingent upon Buyer’s continued compliance with its obligation to pay the Deferred Cash Consideration, if applicable, due and owing, and subject to permitted setoffs, under the terms of this Agreement, such Seller Group Party shall during the Restricted Period, except as otherwise mutually agreed in writing by the parties hereto, and the Restricted Persons shall not, directly or indirectly, whether through any of its or their respective officers, directors, managers, employees or agents or otherwise make any disparaging, critical, adverse, derogatory, negative or false statement or comment about Buyer Parent or any subsidiary of Buyer Parent (including Buyer) or any of its or their respective affiliates, directors, officers or employees. 

Section 4.10.Buyer Parent Guaranty. Buyer Parent unconditionally and irrevocably guarantees to Seller and its successors and assigns the full and timely performance of Buyer’s obligations required to be performed at and after the Closing, including the obligation to pay the Deferred Cash Consideration pursuant to this Agreement as the same is now or may hereafter be in effect (collectively, the “Guaranteed Buyer Obligations”). Buyer Parent acknowledges and agrees that its guaranty is full, absolute and unconditional, is a guaranty of performance and not merely of collection and is in no way conditioned or contingent upon any attempt to collect from Buyer, and no extension, increase, modification, amendment, waiver, consent, release or extinguishment of any Guaranteed Buyer Obligation, or other change in any Guaranteed Buyer Obligation, whether by agreement of Buyer and Seller, decree in any bankruptcy proceeding or otherwise, will affect the continuing validity and enforceability of its guaranty, nor will such validity and enforceability be affected by any lack of validity or enforceability of any obligation of Buyer as a result of the application of any bankruptcy, insolvency, moratorium or other similar Law relating to creditors’ rights and general principles of equity to Buyer. Buyer Parent hereby waives, for the benefit of Seller, to the fullest extent permitted by applicable Law, any defenses or benefits that may be derived from or afforded by Law that limit the liability of or exonerate guarantors or sureties, including those which would otherwise require any election of remedies by Seller (other than payment of the applicable Guaranteed Buyer Obligations), and further waives  

14 

any notice (including notice of acceptance or nonpayment), presentment, demand, performance, protest, suit or other action as the same pertains to Buyer or any of the applicable Guaranteed Buyer Obligations, or any right to require Seller to proceed against Buyer or to exhaust any security held by Seller, or to pursue any other remedy with respect to any of the applicable Guaranteed Buyer Obligations.

15 

(a)Indemnification By Seller Group Parties. Subject to the limitation and other provisions set forth herein, Seller and Founders, jointly and severally, shall defend, indemnify and hold harmless Buyer, its affiliates and their respective stockholders, members, managers, directors, officers, employees, and agents (the “Buyer Indemnified Parties”) from and against all claims, judgments, damages, liabilities, settlements, losses, costs and expenses, including attorneys’ fees and disbursements (collectively, “Buyer Losses”), arising from or relating to: 

(i)any inaccuracy in or breach of any of the representations or warranties of Seller or Founders contained in this Agreement or any document to be delivered hereunder;  

(ii)any breach or non-fulfillment of any covenant, agreement or obligation to be performed by Seller or Founders pursuant to this Agreement or any document to be delivered hereunder; 

(iii)all Excluded Liabilities and Excluded Assets; or 

(iv)any third-party claim based upon, resulting from or arising out of the business, operations, properties, assets or obligations of Seller or any of its Affiliates (other than the Purchased Assets or Assumed Liabilities) conducted, existing or arising on or prior to the Effective Date. 

(i)any inaccuracy in or breach of any of the representations or warranties of Buyer contained in this Agreement or any document to be delivered hereunder; or 

(ii)any breach or non-fulfillment of any covenant, agreement or obligation to be performed by Buyer pursuant to this Agreement or any document to be delivered hereunder; 

(iii)any Assumed Liability; or  

(iv)Liability arising out of the Buyer’s ownership or operation of the Purchased Assets or the Business after Closing, other than the Excluded Liabilities. 

16 

Section 5.3.Limitations on Indemnification. 

(a)Notwithstanding anything contained in this Agreement to the contrary, in no event shall an Indemnifying Party be liable under this Agreement for any consequential or punitive damages, except (1) to the extent any such damages are awarded and paid or payable by an Indemnified Party to a third party in connection with any third party claim or (2) in the case of fraud or willful misconduct. 

Section 5.4.Manner of Payment. 

(b)For the purposes of determining the value of each share of Buyer Parent Common Stock to be forfeited by a Seller Group Party pursuant to this Agreement, the value of a share of Buyer Parent Common Stock shall be the 10-trading day volume weighted average trading price of a share of Buyer Parent Common Stock on the OTCQB ending on the last trading day immediately prior to the date such amount becomes payable. 

Section 5.6.Effect of Investigation. The representations, warranties and covenants of the Indemnifying Party, and the Indemnified Party’s right to indemnification with respect thereto,  

17 

shall not be affected or deemed waived by reason of any investigation made by or on behalf of the Indemnified Party or by reason of the fact that the Indemnified Party knew or should have known that any such representation or warranty is, was or might be inaccurate.

Section 5.7.Right of Set-off. In the event of a breach by any Seller Group Party of the provisions of this Agreement, Buyer is hereby authorized at any time and from time to time, to the fullest extent permitted by law, and after five (5) business days prior written notice to the Seller, to set-off and apply any and all indebtedness or other amounts (including any unpaid portion of the Purchase Price and any unissued Buyer Parent Common Stock) at any time owing by Buyer to the Seller and/or Founders against any and all of the obligations of the Seller or Founders now or hereafter existing. 

Section 6.1.Expenses. All costs and expenses incurred in connection with this Agreement and the Transaction shall be paid by the Party incurring such costs and expenses. 

18 

Section 6.3.Headings. The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement. 

Section 6.4.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. 

Section 6.5.Entire Agreement. This Agreement and the documents to be delivered hereunder constitute the sole and entire agreement of the Parties to this Agreement with respect to the subject matter contained herein, and supersede all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter. 

Section 6.6.Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the Parties hereto and their respective successors and permitted assigns. No Party may assign its rights or obligations hereunder without the prior written consent of the other Parties, which consent shall not be unreasonably withheld or delayed. No assignment shall relieve the assigning Party of any of its obligations hereunder. 

Section 6.8.Amendment and Modification. This Agreement may only be amended, modified or supplemented by an agreement in writing signed by each Party hereto. 

19 

Section 6.9.Waiver. No waiver by any Party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the Party so waiving. No waiver by any Party shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any right, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. 

Section 6.10.Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction). 

Section 6.11.Submission to Jurisdiction. Any legal suit, action or proceeding arising out of or based upon this Agreement or the Transaction may be instituted in the federal courts of the United States of America or the courts of the State of Delaware, and each Party irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action or proceeding. 

Section 6.12.Waiver of Jury Trial. Each Party acknowledges and agrees that any controversy which may arise under this Agreement is likely to involve complicated and difficult issues and, therefore, each such Party irrevocably and unconditionally waives any right it may have to a trial by jury in respect of any legal action arising out of or relating to this Agreement or the Transaction. 

Section 6.13.Specific Performance. The Parties agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the Parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy to which they are entitled at law or in equity. 

Section 6.14.Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement. 

[signature page follows]

20 

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.

21 

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR STATE SECURITIES LAWS, AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT THERETO UNDER SUCH ACT AND APPLICABLE LAWS OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS AND AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED. ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE TERMS OF THIS NOTE.

$[●],000,000Whitefish, Montana 

30 June 2023 

1.Loan 

1.1RANCO, LLC, a Delaware liability company (the “Company”), for value received, hereby promises to pay to [●] (the “Lender”) in lawful money of the United States, at the address of the Lender set forth below, the principal amount of [●] Dollars ($●), together with interest as set forth below (the “Loan”), on the dates set forth in Exhibit A. The Company shall pay the unpaid principal of, and accrued and unpaid interest on, the Loan in full on the date (the “Maturity Date”) that is fifteen (15) months following the closing of the Acquisition (as defined below).  

1.2This Series A Promissory Note (this “Note”) is made by Company in accordance with the Debt Assumption Agreement (the “Assumption Agreement”) among Company, Lender, and Company’s parent CFN Enterprises, Inc. (“Parent”), pursuant to which Company assumed the obligations of Parent under the Original Note and the other Series 1 Notes (each as defined in the Assumption Agreement) which were incurred to finance a portion of the expenses of Company in connection with Company’s acquisition, on or about the date hereof, of a business or commercial enterprise (the “Acquisition”) and/or carrying on such business, as disclosed to Lender prior to the date of this Note. In accordance with the Assumption Agreement, this Note replaces the Original Note. 

2.Interest 

2.1To the extent it may lawfully do so, the Company hereby agrees not to insist upon or plead or in any manner whatsoever claim, and will resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted, now or at any time hereafter in force, in connection with any claim, action or proceeding that may be brought by Lender in order to enforce any right or remedy under this Note. If under any circumstances whatsoever, interest in excess of the maximum lawful rate authorized under applicable law is paid by the Company to Lender with respect to indebtedness evidenced hereby, such excess shall be applied by Lender to the unpaid principal balance of any such indebtedness or be refunded to the Company, the manner of handling such excess to be at Lender’s election. 

1

3.Security 

3.1This Note is one of the Series A Notes referred to in, and is entitled to all the benefits of, a Security and Collateral Agency Agreement dated as of 30 June 2023, among Borrower, Lender, and Ezra I. Shehebar, as collateral agent for the Lender and other lenders (as supplemented, amended and modified from time to time, the “Security Agreement”). Each capitalized term not otherwise defined herein shall have the meaning set forth in the Security Agreement. The Security Agreement contains provisions for the acceleration of the maturity of the Series A Notes upon the happening of certain stated events of default, and for rights in certain collateral security for repayment of the Series A Notes. 

4.Terms of Payment 

4.1Mandatory Payments. Payments of principal and accrued and unpaid interest and other amounts payable hereunder shall be due and payable on the dates set forth in Exhibit A, subject in any event to acceleration upon the occurrence of an Event of Default (as defined in the Security Agreement). Upon payment in full of all principal and interest payable hereunder, this Note shall be surrendered to the Company for cancellation. The Company may not prepay this Note prior to the Maturity Date without the consent of the Lender. 

4.2Manner of Payment. All payments made hereunder shall be paid to Lender at such place as may be designated in writing by Lender, in immediately available United States funds without any deduction whatsoever including, but not limited to, any deduction for any setoff or counterclaim. 

5.Representations and Warranties of the Lender 

The Lender represents and warrants to the Company as follows:

5.1Investment Experience. The Lender is either an accredited investor within the meaning of Regulation D prescribed by the Securities and Exchange Commission pursuant to the Securities Act of 1933, as amended (the “Act”) or, by virtue of the Lender’s experience in evaluating and investing in private placement transactions of securities in companies similar to the Company, the Lender is capable of evaluating the merits and risks of the Lender’s investment in the Company and has the capacity to protect the Lender’s own interests. 

5.2Investment Intent. The Lender is acquiring this Note for investment for the Lender’s own account and not with a view to, or for resale in connection with, any distribution thereof. The Lender understands that the Note has not been registered under the Act by reason of a specific exemption from the registration provisions of the Act that depends upon, among other things, the bona fide nature of the investment intent as expressed herein. 

5.3Knowledge of Company. The Lender is familiar with, or has had the opportunity to acquire knowledge of, the nature of the Company’s business, its financial prospects and the merits and risks of an investment in the Company, and has the capacity to protect its own interests. 

2

6.1Governing Law. This Note shall be governed by and construed according to the laws of the State of New York. 

6.2Successors and Assigns. Except as otherwise expressly provided herein, this Note may be transferred, by operation of law or otherwise, only with the prior written consent of the Company, at its sole and absolute discretion, upon its surrender to the Company for registration of transfer, duly endorsed, or accompanied by a duly executed written instrument of transfer in form satisfactory to the Company. 

[Signature page follows]

3

IN WITNESS WHEREOF, the Company has caused this Note to be issued as of the date first written above.

4

EXHIBIT A

REPAYMENT DATES

If any date set forth above is not a business day, then payment shall be due and payable on the business day immediately preceding such date. To the extent not previously repaid, the unpaid amount of the Loan shall be paid in full in cash by the Company on the Maturity Date.

5

This Packwoods Private Label Services and Intellectual Property Licensing Agreement (“Agreement”) dated July 1, 2023 (the “Effective Date”), is entered into by and among PW Industries LLC, a Wyoming limited liability company (“PW”), RS Distributions LLC, a Delaware limited liability company (“RS”), Packaging Innovations LLC, a Wyoming limited liability company (“PI”), and RANCO, LLC, a Delaware limited liability company (“RA”). PW, RS, PI, and RA may be referred to together as the “Parties”, and each individually as a “Party”. Unless otherwise defined elsewhere in the Agreement, capitalized terms have the meaning ascribed in the attached Exhibit A, which is hereby incorporated into this Agreement by reference.

RECITALS

WHEREAS, RA is a commercial Manufacturer, Packager, Distributor, and retailer of hemp-based inhalable and edible products containing less than 0.3% delta-9 THC by weight, and of nicotine-based inhalable products, and RA handles procurement, logistics, Manufacturing, designing, marketing, and sales for a portfolio of brands; and

WHEREAS, PW owns or is licensed to use one hundred percent (100%) of the Intellectual Property behind the “Packwoods” brand of products, and licenses its Intellectual Property to a network of partners (including RS and PI) to support the commercialization of its brand; and

WHEREAS, RS Manufactures and Distributes hemp-derived consumer product goods, and holds the exclusive rights to sublicense the Packwoods brand in the hemp space on a global basis; and

WHEREAS, PI Manufactures and Distributes nicotine goods, and holds the exclusive rights to sublicense the Packwoods brand in the nicotine space; and

WHEREAS, the Parties wish for RA to Manufacture, Package, Distribute and sell at wholesale and retail a variety hemp-based inhalable (pre-roll and vaporizer) and edible products (“Hemp Products”); to Package, Distribute and sell at wholesale and retail disposable nicotine-based inhalable vaporizer products (“Nicotine Products”); and to purchase Packaging materials to be used with Packwoods-branded cannabis products (containing more than 0.3% delta-9 THC by weight) and Distribute those Packaging materials to licensed cannabis manufacturers designated by PW, using PW’s, RS’s and PI’s Licensed Property;

NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the mutual receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

1

AGREEMENT

ARTICLE I 
PRIVATE LABEL SERVICES AND FEES

I.1Recitals. The foregoing Recitals are hereby incorporated into this Agreement as contractual terms to the same extent as if set forth herein in full. 

I.2Licenses to RS and PI. PW, for itself and on behalf of its Affiliates, hereby grants to RS a non-transferable, irrevocable, exclusive (even as to PW and its Affiliates), worldwide license, with the right to sublicense, to use and exploit the Packwoods brands in connection with any and all hemp-derived products, including hemp-based inhalable and edible products. PW, for itself and on behalf of its Affiliates, hereby grants to PI a non-transferable, irrevocable, exclusive (except with certain carve outs as set forth in Exhibit B attached hereto and incorporated by reference) (even as to PW and its Affiliates), worldwide license, with the right to sublicense, to use and exploit the Packwoods brands in connection with all nicotine-derived products, including the disposable nicotine-based inhalable vaporizer products known as PacksPod. Within 15 days after execution of this Agreement, PW shall provide RA with copies of written contracts between PW and RS, and between PW and PI, documenting the aforementioned licenses to use and exploit the Packwoods brands in connection with hemp-derived and nicotine-derived products, however, any failure of PW to do so shall in no way impede or alter the validity of this Agreement and RA shall be entitled to rely on the licenses granted in this Section 1.2. By virtue of this Agreement, RS and PI are sublicensing the exclusive licenses to use and exploit and Packwoods brands in connection with all hemp-derived products and all nicotine-derived products (other than Glones, Packwraps, and BarePack products and any other carve outs as set forth in Exhibit B attached hereto). If, at any time during the Term of this Agreement, PW’s licensing agreement with RS is terminated for any reason, such that RS no longer holds the right to use the Packwoods brands in connection with hemp-derived products, then this Agreement shall remain in full effect, except that, following such termination, all royalty payments that would have been due and payable from RA to RS shall instead be due and payable from RA to PW, and all contractual rights and obligations assigned to RS by this Agreement shall be automatically assigned to and assumed by PW. Likewise, if, at any time during the Term of this Agreement, PW’s licensing agreement with PI is terminated for any reason, such that PI no longer holds the right to use the Packwoods brands in connection with nicotine-derived products, then this Agreement shall remain in full effect, except that, following such termination, all royalty payments that would have been due and payable from RA to PI shall instead be due and payable from RA to PW, and all contractual rights and obligations assigned to PI by this Agreement shall be automatically assigned to and assumed by PW. 

I.3Engagement for Services. PW, RS, and PI hereby engage RA to Manufacture, Package, Distribute and sell at wholesale and retail Hemp Products under the Packwoods brand, on an exclusive basis during the Term throughout the Territory, except for the Packwoods product lines entitled “Glones,” “Packwraps,” and “BarePack” which are expressly excluded from this Agreement and any other carve outs as set forth in Exhibit  

2

B attached hereto; to Package and Distribute to Ultimate Product Distributors, LLC (“UPD”), a New Jersey limited liability company with headquarters in Hackensack, New Jersey, Nicotine Products under the Packwoods brand, on an exclusive basis (except with certain carve outs as set forth in Exhibit B attached hereto) during the Term in the United States, unless PI expressly agrees in writing to allow sales of Nicotine Products under the Packwoods brand to different or additional distributors during the Term; to sell at wholesale and retail or to any Distributor Nicotine Products anywhere outside the United States, on an exclusive basis (except with certain carve outs as set forth in Exhibit B attached hereto and incorporated by reference) during the Term; and to sell Packaging and Labeling materials to any licensed Manufacturers of Packwoods-branded cannabis products in United States, on an exclusive basis (except with certain carve outs as set forth in Exhibit B attached hereto and incorporated by reference) during the Term. RA agrees to provide or cause to be provided such services in accordance with the terms and conditions of this Agreement.

I.4Grant of License and Right to Use.  

(a)RS, and PI hereby grant to RA, a limited, revocable (but only in accordance with the terms hereof), exclusive, non-transferable, non-sublicensable (except as set forth in Section I.4(b)) license and right to use the Licensed Property for the limited purpose of performing the Private Label Services (all such rights, the “License”) as set forth herein during the Term. PW hereby consents and agrees to such grant of the License to RA. 

(b)RA may sublicense only such Licensed Property strictly necessary for the Manufacturing, Packaging, warehousing, Distribution, and retail sale of the Branded Products, provided that (a) RA shall ensure that each sublicensee complies with the terms and conditions of this Agreement; and (b) each sublicense will terminate automatically effective as of the earlier of (i) termination of this Agreement, and (ii) the date the sublicensee ceases to provide services for RA. Such sublicense will not relieve RA of any of its obligations or liabilities under this Agreement and RA will be primarily and fully liable to PW, RS, and PI for the full and timely performance and observance by a sublicensee of all of the terms and conditions of this Agreement sublicensed to sublicensee (and, for clarity, PW, RS, and PI shall have all of the same remedies against RA for a breach by sublicensee or the failure of any sublicensee to so perform and observe such terms and conditions herein as if the failure of performance or observance was directly by RA itself). RA’s engagement of a sublicensee shall not in any way limit RA’s obligations or responsibilities hereunder. 

(c)The Parties acknowledge that the information underlying the License represents valuable Trade Secrets of PW, RS, and PI. 

I.5Private Label Services. Upon the terms and conditions contained in this Agreement, the Parties acknowledge and agree that RA’s Private Label Services shall include the services listed in this Section I.5 and such other services that PW may reasonably request from time to time. 

(a)RA shall Manufacture, Package, Distribute, and sell at wholesale and retail Branded Products in accordance with the Formulations and Specifications that are pre-approved in writing by PW prior to RA’s use, and the packaging instructions, and in compliance with the policies, procedures, Quality Control Standards, and Quality Control  

3

Operations set forth in this Agreement that are pre-approved in writing by PW prior to such use, and any other Preventive Measures that are pre-approved in writing by PW prior to such use. RA and its Quality Control Personnel shall ensure that all Branded Products are of consistent quality, composed of safe and wholesome Ingredients, and Manufactured, prepared, Packaged, held, and Labeled under conditions compliant with PW’s standards. During the Term, RA shall provide PW, RS, and PI with reasonable access to the Location to overview the Manufacture and Distribution of the Branded Products.

(b)Product Supplies, Materials and Packaging.  

(1)RA shall be responsible for the timely procurement of all Hemp Product Raw Materials, Ingredients, Labels, Packaging, and any other materials needed for the Manufacture, production, Labeling, and Packaging of Hemp Products that have been pre-approved by RS (collectively, “Product Supplies”) under and in accordance with this Agreement.  RA agrees to order from vendors approved by PW and at prices pre-approved by PW regarding all Labels and Packaging to be Distributed to licensed cannabis manufacturers in accordance with Section I.5(c), and to order from vendors approved by PI all PacksPod prefilled hardware devices and packaging. 

(2)RA shall ensure that the quality, materials, and general characteristics of Branded Products (including, without limitation, texture, color, viscosity, and overall appearance) are substantially similar to the Branded Product samples presented to and approved by PW.  

(c)Labeling and Packaging Procurement and Expenses.  

(1)RA shall not Manufacture or Distribute any cannabis products pursuant to this Agreement, but shall purchase Packaging and Labeling materials from PW-approved vendors and at prices pre-approved by PW– including empty Packaging materials, and unfilled disposable vaping devices and cartridges – and Distribute such Packaging and Labeling materials to licensed manufacturers of PW’s sole choosing regarding Packwoods-branded cannabis products designated by PW. RA shall order from the PW-approved vendors and the PW-approved vendors shall deliver and fulfill all Packaging and Labels materials necessary and required for the Packaging and Labeling of Packwoods-branded cannabis Products, with RA initially paying for the Labels and Packaging expenses, subject to being reimbursed by PW as set forth below. PW shall have the right to sell, collect and keep funds from customers on any packaging and labeling materials currently on order, in its inventory, or already sent to customers at the time of execution of this Agreement or already under an agreement with PW. 

(2)RA shall Label and Package all Branded Products with the Labels and the Packaging in compliance with the packaging instructions that PW provides from time to time (the “Packaging Instructions”).  

(3)PW shall pay to RA a Labels and Packaging fee to reimburse RA for its expenses incurred in purchasing Labels and Packaging for use with Packwoods-branded cannabis products from a PW-approved vendor and at prices pre-approved by PW, and labor spent on cannabis Labeling and Packaging Distribution activities. The amount of the Labeling and Packaging fee charged by RA to PW for cannabis Labels and  

4

Packaging shall the full cost of RA’s cannabis-related Labels and Packaging expenses, including both domestic and international shipping charges, plus an additional 10% charge based on true cost that has been pre-approved by PW to compensate RA for its labor related to cannabis-related Labeling and Packaging. PW shall pay the Labels and Packaging fee to RA within ninety (90) days after receiving each Labels and Packaging invoice from RA. A Labeling and Packaging invoice shall only be issued once such Labels and/or Packaging have been shipped to a customer of PW (i.e., ninety (90) day period commences once Labels and/or Packaging have been shipped to a customer of PW at the sole direction of PW. RA shall make best efforts to purchase at least $1 million in Labels and Packaging materials for Packwoods-branded cannabis products per quarter, or pursuant to PW’s market needs if such needs are less than $1 million per quarter. If at any time PW requests RA to make a purchase of Labels and/or Packaging for cannabis products that is justified and reasonable and RA is unwilling or unable to fulfil, within 30 days of such reasonable request, PW, RS, and PI may, after engaging in good-faith negotiations with RA, all terminate this entire agreement by providing RA with written notice. In that case, PW will assist RA to sell all its current stock and inventory of cannabis Labeling and Packaging materials. If all such inventory is not sold by RA within sixty (60) days of PW’s notice, RA is obligated to sell all remaining inventory to PW, and PW will purchase all remaining inventory from RA, and shall pay the full balance to RA consisting of the full cost of RA’s cannabis-related Labels and Packaging expenses, plus an additional 10% charge on such true costs pre-approved by PW, within nine months of the date RA received the Labels and/or Packaging or at the time PW collects payment for the Labels and/or Packaging, whichever is sooner.

(d)Compliance Testing. With respect to Hemp Products Manufactured by RA at its own facility, upon completion of the Manufacturing, Packaging and Labeling of the Hemp Products and before Distribution or sale of the Hemp Products, RA shall arrange for Compliance Testing on samples of the Hemp Products by a Laboratory, at RA’s cost. RA shall provide RS and/or PW with true and correct copies of all certificates of analysis, upon request by RS and/or PW, within three (3) business days after receipt of such request. In the event the Hemp Products fail Compliance Testing, RA shall notify RS and PW in writing, and RA shall be responsible at its sole expense to use commercially reasonable efforts to remediate, fix, or otherwise replace the Hemp Products that failed Testing. Additionally, RA shall be responsible for ensuring any Hemp Products manufactured by 3^rd parties undergo Compliance Testing before being taken to market.  RA shall not be responsible for arranging Compliance Testing for any other Branded Products that it did not Manufacture at its facility, including all Nicotine Products.  

(e)Distribution and Sales 

(1)Hemp Products. RA will, and is hereby authorized by PW and RS to, Distribute the Hemp Products to any and all wholesale and retail outlets within the Territory, and to sell the Hemp Products directly to any and all consumers within the Territory. RA shall Distribute and sell a monthly minimum of 100,000 units of Hemp Products, beginning six months after the execution of this Agreement. If RA fails to reach or maintain sales of the monthly minimum quantity of hemp units for three consecutive months, the exclusivity provisions of this Agreement found in Articles I.3 and I.4. for Hemp Products may become null and void for all parties to this Agreement in accordance with  

5

RS’s discretion. If after discussions with RA, RS still decides to void the exclusivity for Hemp Products portion of this Agreement, all other portions of this Agreement shall remain in effect, and RS shall give RA at least thirty days’ notice prior to voiding this Agreement.  In that case, RS will assist RA to sell all its current stock and inventory. If all inventory is not sold, RS will purchase all remaining inventory from RA, at true cost plus 5%, within ninety days. RA shall pay to RS a 15% royalty payment on all gross revenues earned from RA’s Distribution and retail sales of all Hemp Products sold under the Packwoods brand. All such royalty payments shall be made within 15 days after the end of each calendar quarter for the first year. After the first twelve months of this Agreement, the royalty payments will be made within 15 days after the end of each calendar month. RS shall have the right to sell and collect funds from customers on any Hemp Products currently on order, in its inventory, or already sent to customers at the time of execution of this Agreement or already under an agreement with RS.

(2)Nicotine Products in United States. RA will, and is hereby authorized by PW and PI to, sell the Nicotine Products exclusively in the United States to UPD. The current price per PacksPod disposable vaporizer containing 12 mL of fluid with 5% nicotine is $6.25.
The arrangement to sell PacksPod exclusively to UPD shall remain in effect until and unless PI directs RA in writing to end the exclusive arrangement with UPD, and then only as directed in writing by PI.  In the event that PI directs RA to end the exclusive arrangement with UPD, then RA will have the option to exclusively distribute Nicotine Products in the United States based upon the same pricing set forth above in this paragraph, such option to be exercised in writing within thirty (30) days of UPD’s termination, provided, however, that, RA shall maintain such exclusive distribute rights only if RA’s monthly sales of Nicotine Products exceed UPD’s average monthly sales in the six (6) months preceding the termination of UPD’s termination.  

RA shall pay to PI a royalty payment of 27.5% per unit of Nicotine Product sold by RA to UPD or any other distributor in United States, and RA shall be entitled to keep the remaining 72.5% per unit sold to compensate RA for the costs and expenses of purchasing, financing, Packaging and Distributing the Nicotine Products. The royalty fee shall initially be paid to PI within 15 days after each calendar quarter for first year.  After the first twelve months of this Agreement, the royalty payments will be made within 15 days after the end of each calendar month.

RA shall purchase the previously Manufactured and prefilled PacksPod hardware devices and packaging exclusively from designated vendors specified by PI. RA shall bear the costs for the Premarket Tobacco Product Applications for PacksPod nicotine products, and shall fully include PI representatives in the process of evaluating the options presented by legal and other experts engaged by RA for this purpose.  RA shall make the purchase order(s) and pay the required deposit(s) in order for the Manufacturer(s) to start production on the Nicotine Products in such number as PI may reasonably request from time to time in writing. A purchase order from UPD shall always constitute a reasonable request from PI. Upon failure to perform on this clause within 30 days of such reasonable request, PW, RS, and PI may, after engaging in good-faith negotiations with RA, all terminate this entire agreement by providing RA with written notice. If exclusivity ends,  

6

RA is not allowed to purchase any additional Nicotine Products without PI’s consent. In that case, PI will assist RA to sell all its current stock and inventory. If all such inventory is not sold within 60 days of PI’s notice, PI will purchase all remaining inventory from RA at true cost plus 5%. PI (and RS as granted by PI) shall have the right to sell and collect funds from customers on any Nicotine Products currently on order, in its inventory, or already sent to customers at the time of execution of this Agreement or already under an agreement with PI.

(3)Nicotine Products Internationally. RA will also, and is hereby authorized by PW and PI to, sell the Nicotine Products to Distributors, retailers, and consumers outside the United States, and shall pay to PI a royalty fee of 15% of all gross revenues earned from any such international sales of Nicotine Products, with the royalty fee to be paid within 15 days after each calendar quarter for first year.  After the first twelve months of this Agreement, the royalty payments will be made within 15 days after the end of each calendar month. RA shall purchase the Nicotine Products hardware devices and packaging exclusively from designated vendors specified by PI.  RA shall Distribute and sell a monthly minimum of 500,000 units of Nicotine Products, beginning twelve (12) months after the execution of this Agreement, provided, however, that RA shall engage in reasonable commercial efforts to Distribute and sell Nicotine Products outside the United States upon execution of this Agreement. If RA fails to reach by the end of the 13^th month, or fails to maintain sales of the monthly minimum quantity of Nicotine Products for three consecutive months, the exclusivity provisions of this Agreement found in Articles I.3 and I.4. for Nicotine Products Internationally may become null and void for all parties to this Agreement in accordance with PI’s discretion, in which case all other portions of this Agreement will remain in full effect. If after discussions with RA, PI still decides to void the portion of this Agreement providing exclusivity for sales and distribution of Nicotine Products outside the United States, PI shall give RA at least thirty days’ notice prior to voiding this Agreement, and PI shall assist RA to sell all its current stock and inventory intended for sales and distribution of Nicotine Products outside the United States. If exclusivity ends, RA is not allowed to purchase any additional Nicotine Products without PI’s consent. If all such inventory is not sold within sixty (60) days of PI’s notice, PI will purchase all such remaining inventory from RA, at fair market value. PI shall have the right to sell and collect funds from customers on any Nicotine Products currently on order, in its inventory, or already sent to customers at the time of execution of this Agreement or already under an agreement with PI. 

(4)RA will, and is hereby authorized by PW to, purchase Packaging and Labeling materials to be used with Packwoods-branded cannabis products Manufactured by licensed cannabis Manufacturers, and shall Distribute and sell such Packaging and Labeling materials to such licensed cannabis Manufacturers designated by PW in accordance with Section I.5(c) above. 

(5)Referral of all Order Inquiries to RA. If PW, RS, or PI receives any inquiries from any retailer or consumer in the Territory regarding purchase orders for any Hemp Products, or any inquiries from any retailer, Distributor, or consumer outside the United States regarding purchase orders for any Nicotine Products, the Party receiving the inquiry shall refer the party making the inquiry to RA, so that the purchase order can be placed with RA.  Any online platform for sales of Branded Products shall be maintained  

7

by RA, with PW, RS, and RI directing any potential purchasers of Branded Products to this online platform, or to a representative of RA designated by RA. All data and analytics collected from PW, RS, or PI customers (i.e., all customer information including names and contact information) gathered by RA, or sent to RA from PW, RS, and/or PI, or customers RA distributes to, shall be saved by RA and provided to PW, RS, and/or PI within 2 days upon request and at expiration or termination of this Agreement. This information shall be considered confidential.

(f)Production Transparency.  

(1) The Branded Product types subject to the License are any and all Hemp Products and Nicotine Products that incorporate any Intellectual Property owned by PW, in existence now or created during the Term, except for the “Glones,” “Packwraps,” and “BarePack” brands and any other carve outs as set forth in Exhibit B attached hereto, which are expressly excluded from the definition of “Branded Products,” and are not covered by this Agreement.  The Parties hereby agree to explore a potential buy-out for the products listed in Exhibit B, which would result in the inclusion of these brands within the definition of “Branded Products” and the scope of the License if the Parties were to reach an agreement with respect to these brands. In addition, RA needs to receive agreed upon pricing on the products listed in Exhibit B in order to include these excluded items in its distribution platform.  

(2)As set forth herein, RA shall Distribute and Manufacture Hemp Products, and Distribute Nicotine Products and/or Labels and/or Packaging for cannabis products in such number as PW, PI, or RS may reasonably request from time to time in writing; however, if at any time RS, PI, or PW requests RA to make a purchase of Hemp Products or Nicotine Products (in United States or outside United States) or Labels and/or Packaging for cannabis products (respectively) that is justified and reasonable, and RA fails to comply with such a request within 30 days of such reasonable request,  PW, RS, and PI may, after engaging in good-faith negotiations with RA, all terminate this entire agreement by providing RA with written notice. 

PW, RS, and PI Approvals. Prior to Distribution or sales of any new type of Branded Products, PW shall have the opportunity to review the Branded Products to verify that the quality, look, and feel of Branded Products are consistent with PW’s Formulations, Specifications, packaging instructions, and Trademarks. Notwithstanding the foregoing, five (5) days after RA has informed PW in writing that any new type of Branded Products is ready for Distribution and sale, if PW has not objected, PW’s approval shall be deemed granted and RA may Distribute and sell the Branded Products for such batch. If PW approves or neglects to answer within 5 days, the next batch of Manufactured Branded Products shall be modified in accordance with PW’s modifications. The rights extended here to PW, extend to RS for Hemp Products and to PI for Nicotine Products. PW, RS and PI have a right to control what Branded Products they would like to sell under this Agreement in their sole discretion, within their respective product categories.

I.6Sales Statements and Marketing 

(a)Sales Statements. At the end of each calendar quarter in which RA has sold or Distributed any Branded Products, RA shall deliver to PW, RS, and PI a statement certified to be accurate by an officer or manager of RA, showing for the preceding month  

8

a detailed accounting of: (1) the quantities sold and sales prices of each of the Branded Products that RA Distributed or sold at retail or wholesale and the date that each such Branded Product was Distributed or sold, including an applicable description and SKU for each type of Branded Product that RA produced in the prior calendar quarter; and (2) such other information as may be reasonably requested by PW, RS, or PI from time to time (each, a “Brand Unit Fee Statement”). RA shall supplement, revise, or correct any Brand Unit Fee Statement delivered to PW, RS, or PI pursuant to this Agreement that is subsequently modified or discovered to have been in any way incomplete or inaccurate, and promptly deliver the new Brand Unit Fee Statement to PW, RS, and PI.

(b)Purchase Order and Sales Notifications for Nicotine Products. Notwithstanding the above provisions, RA is responsible for providing full, real-time transparency to PI into purchase orders made with vendors, sales made to customers, and the logistics details of both ends of the Nicotine Products business. Specifically, if requested in writing by PI, any time a purchase order is made, a sales order is made, Nicotine Products go into transit, or a payment is made by RA for purchases or to RA for sales, notification to PI must be given. PI shall appoint a single point of contact to receive these notifications, and that person shall have the right to request supplemental information. PI may change the point of contact in its sole discretion. PI and RA agree that they will work together to develop systems for visibility in real time into the information detailed above.  

(c)Brand Marketing. PW, RS, and PI shall have the primary responsibility to market the Branded Products to retail outlets and directly to consumers, and to generate sales of the Branded Products, although RA is authorized to conduct any marketing activities to market the Branded Products at its discretion. Notwithstanding the responsibilities above, RA agrees to spend a minimum of $500,000 in year 1 to develop its internal team responsible for the sales and marketing of PW, RS, and PI’s Branded Products, and maintain those levels throughout the Term. Furthermore, in addition to $500,000, RA agrees to sponsor a minimum of 8 hemp and/or tobacco industry trade shows annually and commit a minimum of $1,200,000 towards these shows and other outside promotional and marketing activities. RA agrees to consult with PW, RS, and PI on ways to effectively spend these marketing funds. Finally, RA agrees to provide evidence annually that it has met or exceeded the brand marketing commitments in this clause. After discussions between RA and PW, PI, and/or RS, PW, PI and/or RS have the right to direct funds that are unallocated to other outside promotional and marketing activities towards providing customer promotional samples.  

(d)Storage and Shipment. RA shall have the primary responsibility to store the Branded Products and to ship the Branded Products to Distributors, retail outlets, and directly to consumers.  

(e)Taxes. With respect to any Branded Products Manufactured or Distributed by RA, RA shall be solely responsible for and complete the payment of any applicable local, state, or federal taxes accrued in connection with RA’s purchasing, importing, Manufacturing, Packaging, Labeling, Distribution, or sale of the Branded Products.  

9

ARTICLE II 
PRODUCT INSPECTIONS, WARRANTY & COMPLIANCE

II.1Product Inspections. At any time during the Term, PW, RS, and/or PI shall have the right (upon providing prior written notice to RA) to request that RA (i) engage a Laboratory to perform research and development Testing (the “R&D Testing”) on the Branded Products prior to Labeling and Packaging of the Branded Products for conformance with the Formulations and the Specifications, at RA’s sole cost; (ii) make samples of the unpackaged Branded Products available to PW, RS, and/or PI at the Location for PW, RS, and/or PI’s physical inspection; and, (iii) make any changes to the Manufacture of the Branded Products as PW, RS, or PI instructs.  

II.2Production Records and Record Retention. RA agrees to keep and maintain accurate and complete books and records covering all transactions in furtherance of the Manufacture, Packaging, Labeling and Distribution of the Branded Products. PW, RS and/or PI’s Representatives shall have the right, on reasonable notice during normal business hours, during the Term, and for two (2) years after Termination of this Agreement, to examine all books and records related to the Private Label Services and to make copies. RA must cooperate with PW, RS and/or PI and its Representatives or auditors throughout the examination process, including in the preparation and release of related reports. PW, RS and/or PI has the irrevocable right to have a certified public accountant (“CPA”) inspection, audit and/or make extracts of RA’s records and accounts four times per year, that relate to this Agreement, at PW, RS and/or PI’s sole cost and expense. PW, RS and/or PI will provide RA with a true and correct copy of all audit results and other documents generated by or on behalf of CPA who conducted the audit, within fourteen (14) Calendar Days of receipt of the audit report. Notwithstanding anything to the contrary in this Agreement, in the event that any audit establishes any underpayments by RA, of five percent (5%) or more of any payment hereunder, RA has a duty to reimburse PW, RS and/or PI on demand within ten (10) Business Days of written notice for its actual costs and expenses incurred in that audit, as well as, interest on the underpaid amount, at (i) maximum amount allowed by applicable law, calculated compounded monthly; or (ii) 1.5% per month. In the event that any audit establishes any underpayments by RA, of ten percent (10%) or more of any payment hereunder, PW, RS and/or PI may all terminate this entire agreement immediately with no further force or effect with written notice. 

II.3Product Recalls and Rejected Products.  

(a)RA shall be responsible for at its sole cost and expense all Hemp Product recalls. RA agrees to take any and all actions, that are reasonably necessary and appropriate to effectuate a Hemp Product corrective action, including, without limitation, a Hemp Product recall, and each Party agrees to cooperate with the other Party in such Hemp Product corrective action, including if and as necessary, notifying consumers and wholesale distributors and assisting in the transfer of Hemp Products. RA agrees to promptly respond within a reasonable period to any question or request for information received by PW or RS pertaining to the production of Hemp Products. Each Party agrees to provide to the other Party all necessary information in its possession arising out of a  

10

recall, corrective action program, or similar program, including a RA quality assurance program.

(b)In addition, each Party shall promptly notify the other Parties if such Party suspects or learns of any condition that could raise the possibility that any of Branded Products Manufactured, Packaged, Labeled, Distributed, tested or stored may be adulterated or misbranded, and each Party agrees to cooperate fully with the other Parties and to provide all information necessary for the other Parties to make an informed determination as to whether a Branded Product recall or market withdrawal is necessary. 

II.4Product Warranty. RA warrants to PW and RS that Hemp Products Manufactured pursuant to this Agreement shall conform to the Formulations, Specifications, and packaging instructions (“RA’s Warranty”). RA’s Warranty shall survive any inspection, delivery, acceptance, payment or sale of Hemp Product, but shall be void in the event there is any tampering or modification of a Hemp Product by an end user, or to the extent related to any defect in PW and/or RS’s requested Formulations, Specifications or Packaging Instructions.  

II.5Product Compliance. RA shall handle and be responsible for all compliance as it relates to this Agreement and applicable law for Hemp Products under this Agreement and where they are sold.  

ARTICLE III 
INDEMNIFICATION AND LIABILITY

III.1Indemnification.  

(a)PW's Indemnification. PW will indemnify, defend and hold RA and its Affiliates, and all their respective officers, managers, employees, and agents, harmless from and against any and all Losses asserted by third parties arising out of the performance by PW of its obligations under this Agreement, or to the extent caused by or resulting from a claim that the Licensed Property or use thereof infringes any Intellectual Property right of any third party.  

(b)RA's Indemnification. RA shall defend, indemnify, and hold harmless PW, RS and PI and its Affiliates, and all their respective officers, managers, employees, and agents, against any Losses asserted by third parties, arising out of (i) any inaccuracy in or breach of any of the representations or warranties of RA pursuant to this Agreement; (ii) any breach or nonperformance of any covenant, agreement or obligation to be performed by RA, any sublicensee, or RA’s Affiliates pursuant to this Agreement; (iii) gross negligent acts and/or omissions and/or willful misconduct of RA, any sublicensee, or RA’s Affiliates; (iv) except for Licensed Property, any claim that RA, any sublicensee, or RA’s Affiliates, has infringed or violated a third-party’s intellectual property or other rights (including RA, any sublicensee, or RA’s Affiliates creation of marketing materials hereunder), including without limitation to, the rights of publicity, rights of privacy, and intellectual property rights, of third-parties; (v) any alleged defects or dangers inherent in Hemp Products or the use thereof; (vi) any claims of sublicensees regarding Hemp Products, arising out of RA’s negligence or intentional misconduct; (vii) any death, injuries or damages to purchasers, users, or consumers of Hemp Products or arising from or related to the use of Hemp Products; (viii) performance under this Agreement by RA, any  

11

sublicensee, or RA’s Affiliates, including without limitation to, any product liability claim related to Hemp Products,; (ix) any violation of applicable law (excepting the Controlled Substances Act and any related laws) as it relates to RA, any sublicensee, or RA’s Affiliates business; (x) any tax or penalty related to RA, any sublicensee, or RA’s Affiliates business; (xi) any of RA’s insurance requirements hereunder; (xii) any claim of false or misleading conduct or advertising by RA, any sublicensee, or RA’s Affiliates; (xiii) any business or other activities conducted or pursued by RA, any sublicensee, or RA’s Affiliates related to this agreement but unauthorized by this Agreement.

(c)Procedure. An indemnified party (an "Indemnitee") shall promptly notify the indemnifying party (an "Indemnitor") upon notice of any claim in writing and shall reasonably cooperate with Indemnitor to defend any such claim at the Indemnitor's expense. The failure of an Indemnitee to give reasonably prompt notice of any claim shall not release, waive or otherwise affect an Indemnitor's obligations with respect thereto except to the extent that the Indemnitor can demonstrate actual loss and prejudice as a result of such failure or delay. The Indemnitor shall select defense counsel and control the defense of the claim; provided that Indemnitor must conduct its defense of the claim actively and diligently thereafter in order to preserve its rights in this regard. If an Indemnitor shall assume the defense of any claim, the Indemnitee(s) may participate, at its own expense, in the defense (but will not control the defense) of such claim. If the Indemnitor elects not to defend against, negotiate, settle or otherwise deal with any claim, fails to notify the applicable Indemnitee(s) of its election or contests its obligation to indemnify the Indemnitee(s) under this Agreement, the Indemnitee(s) may, at the Indemnitor's expense, select their own counsel to defend against, negotiate, settle or otherwise deal with such claim. An Indemnitor may not settle any such suit or claim without prior written approval of the applicable Indemnitee(s) unless such settlement: (A) includes a complete release of all Indemnitee(s); (B) does not require any Indemnitee to pay any amount or deliver any other consideration; and (C) places no restriction on the future conduct of any Indemnitee. 

III.2Limitation of Liability. Notwithstanding anything to the contrary in this Agreement or otherwise, except in the event of a final determination of fraud, gross negligence, willful misconduct or intentional misrepresentation, no Party (including each Party’s Affiliates, successors, assigns, officers, directors, managers, owners, employees, and agents) shall be responsible for consequential, incidental, special or punitive damages, regardless of whether an action is brought in tort, contract or any other basis, including, without limitation, damages characterized as lost profits or business revenue, diminution in business value or the like. Losses for which a Party must indemnify the other Party in accordance with this Section III.2 will not be limited pursuant to the preceding sentence notwithstanding how such Losses may be characterized in an underlying claim. 

12

ARTICLE IV 
INTELLECTUAL PROPERTY

IV.1Intellectual Property Rights. In addition to the rights granted and acknowledged by the Parties elsewhere in this Agreement, the Parties acknowledge and agree as follows:  

(a)As between RA and PW, RS and/or PI, PW, RS and/or PI are and shall remain the owner(s) of all Licensed Property. 

(b)RA agrees to comply with PW, RS and/or PI’s guidelines and instructions regarding use of the Licensed Property as communicated to RA from time to time. 

(c)In the event PW, RS and/or PI notifies RA that its use of the Licensed Property is not in conformance with PW, RS and/or PI’s guidelines and instructions, RA agrees to promptly bring its use into conformance. 

(d)RA agrees that it shall not take any action to contest the validity of the Licensed Property or otherwise interfere with the Licensed Property and the goodwill associated therewith, and that all usage of the Licensed Property will be on behalf of and inure to the benefit of PW, RS and/or PI. 

(e)RA shall not adopt any trademark, trade name, trade dress, Labeling, or Packaging that is deceptively similar to or likely to cause confusion with respect to any of Trademarks or with respect to Branded Products. 

(f)All marketing materials created by RA must be pre-approved in writing prior to such RA’s public use. 

IV.2Infringement.  

(a)Each Party agrees to promptly notify the other Parties in writing of any information that comes to its attention from any source regarding: (1) any actual, alleged, or attempted infringement, imitation, illegal use or misuse of the Licensed Property or Branded Products; and (2) any claim or allegation that the use of the Licensed Property or the marketing of Branded Products may infringe the Intellectual Property rights of third parties. The parties acknowledge ITG Cigars and its predecessor in ownership of “Backwoods” (Altadis) currently challenge the rights of PW to use the name “Packwoods.” PW shall defend, indemnify, and hold harmless RA and its Affiliates, and all their respective officers, managers, employees, and agents, for any Losses or other expenses incurred that arose out of claims made by ITG Cigars or Altadis for allegedly unlawful use of the “Packwoods” brand. 

(b)Without the express written permission of PW, RS and/or PI, RA shall have no right to bring any action or proceeding relating to any infringement or potential infringement or that may involve, directly or indirectly, any issue that the litigation of which may affect the interest of PW, RS and/or PI.  

IV.3No Other Use of the Licensed Property. RA covenants and agrees that it shall not (and shall ensure that its officers, directors, employees, and agents do not), at any time, in any manner, directly or indirectly, develop, Manufacture, Process, sell, Distribute or otherwise market, any product using the Licensed Property or Branded Products, except in strict accordance with this Agreement.  

13

ARTICLE V 
TERM AND TERMINATION

V.1Term. The term of this Agreement shall initially be for a period of five (5) years beginning as of the Effective Date (the “Term”), unless terminated earlier pursuant to its terms or by law. If, no later than forty-five (45) days from the time the Term expires, RA is adequately performing its obligations in connection with this Agreement, RA shall have the option to extend the Term for one additional five-year period. “Expiration Date” shall mean the last day of the then-current Term. 

V.2Termination.  

(a)Any Party may terminate this Agreement upon written notice to the other Parties in the event that (i) any other Party becomes the subject of a bankruptcy, insolvency, reorganization, dissolution, liquidation of debt, receivership, conservatorship or other similar proceeding under bankruptcy, debtors relief, securities, bank regulatory or other law, (ii) any other Party acknowledges in writing its inability to pay its debts, suspends its business, becomes insolvent, or transfers a substantial portion of its property, assets or business, (iii) any other Party materially breaches this Agreement and does not cure such breach within fifteen (15) days following receipt from the non-breaching Party of a written notice of material breach of this Agreement, unless it does not lend itself to cure, in which case the non-breaching party may terminate this Agreement immediately, or (iv) a Force Majeure Event occurs with respect to another Party and lasts longer than sixty (60) days.  

V.3Notwithstanding the foregoing, in the event that RA terminates this Agreement for any valid reason, the Parties agree that RA must provide a minimum sixty (60) days’ notice to PW, RS and/or PI prior to discontinuing production of the Branded Products in the event of a Termination (defined below) (the “Termination Notice Period”). During such Termination Notice Period, RA shall continue to Manufacture, Distribute, and sell at retail any and all Branded Products, subject to the terms of this Agreement. Any notice of Termination (defined below) shall specify a Termination Date. 

V.4Notwithstanding the foregoing, the Parties agree that failure by RA to make payment to either PW, RS or PI of royalties on the terms described in Article I.5 (e), within 15 days after such royalties are due to be paid, shall be grounds for PW, RS, and/or PI to terminate this entire Agreement, or the exclusivity provisions of this agreement found in Articles I.3 and I.4, at the sole discretion of PW, RS, and/or PI, by providing written notice to RA, and giving RA 15 days to cure the default. Any accrued but unpaid royalties due at the time of this notice will become immediately due to PW, RS and/or PI. All payments hereunder shall be paid in United States dollars via a mutually agreed method of payment by the Parties. All late payments owed by RA past the date due shall bear interest at the rate of the greater of: (i) maximum amount allowed by applicable law compounded monthly; or (ii) 1.5% per month. RA shall also reimburse PW for all reasonable costs incurred in collecting any late payments, including without limitation to, attorneys’ fees. In addition to all other remedies available at law (which PW, RS, and PI do not waive by the exercise of any rights hereunder), PW, RS, and PI shall be entitled to terminate this Agreement in their sole discretion, it being considered a material breach, if RA fails to pay any amounts when due hereunder. 

14

V.5Security Interest. RA shall grant PW, RS and PI a continuing first priority security interest in all products subject to this Agreement (including Hemp Products, Nicotine Products and Labels and/or Packaging for cannabis materials), as well as all proceeds received therefrom and accessions thereto, effective after RA finishes paying its lenders which hold a security interest in such products, in order to secure payment and performance of all obligations or liabilities of RA to PW, RS and PI, now or hereafter existing in connection herewith, including without limitation to, any expenses incurred by PW, RS and PI in enforcing its rights hereunder (including without limitation, attorneys’ fees, court costs and the costs of retaking and holding such collateral, preparing it for resale or other disposition, or selling or otherwise disposing of it). Upon any court or arbitration judgment establishing any breach of this Agreement by RA, PW, RS and PI, in addition to all other rights and remedies under this Agreement, shall be entitled to all rights, powers and remedies available to a secured party under the Uniform Commercial Code with respect to such collateral, to the extent that such rights, powers, and remedies are not inconsistent with any terms of this Agreement. 

V.6Effect of Termination. Upon termination, expiration or cancellation of this Agreement for any reason (a “Termination”):  

(a)Subject to Section VI.15 and Section V.5(b) below, upon Expiration Date or date of effective Termination of this Agreement, the provisions of this Agreement shall cease to be effective and all the rights granted in this Agreement that can be terminated, including, without limitation, the License set forth in Section I.4, shall become null and void as of the Termination Date, and RA shall discontinue all use and production of the Licensed Property, the Labels and the Packaging, but such Termination shall not affect any obligation or liability incurred by either Party prior to the Termination Date, including RA’s obligation to Manufacture, produce, Package, Label, and Distribute, orders outstanding on the Termination Date as if the Agreement had not been terminated.  

(b)Following a Termination, RA shall have the right to sell any inventory of Branded Products remaining in RA’s possession to retailers and consumers, and PW, RS and PI shall have the right to receive the applicable royalty payments for such inventory sold. 

(c)Survival. On expiration or termination of this Agreement, all rights and obligations of the Parties shall expire or terminate, provided, however, those sections in this Agreement that would naturally survive expiration or termination of this Agreement in order to be effective shall survive such expiration or termination, no matter the reason for such expiration or termination, including without limitation to, the obligation for RA to pay all amounts due.  

V.7Pricing of Hemp Products and Nicotine Products. The price at which Hemp Products and Nicotine Products are sold to wholesalers (“Wholesale Price”) shall be agreed to by RS and PI (respectively) and the price at which Hemp Products and Nicotine Products are sold directly to consumers (“Retail Price”) shall be agreed to by RS and PI (respectively) as may be amended from time to time in writing by RS and PI (respectively), and shall be appropriate for a brand of the prestige of PW’s brand and in line with the branding guidelines provided by PW from time to time.  

15

V.8Insurance. During Term, RA shall, at its own expense and at its sole discretion as to the actual insurer(s), maintain and carry insurance with a financially sound and reputable insurer or insurers (RA shall use its best efforts to use an insurer with an AM Best Rating of A- or Better, Size VII or greater), in full force and effect for the duration of this Agreement, and add PW, RS and PI as a Vendor Additional as broad as form (CG 20 15 07 04 or its equivalent), Waiver of Transfer of Rights, and Primary & Non-Contributory Language, that includes: (i) RA shall maintain comprehensive general commercial liability insurance, consistent with commercial practices or standards for similar industries, insuring against any and all loss, liability, or business interruption arising from the obligations and activities hereunder, including without limitation to, those arising from, personal property of others, product liability, personal injury, wrongful death, property or product theft, or property or product damage and contractual liability with respect to the indemnity obligations with coverage of not less than one million United States dollars ($1,000,000.00 USD) combined single limit per occurrence and two million United States dollars ($2,000,000.00 USD) in the aggregate; (ii) RA shall maintain errors and omissions/professional liability of not less than one million United States dollars ($1,000,000.00 USD) per occurrence; (iii) following PW and RA’s consultation and consideration of quotes, RA  may, but is not obligated to, obtain cyber liability of not less than one million United States dollars ($1,000,000.00 USD) in which such cyber liability coverage shall include network & information security liability and multimedia content liability; and (iv) RA, if applicable, shall maintain worker’s compensation insurance in amounts as may be required by applicable law based upon the respective State’s Jurisdiction. RA shall, for a period of at two (2) years following expiration or termination of this Agreement, maintain such insurance. RA shall require its insurer(s) to waive all rights of subrogation against PW, RS and PI and its successors and assigns. Furthermore, RA shall maintain insurance that provides coverage for risk of loss of Hemp Products, Nicotine Products and Labels and/or Packaging for cannabis materials including without limitation to, any finished goods, brand materials, or any other materials while under RA’s care, custody, and control under an All-Risk property form, minimum coinsurance allowable of eighty percent (80.00%). RA shall, regardless of the insurance coverage, RA be liable for any Hemp Products, Nicotine Products and Labels and/or Packaging for cannabis materials that are lost, damaged, or destroyed while in RA’s care, custody, and control or if caused by RA’s gross negligence or willful misconduct. RA shall add PW, RS and PI as an additional named insured hereunder. Upon written request by PW, RS or PI, RA shall provide copies of certificates evidencing the insurance coverages required pursuant to this Section V9 and reflecting PW, RS and PI as an additional named insured. The insurance policies shall provide that both, RA and the insurance company, shall notify PW, RS and PI in writing at least sixty (60) Calendar Days for non-renewal, and ten (10) Calendar Days for non-payment, in advance, if RA’s insurance coverage is to be canceled or materially altered so as not to comply with the requirements of this Section V9. 

16

ARTICLE VI 
GENERAL AND MISCELLANEOUS PROVISIONS

VI.1Confidentiality. The Parties agree to hold each other’s Confidential Information in strict confidence. “Confidential Information” shall include, but is not limited to, any non-public information that belongs to a Party (the “Disclosing Party”) relating to the Disclosing Party’s business including, but not limited to information concerning the business, operations and assets of Disclosing Party, and its parent, subsidiaries and affiliates and the directors, members, shareholders, partners, officers, employees, agents, representatives, subcontractors and suppliers, including, without limitation, the terms and conditions of this Agreement or any related agreement, know how, technology, software, hardware, code, data bases, technical data, proprietary processes, formulations, customer lists; patents, inventions (whether patentable or not), invention disclosures, improvements and designs, products, systems, business plans, product plans, costs, prices, specifications, techniques, and other information of a similar nature, whether or not reduced to writing or other tangible form, and any other trade secrets, including, without limitation, information protected under the California Uniform Trade Secrets Act whether written or oral. Confidential Information shall not include any information which: (i) is or becomes generally known to the public by any means other than a breach of the obligations of the receiving Party; (ii) was previously known to the receiving Party or rightly received by the receiving Party from a third party; or (iii) is independently developed by the receiving Party. The Parties agree not to make each other’s Confidential Information available in any form to any third party or to use each other’s Confidential Information for any purpose other than as specified in this Agreement. Notwithstanding the foregoing, a Party may disclose Confidential Information as required by applicable law or by proper legal or governmental authority. The disclosing Party shall give the non-disclosing Party prompt notice of any such legal or governmental demand and reasonably cooperate with the non-disclosing Party in any effort to seek a protective order or otherwise to contest such required disclosure, at the non-disclosing Party expense. 

VI.2Independent Contractor. It is expressly acknowledged by the Parties hereto that the relationship of the Parties is that of “independent contractors” and nothing in this Agreement is intended or shall be construed to create with the other Party an employer/employee, partnership, joint venture or other relationship. Each Party (the “Service Provider”) understands and agrees that the other Party (the “Contracting Party”) will not withhold on behalf of Service Provider or any personnel pursuant to this Agreement any sums for income tax, unemployment insurance, social security, or any other withholding pursuant to any law or requirement of any governmental body relating to Service Provider or make available to Service Provider any of the benefits afforded to employees of Contracting Party and that all such payments, withholding, and benefits, if any, are the sole responsibility of Service Provider. Service Provider hereby agrees to indemnify and hold Contracting Party harmless from and against any Losses arising from (i) Service Provider’s failure to pay taxes, rightfully owed by Service Provider, based on transactions hereunder, or (ii) any determination that any of the Service Provider personnel is an employee of Contracting Party. 

17

VI.3Notice. All notices, approvals, requests or demands (“Notices”) which any Party is required or may desire to give to the other hereunder shall be in writing, unless otherwise specified, and shall deemed to have been received (i) immediately upon delivery to the address set forth below; (ii) three (3) days from the date by mailed, registered or certified, postage prepaid to the address set forth below; or (iii) upon confirmation of transmittal by any electronic means whether now known or hereafter developed, including but not limited to email to the email address specified below: 

18

VI.4Governing Law; Venue and Jurisdiction. This Agreement and all related documents including all exhibits attached hereto and all matters arising out of or relating to this Agreement, whether sounding in contract, tort, or statute are governed by, and construed in accordance with, the laws of the State of California, including the California Arbitration Act, without giving effect to the conflict of laws provisions thereof to the extent such principles or rules would require or permit the application of the laws of any jurisdiction other than those of the State of California. EACH PARTY ACKNOWLEDGES THAT THE SALE AND MANUFACTURING, OF HEMP-BASED EDIBLE PRODUCTS CONTAINING CBD IS ILLEGAL UNDER FEDERAL LAW. EACH PARTY WAIVES ANY DEFENSES BASED UPON ILLEGALITY OR INVALIDITY OF CONTRACTS FOR PUBLIC POLICY REASONS AND/OR THE SUBSTANCE OF ANY DEFINITIVE AGREEMENT VIOLATING FEDERAL LAW. EACH PARTY HEREBY VOLUNTARILY AND UNCONDITIONALLY WAIVES, IN RELATION TO THIS AGREEMENT OR ANY ISSUE THEREUNDER: (A) ANY RIGHT OF REMOVAL OR APPEAL TO THE UNITED STATES FEDERAL DISTRICT COURTS, INCLUDING WITHOUT LIMITATION WAIVING THE RIGHT TO REMOVE TO FEDERAL COURT BASED ON DIVERSITY OF CITIZENSHIP; AND (B) ANY RIGHT TO COMPEL OR APPEAL ARBITRATION, TO CONFIRM ANY ARBITRATION AWARD OR ORDER, OR TO SEEK ANY AID OR ASSISTANCE OF ANY KIND IN THE UNITED STATES FEDERAL DISTRICT COURTS. Notwithstanding any provision to the contrary, this Agreement shall be enforced in accordance with California Civil Code §1550.5, namely, commercial activity conducted in compliance with California law and any applicable local standards, requirements, and regulations shall be deemed to be a lawful object of a contract and not contrary to, an express provision of law, any policy of express law, good morals, or public policy. The Parties further agree that all commercial activity conducted pursuant to this Agreement shall be deemed to be a lawful object of a contract and not contrary to, an express provision of law, any policy of express law, good morals, or public policy. Accordingly, the Parties waive all defenses to the enforcement of this Agreement related to the “illegality of purpose doctrine” or any other defense related to such doctrine.  

VI.5Dispute Resolution. Except as explicitly provided for otherwise herein, any controversy or claim arising under or in connection with this Agreement, or in connection with the validity, construction, performance, or purported breach of this Agreement, or in connection with the subject matter of this Agreement, shall be resolved exclusively by final, binding, and non-appealable arbitration conducted by a single arbitrator and administered by the American Arbitration Association in the State of California, all in accordance with the Commercial Arbitration Rules (the “Rules”), as they may be amended and in effect at the time the arbitration is filed, regardless of the amount in dispute, and judgment upon any award rendered by the arbitrator may be entered by any state or federal court having jurisdiction thereof. To be clear, without limiting the previous sentence, the arbitration shall be commenced, and the arbitrator shall be chosen, in accordance with the procedures set forth in the Rules, which are incorporated herein and made a part of this Agreement by reference. The Parties shall accept service of process in accordance with the Rules. Further, the Parties shall abide by and perform any award rendered in any such arbitration and understand that any court having jurisdiction over them may issue a judgment based upon the award. The prevailing Party in any arbitration  

19

shall be entitled to reimbursement of all costs of the arbitration, including but not limited to filing fees and expenses, arbitrator fees and expenses, and reasonable attorneys’ fees and expenses.

VI.6Rights and Remedies. All rights and remedies of any Party shall be cumulative and may be exercised singularly or concurrently. The failure of either Party, in any one or more instances, to enforce any of the terms of this Agreement shall not be construed as a waiver of future enforcement of that or any other term. 

VI.7Modifications, Amendments. This Agreement may not be modified by oral agreement, course of conduct, waiver, estoppels, or terms incorporated into a purchase order or any other document. Neither Party shall be bound by any expectation, warranty, promise or representation at any time, unless specifically agreed to in writing and signed by an officer of each Party or stated herein. To be effective, any amendment or modification of this Agreement must be in writing and signed by an officer of each Party.  

VI.8Assignment; Subcontracting.  

(a)RA may use subcontractors (i.e., sublicensees) to Manufacture, test, Package, Label, and deliver the Branded Products. RA will remain wholly liable for all of its subcontractors’ performance or failures and will ensure that such subcontractors abide by this Agreement. RA will ensure that each of the subcontractors has valid, current, and appropriate licenses under applicable law to perform any subcontracted duties. 

(b)Except as set forth in Section VI.8(a), no Party may directly or indirectly assign, sublicense, delegate, encumber or in any other manner transfer or convey any of its rights, remedies, obligations, liabilities or interests in or arising under this Agreement without the prior written consent of the other Parties; provided, however, that any Party shall have the right to assign this Agreement, without each of the other Parties’ consent, in connection with the transfer of all or substantially all of the assets or equity interests in such Party to an Affiliate or a third party acquirer, or in connection with a Change of Control, whether by transfer or stock or equity interests, merger or otherwise. 

VI.9Force Majeure. Except for payment obligations owned to RS, PI and PW, no Party shall be liable for delay, inability to perform, loss or damage caused by the elements, a Disaster, acts of God, acts of a government, acts of civil or military authority, acts of terrorism, unusual traffic delays, fires, floods, epidemics, quarantine restrictions, war, armed hostilities, riots, strikes, lockouts, breakdown, differences with workers, accidents to machinery, delays in Transportation or any other cause beyond the reasonable control of such Party (each, a “Force Majeure Event”). Upon the occurrence of a Force Majeure Event, the affected Party shall notify the other as soon as practicable of such Force Majeure Event, its effect, and the period for which such delay, inability to perform, loss or damage is expected to continue. Any time for performance shall be extended by the actual time of delay caused by the Force Majeure Event, provided that the affected Party uses commercially reasonable efforts to mitigate any damages resulting from the Force Majeure Event.  

20

VI.10Governmental Orders. In the event of a determination by the Parties that this Agreement must be reformed to comply with any governmental orders (from any local, state, or federal government official) relating to the operations of any of the Parties, the Parties shall immediately enter into good faith negotiations regarding an arrangement which is consistent and in compliance with the governmental orders that approximates as closely as possible the economic position of the Parties prior to the point where the Parties determined that this Agreement must be reformed to comply with the governmental orders. 

VI.11Federal Government Action. The Parties each expressly acknowledge and agree that (a) they are fully aware that, notwithstanding state hemp, CBD, and cannabis laws, all individuals involved and entities engaged directly or indirectly in the, production, sale, or Transportation of edible products containing CBD, or aiding and abetting the production, sale, or Transportation of any cannabis products, risk criminal or civil prosecution, or forfeiture under federal law, and face other risks associated with engaging in an industry that is illegal under federal law; (b) the CBD edible industry in various states today, and the entire state-licensed cannabis industry, exists in what some have called “terra incognita”, in conflict between federal and state law, in that state laws allow the Manufacture and sale of edible products containing CBD, and the Manufacturing and Distribution of cannabis-related products, while federal law prohibits such conduct; (c) all individuals and entities engaged in the production, preparation, sale, or Transportation of edible products containing CBD, or in aiding and abetting the Manufacturing or Distribution of cannabis products, may still be arrested by federal officers and prosecuted under federal law, and in the event of federal arrest, seizure, and/or prosecution of a Party in connection with the obligations of such Party under this Agreement (each a “Federal Action” and such Party, the “Defending Party”), the Defending Party shall and hereby does waive any and all Claims against the other Party in connection with such Federal Action against such Defending Party and agrees to be individually responsible for its own attorneys’ fees associated with defending such actions; and (d) the Parties also hereby mutually and expressly agree to waive federal illegality as a defense to any claim or contract enforcement action relating to or arising out of this Agreement. 

VI.12Acknowledgments. The inherent risks of engaging in the industry are assumed by each Party (including its direct and indirect owners, investors, and their respective ultimate beneficial owners), and such Party has elected to assume such risks and commit to its obligations and responsibilities under this Agreement despite such risks). Any incident of Federal Action, forfeiture, suspension of operations at any level or entity, criminal or civil prosecution, or a crime of violence shall not in and of itself be indicative or determinative of gross negligence, willful misconduct, fraud, or a breach of a duty (if any) or a contract of a Party or any manager, member, director, officer, Affiliate, agent or employee of the Party; it being further acknowledged that given the risks in the industry, particularly in terms of day-to-day operations, the Parties (including their Affiliates and employees) shall only be responsible for the exercise of such care that a reasonably careful Person would exercise under like circumstances in the industry, and shall only be liable in connection with the failure to exercise such standard of care. 

21

VI.13Authority; Non-Contravention. Each Party (i) has the corporate power and authority and the legal right to enter into the Agreement and perform its obligations under this Agreement; and (ii) has taken all necessary corporate action on its behalf as required to authorize the execution and delivery of the Agreement and the performance of its obligations hereunder. The Agreement has been duly executed and delivered on behalf of each Party, and constitutes a legal, valid, binding obligation of such Party, and is enforceable against it in accordance with its terms subject to the effects of bankruptcy, insolvency or other laws of general application affecting the enforcement of creditor rights and judicial principles affecting the availability of specific performance and general principles of equity whether enforceability is considered a proceeding at law or equity. Each Party’s execution, delivery and performance of this Agreement does not violate any provision of any agreement to which such Party is a party or beneficiary, or any provision of applicable law. 

VI.14Entire Agreement. This Agreement, and its exhibits, constitutes the entire agreement among the Parties, and all understandings and agreements previously or simultaneously had between the Parties are merged into and are contained in this Agreement. All Parties have participated in the preparation of this Agreement and it shall in all cases be construed as a whole and in accordance with its fair meaning, and not restricted for or against any Party, without any presumption, construction or implication favoring the position of either Party. 

VI.15Survival. Notwithstanding anything to the contrary in this Agreement, the Parties agree that the following provisions shall survive Termination of this Agreement: Sections I.1, II.3, II.4, III.1, III.2, V.2, V.3, V.7, ARTICLE IV, and ARTICLE VI (to the extent applicable). 

VI.16Relationship of the Parties; No Agency or Ownership. Nothing in this Agreement is intended or will be construed to create any partnership, joint venture, joint enterprise, or other similar joint relationship, nor shall either Party be deemed to be an employee, agent or legal representative of the other for any purpose whatsoever. No Party will have any authority, whether express, implied, or apparent to assume or create any obligations for, on behalf of, in the name of, or for the benefit of any other Party.  

VI.17No Third-Party Beneficiaries. This Agreement shall inure to the benefit of and be binding upon the Parties and their respective legal Representatives, successors, and permitted assigns. Except as otherwise provided herein, nothing in this Agreement, express or implied, is intended to confer on any Person other than the Parties (or their respective legal Representatives, successors, and permitted assigns) any rights, remedies, obligations, or liabilities under or by reason of this Agreement.  

VI.18Waiver. A waiver must be in writing, executed by the Party against which enforcement is sought, to be enforceable. No delay or omission in requiring performance by a Party or in exercising any right under this Agreement shall operate as a waiver, and no waiver of any term, covenant or condition of this Agreement shall be deemed a waiver of any other term, covenant, or condition. A Party’s election not to enforce any right or remedy for a breach shall not be a waiver of that Party’s rights to enforce the same right or remedy for any other breach.  

22

VI.19Severability. In the event any section of this Agreement, or any sentence within any Section, or the application of such Section or sentence within any Section to any Person or circumstance, is declared by a court of competent jurisdiction to be void or unenforceable, such sentence or Section shall be deemed severed from the remainder of this Agreement and the balance of this Agreement or the circumstances other than those as to whom or which it is held invalid or unenforceable shall not be affected and shall remain in full force and effect.  

VI.20Reasonableness; Time is of the Essence. The Parties each acknowledge and agree that the rights, duration, scope, and geographic areas contemplated by this Agreement are fair, reasonable, and necessary. The Parties acknowledge and agree that time is of the essence with respect to all matters in connection with this Agreement. 

VI.21Further Assurances, Effectiveness, Headings and Counterparts. The Parties shall execute and deliver all documents, provide all information, and take such actions as may be necessary or appropriate to achieve the purposes of the Agreement. The headings contained in this Agreement are for reference purposes only and shall not be deemed to be part of this Agreement or to affect its meaning or interpretation. This Agreement may be executed in any number of counterparts, each of which may be delivered electronically and shall be deemed to be an original, and all of which together shall be deemed to be one and the same instrument. Upon the full execution of this Agreement and mutual delivery of counterparts by the Parties, this Agreement shall be effective and binding as of the Effective Date.  

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their duly authorized Representatives as of the Effective Date. 

23

EXHIBIT A

DEFINED TERMS AND DEFINITIONS

Definitions. As used herein, the following terms shall have the following meanings:

1.“Affiliate” or “Affiliates” means, as applied to any Person, any other Person who controls, is controlled by, or is under common control with, such Person. For purposes of this definition, “control” means the possession, directly or indirectly through one or more intermediaries, of the power to direct the management and policies of a Person, whether through the ownership of equity interests, by contract, or otherwise. 

2.“Agreement” is defined in the Preamble.  

3.“Brand Unit Fee Statement” is defined in Section I.6(a). 

4. “ Branded Products ” means Hemp Products and Nicotine Products Manufactured using the Formulations, and incorporating any of PW’s Intellectual Property, in existence now or created during the Term, and bearing the Labels and the Packaging, except for the “Glones,” “Packwraps,” and “BarePack” brands (or any other carve outs found in Exhibit B), which are expressly excluded from the definition of “Branded Products,” and are not covered by this Agreement.  

5.“CBD” means cannabidiol, which is a cannabinoid found in the cannabis plant. 

6.“Change of Control” means, with respect to a Party: (a) the sale of all or substantially all of the consolidated assets of the Party to a Third Party Purchaser; (b) a sale resulting in no less than a majority of the common units (or equivalent equity interest) on a fully diluted basis being held by a Third Party Purchaser; or (c) a merger, consolidation, recapitalization or reorganization of the company with or into a Third Party Purchaser that results in the inability of its members to designate or elect a majority of the board of directors (or its equivalent) of the resulting entity or its parent company. 

24

7.“Claims” means collectively, claims, demands, causes of action, lawsuits, and other proceedings. 

8.“Compliance Testing” means potency and contaminant testing of the Branded Hemp Products prior to Distribution to a Distributor or retailer or sale to a consumer. 

9.“Defending Party” is defined in Section VI.11. 

10.“Derivatives” means: (a) for any copyright-protected or copyright-protectable work(s), any improvement, enhancement, update, upgrade, abridgement, revision, adaptation, alteration, new version or other form in which an existing work may be recast, transformed, or adapted; (b) for patentable or patented material, any improvement thereon; and (c) for material which is protected by trade secret, any new material derived from such existing trade secret material, including new material which may be protected by copyright, patent and/or trade secret. 

11. “Disaster” means condition of extreme peril to the safety of Persons and property within the state or a county, city and county, or city caused by such conditions such as air pollution, fire, flood, storm, tidal wave, epidemic, riot, drought, terrorism, sudden and severe energy shortage, plant or animal infestation or disease, Governor’s warning of an earthquake or volcanic prediction, or an earthquake, or similar public calamity, other than conditions resulting from a labor controversy, for which the Governor has proclaimed a state of emergency in accordance with California Government Code sections 8558 and 8625, or for which a local governing body has proclaimed a local emergency in accordance with California Government Code sections 8558 and 8630. 

12. “Distribute” or “Distribution” means to sell a Hemp Product, Nicotine Product, or cannabis product at wholesale to a distributor or retailer. 

13. “Effective Date” is defined in the Preamble.  

14.“Expiration Date” is defined in Section V.1. 

15.“Extraction” means a process by which cannabinoids are separated from hemp plant material through chemical or physical means. 

16.“Federal Action” is defined in Section VI.11. 

17.“Force Majeure Event” is defined in Section VI.9. 

18.“Formulations” means the Trade Secrets, the Technical Information, and the Licensed Processes collectively. 

19.“Hazard” means any biological, chemical, radiological, or physical agent that has the potential to cause illness or injury.  

20.“Hemp Products” is defined in the Recitals, shall exclude the products listed in Exhibit B, and shall include hemp that has undergone a process whereby the plant material has been transformed into an inhalable or edible product containing CBD and other Ingredients.  

21.“Indemnitee” is defined in Section III.1(c). 

22.“Indemnitor” is defined in Section III.1(c). 

25

23.“Infusion” means a process by which hemp, cannabinoids, or hemp concentrates are directly incorporated into a product Formulation to produce a Hemp Product. 

24.“Ingredient(s)” means any substance used in the Manufacture, Processing, Labeling, and Packaging of a Branded Product and that is intended to be present in the product’s final form. 

25.“Intellectual Property” means PW, RS and PI intellectual property that they decide to share with RA in PW, RS and PI sole discretion including without limitation to, any and all worldwide intellectual property and intellectual property rights of a Party, including, but not limited to: (i) rights associated with works of authorship, including copyrights, moral rights, and mask-works; (ii) such Party’s trademarks, service marks, trade names, logos, common law trademarks and service marks, trademark and service mark registrations, Internet domain names, Internet and World Wide Web URLs or addresses; (iii) rights to trade secrets, proprietary information, know-how, technology, technical data, proprietary processes, formulas and materials used, customer lists and PW lists; (iv) any patents, biological materials (including without limitation organisms, cells, viruses, cell products, DNA, cDNA, and RNA sequences), provisionals, continuations and continuations-in-part thereof, all inventions (whether patentable or not), invention disclosures, designs and any registration and application thereof; (v) products, machines, equipment, devices, prototypes, discoveries, website designs, graphic designs, other designs, artwork, ideas, works, creations, developments, procedures, methods of doing business, processes, techniques, documents, computer programs, writings (including any copyright interests therein), suggestions, and proposals, and regarding all of the aforementioned, including any modifications or improvements thereto; (vi) other intellectual property rights of every kind and nature, however designated, whether arising by operation of law, contract, license or otherwise; and (vii) applications, registrations, renewals, extensions, continuations, divisions or reissues thereof now or hereafter in force (including any rights in any of the foregoing).  If it’s needed to perform under this Agreement, PW, RS and PI shall only share such required Intellectual Property to perform this Agreement. 

26.“Label” or “Labeling” means any label or other written, printed, or graphic matter upon a Branded Product or Packwoods-branded cannabis product, upon its container or wrapper, or that accompanies any Branded Product or Packwoods-branded cannabis product.  

27.“Laboratory” means an appropriately certified testing laboratory. 

28. “License” is defined in Section I.4(a). 

29. “ Licensed Processes ” means the proprietary processes and methods necessary to Manufacture the Hemp Products and Nicotine Products, including any processes also constituting Trade Secrets, as defined herein.  

30.“ Licensed Property ” means all Intellectual Property owned by PW, RS, and/or PI and necessary to Manufacture, Package, Label, Distribute, and sell at retail the Branded Products and Packwoods-branded cannabis products, including, without limitation, the Formulations, the Trademarks, and all Derivatives of each of the foregoing. 

26

31.“Location” means RA’s Manufacturing and Distribution facility located at 2025-2027 Long Beach Avenue, Los Angeles, CA 90058. 

32. “Losses” means all losses, damages, liabilities, deficiencies, actions, 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 and the cost of pursuing any insurance providers. 

33.“ Manufacture”, “Manufactured”, “Manufacturing”, or “Manufactures” means to decarboxylate, compound, blend, infuse, Package, Label, Process, hold, store, or otherwise make or prepare a Hemp Product, Nicotine Product, or cannabis product or any components or Ingredients of a Hemp Product, Nicotine Product, or cannabis product. 

34.“Nicotine Products” is defined in the Recitals. 

35.“Notices” is defined in Section VI.3. 

36.“Package” and “Packaging” means any container or wrapper that may be used for enclosing or containing any Branded Products or Packwoods-branded cannabis products for final retail sale, including empty boxes and unfilled disposable vaping devices or cartridges. “Package” and “Packaging” does not include a shipping container or outer wrapping used solely for the Transport of Branded Products.  

37. “ Packaging Instructions ” is defined in Section I.5(c)(2) .  

38. “ Party ” and “ Parties ” is defined in the Preamble.  

39.“Person” means any natural person, corporation, company, partnership, association, sole proprietorship, trust, joint venture, non-profit entity, institute, governmental authority, trust association or other form of entity not specifically listed and includes any individual, firm, partnership, joint venture, association, corporation, limited liability company, estate, trust, business trust, receiver, syndicate, or any other group or combination acting as a unit, and the plural as well as the singular. 

40.“PI” is defined in the Preamble. 

41.“Preventive Measures” means those risk-based, reasonably appropriate procedures, practices, and processes that a Person knowledgeable about the safe Manufacturing, processing, packing, or holding of agricultural products for human consumption would employ to significantly minimize or prevent Hazards. 

42.“ Private Label Services ” means RA’s Manufacturing, Packaging, Labeling, Distribution, retail sales, and R&D Testing and Compliance Testing of the Branded Products, and RA’s sales of Packaging and Labeling materials to licensed Manufacturers of Packwoods-branded cannabis products.  

43.“ Process ,” “ Processing ,” and “ Processes ” means all activities associated with the drying, curing, grading, trimming, storing, Packaging, and Labeling of Hemp Products and Nicotine Products.  

44.“Product Complaint(s)” means any written, electronic, or oral communication that contains any allegation expressing concern, for any reason, with the quality of a Branded Product that could be related to the Manufacturing practices. Examples of  

27

Product Complaints may include but are not limited to: foul odor, off taste, illness or injury, disintegration time, color variation, foreign material in a Branded Product container, improper packaging, mislabeling, Branded Products that contain an incorrect concentration of cannabinoids, or Branded Products that contain an unidentified Ingredient, or any form of contaminant.

45.“Product Supplies” is defined in Section I.5(b)(1). 

46.“PW” is defined in the Preamble. 

47.“Quality Control Operations” means a planned and systematic procedure for taking all actions necessary to prevent Hemp Products and Nicotine Products from being adulterated or misbranded. RA shall implement appropriate Quality Control Operations to ensure that Hemp Products and Nicotine Products are suitable for human consumption or use, and that Hemp Product and Nicotine Product Packaging materials are safe and suitable. 

48.“Quality Control Personnel” means any Person or group designated by RA to be responsible for Quality Control Operations. 

49.“Quality Control Standard(s)” means a planned and systematic operation or procedure for ensuring the quality of a Hemp Product or Nicotine Product.  

50. “RA” is defined in the Recitals. 

51. “RA’s Warranty” is defined in Section II.4. 

52.“R&D Testing” is defined in Section II.1. 

53.“Raw Material(s)” means any unprocessed material in its raw or natural state that is intended to become part of the components of a Hemp Product. Raw Materials and other Ingredients susceptible to contamination with aflatoxin or other natural toxins, pests, or extraneous material shall not exceed generally acceptable limits set by the U.S. Food and Drug Administration in the Defect Levels Handbook (Rev. February 2005), before these Raw Materials or other Ingredients are incorporated into finished Hemp Products. 

54.“Representative(s)” means the employees, officers, directors, partners, shareholders, agents, attorneys, accountants or advisors of a Party or its Affiliates. 

55.“Responsible Party” is defined in Section II.3(a). 

56.“RS” is defined in the Preamble.  

57.“Rules” is defined in Section VI.5. 

58.“Specifications” means the Manufacturing specifications that PW and RA agree upon from time to time.  

59.“Technical Information” means all transferable technical data, know-how, shop practices, plans, drawings, blueprints, specifications, methods of Manufacture, and other information or assistance pertaining to the Licensed Processes, in each case belonging to PW. 

60.“Term” is defined in Section V.1. 

28

61.“Termination” is defined in Section V.5. 

62.“Termination Date” means the effective date of any termination, expiration or cancellation of this Agreement in accordance with its terms. 

63.“Termination Notice Period” is defined in Section V.3 

64.“Territory” means the entire world. 

65.“Testing” means R&D Testing or Compliance Testing of the Branded Products at a Laboratory.  

66.“Third Party Purchaser” means any Person who, immediately prior to the contemplated transaction, (a) does not directly or indirectly own or have the right to acquire any outstanding common units (or equivalent equity interest); or (b) is not an Affiliate of any Person who directly or indirectly owns or has the right to acquire any common units (or equivalent equity interest). 

67.“Trade Secrets” means information, including without limitation formulas, patterns, compilations, programs, devices, methods, techniques, or processes, that: (i) derives independent economic value, whether actual, potential, or both, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use; and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. 

68.“ Trademarks ” means, (i) the trademarks, services marks, trade names, design marks and commercial symbols owned by PW, now or at any time in the future, relating to the “Packwoods” brand, and (ii) such other common law trademarks, service marks, trade names, design marks and commercial symbols owned or licensed by PW, now or any time in the future, related to the property identified in clause (i) above.  

69“Transport” or “Transportation” means the physical movement of the Branded Products from one location to another location. 

29