Patents Purchase Agreement by and between NaturalShrimp Incorporated and F&T Water Solutions, LLC, dated May 19, 2021

This Patents Purchase Agreement (this “Agreement”), dated as of the 19th day of May 2021 (the “Effective Date”), is entered into by and between F&T Water Solutions, LLC, a Florida limited liability company (“F&T” or “Seller”), and NaturalShrimp Incorporated, a Nevada corporation, that is traded on the OTC Markets under OTCQB tier under the symbol “SHMP” (“Buyer” or “NSI”).

(a)           NSI and F&T have jointly developed and patented a water treatment technology used or useful in growing aquatic species in re-circulating and enclosed environments (the “Patent”) with each party owning a fifty percent (50%) interest.

(b)           F&T desires to sell to Buyer, and Buyer desires to purchase from F&T, F&T’s remaining interest in the Patent and all other intellectual property rights owned by F&T;

(c)           In addition, a second patent associated with the first Patent was issued to F&T on March 6, 2018 under US Patent No. 9,908,794 (B2);

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:

(i) An Assignment of the Patents duly signed and authorized by an officer of F&T authorized to sign same the form of which is attached as Exhibit B (the “the Patents Assignment”);

 

(ii) A “Lock Out and Leak-Out Agreement executed by the Class A and Class B members of F&T the form of which is attached hereto as Exhibit D;

 

(iii) The duly authorized and executed Escrow Agreement, the form of which is attached hereto as Exhibit E;

 

(iv) The duly executed Non-Competition, Non-Circumvention Agreement;

 

(v) a certificate of the Secretary (or equivalent officer) of F&T to Buyer certifying as to (A) the resolutions of the board of directors or Managers of F&T, which authorize the execution, delivery and performance of this Agreement by F&T, including all documents to be delivered pursuant to Section 2.02(a), and the other agreements, instruments and documents required to be delivered in connection with this Agreement or at the Closing (collectively and for any party, the "Transaction Documents") and the consummation of the transactions contemplated hereby and thereby and (B) the names and signatures of the officers of F&T authorized to sign this Agreement and the other Transaction Documents; and

 

(vi) such other customary instruments of transfer, assumption, filings or documents, in form and substance reasonably satisfactory to Buyer, as may be required by F&T to give effect to the transactions contemplated by this Agreement.

(ii) the NSI Securities, fully paid and non-assessable delivered to TranShare Corportion for the benefit of F&T subject however to that certain Lock out and Leak Out Agreement;

 

 

(iii) The countersigned documents as necessary or required to affect the Closing;

 

 

(iv) a certificate of the Secretary (or equivalent officer) of Buyer to F&T certifying as to (A) the resolutions of the Board of Directors of Buyer, which authorize the execution, delivery and performance of this Agreement, including all documents to be delivered pursuant to this Section 2.02(b), and the other Transaction Documents and the consummation of the transactions contemplated hereby and thereby and (B) the names and signatures of the officers of Buyer authorized to sign this Agreement and the other Transaction Documents; and

 

 

(v) such other customary instruments of transfer, assumption, filings or documents, in form and substance reasonably satisfactory to Buyer, as may be required to give effect to the transactions contemplated by this Agreement.

Seller represents and warrants to Buyer that the statements contained in this ARTICLE III are true and correct as of the date hereof.

Buyer represents and warrants to F&T that the statements contained in this ARTICLE IV are true and correct as of the date hereof. For purposes of this ARTICLE IV,

Section 4.01  Organization and Authority of Buyer; Enforceability. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the state of Nevada. Buyer has full corporate 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 transactions contemplated hereby. The execution, delivery and performance by Buyer of this Agreement and the documents to be delivered hereunder and the consummation of the transactions contemplated hereby have been duly authorized by Buyer’s Board of Directors. 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 4.02  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 transactions contemplated hereby, do not and will not: (a) violate or conflict with the 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 transactions contemplated hereby.

Section 4.03 Legal Proceedings. There is no Action of any nature pending or, to Buyer’s knowledge, threatened against or by Buyer that challenges or seeks to prevent, enjoin or otherwise delay 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.

(a) Representations. All representations and warranties of Buyer contained herein shall be true and correct on the Closing Date in all material respects as if made on such date; all agreements of Buyer contained herein shall have been complied with; and Seller shall have received a certification of Buyer, dated the Closing Date, to each such effect.

 

(b) Closing Deliveries. Buyer shall have executed and delivered the Transaction Documents required by Section 2.02(b).

 

(c) Approval of the Board of Buyer. The board of directors of Buyer shall have approved the Agreement and the transactions contemplated hereby.

 

(d) Actions or Proceedings. No preliminary or permanent injunction or other order by any federal or state court of competent jurisdiction that makes it illegal or otherwise prevents the consummation of the transactions contemplated hereby shall have been issued and shall remain in effect.

(a) Representations. All representations and warranties of F&T contained herein shall be true and correct in all material respects on the Closing Date as if made on such date.

 

(b) Member Approval. The Class A Members of F&T, by written consent, shall have approved this Agreement and the transactions contemplated hereby.

 

(c) Judgment. F&T will have provided to Buyer such security or protection to the reasonable satisfaction of Buyer, in its sole discretion, to protect Buyer from any claims or collection actions relating to the Judgment as described in Exhibit A.

 

(d) F&T Closing Deliveries. F&T shall have executed and delivered the Transaction Documents required by Section 2.02(a) including the Non-competition and Non-solicitation Agreement.

 

(e) Board of Directors Approval. The Board of Directors or Managers of Seller shall have approved of the Agreement and the transactions contemplated hereby.

 

(f) Actions or Proceedings. No preliminary or permanent injunction or other order by any federal or state court of competent jurisdiction that makes it illegal or otherwise prevents the consummation of the transactions contemplated hereby shall have been issued and shall remain in effect.

 

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

 

(b) all Liabilities of Seller.

 

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

 

(d) third party litigation for matters arising prior to Closing whether or not asserted prior to or after Closing but unrelated to any attempt to restrain the Closing.

 

(e) Collection or attempt to collect the Judgment and any proceedings associated therewith.

 

(f) Any claim for infringement of Intellectual Property transferred or assigned to Buyer hereunder

(a) 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

 

(b) 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.

 

 

(c) third party litigation for matters arising subsequent to Closing but unrelated to any attempt to cancel, undo or terminate Closing.

 

Section 7.04   Indemnification Procedures. Whenever any claim shall arise for indemnification within the Survival Period, the party entitled to indemnification (the “Indemnified Party”) shall promptly provide written notice of such claim (a ”Claim Notice”) to the other party (the “Indemnifying Party”). In connection with any claim giving rise to indemnity hereunder resulting from or arising out of any Action by a person or entity who is not a party to this Agreement, the Indemnifying Party, at its sole cost and expense and upon written notice to the Indemnified Party, may assume the defense of any such Action with counsel reasonably satisfactory to the Indemnified Party. The Indemnified Party shall be entitled to participate in the defense of any such Action, with its counsel and at its own cost and expense. If the Indemnifying Party does not assume the defense of any such Action, the Indemnified Party may, but shall not be obligated to, defend against such Action in such manner as it may deem appropriate, including, but not limited to, settling such Action, after giving notice of it to the Indemnifying Party, on such terms as the Indemnified Party may deem appropriate and no action taken by the Indemnified Party in accordance with such defense and settlement shall relieve the Indemnifying Party of its indemnification obligations herein provided with respect to any damages resulting therefrom. The Indemnifying Party shall not settle any Action without the Indemnified Party’s prior written consent (which consent shall not be unreasonably withheld or delayed).

 

Section 7.05     Tax Treatment of Indemnification Payments. All indemnification payments made by F&T under this Agreement shall be treated by the parties as an adjustment to the Purchase Price for tax purposes, unless otherwise required by law.

 

Section 7.06     Certain Limitations.

(a)           The aggregate amount of all Losses for which Seller shall be liable under this Article VII shall not exceed Two Million Dollars ($2,000,000), provided however, the limitations imposed by the Survival Period or the dollar limitation shall not apply to the Judgment defined in Exhibit A. Seller’s indemnification shall continue so long as the Judgment is extant or enforceable.

 

(b)           In no event shall any Indemnifying Party be liable to any Indemnified Party for any punitive, incidental, consequential, special or indirect damages, including loss of future revenue or income, loss of business reputation or opportunity relating to the breach or alleged breach of this Agreement, or diminution of value or any damages based on any type of multiple.

(c)           Buyer shall not communicate with any third-party individual or entity regarding the Judgment or any liability there under without the prior approval of Seller. Seller shall have exclusive authority to negotiate any payment due under the Judgment. Any violation of this limitation will excuse Seller’s indemnification obligations regarding the Judgment.

Section 7.07    Exclusive Remedies. Except as otherwise set forth herein, Seller and Buyer acknowledge and agree that their sole and exclusive remedy with respect to any and all claims (other than claims arising from fraud on the part of a party hereto in connection with the transactions contemplated by this Agreement or the Judgment) for any breach of any representation, warranty, covenant, agreement or obligation set forth herein or otherwise relating to the subject matter of this Agreement shall be pursuant to the indemnification provisions set forth in this Article VII.

 

 

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.

 

 

 

 

“Action” means any claim, action, cause of action, demand lawsuit, formal or informal arbitration or mediation, notice of violation or potential violation, inquiry, proceeding or investigation by or before any Governmental Authority or private authority.

“Agreement” means this Patents Purchase Agreement among Buyer and Seller (including the Exhibits and the Disclosure Schedules).

“Affiliate” means, with respect to any specified Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such specified Person.

“Bankruptcy Code” means Title 11 of the United States Code.

“Claim Notice” means a notice of claim for indemnification pursuant to Section 7.04.

“Closing” has the meaning specified in Section 2.01.

‘Closing Cash Payment” has the meaning specified in Section 2.04

“Closing Date” means the date on which the Closing occurs.

“Code” means the Internal Revenue Code of 1986, as amended.

“Consents” means those authorizations, consents, waivers, orders, approvals and clearances of Governmental Authorities and officials and other Persons which are necessary for the sale and transfer to Buyer of the Purchased Assets or the consummation of the Transactions where the approval of any other Person may be required.

“Dispute Notice” means a notice disputing the propriety or amount of a Claim Notice pursuant to Section 7.04.

“Encumbrance” means any security interest, pledge, mortgage, deed of trust, lien (including Tax liens), charge, judgment, encumbrance, adverse claim, claim arising under Section 506(c) of the Bankruptcy Code, preferential arrangement, fraudulent transfer or other avoidance claim or restriction of any kind, including any restriction on the use, voting, transfer, receipt of income or other exercise of any attributes of ownership, and any lien, interest, restriction or limitation arising from or relating to personal or other property tax, sales and transaction privilege, claim of successor liability for any alleged unpaid sales or other tax, and any other lien or assessment of any Governmental Authority, whether or not allowable, recorded or contingent.

“Escrow Agreement” means that certain agreement executed contemporaneously with the Patents Purchase Agreement to secure F&T’s Indemnification Obligation with respect to the Judgment.

“Governmental Authority” means any United States federal, state or local or any foreign government, governmental, regulatory or administrative authority, agency or commission or any court, tribunal, or judicial or arbitral body.

“Governmental Order” means any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority.

“Intellectual Property Rights” means any and all rights in, arising out of or associated with any of the following, (a) issued patents and patent applications (whether provisional or non-provisional) including divisionals, continuation, continuation-in-part, substitution reissue, reexaminations, extensions or restorations or any of the foregoing and other Governmental Authority-issued indicia of invention ownership (including certificates of invention, petty patents and patent utility models) (the “Patents”); (b) trademarks, trade names and service marks (“Trademarks”); (c) trade secrets, know-how, inventions (whether or not patentable) improvements, technology, data bases, data compilation and collection, tools, methods, processes, techniques, and other confidential and proprietary information and all rights therein (“Trade Secrets”) (d) copywrites, designs, industrial designs, , royalties, secret processes, formulae, and all applications, registrations, renewals and other rights relating to the foregoing (whether or not any registration or filing has been made with respect thereto).

“IRS” means the Internal Revenue Service of the United States.

“Judgment” means that certain Judgment dated February 19, 2016 rendered against F&T in Adversary Proceeding No. 15-04084-rfn in the Latitude Solutions Bankruptcy in the amount of $350.125.00 plus pre-judgment interest in the amount of $5,251.87, attorneys fees in the amount of $4,070.00 and post-judgment interest at the rate of 1.5% per month.

“Latitude Solutions Bankruptcy” means the bankruptcy proceedings in In Re: Latitutde Solutions, Inc, Case No. 12-46295-rfn-11

“Liabilities” means all debts, liabilities and obligations, whether legal or equitable, accrued or fixed, absolute or contingent, matured or unmatured, determined or determinable, foreseen or unforeseen, ordinary or extraordinary, patent or latent, including those arising under any Law or Action and those arising under any contract, agreement, arrangement, commitment or undertaking.

“Loss” or “Losses” means Liabilities, claims, damages, Actions, demands, assessments, adjustments, penalties, losses, costs and expenses whatsoever (including court costs, reasonable attorneys’ fees and expenses of investigation, and environmental costs, fees or expenses for investigation, remediation or removal), whether equitable or legal, matured or contingent, known or unknown, foreseen or unforeseen, ordinary or extraordinary, patent or latent and any and all judgments that may result from the foregoing.

“NSI Securities” has the meaning specified in Section 1.04.

“Patents” means U.S. Patent No. 10,163,199 and Patent No. 9,908,794

“Patents Purchase Agreement” means this Agreement

 

“Person” means any individual, partnership, firm, corporation, limited liability company, association, trust, unincorporated organization, Governmental Authority or other entity.

“Purchase Price” has the meaning specified in Section 1.02.

“Tax” or “Taxes” means any and all taxes, fees, levies, duties, tariffs, imposts and other charges of any kind (together with any and all interest, penalties, additions to tax and additional amounts imposed with respect thereto) imposed by any Governmental Authority or taxing authority, including: taxes or other charges on or with respect to income, franchises, windfall or other profits, gross receipts, property, minimum, alternative minimum, estimated, sales, use, equity interests, payroll, employment, social security, workers’ compensation, unemployment compensation, or net worth; taxes or other charges in the nature of excise, withholding, ad valorem, stamp, transfer, value added, or gains taxes; license, registration and documentation fees; and customs duties, tariffs, and similar charges.

“Third Party Claim” means any claim by a third party that may give rise to a claim for indemnification against any Indemnifying Party.