Exhibit 10.1
MEMBERSHIP INTEREST
PURCHASE AGREEMENT
THIS MEMBERSHIP INTEREST PURCHASE AGREEMENT (the
“Agreement”) is entered into as of January 31, 2025, by and among TREES COLORADO, LLC, a Colorado limited liability
company, or its assigns (“Buyer”), BEDDOR CLAUDE LLC D/B/A CHRONIC THERAPY, a Colorado limited liability company
(the “Company”), and the individuals set forth on the signature page hereto (collectively together with their respective
subsidiaries, affiliates and assigns, “Seller” or “Sellers”). Sellers and Buyer are sometimes referred
to individually as a “Party” and collectively as the “Parties.”
Recitals
A. Sellers
own and operate a licensed retail marijuana dispensary and retail marijuana cultivation in Wheat Ridge, Colorado (collectively the “Business”);
B. Sellers
are licensed and authorized to cultivate, possess, and sell retail marijuana at the Leased Premises under the Marijuana Code; and
C. Buyer
desires to acquire, and Sellers desire to sell to Buyer, the Business by purchasing all of the outstanding membership interests in the
Company.
NOW THEREFORE, the Parties
agree as follows:
Article
I
DEFINITIONS AND CONSTRUCTION
1.1 Definitions.
Capitalized terms have the meanings set forth below unless defined elsewhere in this Agreement.
“Affiliate”
means any Person that directly or indirectly through one or more intermediaries, Controls, is Controlled by or is under common Control
with the Person specified.
“Agreement”
shall have the meaning as set forth in the preamble.
“Applicable City”
means the City of Wheat Ridge, Colorado, as applicable.
“Application Fees”
means all fees paid to Governmental Authorities associated with the Change of Ownership applications.
“Balance Sheet Date”
shall have the meaning as set forth in Section 4.5.
“Business”
shall have the meaning as set forth in the Recitals.
“Business Day”
means a day other than Saturday, Sunday, or any day on which banks located in the State of Colorado are authorized or obligated to close.
“Buyer”
shall have the meaning as set forth in the preamble.
“Buyer’s Closing
Documents” shall have the meaning as set forth in Section 2.6(b) hereof.
“Buyer’s Statements
of Fact” shall have the meaning as set forth in Article V hereof.
“CERCLA”
means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, and any rules or regulations promulgated
thereunder.
“Change of Ownership”
means the transfer of beneficial ownership of the Licenses from Sellers to Buyer.
“Charter Documents”
means with respect to any Person, the articles or certificate of incorporation, formation or organization and by-laws, the limited partnership
agreement, the partnership agreement or the limited liability company agreement, or such other organizational documents of the Person,
including those that are required to be registered or kept in the place of incorporation, organization or formation of the Person and
which establish the legal personality of the Person.
“Claim”
means any demand, claim, action, investigation, or Proceeding.
“Claiming Party”
shall have the meaning as set forth in Section 10.3(a) hereof.
“Closing”
and “Closing Date” shall have the meanings respectively as set forth in Section 2.5 hereof.
“Closing Working
Capital” means the Working Capital as of the Closing Date.
“Company”
shall have the meaning as set forth in the preamble.
“Company’s
Statements of Fact” shall have the meaning as set forth in Article IV hereof.
“Competing Business”
shall have the meaning as set forth in Section 6.7 hereof.
“Contract”
means any legally binding written contract, lease, license, evidence of indebtedness, mortgage, indenture, purchase order, binding bid,
letter of credit, security agreement or other written and legally binding arrangement.
“Control”
means the power, direct or indirect, to direct or cause the direction of the management and policies of a Person whether through ownership
of voting securities or ownership interests, by Contract or otherwise, and specifically with respect to a corporation, partnership or
limited liability company, means direct or indirect ownership of at least 50% of the voting securities in the corporation or of the voting
interest in a partnership or limited liability company.
“CRAA”
shall have the meaning as set forth in Section 10.5(a) hereof.
“Environmental Laws”
means any federal, state, local or foreign law (including, without limitation, common law), treaty, judicial decision, regulation, rule,
judgment , order, decree, injunction, permit or governmental restriction or any agreement with any Governmental Authority or other third
party, whether now or hereafter in effect, relating to the environment, human health and safety or to pollutants, contaminants, wastes
or chemicals or any toxic, radioactive, ignitable, corrosive, reactive or otherwise hazardous substances, wastes or materials.
“Environmental Liabilities”
means any and all liabilities arising in connection with or in any way relating to Sellers (or any predecessor of Sellers or any prior
owner of all or part of its business and assets), any property now or previously owned, leased or operated by Sellers, the Business (as
currently or previously conducted), the assets of the Business or any activities or operations occurring or conducted at the Leased Premises
(including, without limitation, offsite disposal), whether accrued, contingent, absolute, determined, determinable or otherwise, which
(i) arise under or relate to any Environmental Law and (ii) relate to actions occurring or conditions existing on or prior to the Closing.
“ERISA”
shall have the meaning as set forth in Section 4.15(a) hereof.
“Estimated Net Operating
Working Capital” means the estimated Closing Working Capital.
“Excluded Liabilities”
shall have the meaning as set forth in Section 2.7 hereof.
“Final Governmental
Approval” means the final decisions by the MED and the Applicable City in writing approving the Change of Ownership.
“Final Judgement”
shall have the meaning as set forth in Section 2.2(a)(ii).
“Financial Statements”
shall have the meaning as set forth in Section 4.5.
“Fundamental Representations”
shall have the meaning as set forth in Section 10.2(e).
“Governmental Authority”
means any court, tribunal, arbitrator, authority, agency, commission, official or other instrumentality of the United States or any state,
county, city or other political subdivision or similar governing entity.
“Hazardous Substances”
means any pollutant, contaminant, waste or chemical or any toxic, radioactive, ignitable corrosive, reactive or otherwise hazardous substance,
waste or material or any substance, waste or material having any constituent elements displaying any of the foregoing characteristics
including, without limitation, petroleum, its derivatives, by-products and other hydrocarbons, and any substance, waste or material regulated
under any Environmental Law.
“Holdback”
shall have the meaning as set forth in Section 2.2 hereof.
“Indebtedness”
shall have the meaning as set forth in Section 6.9 hereof.
“Intellectual Property”
shall have the meaning as set forth in Section 4.11 hereof.
“Interim Period”
means the time period from the date of this Agreement through and including the Closing.
“Interests”
means all of the outstanding limited liability membership interests of the Company.
“Inventory Count”
shall have the meaning as set forth in Section 2.3 hereof.
“JAG” shall
have the meaning as set forth in Section 10.4(b) hereof.
“Knowledge”
when used in a particular statement of fact in this Agreement, means the actual knowledge (as opposed to any constructive or imputed knowledge)
of a Party or its owners, without inquiry.
“Laws”
means all laws, statutes, rules, regulations, ordinances, and other pronouncements having the effect of law of a Governmental Authority,
except for any United States federal law, rule or regulation related to marijuana which this Agreement may violate.
“Leased Premises”
means the premises located at 10030 West 27th Avenue, Wheat Ridge, Colorado 80215.
“Licenses”
means the following licenses held by Sellers and any other applicable licenses of Sellers in the State of Colorado:
MED License No. 402R-00217 (retail
dispensary)
MED License No. 403R-00287 (retail
cultivation)
Wheat Ridge License No. 11810.1
“Lien”
means any mortgage, lien, claim, pledge, charge, security interest, restriction, prior assignment and encumbrance of any kind whatsoever,
or any conditional sale agreement or other title retention agreement.
“Loss”
means any and all direct losses, judgments, liabilities, amounts paid in settlement, direct damages, fines, penalties, deficiencies, direct
or indirect expenses (including interest, court costs, reasonable fees of attorneys, accountants and other experts or other reasonable
expenses of litigation or other Proceedings or of any Claim, default or assessment).
“Marijuana Code”
means, collectively, Sections 14 and 16 of Article XVIII of the Colorado Constitution, the Colorado Marijuana Code, §§ 44-10-101,
.et seq., C.R.S., as the same may be supplemented or amended from time to time, together with the regulations promulgated thereunder,
and all applicable local Laws and regulations thereto promulgated by a Governmental Authority.
“Material Adverse
Effect” means any occurrence, condition, change, development, event or effect that results in a decrease of more then fifteen
(15) percent in the assets, properties, financial condition, or results of operations on a Party, as the context dictates, taken
as a whole.
“MED” means
the Colorado Marijuana Enforcement Division.
“MIP” shall
have the meaning as set forth in Section 2.7 hereof.
“MIP Assets”
shall have the meaning as set forth in Section 6.11 hereof.
“Multiemployer Plan”
shall have the meaning as set forth in Section 4.15(a) hereof.
“Party or Parties”
shall have the meaning as set forth in the preamble.
“Permits”
means all licenses (including the Licenses), permits, certificates of authority, authorizations, approvals, registrations, franchises,
and similar consents granted by a Governmental Authority related to the transactions contemplated by this Agreement.
“Person”
means any natural person, corporation, general partnership, limited partnership, limited liability company, proprietorship, other business
organization, trust, union, association, or Governmental Authority.
“Pre-Closing Period”
shall mean any Tax period ending on or before the Closing Date and, in the case of a Straddle Period, the portion of such period through
and including the Closing Date.
“Proceeding”
means any complaint, lawsuit, action, suit, Claim (including claim of a violation of Law), or other proceeding at law or in equity or
order or ruling, in each case by or before any Governmental Authority, arbitral tribunal or any other third party.
“Purchase Price”
shall have the meaning as set forth in Section 2.2 hereof.
“Responding Party”
shall have the meaning as set forth in Section 10.3(a) hereof.
“Restricted Period”
shall have the meaning as set forth in Section 6.7 hereof.
“Restricted Territory”
shall have the meaning as set forth in Section 6.7 hereof.
“Sellers”
and “Sellers” shall have the meaning set forth in the preamble hereto. For purposes hereof, any reference to Sellers
in the singular shall mean all Sellers for the purpose of any representations, warranties, covenants or other obligations or agreements
set forth in this Agreement.
“Sellers’ Closing
Documents” shall have the meaning as set forth in Section 2.6(a) hereof.
“Sellers’ Statements
of Fact” shall have the meaning as set forth in Article III hereof.
“Straddle Period”
means any taxable period that begins on or before the Closing Date and ends after the Closing Date.
“Streamline”
shall have the meaning as set forth in Section 4.11 hereof.
“Tangible Personal
Property” shall have the meaning as set forth in Section 4.9(c) hereof.
“Target Working Capital”
means an amount equal to $100,000.00.
“Tax” or “Taxes”
means any federal, state, local, or foreign income, gross receipts, ad valorem, sales, use, employment, social security,
disability, occupation, property, severance, value added, goods and services, documentary, stamp duty, transfer, conveyance, capital
stock, excise, or withholding tax or other taxes imposed by or on behalf of any Governmental Authority, including any interest, penalty
or addition thereto.
“Tax Authority”
means any branch, office, department, agency, instrumentality, court, tribunal, officer, employee, designee, representative, or other
Person that is acting for, on behalf or as a part of any foreign or domestic government (or political subdivision thereof) that is engaged
in or has any power, duty, responsibility or obligation relating to the legislation, promulgation, interpretation, enforcement, regulation,
monitoring, supervision or collection of or any other activity relating to any Tax.
“Taxpayer”
shall have the meaning as set forth in Section 10.1(c) hereof.
“Tax Return”
means any declaration, report, statement, form, return or other document or information required to be supplied to a Governmental
Authority in connection with Taxes, including any schedule or attachment thereto, and including any amendment thereof.
“Transfer Taxes”
shall have the meaning as set forth in Section 6.8(c) hereof.
“Working Capital”
means the aggregate of cash, depository accounts, and inventory minus current liabilities, accounts payable and accrued expenses.
1.2 Rules
of Construction.
(a) All
article, section, subsection, schedules and exhibit references used in this Agreement are to articles, sections, subsections, schedules
and exhibits to this Agreement unless otherwise specified. The exhibits and schedules attached to this Agreement constitute a part of
this Agreement and are incorporated herein for all purposes.
(b) If
a term is defined as one part of speech (such as a noun), it has a corresponding meaning when used as another part of speech (such as
a verb). Unless the context of this Agreement clearly requires otherwise, words importing the masculine gender include the feminine and
neutral genders and vice versa. Words in the plural form include the singular form, and words in the singular form include the plural
form. The words “includes” or “including” means “including without limitation,” the words “hereof,”
“hereby,” “herein,” “hereunder” and similar terms in this Agreement refer to this Agreement as a whole
and not any particular section or article in which the words appear and any reference to a Law includes any rules and regulations
promulgated thereunder. Currency amounts referenced herein are in U.S. dollars.
(c) Whenever
this Agreement refers to a number of days, the number refers to calendar days unless Business Days are specified. Whenever any action
must be taken hereunder on or by a day that is not a Business Day, then the action may be validly taken on or by the next day that is
a Business Day.
(d) Each
Party and its respective attorneys have been given an equal opportunity to negotiate the terms and conditions of this Agreement, and
any rule of construction to the effect that ambiguities are to be resolved against the drafting Party or any similar rule operating against
the drafter of an agreement will not be applicable to the construction or interpretation of this Agreement.
Article
II
PURCHASE OF BUSINESS, PAYMENT, AND CLOSING
2.1 Purchase
and Sale of Interests. Subject to the terms and conditions set forth in this Agreement, the Sellers hereby agree to sell, transfer,
convey, assign and deliver to the Buyer at the Closing, and the Buyer hereby agrees to purchase, accept and acquire from the Sellers at
the Closing, all of the issued and outstanding Interests, consisting all of the issued and outstanding membership interests of the Company,
free and clear of any and all Liens.
2.2 Purchase
Price; Holdback.
(a) The
purchase price for the Interests is set forth in this Section 2.2 shall be an aggregate amount equal to $1,750,000 (as the same
may be adjusted pursuant to Section 2.3 below), paid as follows (collectively, the “Purchase Price”).
(i) Subject
to Section 2.3 below, Buyer shall deliver to Sellers the sum of $1,487,500 in cash upon the Closing.
(ii) The
remaining $262,500 shall be deposited into escrow at Closing with an escrow agent mutually agreeable to the Parties (“Holdback”),
pursuant to this Agreement and as otherwise set forth in the escrow agreement, the form of which is annexed hereto as Exhibit A.
The Holdback may be applied by Buyer to pay any amounts owing or payable by the Company, or any Seller, to Buyer or to any other Person,
with any remaining funds distributed to Sellers by such escrow agent. The Holdback shall be applied by Buyer as follows:
a. In
the event of a Claim by Buyer for indemnification pursuant to Article X, Buyer shall notify Sellers of the Claim pursuant to Section
10.3 (a “Claim Notice”).
b. Upon
delivery of a Claim Notice pursuant to Section 2.2(a), Sellers shall notify Buyer in writing within 14 days of the date of Buyer’s
Claim Notice of any objection to the Claim. If Sellers object, for 60 days following the Claim Notice, the Parties shall negotiate in
good faith any dispute related to the Claim, including without limitation a mediation conducted pursuant to Section 10.5 if agreed
by the Parties. If the Parties are unable to reach a resolution regarding the Claim within such 90 days, Seller shall commence an arbitration
pursuant to Section 10.5 or court Proceeding to determine the validity of the Claim no later than 150 days following the Claim Notice.
If Sellers fails to timely commence an arbitration or court Proceeding, Sellers shall be deemed to have forever forfeited their rights
to the amount of the Claim from the Holdback.
c. If
(i) Sellers have not furnished Buyer with a written objection within 14 days of the date of Buyer’s Claim Notice, (ii) the Parties
have agreed, subsequent to such Claim Notice, that a Seller or Sellers are obligated to indemnify Buyer for a specified amount, (iii)
Sellers forfeit their rights to the Claim pursuant to Section 2.2(a)(ii)b; or (iv) the Parties have received an order of any arbitrator
or court of competent jurisdiction related to the disposition of such Claim (a “Final Judgment”), Buyer shall be entitled
to retain from the Holdback the amount determined to be owed to Buyer as set forth in Buyer’s Claim Notice, the agreement of the
Parties, or the Final Judgment, as the case may be, and the Escrow Agent will be deemed authorized to release such amount to Buyer without
further action from Sellers or the Company.
d. One
(1) year following the Closing, the Parties shall direct the Escrow Agent to disburse fifty percent (50%) of the Holdback, less any amounts
retained by Buyer pursuant to subsection (b) above, to each of the Sellers, pro rata, in the same ratio set forth in Section 2.4 below;
provided, however, if an individual Seller is responsible for an indemnification Claim, any funds withheld pursuant to this Section
2.2 will be deducted dollar for dollar from such Seller’s portion of the disbursement otherwise set forth in Section 2.4.
e. Two
(2) years following the Closing, the Parties shall direct the Escrow Agent to disburse the remainder of the Holdback, less any amounts
retained by Buyer pursuant to subsection (b) above, to each of the Sellers, pro rata, in the same ratio set forth in Section 2.4
below; provided, however, if an individual Seller is responsible for an indemnification Claim, any funds withheld pursuant to this Section
2.2 will be deducted dollar for dollar from such Seller’s portion of the disbursement otherwise set forth in Section 2.4.
2.3 Purchase
Price Adjustment.
(a) Three
(3) days prior to Closing, Seller shall prepare and deliver to Buyer a statement setting forth its good faith estimate of Estimated
Closing Working Capital at Closing, which statement shall contain an estimated balance sheet of the Company as of the date of Closing
(without giving effect to the transactions contemplated herein). The cash and depository account valuation set forth in the Closing Working
Capital Statement will be based on the actual cash on hand at the Leased Premises, plus the closing account balance for the Company’s
bank accounts. The inventory valuation set forth in the Closing Working Capital Statement shall be based on a physical count of the inventory
conducted jointly by the Buyer and Seller (“Inventory Count”) promptly prior to the Closing Date, including all inventory
as of the date of the Inventory Count, whether or not such inventory has already been packaged and is on shelves, provided that,
no more than forty (40) pounds of all inventory (including no more than twenty (20) pounds of all such Chronic Therapy-branded inventory)
shall be non-prepackaged ‘deli style’ product, and explicitly excluding any other inventory with an expiration date of less
than forty-five (45) days after the Closing Date. The valuation of the Company’s inventory will be calculated on the Company’s
actual wholesale price paid for such inventory shown on purchase invoices or METRC transfer manifests, or for inventory from the Company’s
cultivation, the Average Market Price for such inventory as of the Closing Date as published by the Colorado Department of Revenue from
time to time. The Parties shall use commercially reasonable efforts to complete the physical count of the inventory on or before the close
of business on the Closing Date, and such physical count shall be updated by the Company’s inventory records for the time period after
the taking of such physical count through the Closing Date. The remaining items on the Closing Working Capital Statement shall be commercially
reasonably determined and represent a fair and reasonable determination by Seller.
(b) At
Closing:
(i) if
the Closing Working Capital exceeds the Target Working Capital, the Purchase Price payable at Closing shall be correspondingly adjusted
in Sellers’ favor in an amount equal to the excess of the Closing Working Capital over the Target Working Capital; or
(ii) if
the Closing Working Capital is less than the Target Working Capital, the Purchase Price payable at Closing shall be correspondingly adjusted
in Buyer’s favor in an amount equal to the excess of the Target Working Capital over the Closing Working Capital.
(iii) Notwithstanding
the foregoing, in the event that the difference between the Target Working Capital and the Closing Working Capital is less than ten percent
(10%), no adjustment to the Purchase Price pursuant to this Section 2.3 shall be made.
2.4 Allocation
of Consideration. The Purchase Price shall be allocated among the Sellers in the respective amounts set forth on Exhibit B
hereto.
2.5 Closing.
The closing for the purchase and sale of the Interests (the “Closing”) will be held within fifteen calendar days of
satisfaction of all closing conditions set forth herein including, without limitation, Final Governmental Approval (the “Closing
Date”), unless otherwise agreed by the Parties. The Closing will be at a time agreed to by the Parties. The Parties intend for
the Closing to take place by conference call and electronic transfer of signature pages and deliverables.
2.6 Documents
Deliverable at Closing. At, or prior to, the Closing:
(a) Sellers
shall provide to Buyer (collectively, “Sellers’ Closing Documents”):
(i) An
executed Sellers’ Officer’s Certificate in the form attached hereto as Exhibit C;
(ii) Such
membership interest powers and/or other instruments of transfer for the Interests as may be requested by Buyer;
(iii) Executed
intercompany Intellectual Property License Agreements (“IP Agreements”), by and between Streamline Management, LLC,
a Colorado limited liability company (“Streamline”) and the Company in substantially the form attached hereto as Exhibit
D; and
(iv) Such
other documents or instruments as may be requested by Buyer.
(b) Buyer
shall provide to Sellers (collectively, “Buyer’s Closing Documents”):
(i) an
executed Buyer’s Officer’s Certificate in the form attached hereto as Exhibit E; and
(ii) Such
other documents or instruments as may be reasonably requested by Sellers.
2.7 Non-Assumption
of Liabilities. Upon the sale and purchase of the Interests, except as set forth on Schedule 2.7, Buyer shall not assume nor
agree to pay or discharge when due any debt, obligation, responsibility, claim or liability of any Seller and/or Affiliate thereof which
arose prior to Closing, whether known or unknown, contingent or absolute, which shall include, but not be limited to: (i) all liabilities,
obligations, contracts and commitments arising out of the ownership and operation of the Business that occurred prior to the Closing (except
for accounts payable incurred in the normal course of business); (ii) any obligation or liability related to any present (prior to Closing)
or former officer, director, shareholder, employee or agent of any Seller or any Affiliate or person or entity controlled or under common
control with any such person; (iii) any obligation or liability of any kind arising out of noncompliance with any federal, state or local
Laws; (iv) any indebtedness for borrowed money or any guarantee of any Seller and/or Affiliate; (v) any amounts due any member of Sellers
or Affiliate; (vi) any liability relating to pension, profit-sharing, worker’s compensation or other employee benefit plan or policy;
(vii) any liability resulting from injury to persons or property; or (viii) any liability, obligation, Claim or Loss whatsoever relating
to, or arising out of, that certain retail marijuana manufacturing license No. 404R-00161 (the “MIP”) (collectively,
“Excluded Liabilities”).
Article
III
SELLERS’ STATEMENTS OF FACT
Each Seller severally, not jointly, states that
the following are true as of the date of this Agreement:
3.1 Company
Organization. The Company is a limited liability company duly formed, validly existing and in good standing under the Laws of
the State of Colorado and has all requisite limited liability company power and authority to conduct the Business as it is now being
conducted in accordance with the Laws.
3.2 Authority.
Each Seller has all requisite power and authority to execute and deliver this Agreement and the other instruments to be delivered by Sellers
at the Closing, to perform its obligations hereunder and thereunder, and to consummate the transactions contemplated hereby and thereby,
subject to approvals required by the Marijuana Code. Subject to approvals required by the Marijuana Code, the execution and delivery
of this Agreement and the other instruments to be delivered by Sellers at the Closing, and the performance by Sellers of their respective
obligations hereunder and thereunder, have been duly and validly authorized by necessary action. This Agreement has been, and the instruments
to be delivered by Sellers at the Closing will at the Closing be, duly and validly executed and delivered by Sellers and constitute (or,
in the case of instruments to be delivered by Sellers at the Closing, will at the Closing constitute) the legal, valid and binding
obligation of each Seller enforceable against it in accordance with its terms, subject to approvals required by the Marijuana Code, except
as the same may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance, arrangement, moratorium or other similar
Laws relating to or affecting the rights of creditors generally, or by general equitable principles.
3.3 No
Conflicts; Consents and Approvals. The execution and delivery by Sellers of this Agreement does not, and the performance by each Seller
of its respective obligations under this Agreement does not:
(a) materially
violate or result in a material breach of its respective Charter Documents;
(b) materially
violate or result in a material default under any material Contract to which any Seller is a party, except for any violation or default
that would not be expected materially adversely impact any Seller’s ability to perform its obligations hereunder; or
(c) materially
violate or result in a material breach of any Law applicable to such Seller or (ii) require any consent or approval of any Governmental
Authority other than the MED and the Applicable City and under any Law applicable to such Seller.
3.4 Capitalization.
The authorized Interests consist of one hundred percent (100%) of the limited liability company membership interests, all of which are
outstanding. All such Interests were duly authorized and validly issued and are fully paid and non-assessable and are owned by the Sellers
in the respective amounts set forth on Exhibit B. Each Seller owns the Interests set forth opposite his or her name on Exhibit
B beneficially and of record, free and clear of any Liens. There are no outstanding options, warrants, rights to acquire or subscribe
to, or calls or commitments of any character whatsoever to which the Company or any Seller is a party or may be bound, requiring the issuance
or sale of equity securities of the Company or securities or rights convertible into or exchangeable for such equity securities, and there
are no contracts, commitments, understandings or arrangements for which the Company is or may become bound to issue additional equity
securities or options, warrants or rights to acquire or subscribe to any additional equity securities or securities convertible into or
exchangeable for such equity securities. There is no existing arrangement that requires or permits any equity securities of the Company
to be voted by or at the discretion of anyone other than the record owner thereof and there are no proxies providing for such a voting
arrangement. Except for restrictions imposed by applicable securities Laws, there are no restrictions of any kind on the transfer of any
of the outstanding Interests.
3.5 Brokers.
Except as set forth on Schedule 3.5, Sellers do not have any liability or obligation to pay fees or commissions to any broker,
finder, or agent with respect to the transactions contemplated by this Agreement for which Sellers, the Company, or any of their respective
Affiliates could become liable or obligated.
3.6 Intentionally
omitted.
(Section 3.1 through Section 3.6 are collectively,
“Sellers’ Statements of Fact”).
Article
IV
COMPANY’S STATEMENTS OF FACT
The Company and each Seller severally, not jointly,
states that the following statements are true as of the date of this Agreement:
4.1 Company
Organization. The Company is a limited liability company duly formed, validly existing and in good standing under the Laws of
the State of Colorado and has all requisite limited liability company power and authority to conduct the Business as it is now being
conducted in accordance with the Laws.
4.2 Authority.
The Company has all requisite power and authority to execute and deliver this Agreement and the other legal documents specified in this
Agreement to be delivered by the Company at the Closing, to perform its obligations hereunder and thereunder, and to consummate the transactions
contemplated hereby and thereby, subject to approvals required by the Marijuana Code. Subject to approvals required by the Marijuana Code, the
execution and delivery of this Agreement and the other instruments to be delivered the Company at the Closing, and the performance the
Company of their respective obligations hereunder and thereunder, have been duly and validly authorized by necessary action. This Agreement
has been, and the instruments to be delivered by the Company at the Closing will at the Closing be, duly and validly executed and delivered
by the Company and constitute (or, in the case of instruments to be delivered by the Company at the Closing, will at the Closing
constitute) the legal, valid and binding obligation of the Company enforceable against it in accordance with its terms, subject to approvals
required by the Marijuana Code, except as the same may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance,
arrangement, moratorium or other similar Laws relating to or affecting the rights of creditors generally, or by general equitable principles.
4.3 No
Conflicts; Required Consents and Approvals. The execution and delivery by the Company of this Agreement does not, and the performance
by the Company of its respective obligations under this Agreement does not:
(a) materially
violate or result in a material breach of its respective Charter Documents;
(b) materially
violate or result in a material default under any material Contract to which the Company are a party, except for any violation or default
that would not be expected materially adversely impact any Seller’s ability to perform its obligations hereunder; or
(c) materially
violate or result in a material breach of any Law applicable to the Company or (ii) require any consent or approval of any Governmental
Authority other than the MED and the Applicable City and under any Law applicable to the Company.
4.4 Capitalization.
The authorized Interests consist of one hundred percent (100%) limited liability company membership interests, all of which are outstanding.
All such Interests were duly authorized and validly issued and are fully paid and non-assessable and are owned by the Sellers in the respective
amounts set forth on Exhibit B. Each Seller owns the Interests set forth opposite his or her name on Exhibit B beneficially
and of record, free and clear of any Liens. There are no outstanding options, warrants, rights to acquire or subscribe to, or calls or
commitments of any character whatsoever to which the Company or any Seller is a party or may be bound, requiring the issuance or sale
of equity securities of the Company or securities or rights convertible into or exchangeable for such equity securities, and there are
no contracts, commitments, understandings or arrangements for which the Company is or may become bound to issue additional equity securities
or options, warrants or rights to acquire or subscribe to any additional equity securities or securities convertible into or exchangeable
for such equity securities. There is no existing arrangement that requires or permits any equity securities of the Company to be voted
by or at the discretion of anyone other than the record owner thereof and there are no proxies providing for such a voting arrangement.
Except for restrictions imposed by applicable securities Laws, there are no restrictions of any kind on the transfer of any of the outstanding
Interests.
4.5 Financial
Information; Statements; Accounts Payable.
(a) The
financial statements of the Company for the years ended December 31, 2023 and 2022, together with any and all quarterly or interim
statements in respect thereof, including the balance sheets, and related statements of operations, cash flows and members’ interest
ownership of the Company, copies of which have been delivered to the Buyer or which will be delivered to the Buyer during the Interim
Period (“Financial Statements”), fairly present the financial condition of the Company as of the dates set forth therein;
and have been prepared in accordance in accordance with historical business practices of the Company consistently applied. All contingent
liabilities of the Company have been disclosed in the Financial Statements, and the Company has not incurred any contingent liabilities
subsequent to the most recent balance sheet dated November 30, 2024 (“Balance Sheet Date”) contained in the Financial
Statements. The Financial Statements do not contain any misrepresentation of material fact or statement or omit any material fact or statement
that would render such fact or statement, in the light of the circumstances under which they were made, misleading.
(b) The
accounts payable and other accrued expenses included among the liabilities of the Company represent bona fide obligations incurred
by the Company which arose in the ordinary course of its business. Set forth on Schedule 4.5 hereto is a list of all accounts payable
and other accrued expenses as of the Balance Sheet Date, indicating the name of each payee, their relationship (if any) to the Company,
the date each such payment is due and the nature of the transaction in which it was incurred if other than a trade payable incurred in
the ordinary course of business.
4.6 Inventory
and Supplies. The inventory and supplies of the Company were acquired in the ordinary course of the business of the Company. All such
inventory is valued at the actual wholesale cost to the Company in accordance with consistent business practices. There are no actual
or potential material liabilities or material obligations with respect to the return of inventory in the possession of customers. The
inventories do not consist of any items held on consignment. The Company has good and merchantable title to each item of inventory and
supplies free and clear of all Liens.
4.7 Accounts
Receivable. The accounts receivable of the Company represent bona fide indebtedness incurred by account debtors and arose in
the ordinary course of the business of the Company. Since the Balance Sheet Date, no event has occurred that would, under practices in
effect by the Company when the Balance Sheet was prepared, require an increase in the reserves for any accounts receivable. To the knowledge
of the Company, there is no contest, claim or right of set-off with any account debtor relating to the amount or validity of any account
receivable other than those which do not exceed, in the aggregate, the reserve for uncollectible accounts contained in the Balance Sheet.
The Company has good and merchantable title to each of the accounts receivable free and clear of all Liens.
4.8 Ordinary
Course; No Material Adverse Change. The business of the Company has been conducted in the ordinary course since the Balance Sheet
Date. The Company has not suffered any material adverse change in its business, operations, condition (financial or otherwise) or prospects
subsequent to the Balance Sheet Date which would constitute a Material Adverse Effect.
4.9 Property.
(a) Real
Property Leases. Schedule 4.9(a) hereto contains a description of all real property leased, licensed to or otherwise used by
the Company (including, where available, the address thereof, a brief description of the premises and the structures and improvements
thereon, the annual fixed rental, the expiration of the term and any extension options). A true and correct copy of each such lease, license
and/or occupancy agreement, and any amendments thereto, has been delivered to Buyer, and no changes have been made thereto since the date
of delivery. The Company has a valid and enforceable leasehold interest, free and clear of all Liens which individually or in the aggregate
would have a Material Adverse Effect on the use or value thereof, in each parcel or tract of real property leased, licensed and/or occupied
by it. Each such lease, license and/or occupancy agreement is valid, binding, and enforceable in accordance with its terms and is in full
force and effect in all material respects. There are no existing material defaults thereunder by the Company or the lessor thereof and,
to the knowledge of the Company, no event has occurred which (with notice, lapse of time or both) would constitute a material breach or
default thereunder by any party or give any party the right to terminate, accelerate or modify such lease, license and/or occupancy agreement.
No consent is required from the lessor under any lease, license and/or occupancy agreement of real property listed on Schedule 4.9(a)
hereto in order to consummate the transactions contemplated hereby.
(b) Real
Property. The Company does not own or have any right, title, or interest in any real property.
(c) Tangible
Personal Property. Schedule 4.9(c) hereto lists, by categories, all equipment, machinery, and other similar tangible personal
property, with an individual original cost of $10,000 or more, owned or leased by the Company (the “Tangible Personal Property”).
The Company has good and marketable title to and is in possession of all items of tangible personal property used in its business (other
than leased property), whether or not listed on Schedule 4.9(c) hereto, and such property is free and clear of all Liens, except
for (i) Liens set forth on Schedule 4.9(c) hereto, (ii) Liens for Taxes not yet due, and (iii) imperfections in title, if any,
which do not interfere with the conduct of the business of the Company, or detract from the value or materially adversely affect the marketability
of such property. The Tangible Personal Property are free from patent material defects, have been maintained in accordance with normal
industry practice, and are in good operating condition and repair (subject to normal wear and tear).
(d) Condemnation.
Neither the whole nor any portion of the Real Property has been condemned, requisitioned, or otherwise taken by any public authority,
and no such condemnation, requisition or taking is, to the knowledge of the Company, threatened or contemplated.
(e) Intentionally
deleted.
(f) Absence
of Violations.
(i) None
of the real or personal properties owned, leased, occupied or operated by the Company nor the leasing, occupancy or operation thereof,
is in violation of any Law or any building, zoning, environmental or other ordinance, code, rule or regulation, except for violations
which would not have a Material Adverse Effect on the Company.
(ii) No
notice from any governmental body or other person has been served upon the Company or upon any property owned or, to the knowledge of
the Company, leased, occupied or operated by the Company claiming any material violation of any such Law, ordinance, code, rule or regulation
or requiring, or calling attention to the need for, any work, repairs, construction, alterations or installation on or in connection with
such property which has not been complied with in all material respects. The Company has the right to use its properties for all operations
currently conducted by it on such properties.
(iii) Each
portion of the improvements on the Real Property is covered by a valid building permit therefor that has been filed in compliance with
all local requirements with the building permit department in the locality where such Real Property is located. There is no alteration,
improvement or change in use of any building or other improvement located on the Real Property that would require a new certificate of
occupancy or amendment of an existing certificate of occupancy or building permit. The condition and use of the Real Property conforms
to each applicable certificate of occupancy, and all other Permits required to be issued in connection with the Real Property. The Company
has obtained all Permits necessary for the operation of the business of the Company on the Real Property.
4.10 Miscellaneous
Contracts.
(a) Schedule
4.10(a) hereto contains an accurate and complete list of all material agreements, leases, licenses, contracts or commitments (whether
oral or written) to which the Company is a party or by which any of its material assets are bound, including, without limitation, (i)
royalty, distribution, sales representative, agency, territorial or license agreements, (ii) agreements or contracts with any officer,
employee, director, shareholder, professional person or firm, independent contractor or advertising firm or agency, (iii) contracts or
collective bargaining agreements with any labor union or representative of employees, (iv) agreements, contracts or commitments containing
any covenant restricting the business conducted by the Company, (v) leases of real and personal property, (vi) agreements or contracts
granting or agreeing to grant any person or entity sourcing, marketing, distribution or similar rights, (vii) purchase and sales orders
and commitments and agreements or contracts with vendors, contractors or customers, (viii) powers of attorney, (ix) loans, financing or
other credit arrangements or agreements under which money has been borrowed or loaned (including security agreements relating thereto),
(x) bonds, fidelity or surety contracts, guarantees or similar obligations, (xi) employment, consulting, pension, profit sharing, retirement,
severance, matching gift, bonus, stock option, employee stock ownership, employee or officer incentive or other compensation or employee
benefit contracts, plans or agreements, (xii) commitments or contracts relating to political contributions or donations, (xiii) agreements
restricting dividends or distributions or the right to conduct business and (xiv) joint venture agreements. For purposes of this Section
4.10, an agreement, lease, license, contract or commitment shall be deemed “material” if it either (a) obligates the Company
to pay an amount of $25,000 or more, (b) cannot be terminated by providing less than ninety (90) days’ notice or by paying any penalty,
or (c) could have a significant impact on the Company’s operations, regardless of the monetary value involved. Complete and accurate copies
of all such listed contracts or other obligations have been delivered by the Company to Buyer.
(b) No
Defaults. Except as set forth on Schedule 4.10(b) hereto, the Company (i) is not in default under any material contract, commitment
or agreement to which it is a party or under which it is obligated or bound or to which any of its properties may be subject, and there
is no material breach or default on the part of the Company that, with notice or lapse of time, or both would constitute a default by
any party to any of these agreements or give them any right to terminate, cancel, accelerate or modify any of these agreements, (ii) has
not received notice that any party to any of these agreements intends to cancel or terminate any of these agreements or to exercise or
not to exercise any renewal or extension options or rights under any of these agreements, and (iii) has not waived or exercised any material
renewal or extension options or rights under any of these agreements.
4.11 Intellectual
Property. Set forth in Schedule 4.11 hereto is a true and correct list of all trademarks, trade names, patents, service marks
and copyrights, including any applications therefor (collectively, the “Intellectual Property”), used in connection
with the Business, all of which is licensed to the Company by Streamline.
4.12 Legal
Proceedings. Except as set forth in Schedule 4.12, here are no Claims or Proceedings instituted by or against, or, to the knowledge
of the Company, threatened against the Company, whether at law, in equity or admiralty or before any governmental department, commission,
board, agency or instrumentality, domestic or foreign, whether or not fully covered by insurance. To the knowledge of the Company, the
Company is not subject to any order, writ, injunction or decree of any court or any governmental department, commission, board, agency,
or instrumentality, domestic or foreign, having jurisdiction over it.
4.13 Licenses
and Compliance with Law. The Company holds and is in material compliance with all Permits required by it in connection with the conduct
of the Business. All of the Permits are in full force and effect and will continue to be in full force and effect in all material respects
pursuant to their respective terms after the Closing of the transactions contemplated hereby. All of the Permits and the expiration dates
thereof, if any, are set forth on Schedule 4.13 hereto. The Company has complied and is currently in material compliance with all
applicable Laws (including rules, regulations, codes, plans, injunctions, judgements, orders, decrees, rulings, and changes thereunder)
of federal, state, local and foreign governments (and all agencies thereof), asserting or claiming jurisdiction over it or over any part
of its operations, and no Proceedings or notices have been filed or, to the knowledge of the Company, threatened against the Company alleging
any failure to comply.
4.14 Labor
Matters.
(a) No
employees of the Company are covered by a collective bargaining agreement and no collective bargaining agreement binding on the Company
restricts the Company from relocating or closing any or all of its business or operations.
(b) There
are currently pending, and during the past three (3) years there has been, no strike, lockout, picketing, slow-downs or work stoppages
with respect to the Company and, to the knowledge of the Company, no such strikes, picketing, lockouts, slow-downs or work stoppages are
threatened.
(c) There
has not existed during the past three (3) years, does not currently exist and to the knowledge of the Company, is not currently threatened,
any grievance, arbitration proceeding, charge or complaint filed on behalf of an employee or labor organization, before the National Labor
Relations Board, the Equal Employment Opportunity Commission, state and local civil rights agencies, federal or state departments of labor,
the various occupational health and safety agencies or any judicial or arbitration forum with respect to the Company.
(d) The
Company is and has been in compliance, in all material respects, with all applicable Laws, regulations, policies, procedures and contractual
obligations relating to employment, employment practices, wages, hours, discrimination, safety and health of employees, workers compensation,
unemployment insurance, withholding of wages, and terms and conditions of employment. All personnel manuals, handbooks, policy and procedure
manuals applicable to the employees of the Company have been disclosed and made available to Buyer.
(e) Except
as set forth in Schedule 4.14 hereto, the Company has not closed any plant or facility, effectuated any mass layoff of employees
as defined under the Workers Adjustment and Retraining Notification Act (or other similar state Law), implemented any early retirement
or separation program during the past three (3) years nor has the Company announced any such action or terminated the employment of any
persons during the past three (3) years whose compensation exceeded $50,000 per annum.
(f) Except
as set forth on Schedule 4.14 hereto, the Company is not liable for any severance pay or other payments to any employee or former
employee due to the termination of employment and will not have any liability under any benefit or severance plan, policy, practice, program
or agreement which exists or may be deemed to exist under any applicable Law, as a result of the transactions contemplated hereunder.
4.15 Employee
Benefit Plans.
(a) Schedule
4.15(a) hereto lists any bonus, incentive compensation, deferred compensation, pension, profit sharing, retirement, stock purchase,
stock option, stock ownership, stock appreciation rights, phantom stock, cafeteria, life, health, accident, disability, welfare, worker’s
compensation or other insurance, severance, separation or other employee benefit plan of any kind, including, but not limited to, any
“employee benefit plan” within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”) (other than a “multiemployer plan” within the meaning of Sections 3(37) and 4001(a)(3) of ERISA;
a “Multiemployer Plan”) established by the Company or to which the Company contributes or has contributed (including
employee benefit plans not now maintained by the Company or to which the Company does not now contribute, but with respect to which the
Company has or may have any liability). No such employee benefits plan is or was subject to Title IV of ERISA. With respect to each employee
benefit plan (where applicable): the Company has delivered or made available to Buyer complete and accurate copies of (i) all plan texts
and agreements, (ii) material communications to employees with respect to benefit commitments, and (iii) the most recent determination
letter received from the Internal Revenue Service.
(b) Each
employee benefit plan listed in Schedule 4.15(b) and any related trust agreements, annuity contracts, insurance contracts or other instruments
are in compliance in all material respects both as to form and operation with the requirements of ERISA and the Code to the best of the
Company’s knowledge and belief. Any non-compliance not known to the Company shall not constitute a breach of this contract.
(c) No
“pension plan” (within the meaning of Section 3(2) of ERISA) maintained by the Company which is subject to Section 302 of ERISA
or Section 412 of the Code has incurred any “accumulated funding deficiency” (as defined in Section 302 of ERISA or Section
412 of the Code), whether or not waived. Each pension plan which is intended to be qualified under Section 401(a) of the Code has been
determined to be qualified by the Internal Revenue Service.
(d) The
Company has not communicated (whether orally or in writing) generally to employees or specifically to any employee regarding (i) any future
increase of benefit levels (or creation of new benefits) with respect to any employee benefit plan set forth on Schedule 4.15(a)
hereto beyond those reflected in such plans or (ii) the adoption or creation of any new benefit plan.
(e) All
reports and applications relating thereto required by any government agency have been timely filed and all contributions required to be
made to each employee benefit plan under the terms of such plan, ERISA, the Code or other applicable Law have been timely made. Schedule
4.15(e) hereto sets forth the liability of the Company, if any, for contributions accrued with respect to such employee benefit plans
and either not yet paid or not recorded on the Financial Statements.
(f) The
Company has not engaged in, and, to the knowledge of the Company and each of the Sellers, no fiduciary of any such employee benefit plan
has engaged in, any transaction in violation of Section 406 of ERISA or any “prohibited transaction” (within the meaning of
Section 4975 of the Code) for which no exemption exists under ERISA or the Code.
(g) The
Company does not maintain or contribute to any employee benefit plan which provides, and has no liability or obligation to provide, life
insurance, medical or other employee welfare benefits to any employee (or such employee’s beneficiary) upon such employee’s retirement
or termination of employment, except as may be required by federal, state or local Laws, rules or regulations, and the Company has never
represented, promised or contracted to any employee that such employee would be provided with life insurance, medical or other employee
welfare benefits upon such employee’s retirement or termination of employment, except to the extent required by federal, state or local
Laws, rules or regulations.
(h) The
Company has not taken any action, and, to the knowledge of the Company, no action or event has occurred that could cause the Company to
incur materiality liability, fines or penalties under ERISA or the Code in respect of an employee benefit plan (other than routine claims
for benefits or normal operations of the plan).
(i) Except
as set forth on Schedule 4.15, the Company is not now nor has ever been a contributing employer with respect to any Multiemployer
Plan. There is no circumstance, event or condition which could cause the Company to incur any liability in respect of an employee benefit
plan maintained by any entity which is (or at any relevant time was) a member of a “controlled group of corporations” (within
the meaning of Section 414(c) of the Code) with the Company or under “common control” (within the meaning of Section 414(c)
of the Code) with the Company.
(j) The
consummation of the transactions contemplated by this Agreement will not (i) entitle any individual to severance pay or (ii) accelerate
the time of payment, vesting or increase the amount of compensation due to any such individual.
4.16 Relationships
with Suppliers. Schedule 4.16 hereto sets forth a complete and correct list of the names and addresses of the ten (10) largest
suppliers of the Company during the Company’s fiscal year ended December 31, 2023, as well as the total sales to or purchases from such
suppliers made by the Company during such year. No such supplier of the Company has advised the Company, formally or informally, and the
Company has no knowledge that any such supplier intends to terminate, discontinue, or substantially reduce its business with the Company
by reason of the transactions contemplated by this Agreement or otherwise.
4.17 Consultants.
Set forth on Schedule 4.17 hereto is a list of all of the outside consultants currently retained by the Company and a summary of
the material terms of any arrangements or agreements between the Company and those consultants.
4.18 Absence
of Changes. Except as set forth on Schedule 4.18, since the Balance Sheet Date there has not been:
(a) any
material damage, destruction, or casualty loss (whether or not covered by insurance) suffered by the Company;
(b) any
change in the condition (financial or otherwise), business, properties, assets, liabilities, earnings, business, or prospects of the Company,
other than changes in the ordinary course of business which individually or in the aggregate are not materially adverse;
(c) any
transaction material to the business or the assets of the Company, except in the ordinary course of business;
(d) any
employment agreement or deferred compensation agreement entered into between the Company and any of its employees providing for payments
in excess of $25,000; or any increase, not in the ordinary course of business, in the compensation payable or to become payable by the
Company or the adoption of any new (or amendment to or alteration of any existing) bonus, incentive, compensation, pension, stock, matching
gift, profit sharing, retirement, death benefit or other fringe benefit plan;
(e) any
increase in the aggregate indebtedness for borrowed money or any increase in purchase commitments or other liabilities or obligations
(whether absolute, accrued, contingent or otherwise) incurred by the Company, except for liabilities, commitments and obligations incurred
in the ordinary course of business;
(f) any
Lien created on any of the assets of the Company;
(g) any
material labor dispute involving the employees of the Company;
(h) any
sale, assignment, transfer or other disposition or license of any material tangible or intangible assets of the Company, other than the
sale of inventory in the ordinary course of business; provided, however, that the Company’s surrender of the MIP License and sale
of all equipment, inventory and other tangible and intangible assets associated therewith in the Company’s discretion shall not
be prohibited hereby;
(i) any
amendment, termination, or waiver by the Company of any right, where the value of such right exceeds a defined monetary threshold, belonging
to it;
(j) any
amendment of the Articles of Organization or Operating Agreement of the Company;
(k) any
declaration, payment or setting aside by the Company of any dividend or other distribution of assets, pro rata or otherwise, to
its stockholders or any direct or indirect purchase, redemption or retirement or other acquisition by the Company of any shares of its
capital stock;
(l) any
capital expenditure or commitment by the Company not fully paid for; or
(m) any
agreement by the Company to do any of the foregoing.
4.19 Bank
Accounts. Schedule 4.19 hereto sets forth: (a) the name of each bank in which the Company has an account or safe deposit box
and the names of all persons authorized to draw thereon or to have access thereto; and (b) the name of each person, corporation, firm,
association or business organization, entity or enterprise holding a general or special power of attorney from the Company and a summary
of the terms thereof.
4.20 Insurance.
Schedule 4.20 hereto sets forth each insurance policy (specifying the insurer, the type of insurance and the policy number) maintained
by the Company on its properties, assets, products, business or personnel, and true and complete copies of the most recent inspection
reports, if any, received from insurance underwriters as to the condition of the properties and assets owned, leased, occupied or operated
by the Company or the conduct of its business. The Company is not in default with respect to any provision contained in any material insurance
policy and has not failed to give any notice or present any material claim under any insurance policy in due and timely fashion. The Company
has maintained comparable insurance with carriers which are, to the knowledge of the Company and each of the Sellers, financially sound
and of good reputation continuously for the past five (5) years and such insurance is, and has been adequate as to coverage, and in amounts,
in accordance with the standards of the industry in which the Company operates. True and complete copies of all liability insurance policies
of the Company which are in effect have heretofore been delivered by the Sellers to Buyer.
4.21 Taxes.
Except as set forth on Schedule 4.21, for the last three (3) years, the Company has (i) duly and timely filed or caused to be filed
with the Tax Authority each Tax Return that is required to be filed by or on behalf of the Company or that includes or relates to the
Company, its income, sales, assets or business, which Tax Return is true, correct and complete, (ii) duly and timely paid in full, caused
to be paid in full, all Taxes due and payable, and (iii) has properly accrued on the books and records of the Company, in accordance with
historical business practices of the Company, a provision for the payment of all Taxes due or claimed to be due or for which the Company
otherwise is or may be liable;
(a) the
Company has complied in all material respects with all applicable Laws relating to the payment, collection or withholding of any Tax,
and the remittance thereof to any and all Tax Authorities, including, but not limited to, Code sections 1441, 1442, 1445 and 3402;
(b) there
is no Lien for Taxes upon any asset or property of the Company (except for any statutory Lien for any Tax not yet due);
(c) no
Tax Return filed by or on behalf of the Company or that includes or relates to its income, sales, assets or business, has ever been examined,
audited or reviewed by any Tax Authority;
(d) no
audit, examination, investigation, reassessment or other administrative or court proceeding is pending, proposed, or to the Company’s
knowledge, threatened with regard to any Tax or Tax Return or the payment, collection or withholding of any Tax;
(e) the
Company has not received a ruling from any Tax Authority or signed an agreement with any Tax Authority and has not requested a ruling
from or an agreement with any Tax Authority, and there is no outstanding subpoena or request for information or documents from any Tax
Authority, with respect to any Tax for which the Company is or may be liable or with respect to the Company’s income, sales, assets
or business;
(f) the
statute of limitations for the assessment or collection of any Tax for which the Company is or may be liable or with respect to the Company’s
income, sales, assets or business has never been extended or waived;
(g) the
Company has not requested an extension of time within which to file any Tax Return in respect of any Tax period which has not since been
filed;
(h) all
Taxes assessed or proposed to be assessed with respect to the Company’s income, sales, assets or business, or for which the Company
is or may be liable have been paid for the last three (3) years;
(i) any
deficiency or adjustment related to or in connection with any Tax for which the Company is or may be liable or with respect to the Company’s
income, sales, assets or business that is or was required to be reported to any Tax Authority has been so reported, and any additional
Taxes owed with respect thereto have been paid for the last (3) years;
(j) there
is no closing agreement, within the meaning of Code section 7121 or any analogous provision of applicable Law relating to any Tax for
which the Company is or may be liable or with respect to the Company’s income, sales, assets or business;
(k) the
Company does not have, and is not expected to have, any liability in respect of any Tax as a transferee or successor of any Person (including,
but not limited to, liability arising under Treas. Reg. §1.1502-6), and the Company is not, and never has been, a party to any Tax
allocation, Tax indemnification or Tax sharing contract or agreement;
(l) there
is no power of attorney in effect relating to any Tax for which the Company is or may be liable or with respect to the Company’s income,
sales, assets or business;
(m) the
Company is not a party to any contract, agreement or other arrangement that would result, alone or in conjunction with any other contract,
agreement or other arrangement, in the payment of any amount that would not be deductible by reason of Code sections 162, 280G or 404
or any similar provision of applicable Law;
(n) intentionally
omitted;
(o) the
Company does not have any “tax-exempt use property” within the meaning of Code sections 168(g) or (h) or any similar provision
of applicable Law with respect to the Company, its income, sales, assets or business;
(p) intentionally
omitted;
(q) no
election under Code section 338 or any similar provision of applicable Law has been made or required to be made by or with respect to
the Company;
(r) the
Company is not, nor has it been, a “United States real property holding corporation” within the meaning of Code section 897(c)(2)
at any time during the applicable period referred to in Code section 897(c)(1)(A)(ii);
(s) intentionally
omitted;
(t)
no jurisdiction where the Company does not file a Tax Return has made or to the Company’s knowledge, threatened to make a claim
that the Company is required to file a Tax Return for such jurisdiction;
(u) the
Company has not changed any method of accounting, received a ruling from any Tax Authority or signed an agreement with any Tax Authority;
(v) all
elections with respect to any Tax of the Company are set forth in Schedule 4.21;
(w) the
Company (i) is not required to include in income any adjustment pursuant to Code section 481(a) (or any similar provision of applicable
Law) by reason of a change in accounting method, and no Tax Authority has proposed any such adjustment or change of accounting method,
and (ii) has neither deferred any income to a period after the Closing Date that has economically accrued or is otherwise attributable
to a period prior to the Closing Date nor accelerated any deductions into a period ending on or before the Closing Date that will or may
economically accrue after the Closing Date;
(x) other
than those Taxes subject to indemnification pursuant to Section 10.1(c) and penalties and interest for failure to adequately disclose
a Code section 471(c) tax position, the Company has no tax liability, including penalties and/or interest, relating to any tax election,
tax accounting method, or tax treatment of deductions claimed under Code section 471(c) for any Pre-Closing Period; and
(y) Schedule
4.21 sets forth a list of all jurisdictions (both foreign and domestic) in which any Tax Returns have been filed by or on behalf of
the Company, respectively, or with respect to the Company’s income, sales, assets or business since close of third preceding calendar
year and a description of each such Tax Return and the period for which it was filed; and the Company has provided to Buyer (i) a copy
of all Tax Returns for the past three (3) years, and (ii) all audit reports, closing agreements, letter rulings, or technical advice memoranda
relating to any Tax for which the Company is or may be liable with respect to the Company’s income, sales, assets or business.
4.22 Operating
Facility. The licensed business at the Leased Premises is a Retail Marijuana Store and Retail Marijuana Cultivation, as each is defined
in the Marijuana Code.
4.23 Third
Party Obligations. The Company has no material obligation or liability, either actual or accrued, accruing or contingent, as guarantor,
surety, co-signer, endorser, co-maker, indemnitor or otherwise, in respect of the obligation of any person, partnership, joint venture,
association, organization or other entity, except as endorser or maker of checks endorsed or made in the ordinary course of business.
4.24 Other
Entities. The Company does not own, directly or indirectly, any outstanding capital stock or equity interest in any corporation, partnership,
joint venture or other entity.
4.25 No
Undisclosed Liabilities. The Company does not have any liabilities or obligations (whether fixed, accrued, absolute, contingent, secured,
unsecured or otherwise and whether due or to become due and including, without limitation, Tax liabilities) which individually or in the
aggregate would be deemed material, other than those set forth in the Financial Statements and those incurred thereafter in the ordinary
course of its business.
4.26 Prohibited
Payments. Neither any Seller nor the Company nor, to the knowledge of the Company and each of the Sellers, any of the Company’s Affiliates
or any employee or agent of the Company has offered, paid or agreed to pay to any person or entity, including any government official,
or solicited, received or agreed to receive from any such person or entity, directly or indirectly, any money or anything of value for
the purpose or with the intent of obtaining or maintaining business for the Company or otherwise affecting the business, operations, prospects,
properties, or condition (financial or otherwise) of the Company and which is or was in violation or any ordinance, regulation or Law,
or, in the case of payment of money or anything of value, if not in violation of any such ordinance, regulation or Law, is not properly
and correctly recorded or disclosed on the books and records of the Company as an expense. The Company has not engaged in any transaction,
maintained any bank account or used any other funds except for transactions, bank accounts and funds which have been and are properly
and correctly reflected in the normally maintained books and records of the Company.
4.27 Brokers.
Except as set forth on Schedule 4.27, the Company do not have any liability or obligation to pay fees or commissions to any broker,
finder, or agent with respect to the transactions contemplated by this Agreement for the Company, or any of their respective Affiliates,
could become liable or obligated.
4.28 Environmental
Matters.
(a) To
the Company’s knowledge, the Company is in material compliance with all Environmental Laws and any other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules and timetables contained in such Environmental Laws, insofar
as failure to comply with the same could result in any liability affecting, or other reduce the value of the assets of the Business. There
are no liabilities arising in connection with or in any way relating to such assets of any kind whatsoever, whether accrued, contingent,
absolute, determined, determinable or otherwise, arising under or relating to any Environmental Law, and there are no facts, events, conditions,
situations or set of circumstances which could reasonably be expected to result in or be the basis for any such liability.
(b) There
has not been any event, condition, circumstance, activity, practice, incident, action or plan which will interfere with or prevent continued
compliance with or which would give rise to any liability under any Environmental Law or give rise to any common law or statutory liability,
based on or resulting from the Company’s or its agents’ manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling, or the emission, discharge, or release into the environment, of any Hazardous Substance, that could result in
any liability affecting, or other reduce the value of, the assets or Business. The Company has taken all actions necessary under applicable
requirements of Environmental Law to register any products or materials required to be registered by the Company (or any of its agents)
thereunder. There is no Proceeding, notice or demand letter pending or threatened against the Company relating in any way to Environmental
Laws, or notice or demand letter issued, entered, promulgated, or approved thereunder. No property now or previously owned, leased or
operated by the Company, nor any property to which Hazardous Substances located on or resulting from the use of any asset or the Leased
Premises have been transported, is listed or, to Company’ Knowledge, proposed for listing on the National Priorities List promulgated
pursuant to CERCLA, on CERCLIS (as defined in CERCLA) or on any similar federal, state, local or foreign list of sites requiring investigation
or cleanup.
(c) The
Company has not used any pesticide or herbicide at the Leased Premises except as permitted by the Marijuana Code.
4.29 Product
Liability. To the Company’s knowledge, neither the Company nor any Affiliate has any liability (whether known or unknown,
whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and
whether due or to become due) arising out of any injury to individuals or property as a result of the ownership, possession,
or use of any product manufactured, designed, sold, leased, or delivered by any of the Company or any Affiliate.
4.30 Affiliate
and Associate Transactions. The Company has no loan or advance outstanding to any member, officer, director or employee and no officer
or director of the Company or any Affiliate of any Seller or any such officer or director has, either directly or indirectly:
(a) an
equity or debt interest in any corporation, partnership, joint venture, association, organization or other person or entity which purchases
from or sells or furnishes to the Company any goods or otherwise does business with the Company; or
(b) a
beneficial interest in any contract, commitment or agreement to which the Company is a party or under which the Company is obligated or
bound or to which the property of the Company may be subject, other than contracts, commitments or agreements between the Company and
such persons in their capacities as employees, officers or directors of the Company; provided, however, that such representation
and warranty in clauses (a) and (b) above shall not apply to the ownership, as a passive investment, by any such employee, officer, director,
or Affiliate, of less than three percent (3%) of a class of securities listed for trading on a national securities exchange or publicly
traded in the over-the-counter market.
(Section 4.01 through Sections 4.30 are collectively,
“Company’s Statements of Fact”).
Article
V
BUYER’S STATEMENTS OF FACT
Buyer states that the following statements are
true as of the date of this Agreement:
5.1 Organization.
Buyer is a limited liability company duly formed, validly existing and in good standing under the Laws of the State of Colorado and has
all requisite corporate power and authority to conduct its business as it is now being conducted.
5.2 Authority.
Buyer has all requisite power and authority to execute and deliver this Agreement and the other instruments to be delivered by Buyer at
the Closing, to perform its obligations hereunder and thereunder, and to consummate the transactions contemplated hereby and thereby,
subject to Final Governmental Approval. The execution and delivery by Buyer of this Agreement and the other instruments to be delivered
by Buyer at the Closing, and the performance by Buyer of its obligations hereunder and thereunder, have been duly and validly authorized
by necessary action. This Agreement has been, and the instruments to be delivered by Buyer at the Closing will at the Closing be, duly
and validly executed and delivered by Buyer and constitutes (or, in the case of instruments to be delivered by Buyer at the Closing, will
at the Closing constitute) the legal, valid and binding obligations of Buyer enforceable against Buyer in accordance with their terms,
except as the same may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance, arrangement, moratorium or other similar
Laws relating to or affecting the rights of creditors generally, or by general equitable principles.
5.3 No
Conflicts; Consents and Approvals. The execution and delivery by Buyer of this Agreement do not, and the performance by Buyer of its
obligations hereunder and the consummation of the transactions contemplated hereby do not:
(a) violate
or result in a breach of its Charter Documents;
(b) violate
or result in a default under any material Contract to which Buyer is a party, except for any such violation or default that would
not reasonably be expected to result in a Material Adverse Effect on Buyer’s ability to perform its obligations hereunder; or
(c) (i)
violate or result in a breach of any Law applicable to Buyer or (ii) require any consent or approval of any Governmental Authority (other
than the MED and any Applicable City) under any Law applicable to Buyer.
5.4 Proceedings.
There is no Proceeding pending or, to Buyer’s Knowledge, threatened, against Buyer before or by any Governmental Authority, which
seeks a writ, judgment order or decree restraining, enjoining, or otherwise prohibiting or making illegal any of the transactions
contemplated by this Agreement.
5.5 Compliance
with Laws and Orders. Buyer is not in violation of, or in default under, any Law or order applicable to Buyer the effect of which,
in the aggregate, would reasonably be expected to hinder, prevent or delay Buyer from performing its obligations hereunder except for
any such violation or default that would not reasonably be expected to result in a Material Adverse Effect on Buyer’s ability to
perform its obligations hereunder.
5.6 Broker.
Buyer does not have any liability or obligation to pay fees or commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement for which Sellers or any of its Affiliates could become liable or obligated.
5.7 Sufficiency
of Funds. Buyer has sufficient cash on hand or other sources of immediately available funds
to enable it to make payment of the Purchase Price and consummate the transactions contemplated by this Agreement.
5.8 Independent
Investigation. Buyer has conducted its own independent investigation, review and analysis of the Business and the Company, and acknowledges
that it has been provided adequate access to the personnel, properties, assets, premises, books and records, and other documents and data
of the Sellers for such purpose. Buyer acknowledges and agrees that: (a) in making its decision to enter into this Agreement and to consummate
the transactions contemplated hereby, Buyer has relied solely upon its own investigation and the express representations and warranties
of Sellers set forth in Article III, and the Company set forth in Article IV, of this Agreement (including related portions of the Schedules);
and (b) neither the Sellers, the Company, nor any other Person has made any representation or warranty as to Sellers, the Business, the
Company or this Agreement, except as expressly set forth in Article III and Article IV of this Agreement (including the related portions
of the Schedules). Notwithstanding anything to the contrary in this Section 5.8, nothing in this Section 5.8 will limit
Buyer’s rights with respect to claims for fraud.
(Section 5.1 through Section 5.8 are collectively,
“Buyer’s Statements of Fact”).
Article
VI
COVENANTS
6.1 Regulatory
and Other Approvals. During the Interim Period:
(a) Each
Party shall attempt to obtain as promptly as practicable all material consents and approvals that either Party or its respective Affiliates
are required to obtain in order to consummate the transactions contemplated hereby; provided that, for purposes of clarification, and
notwithstanding anything to the contrary in this Agreement, the obtaining of the consents and approvals will not be a condition to the
Closing except to the extent set forth in Articles VII or VIII, as applicable.
(b) Each
Party shall (i) make or cause to be made the filings required of the Person or any of its applicable Affiliates under any Laws applicable
to it with respect to the transactions contemplated by this Agreement and to pay any fees due of it in connection with the filings, as
promptly as is reasonably practicable, provided that, for purposes of clarification; (ii) cooperate with the other Party and furnish the
information that is reasonably necessary in connection with the other Party’s filings; (iii) use reasonable efforts to cause the
expiration of the notice or waiting periods under any Laws applicable to it with respect to the consummation of the transactions contemplated
by this Agreement as promptly as is reasonably practicable; (iv) promptly inform the other Party of any communication from or to, and
any proposed understanding or agreement with, any Governmental Authority in respect of the filings; (v) reasonably consult and cooperate
with the other Party in connection with any analyses, appearances, presentations, memoranda, briefs, arguments, and opinions made or submitted
by or on behalf of any Party in connection with all meetings, actions or other Proceedings with Governmental Authorities relating to the
filings; (vi) comply, as promptly as is reasonably practicable, with any requests received by the Party under any Laws for additional
information, documents or other materials with respect to the filings, (vii) attempt to resolve any objections as may be asserted by any
Governmental Authority with respect to the transactions contemplated by this Agreement; and (viii) reasonably contest and resist any action
or other Proceeding instituted (or threatened in writing to be instituted) by any Governmental Authority challenging the transactions
contemplated by this Agreement as violative of any Law.
(c) If
a Party (or any of its applicable Affiliates) intends to participate in any meeting with any Governmental Authority with respect to the
filings and if permitted by, or acceptable to, the applicable Governmental Authority, it shall give the other Party reasonable prior notice
of, but in any event not less than five business days prior to such meeting (unless by the nature of the meeting such notice is impractical)
and an opportunity to participate in, the meeting.
(d) In
connection with any such filings, Buyer shall cooperate in good faith with Governmental Authorities and with Sellers and undertake promptly
any and all action required to lawfully complete the transactions contemplated by this Agreement.
(e) Each
Party shall provide prompt notification to the other when it becomes aware that any such consent or approval referred to in this Section
6.1 is obtained, taken, made, given or denied, as applicable.
(f) In
furtherance of the foregoing covenants:
(i) Each
Party shall prepare and file, or cause its Affiliates to prepare and file, as soon as is practicable following the execution of this Agreement
and in no case later than fifteen (15) days therefrom, all necessary filings applicable to it and in connection with the transactions
contemplated by this Agreement that may be required under any Laws.
(ii) Each
Party shall promptly furnish the other Party with copies of any notices, correspondence or other written communication received by it
from the relevant Governmental Authority, shall promptly make any appropriate or necessary subsequent or supplemental filings required
of it, and shall cooperate in the preparation of the filings as is reasonably necessary and appropriate.
(iii) Each
Party shall not, and shall cause its respective Affiliates not to, take any action that could reasonably be expected to adversely affect
the approval of any Governmental Authority.
6.2 Access
of Buyer; Due Diligence. During the Interim Period, Sellers shall provide Buyer with reasonable access, upon reasonable notice (but
not during normal business hours), to the Business and the Leased Premises, subject to the Marijuana Code; provided, however, that and
the Parties shall thereafter reasonably coordinate such access and requests with the Sellers so as to minimize any adverse impact upon
the Business, and its staffing, prior to Closing. During the Interim Period, Sellers shall provide Buyer, upon request, with access to
Sellers’ books and records, Sellers’ standard operating procedures, and with reasonable access to Sellers’ employees
in order to allow Buyer to conduct due diligence.
6.3 Certain
Restrictions. During the Interim Period, except as permitted or required by the other terms of this Agreement, or consented
to in writing by Buyer, Sellers shall not, and shall cause the Company not to take any of the following actions:
(a) Sell,
lease, transfer, pledge or otherwise dispose of any of the Interests or any assets of the Business or place any Liens or encumbrances
thereon; provided, however, that Sellers and the Company shall not be prohibited from selling and/or otherwise disposing of the MIP License
and/or the MIP Assets and, thereafter, distributing any proceeds of sale (if any) to the Sellers prior to Closing;
(b) Issue
any new Interests;
(c) Fail
to maintain in full force and effect any of the Licenses;
(d) Fail
to perform obligations under any Contracts;
(e) Increase
the salary or compensation or benefits of any employee or contractor, except in the ordinary course consistent with past practice, and
provided Sellers delivers written notice to Buyer of same;
(f) Incur
any liabilities of Sellers other than in the ordinary course of business.
(g) Make
capital expenditures in excess of $15,000;
(h) Invest
in or make any loans to any person or entity in excess of $15,000;
(i) Dissolve
the Company or file or declare bankruptcy, insolvency or similar action;
(j) Operate
the Business or any assets thereof, in any way other than in the ordinary course of business consistent with past practices; provided,
however, that Sellers and the Company shall not be prohibited from selling and/or otherwise disposing of the MIP License and/or the MIP
Assets and, thereafter, distributing any proceeds of sale (if any) to the Sellers prior to Closing;
(k) Sell
the Business or any assets thereof outside of the ordinary course of business; provided, however, that Sellers and the Company shall not
be prohibited from selling and/or otherwise disposing of the MIP License and/or the MIP Assets and, thereafter, distributing any proceeds
of sale (if any) to the Sellers prior to Closing;
(l) Enter
into or materially amend any material Contract, lease or other arrangement; or
(m) Enter
into any agreement, commitment or understanding, whether in writing or not, to take any of the above actions.
6.4 Further
Assurances. Subject to the terms and conditions of this Agreement, at any time or from time to time after the Closing, at a Party’s
request and without further consideration, the other Party shall execute and deliver to the requesting Party such other instruments of
sale, transfer, conveyance, assignment and confirmation, provide such materials and information and take such other actions as the Party
may reasonably request in order to consummate the transactions contemplated by this Agreement.
6.5 Buyer’s
Obligations if No Closing. If the Closing does not occur by reason of Buyer’s default for any reason or if Buyer terminates
this Agreement after Final Governmental Approval, Buyer shall cooperate with Sellers in executing all documents reasonably necessary to
void the Change of Ownership.
6.6 Application
Fees. Buyer and Sellers shall share equally the application fees associated with up to four (4) change of ownership applications (two
(2) applications for MED and two (2) applications for the Applicable City); provided however, Buyer shall exclusively pay all other
application and other fees (if any) associated with the change of ownership contemplated hereby including, without limitation, all controlling
beneficial owner applications as required by the MED and/or the Applicable City pursuant to the Marijuana Code. At Closing, all annual
licensing fees of the Company shall be prorated between Buyer and Seller as of the date of Closing.
6.7 Non-Solicitation.
(a) The
“Restricted Period” begins on the Closing Date and ends on the second anniversary of the Closing Date.
(b) “Competing
Business” means any dispensary engaged in the retail sale of marijuana or marijuana-infused products; provided, however, that
“Competing Business “shall expressly (i) the operations of or related to Chronic Therapy-Cortez, LLC (the “Cortez
Affiliate”) regarding its dispensary options, unless the Cortez Affiliate attempted to open a licensed dispensary within the
Restricted Territory; or (ii) the cultivation or wholesale sale of marijuana or marijuana-infused products, whether or not within the
Restricted Territory.
(c) “Restricted
Territory” means a 15-mile radius of the Colorado Capital Building.
(d) During
the Restricted Period in the Restricted Territory, Sellers and their Affiliates shall not engage in, invest in, or otherwise participate
in, directly or indirectly, any Competing Business unless agreed to in writing by the Parties.
(e) During
the Restricted Period in the Restricted Territory, Sellers and their Affiliates shall not employ, retain, engage, or solicit the
employment or engagement of services of any employee of Buyer, the Business or any of Buyer’s Affiliates on a full- or part-time
basis.
(f) During
the Restricted Period in the Restricted Territory, Sellers and their Affiliates shall not solicit customers, whether prior, existing
or future, of the Business in connection with a Competing Business.
(g) Any
violation of this Section 6.7 may result in irreparable injury to Buyer and the Business and Buyer will be entitled to seek
an injunction against Sellers and its Affiliates from any court having jurisdiction over the matter, restraining any further violation
of this Section 6.7, which rights shall be cumulative and in addition to any other rights or remedies to which Buyer may be entitled.
Each of Sellers and its Affiliates acknowledges that it has carefully read this Agreement and has given careful consideration to the restraints
imposed upon Sellers by this Section 6.7 and is in full accord as to their necessity for the reasonable and proper protection of
the legitimate business interests relating to the Business and Buyer’s business now existing and to be developed in the future.
Each of Sellers and its Affiliates expressly acknowledges and agrees that each and every restraint imposed by this Section 6.7
is reasonable with respect to subject matter, time period and geographical area.
(h) If
any covenant set forth in this Section 6.7 is adjudicated to exceed the time, geographic, product or service or other limitations
permitted by applicable Law in any jurisdiction, then any court is expressly empowered to reform such covenant, and such covenant will
be deemed reformed, in such jurisdiction to the maximum time, geographic, product or service or other limitations permitted by the applicable
Law. The covenants contained in this Section 6.7 and each provision thereof are severable and distinct covenants and provisions.
The invalidity or unenforceability of any such covenant or provision as written will not invalidate or render unenforceable the remaining
covenants or provisions hereof, and any such invalidity or unenforceability in any jurisdiction will not invalidate or render unenforceable
such covenant or provision in any other jurisdiction. To the extent the provisions of this Section 6.7 conflict with the provisions
of Section 11.2, the provisions of this Section 6.7 will control.
(i) Sellers
shall cause its Affiliates to comply with the obligations set forth in this Section 6.7.
6.8 Tax
Matters.
(a) Filing
of Tax Returns.
(i) Sellers,
at their sole cost and expense, shall (i) timely prepare and file, or shall cause to be timely prepared and filed (taking into account
applicable extensions of time to file), all income Tax Returns required to be filed by or on behalf of the Company that relate solely
to a Pre-Closing Period (the “Seller Prepared Returns”); and (ii) timely pay all Taxes that are shown with respect to any
Seller Prepared Returns to the extent not included in existing indebtedness or working capital.
(ii) The
Buyer, at its sole cost and expense, shall timely prepare and file, or cause to be timely prepared and filed, all Tax Returns of the Company
other than Seller Prepared Returns, including with respect to any Straddle Periods (the “Buyer Prepared Returns”).
With respect to Buyer Prepared Returns that are required to be filed by Buyer after the Closing Date and that relate to a Pre-Closing
Period (including Straddle Periods), Buyer shall submit to the Sellers for review and comment at least thirty (30) days prior to the due
date of the Buyer Prepared Return to the extent possible taking into account the due date for such Buyer Prepared Return, such that Sellers
will have thirty (30) days to review and propose any reasonable changes to such Buyer Prepared Returns prior to the Company’s filing
thereof. At least five (5) Business Days prior to the date on which such Taxes are required to be paid, Sellers shall (a) in the case
of any Tax Returns with respect to a taxable period ending on or prior to the Closing Date, pay over to Buyer the amount of any Taxes
shown as due on such Tax Returns and (b) in the case of any Tax Returns with respect to Straddle Periods, pay over to Buyer, Sellers’
allocable amount of any Taxes shown as due on such Tax Returns, to the extent not included in existing indebtedness or working capital;
provided, however, Sellers shall only be liable to the extent that Buyer provides copies of such draft post-Closing Tax Returns to Sellers
no less than thirty (30) days prior to the proposed date of filing, such that Sellers will have thirty (30) days to review and propose
any reasonable changes to such post-Closing Tax Returns prior to Company’s filing thereof.
(b) Straddle
Period Taxes. For purposes of this Agreement, in the case of a Straddle Period, any Taxes based on income, revenues, receipts or payroll
shall be apportioned to that portion of the Straddle Period ending on the Closing Date based on the actual operations of the Company and
treating the Closing Date as the last day of a taxable period (allocating exemptions, allowances, or deductions that are calculated on
an annual or period basis between the Pre-Closing Period and the portion of the Straddle Period after the Closing Date based on the number
of days of the Straddle Period occurring in each such period), and all other Taxes shall be apportioned to that portion of the Straddle
Period ending on the day immediately prior to the Closing Date by multiplying the Taxes payable for such Straddle Period by a fraction,
the numerator of which is the number of days in the Straddle Period ending on the Closing Date and the denominator of which is the total
number of days in the Straddle Period.
(c) Transfer
Taxes. Any transfer, documentary, sales, use, stamp, registration and other such similar Taxes and fees (and related Tax Return preparation
and filing costs) incurred in connection with the transactions contemplated by this Agreement (“Transfer Taxes”) shall
be borne equally by the Company and Buyer. Buyer and the Company shall timely file any tax return or other document with respect to such
taxes or fees.
(d) Cooperation.
The Sellers and Buyer shall cooperate fully, as and to the extent reasonably requested by the other party, in connection with the filing
of any Tax Returns with respect to the Business (including any returns relating to Transfer Taxes), the filing and prosecution of any
Tax claims, and any audit, litigation or other proceeding with respect to Taxes relating to the Business. Such cooperation shall include
the retention of all books and records relating to such Taxes for a period of five (5) years after the filing date of such Tax Returns
(unless such records are offered to the other party (redacted as necessary) before such period expires).
(e) Tax
Contests. Buyer shall notify the Sellers of any pending or threatened Proceeding involving any Tax Return with respect to a Straddle
Period and any Seller Prepared Returns or which might result in any indemnification obligation under Section 10.1(c) within ten
(10) Business Days of receipt of notification thereof. The Sellers shall have the right to elect to represent the interests of the Company
in any such Tax Proceeding (including without limitation, any correspondence or other contact with a Governmental Authority prior to the
filing of such Tax Proceeding); provided, however, that if Sellers so elect, the Buyer shall have the right to participate in any such
Tax Proceeding at the Buyer’s expense. The Sellers shall be deemed to have elected to represent the interests of the Company in
connection with such Tax Proceeding unless Sellers notify Buyer that it is not electing to represent the interests of the Company in connection
with such Tax Proceeding within five (5) days after the Sellers’ receipt of the written notification from Buyer of such Tax Proceeding.
Upon the conclusion of any Tax Proceeding, the Buyer shall cause the Company and an appropriate officer of the Company to execute any
and all agreements, instruments or other documents that are necessary or appropriate to conclude such Tax Proceeding. Notwithstanding
anything to the contrary contained in herein, to the extent that the Sellers do not elect to represent the Company in any Tax Proceeding
pursuant to this Section 6.8(e), without the prior written consent of Sellers (which consent will not be unreasonably withheld,
conditioned or delayed), the Buyer shall not, and shall cause its affiliates not to, agree or consent to compromise or settle, either
administratively or after the commencement of litigation, any issue or claim arising in any such Tax Proceeding, or otherwise agree or
consent to any Tax liability, to the extent that any such compromise, settlement, consent or agreement may affect the Tax liability of
Sellers or any of their affiliates under this Agreement or give rise to an indemnification obligation pursuant to Section 10.1(c).
6.9 Repayment
of Existing Indebtedness.
(a) Prior
to or concurrently with the Closing hereunder, the Sellers shall cause the Company to repay in full and retire all current and long-term
indebtedness (including, without limitation, all revolving credit facilities, term loans and notes and lines of credit or loans due to
banks, similar financial institutions or other third parties, negative book balances and overdrafts, but expressly excluding accounts
payable incurred by the Company in the normal course of business) of the Company (the “Indebtedness”) and all notes,
loan agreements and other documents and instruments evidencing, securing or otherwise pertaining to the Indebtedness to be surrendered
or terminated. For purposes hereof, Indebtedness shall also include all amounts due from the Company to any Seller or any Affiliate of
any Seller or any Affiliate of the Company.
(b) Prior
to or concurrently with the Closing, subject to the satisfaction of the other conditions to Closing hereunder, the Sellers shall cause
all holders of any and all Indebtedness to: (i) release all Liens in any assets of the Company securing such indebtedness, and (ii) terminate
all obligations of the Company with respect to such indebtedness.
(c) From
time to time after the Closing, but in no event less than every thirty (30) days, in the event that Buyer is able to collect on any ordinary
course accounts receivable existing as of the Closing, it shall remit any such amounts to Sellers collected in the preceding trailing
thirty-day period minus any reasonable costs of collection in respect thereof.
6.10 MIP
License. During the Interim Period, Sellers shall cause the Company to sell or surrender, the MIP License, along with all equipment,
inventory and other tangible and intangible assets used in connection with the MIP License (together, the “MIP Assets”),
in either case, before the Closing Date.
6.11 Condition
of Premises. During the Interim Period and before the Closing, Seller shall remove all immature and growing plants from the Premises
in accordance with the Marijuana Code and shall deliver the Premises at the Closing in a broom-clean condition.
Article
VII
BUYER’S CONDITIONS TO CLOSING
The obligation of Buyer to consummate the Closing
is subject to the fulfillment of each of the following conditions (except to the extent waived in writing by Buyer in its sole discretion):
7.1 Statements
of Fact. (a) Sellers’ Statements of Fact will be true and correct on and as of the Closing as though made on and as of the Closing
(other than those Statements of Fact that speak to an earlier date); and (b) in the case of Sellers’ Statements of Fact that speak
to an earlier date, such Statements of Fact will be true and correct as of the earlier date.
7.2 Performance.
Sellers have performed and complied in all respects that could have a material impact on the value, operations, or business prospects
of the Company with the agreements, covenants, and obligations required by this Agreement to be performed or complied with by Sellers
at or before the Closing.
7.3 Sellers’
Deliverables. Sellers have delivered to Buyer, at the Closing, Sellers’ Closing Documents.
7.4 Orders
and Laws. There is no Law or order (except for any such order issued in connection with a Proceeding instituted by Buyer or its Affiliates)
restraining, enjoining or otherwise prohibiting or making illegal the consummation of the transactions contemplated by this Agreement
or the operation of the Business.
7.5 No
Material Adverse Effect. No Material Adverse Effect exists.
7.6 Final
Governmental Approval. Final Governmental Approval shall have occurred.
7.7 Leased
Premises. Buyer (or any Affiliate) and the Company shall have executed a lease for the Leased Premises substantially in the form annexed
hereto as Exhibit F.
7.8 Intentionally
deleted.
7.9 Transfer
or Surrender of the MIP. Seller shall have closed upon the transfer of the MIP License and the MIP Assets to an unrelated third party
or shall have otherwise surrendered the MIP License and otherwise disposed of the MIP Assets.
7.10 Minimum
Inventory. The value of the Company’s inventory as of the Closing shall not be less than the six-month average of such value
as determined in the reasonable discretion of the Parties.
Article
VIII
SELLERS’ CONDITIONS TO CLOSING
The obligation of Sellers to consummate the Closing
is subject to the fulfillment of each of the following conditions (except to the extent waived in writing by Sellers in its sole discretion):
8.1 Statements
of Fact. (a) Buyer’s Statements of Fact will be true and correct in all material respects on and as of the Closing as though
made on and as of the Closing (other than those Statements of Fact that speak to an earlier date); and (b) in the case of those Statements
of Fact that speak as to an earlier date, such Statements of Fact will be true and correct in all material respects as of the earlier
date.
8.2 Performance.
Buyer will have performed and complied in all material respects with the agreements, covenants and obligations required by this Agreement
to be so performed or complied with by Buyer at or before the Closing.
8.3 Buyer’s
Deliverables. Buyer will have delivered to Sellers the Purchase Price and Buyer’s Closing Documents.
8.4 Orders
and Laws. There is no Law or order (except for any such order issued in connection with a Proceeding instituted by Sellers or its
Affiliates) restraining, enjoining or otherwise prohibiting or making illegal the consummation of the transactions contemplated by this
Agreement.
8.5 Final
Governmental Approval. Final Governmental Approval shall have occurred.
8.6 Leased
Premises. Buyer (or any Affiliate) and the Company shall have executed a lease for the Leased Premises substantially in the form annexed
hereto as Exhibit F.
8.7 Transfer
or Surrender of the MIP. Seller shall have closed upon the transfer of the MIP License and the MIP Assets to an unrelated third party
or shall have otherwise surrendered the MIP License and otherwise disposed of the MIP Assets.
Article
IX
TERMINATION
9.1 Termination.
This Agreement may be terminated in one or more of the following ways:
(a) At
any time before the Closing, by Sellers or Buyer, by written notice to the other, if any Law or final order of a Governmental Authority
restrains, enjoins or otherwise prohibits or makes illegal the sale of the Interests pursuant to this Agreement.
(b) At
any time before the Closing, by Buyer, by written notice to Sellers, if Sellers have materially breached their Statements of Fact or obligations
under this Agreement and the breach would or does result in the failure of any condition set forth in Article VII; provided, however,
that prior to any termination pursuant to this Section 9.1(b), Sellers shall have ten (10) Business Days to cure any such alleged
breach, unless such breach is not susceptible to so curing.
(c) At
any time before the Closing, by Sellers, by written notice to Buyer, if Buyer have materially breached its Statements of Fact or obligations
under this Agreement and the breach would or does result in the failure of any condition set forth in Article VIII; provided, however,
that prior to any termination pursuant to this Section 9.1(c), Buyer shall have ten (10) Business Days to cure any such alleged
breach, unless such breach is not susceptible to so curing.
(d) Intentionally
deleted.
(e) by
any Party, by written notice to the other, if any of the conditions required under this Agreement have not occurred, or
if it becomes apparent that any of such conditions will not be fulfilled; provided, however, that the right to terminate
this Agreement under this Section 9.1(e) will not be available to a Party that has intentionally breached in any material respect
any of its obligations under this Agreement and the intentional breach has been the cause of, or resulted in, the failure of the satisfaction
of a condition to the Closing to occur on or before the Termination Date.
(f) This
Agreement will automatically terminate if a Governmental Authority denies the Change of Ownership.
9.2 Effect
of Valid Termination. If this Agreement is validly terminated pursuant to Section 8.1, there will be no liability or obligation hereunder
on the part of either Party or any of their respective Affiliates, except as provided herein, provided, however, that Article I, Section
9.2, Article X, and Article XI will survive any such termination.
Article
X
INDEMNIFICATION, THIRD-PARTY CLAIMS, AND ARBITRATION
10.1 Indemnity.
From and after the Closing:
(a) Sellers
shall severally, but not jointly, indemnify, defend, and hold harmless Buyer from and against all Losses incurred or suffered by Buyer
resulting from:
(i) any
material breach as of the Closing (as though made on and as of the Closing except to the extent a statement of fact is expressly made
as of an earlier date, in which case only as of the earlier date) of Sellers’ Statements of Fact and/or Company’s Statements
of Fact; and
(ii) any
material breach of any covenant or agreement of Sellers or the Company contained in this Agreement; and
(iii) any
Excluded Liabilities.
(b) Buyer
shall indemnify, defend, and hold Sellers harmless from and against all Losses incurred or suffered by Sellers resulting from:
(i) any
material breach as of the Closing (as though made on and as of the Closing Date except to the extent a statement of fact is expressly
made as of an earlier date, in which case only as of the earlier date) of Buyer’s Statements of Fact; and
(ii) any
material breach of any covenant or agreement of Buyer contained in this Agreement.
(c) Tax
Indemnity. The Sellers severally, but not jointly, shall indemnify, defend and hold harmless, on an after-tax basis after taking into
account any transaction Tax deductions, applicable prepayments or estimated payments of Tax, net operating losses or similar tax assets
available to be utilized against Taxes during such Pre-Closing Period, the Company, Buyer, any officer or director thereof, and their
respective Affiliates (collectively, the “Taxpayer”) from and against: (i) any Taxes with respect to a Pre-Closing
Period for which the Taxpayer is or may be liable, subject to Section 6.8 hereof; (ii) the effect, if any, of an adjustment from a Pre-Closing
Period on the Taxpayer in any period that ends after the Closing Date; (iii) any Taxes with respect to the Straddle Period, but only with
respect to the portion of such Straddle Period that begins before and ends on the Closing Date; (iv) any Taxes imposed under Treas. Reg.
§1.1502-6 (or any comparable provision of foreign, state or local Law); (v) notwithstanding any other provision of the Agreement,
a breach of any representation set forth in Section 4.21 hereof; and (vi) fees and expenses (including, without limitation, reasonable
attorneys’ fees) incurred by Buyer, the Company or their respective Affiliates in connection therewith or in enforcing its rights or collecting
any amounts due hereunder. This indemnity shall apply notwithstanding any investigation made by Buyer in connection with the transactions
contemplated by this Agreement or, its receipt, examination, filing of or commenting on any Tax Return, shall be separate and independent
of any other indemnity between the parties hereto, and notwithstanding anything in this Agreement to the contrary shall survive until
three (3) months after the expiration of the applicable statute of limitations (including extension and waivers thereof) for such Taxes
or other items.
10.2 Limitations
of Liability. Notwithstanding anything in this Agreement to the contrary:
(a) Sellers’
Statements of Fact and Buyer’s Statements of Fact will survive the Closing for so long as the appropriate statute of limitations
in respect thereof is applicable.
(b) Buyer
shall give written notice to Sellers within a reasonable period of time after becoming aware of any breach by Sellers of any statement
of fact, covenant, agreement, or obligation in this Agreement, but in any event no later than thirty (30) days after becoming aware
of such breach.
(c) Sellers
shall give written notice to Buyer within a reasonable period of time after becoming aware of any breach by Buyer of any statement of
fact, covenant, agreement, or obligation in this Agreement, but in any event no later than thirty (30) days after becoming aware of such
breach.
(d) the
Parties have a duty to reasonably mitigate any Loss in connection with this Agreement.
(e) Sellers’
liability with respect to non-Fundamental Representations is limited to Losses incurred or suffered by Buyer in an amount not to exceed
the Holdback; provided, however, that with respect to breaches by Sellers of Sections 3.1 (Company Organization), 3.2 (Authority),
3.3 (No Conflicts; Consents and Approvals), 3.4 (Capitalization), 3.5 (Broker), 4.1 (Company Organization), 4.2 (Authority), 4.4 (Capitalization),
4.21 (Taxes) 4.25 (No Undisclosed Liabilities), 4.27 (Brokers), and 4.28 (Environmental) (collectively, the “Fundamental Representations”),
liability shall be limited to an aggregate equal to the Purchase Price; provided, however, that with respect to the Sellers pursuant
to Section 4.21 (Taxes), liability shall be limited to an aggregate equal to one and one-half times (1.5x) the Purchase Price. If there
are any Losses relating to or arising out of fraud, then Sellers’ liability in respect thereof shall be unlimited.
(f) Buyer’s
liability with respect to Section 10.1 is limited to Losses incurred or suffered by Sellers in an amount not exceeding the Purchase
Price.
(g) Recovery
for indemnification hereunder for either Buyer or Sellers shall be available only if and to the extent that Losses exceed, in the aggregate
in respect of either Party, $10,000.
(h) Recovery
for indemnification hereunder for either Buyer or Sellers shall be available only with respect to Claims that arise no later than the
two (2) year anniversary of the Closing; provided, that with respect to any breach by Sellers of Fundamental Representations, the only
time limitation that shall apply for indemnification shall be the applicable statute of limitations in respect thereof.
(i) Buyer
acknowledges that is has exercised due diligence and proper investigation regarding this transaction contemplated by this Agreement. Neither
Sellers nor the Company shall be liable for any Losses if Buyer had knowledge of such inaccuracy or breach prior to Closing.
10.3 Procedure
with Respect to Third-Party Claims.
(a) If
a Party is threatened with or becomes subject to a third party Claim, and such Party (the “Claiming Party”) believes
it has a claim entitled to indemnification from the other Party (the “Responding Party”) as provided in Section
9.1 as a result, then the Claiming Party shall notify the Responding Party within five (5) business days of the earlier of becoming
(i) subject to such third party Claim or (ii) aware of the threat of such Claim, in either case in writing setting forth the basis for
and nature of the Claim in reasonable detail. The failure of the Claiming Party to so notify the Responding Party will not relieve the
Responding Party of liability hereunder except to the extent that the defense of the Claim is prejudiced by the failure to give the notice.
(b) If
any Proceeding is brought by a third party against a Claiming Party and the Claiming Party gives notice to the Responding Party pursuant
to Section 10.3(a), the Responding Party may participate in the Proceeding and, to the extent that it wishes, to assume the defense
of the Proceeding, if (i) the Responding Party provides written notice to the Claiming Party that the Responding Party intends to undertake
the defense, (ii) the Responding Party conducts the defense of the third-party Claim actively and diligently with counsel reasonably satisfactory
to the Claiming Party, and (iii) if the Responding Party is a party to the Proceeding, the Responding Party or the Claiming Party has
not determined in good faith that joint representation would be inappropriate because of a conflict of interest. The Claiming Party may,
in its sole discretion, employ separate counsel (who may be selected by the Claiming Party in its sole discretion) in any such action
and to participate in the defense thereof, and the Claiming Party shall pay the fees and expenses of its counsel. The Claiming Party shall
cooperate with the Responding Party and its counsel in the defense or compromise of the Claim. If the Responding Party assumes the defense
of a Proceeding, no compromise or settlement of the Claims may be effected by the Responding Party without the Claiming Party’s
consent unless (x) there is no finding or admission of any violation of Law or any violation of the rights of any Person and no effect
on any other Claims that may be made against the Claiming Party, and (y) the sole relief provided is monetary damages that the Responding
Party pays in full.
(c) If
notice is given to the Responding Party of the commencement of any third-party Proceeding and the Responding Party does not, within fourteen
(14) days after the Claiming Party’s notice is given pursuant to Section 10.3(a), give notice to the Claiming Party of its
election to assume the defense of the Proceeding, any of the conditions set forth in clauses (i) through (iii) of Section 10.3(b)
above become unsatisfied or a Claiming Party determines in good faith that there is a reasonable probability that a Proceeding may adversely
affect it other than as a result of monetary damages for which it would be entitled to indemnification from the Responding Party under
this Agreement, then the Claiming Party may (upon notice to the Responding Party) undertake the defense, compromise or settlement of the
Claim; provided, however, that the Responding Party shall reimburse the Claiming Party for the Losses associated
with defending against the third-party Claim (including reasonable attorneys’ fees and expenses) and will remain otherwise responsible
for any liability with respect to amounts arising from or related to the third-party Claim, in both cases to the extent it is ultimately
determined that the Responding Party is liable with respect to the third-party Claim for a breach under this Agreement. The Responding
Party may elect to participate in the Proceedings, negotiations or defense at any time at its own expense.
10.4 Mandatory
Mediation.
(a) Except
for Claims arising under Section 6.8, any dispute, Claim, interpretation, controversy, or issues of public policy arising out of
or relating to this Agreement, including the determination of the scope or applicability of this Section 10.4, will be subject
to mandatory mediation prior to the filing of any arbitration action as described in this Section 10.4.
(b) The
mediator will be selected from the roster of mediators at Judicial Arbiter Group, Inc. in Denver, Colorado (“JAG”),
unless the Parties agree otherwise. If the Parties do not agree on the selection of a single mediator within ten days after a demand for
mediation is made, then the mediator will be selected by JAG from among its available professionals. The mediation will be held within
45 days of the selection of the mediator. All communications, both written and oral, during mediation are confidential and will be treated
as settlement negotiations for purposes of the Colorado Rules of Evidence. The mediation process will be confidential pursuant to terms
agreed to by the Parties and the mediator. Each Party shall bear an equal share of any costs and fees associated with mediation, except
for legal fees and expenses incurred by the Parties.
(c) If
the Parties are unable to resolve a dispute, Claim, interpretation, controversy, or issue of public policy pursuant to this Section
10.4, the Parties shall engage in binding arbitration pursuant to Section 10.5.
10.5 Mandatory
Binding Arbitration.
(a) Except
for Claims arising under Section 6.8, any dispute, Claim, interpretation, controversy, or issues of public policy arising out of
or relating to this Agreement, including the determination of the scope or applicability of this Section 10.5, will be determined
exclusively by arbitration held in Denver, Colorado, and will be governed exclusively by the Colorado Revised Arbitration Act, §§
13-22-201, et seq., C.R.S. (the “CRAA’’).
(b) The
arbitrator will be selected from the roster of arbitrators at Judicial Arbiter Group, Inc. in Denver, Colorado (“JAG”),
unless the Parties agree otherwise. If the Parties do not agree on the selection of a single arbitrator within ten days after a demand
for arbitration is made, then the arbitrator will be selected by JAG from among its available professionals. Arbitration of all disputes
and the outcome of the arbitration will remain confidential between the Parties except as necessary to obtain a court judgment on the
award or other relief or to engage in collection of the judgment.
(c) The
Parties irrevocably submit to the exclusive jurisdiction of the state courts located in Denver, Colorado, with respect to this Section
10.5 to compel arbitration, to confirm an arbitration award or order, or to handle court functions permitted under the CRAA. The Parties
irrevocably waive defense of an inconvenient forum to the maintenance of any such action or other proceeding. The Parties may seek recognition
and enforcement of any Colorado state court judgment confirming an arbitration award or order in any United States state court or any
court outside the United States or its territories having jurisdiction with respect to recognition or enforcement of such judgment.
(d) Intentionally
deleted.
Article
XI
MISCELLANEOUS
11.1 No
Third-Party Beneficiaries. The terms and provisions of this Agreement are intended solely for the benefit of the Parties and their
respective successors or permitted assigns, and it is not the intention of the Parties to confer third-party beneficiary rights upon any
other Person.
11.2 Entire
Agreement. This Agreement supersedes all prior discussions and agreements between the Parties and/or their Affiliates with respect
to the subject matter hereof and contains the sole and entire agreement between the Parties and their Affiliates with respect to the subject
matter hereof.
11.3 Waiver.
Any term or condition of this Agreement may be waived at any time by the Party that is entitled to the benefit thereof, but no such waiver
will be effective unless set forth in a written instrument duly executed by or on behalf of the Party waiving the term or condition. No
waiver by a Party of any term or condition of this Agreement, in any one or more instances, will be deemed to be or construed as a waiver
of the same or any other term or condition of this Agreement on any future occasion. All remedies, either under this Agreement or
by Law, are cumulative and not alternative.
11.4 Succession
and Assignment. This Agreement is binding upon and will inure to the benefit of the Parties and their successors and assigns. Buyer
may assign its rights, interests and obligations hereunder. Sellers may not assign this Agreement or any of its rights, interests, or
obligations hereunder.
11.5 Counterparts;
Electronic or Fax Signatures. This Agreement may be executed in counterparts, each of which will be an original and all of which,
when taken together, will constitute one instrument notwithstanding that all parties have not executed the same counterpart. Signatures
that are transmitted electronically or by fax will be effective as originals.
11.6 Headings.
The headings used in this Agreement have been inserted for convenience of reference only and do not modify, define, or limit any of its
terms or provisions.
11.7 Notices.
Any notice, request, demand, Claim, or other communication hereunder will be in writing and will be deemed delivered: (a) three Business
Days after it is sent by U.S. mail, certified mail, return receipt requested, postage prepaid; or (b) one Business Day after it is sent
via a reputable nationwide overnight courier or sent via email, in each of the foregoing cases to the intended recipient as set forth
below:
| |
If to Buyer: |
c/o TREES CORPORATION
215 Union Boulevard, Suite 415
Lakewood, CO 80228
Attn: David R. Fishkin, General Counsel
dfishkin@treescann.com |
| |
|
|
| |
With a copy to: |
Hassan + Cables
1035 Pearl Street, Suite 200
Boulder, CO 80302
Attn: David Wunderlich, Esq.
david@hassancables.com |
| |
|
|
| |
If to Sellers: |
BEDDOR CLAUDE LLC D/B/A CHRONIC THERAPY
6779 W. Arkansas Ave.
Lakewood, CO 80232
Attention: Jason Saunders
jason@chronictherapy.co |
| |
|
|
| |
With a copy to: |
Gould & Ratner LLP |
| |
|
Attention: Garrett Graff |
| |
|
1801 Wewatta Street, 11th Floor |
| |
|
Denver, CO 80202 |
| |
|
Email: ggraff@gouldratner.com |
Any Party may give any notice,
request, demand, Claim, or other communication hereunder by personal delivery, electronically, or fax, but no such notice, request, demand,
Claim, or other communication will be deemed to have been duly given unless and until it is actually received by the Party for whom it
is intended. A Party may change the address to which notices, requests, demands, Claims, and other communications hereunder are to be
delivered by giving notice to the other Party in the manner herein set forth.
11.8 Governing
Law. This Agreement is governed by and construed and enforced in accordance with the Laws of the State of Colorado, without giving
effect to any conflict or choice of law provision that would result in imposition of another state’s Law. THE PARTIES ACKNOWLEDGE
THAT (A) COLORADO HAS PASSED AMENDMENTS TO THE COLORADO CONSTITUTION AND ENACTED CERTAIN LEGISLATION TO GOVERN THE MARIJUANA INDUSTRY
AND (B) THE POSSESSION, SALE, MANUFACTURE, AND CULTIVATION OF MARIJUANA IS ILLEGAL UNDER FEDERAL LAW. THE PARTIES WAIVE ANY DEFENSES BASED
UPON INVALIDITY OF CONTRACTS FOR PUBLIC POLICY REASONS AND/OR THE SUBSTANCE OF THE CONTRACT VIOLATING FEDERAL LAW.
11.9 Waiver
of Right to Trial by Jury. EACH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BYLAW TRIAL BY JURY IN
ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND WITH RESPECT TO ANY COUNTERCLAIM THEREIN.
11.10 Attorneys’
Fees. If either Party brings a Proceeding to enforce the provisions of this Agreement, the substantially prevailing Party will be
entitled to recover its reasonable attorneys’ fees and expenses incurred in such action from the non-prevailing Party as determined
by the arbitrator or a court of law.
11.11 Specific
Performance. The rights of both Parties to consummate the transactions contemplated hereby (including the satisfaction of any condition
to the Closing) are special, unique, and of extraordinary character, and if any Party violates or fails or refuses to perform any covenant
or agreement made by it herein, the other Party may be without an adequate remedy at law. If Sellers violates or fails or refuses to perform
any covenant or agreement made by them herein, Buyer may (at any time prior to the earlier of a) valid termination of this Agreement pursuant
to Article IX and b) the Closing), subject to the terms hereof, institute and prosecute an action to enforce specific performance of the
covenant or agreement. The Parties irrevocably submit to the exclusive jurisdiction of the state courts located in Denver, Colorado, with
respect to this Section 11.11. The Parties irrevocably waive defense of an inconvenient forum to the maintenance of any such action
or other proceeding with respect to this Section 11.11.
11.12 Invalid
Provisions. If a dispute between the Parties arises out of this Agreement or the subject matter of this Agreement, the Parties
would want a court or arbitrator to interpret this Agreement as follows:
(a) With
respect to any provision held to be unenforceable, by modifying that provision to the minimum extent necessary to make it enforceable
or, if that modification is not permitted by law or public policy, by disregarding the provision;
(b) if
an unenforceable provision is modified or disregarded in accordance with this Section 10.12, by holding the rest of the Agreement will
remain in effect as written;
(c) by
holding that any unenforceable provision will remain as written in any circumstances other than those in which the provision is held to
be unenforceable; and
(d) if
modifying or disregarding the unenforceable provision would result in a failure of an essential purpose of this Agreement, by holding
the entire Agreement unenforceable.
Upon the determination that any term or other
provision of this Agreement is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this
Agreement so as to affect the original intent of the Parties as closely as possible in an acceptable manner to the end that the transactions
contemplated hereby are fulfilled to the extent possible.
11.13 Expenses.
Except as otherwise provided in this Agreement, whether or not the transactions contemplated hereby are consummated, each Party shall
pay its own costs and expenses incurred in anticipation of, relating to and in connection with the negotiation and execution of this Agreement
and the transactions contemplated hereby.
11.14 Amendments.
The Parties may amend any provision of this Agreement only by a written instrument signed by the Parties.
11.15 Confidentiality
and Publicity. This Agreement is confidential and will not be disclosed to any third party (other than the Parties’ Affiliates,
attorneys, accountants, auditors, or other advisors, or Governmental Authorities) except as required for Tax purposes or as required by
Law. A Party receiving a request for this Agreement shall promptly notify the other Party to afford it the opportunity to object or seek
a protective order regarding this Agreement or information contained herein. Either Party may issue a press release or public announcement,
and make any required public filings, concerning any of the transactions contemplated by this Agreement, but only with the prior written
consent of the other Party, provided that, Buyer or its Affiliates may make any securities filings or other required disclosures without
any such consent as may be required by applicable Law.
11.16 Advice
of Counsel. Each Party has had the opportunity to seek the advice of independent legal counsel and has read and understood each of
the terms and provisions of this Agreement.
11.17 MED
Reformation. This Agreement and the transactions contemplated hereby are subject to review by the MED and any Applicable City. If
the MED or an Applicable City determines that this Agreement must be reformed, the Parties shall negotiate in good faith to so reform
this Agreement according to such Governmental Authority’s requirements while effectuating the original intent of this Agreement
as near as possible.
[Signature page follows immediately]
IN WITNESS WHEREOF, this Agreement
has been duly executed and delivered by the Parties as of the date first above written.
| |
TREES COLORADO LLC |
| |
|
|
| |
By: |
|
| |
Name: |
Adam Hershey |
| |
Title: |
Interim Chief Executive Officer |
| |
BEDDOR CLAUDE LLC |
| |
D/B/A CHRONIC THERAPY |
| |
|
|
| |
By: |
|
| |
Name: |
Jason Saunders |
| |
Title |
Manager |
| INDIVIDUAL SELLERS: |
|
| |
|
|
|
| Jason Saunders |
|
| |
|
|
|
| Matthew Saunders |
|
| |
|
|
|
| Robert Domagata |
|
| |
|
|
|
| Sandra Beddor |
|
List of Exhibits
| Exhibit A |
Form of Escrow Agreement |
|
| Exhibit B |
Allocation of Consideration |
|
| Exhibit C |
Sellers’ Officer’s Certificate |
|
| Exhibit D |
IP Agreements |
|
| Exhibit E |
Buyer’s Officer’s Certificate |
|
| Exhibit F |
Form of Lease |
|
EXHIBIT A
FORM OF ESCROW AGREEMENT
EXHIBIT B
ALLOCATION OF CONSIDERATION
| Name of Holder | |
Percentage
of Company | |
| Sandra Beddor | |
25% | |
| Matthew Saunders | |
25% | |
| Robert Domagata | |
25% | |
| Jason Saunders | |
25% | |
EXHIBIT C
SELLERS’ OFFICER’S CERTIFICATE
This Sellers’ Officer’s
Certificate is delivered with respect to Article VII of that certain Membership Interest Purchase Agreement dated ________, 2025 (the
“MPA”) by and among TREES COLORADO, LLC, a Colorado limited liability company, or its assigns (“Buyer”),
and BEDDOR CLAUDE LLC D/B/A CHRONIC THERAPY, a Colorado limited liability company, and the individuals set forth on the signature page
to the MPA (collectively together with their respective subsidiaries, affiliates and assigns, “Seller” or “Sellers”).
Capitalized terms used in this certificate that are defined in the MPA have the respective meanings ascribed to them in the MPA.
The undersigned, jointly and
severally, hereby certify as follows:
1. Sellers’
Statements of Fact are true and correct on and as of the Closing as though made on and as of the Closing.
2. Each
Seller has performed and complied in all material respects with the agreements, covenants, and obligations required by the MPA to be performed
or complied with by Sellers at or before the Closing.
IN WITNESS WHEREOF, the undersigned
has executed this Officer’s Certificate on behalf of Sellers as of the date first written above.
| Dated: |
|
|
BEDDOR CLAUDE LLC |
| |
|
|
D/B/A CHRONIC THERAPY |
| |
|
|
|
|
| |
|
|
By: |
|
| |
|
|
Name: |
Jason Saunders |
| |
|
|
Title |
Manager |
| INDIVIDUAL SELLERS: |
|
|
| |
|
|
|
|
|
| Robert Domagata |
|
Jason Saunders |
|
|
|
| |
|
|
| Matthew Saunders |
|
Sandra Beddor |
EXHIBIT D
IP AGREEMENTS
EXHIBIT E
BUYER’S OFFICER’S CERTIFICATE
This Buyer’s Officer’s
Certificate is delivered with respect to Article VIII of that certain Membership Interest Purchase Agreement dated ________, 2025 (the
“MPA”) by and among TREES COLORADO, LLC, a Colorado limited liability company, or its assigns (“Buyer”),
and BEDDOR CLAUDE LLC D/B/A CHRONIC THERAPY, a Colorado limited liability company, and the individuals set forth on the signature page
to the MPA (collectively together with their respective subsidiaries, affiliates and assigns, “Seller” or “Sellers”).
Capitalized terms used in this certificate that are defined in the MPA have the respective meanings ascribed to them in the MPA.
The undersigned hereby certifies
as follows:
1. Buyer’s
Statements of Fact are true and correct on and as of the Closing as though made on and as of the Closing.
2. Buyer
has performed and complied in all material respects with the agreements, covenants, and obligations required by the MPA to be performed
or complied with by Buyer at or before the Closing.
IN WITNESS WHEREOF, the undersigned
has executed this Officer’s Certificate on behalf of Buyer as of the date first written above.
| Dated: |
|
|
TREES COLORADO LLC |
| |
|
|
|
|
| |
|
|
By: |
|
| |
|
|
Name: |
Adam Hershey |
| |
|
|
Title: |
Interim Chief Executive Officer |
EXHIBIT F
FORM OF LEASE
51
Exhibit
10.2
AMENDED
AND RESTATED COMMERCIAL LEASE
THIS
AMENDED AND RESTATED COMMERCIAL LEASE (the “Agreement” or “Lease”) made as of the 31st
day of January, 2025 (the “Execution Date”), but shall become effective as of the date of closing under the “MIPA”
defined below (the “Effective Date”), by and between Streamline Management LLC, a(n) Colorado limited liability company
(the “Landlord”) and Beddor Claude LLC, d/b/a Chronic Therapy, a Colorado limited liability company (“Tenant”).
WHEREAS,
Tenant presently leases and occupies and occupy certain real property owned by Landlord located at 10030 West 27th Avenue,
Wheat Ridge, Colorado 80215 (the “Premises” or “Property”) as a licensed marijuana dispensary to
sell marijuana and marijuana-derived products (the “Business”) thereupon;
WHEREAS,
Trees Colorado, LLC, a Colorado corporation (“Buyer”) and Jason Saunders, Matthew Saunders, Robert Domagata and Sandra
Beddor (collectively, the Sellers”) are parties to that certain Membership Interest Purchase Agreement (the “MIPA”)
dated as of even date herewith, whereby Sellers, upon closing thereof (“Closing”), shall sell to Buyer one hundred
percent of the issued and outstanding membership interests of Tenant; and
WHEREAS,
pursuant to the terms and conditions hereof, Tenant desires to amend and restate in its entirety this Lease, in order that upon Closing,
Tenant may lease and occupy the Premises in order to operate the Business thereupon.
NOW
THEREFORE, in consideration of the mutual covenants, promises, agreements, representations and warranties contained in this Agreement,
and other good and valuable consideration, the receipt and sufficiently of which is hereby acknowledged, the parties hereto do hereby
covenant, promise, agree, represent, and warrant as follows:
1. Basic
Terms.
a. Address
of Landlord. Streamline Management LLC, Attn: Jason Saunders, 6779 W. Arkansas Ave., Lakewood, CO 80232, or such other address as
may from time to time be designated by Landlord in writing.
b. Address
of Tenant. Beddor Cluade LLC, Attn: David R. Fishkin, 215 Union Boulevard, Suite 415, Lakewood, Colorado 80228 or such other address
as may from time to time be designated by Tenant in writing.
c. Leased
Property. The Property consisting of approximately 4898 square feet.
d. Lease
Term. The initial term of this Lease (the “Base Term”) shall run from the Closing of the MIPA (the “Commencement
Date”) for a period of sixty (60) months from the Commencement Date (the “Expiration Date”), unless this
Lease shall be sooner terminated or renewed as set forth herein. Tenant shall have two (2) options to extend the Base Term for additional
consecutive periods of five (5) years (each, an “Extension”). Each applicable five (5) year extension of the Base
Term is referred to herein as a “Renewal Term” and, the Renewal Terms together with the Base Term, the “Term”).
Each option to exercise a Renewal Term will be exercisable by written notice given to Landlord at least one hundred twenty (120) days
prior to the last day of the then-current Term. Upon such exercise, the Term of the Lease and the Expiration Date shall be extended for
the period specified above upon the same terms, conditions, covenants, and agreements as are contained in the Lease without the necessity
for the execution of any further instrument. For purposes of clarity, in the event that Closing pursuant to the MIPA does not occur on
or before June 30, 2025, this Lease shall not commence and shall be deemed void and of no further force and effect.
e. Permitted
Uses. The Property shall be used for use for the cultivation of retail marijuana and the sale of retail marijuana and retail marijuana
products, all of which only to the extent such is in accordance with the Laws, including all required approvals of any Governmental Authority,
for related office and storage uses, or for any other lawful purpose. For purposes hereof, “Governmental Authority”
means any court, tribunal, arbitrator, authority, agency, commission, official or other instrumentality of the United States or any state,
county, city or other political subdivision or similar governing entity including, without limitation, the State of Colorado Marijuana
Enforcement Division and the City of Wheat Ridge (the “City”). For purposes hereof, “Laws” shall
mean all laws, statutes, rules, regulations, ordinances, and other pronouncements having the effect of law of a Governmental Authority,
except for any United States federal law, rule or regulation related to marijuana which this Agreement may violate.
2. Lease
of Premises; Triple Net Lease. Upon execution hereof, Landlord, in consideration of the Rent to be paid and the covenants
and agreements to be performed by the Tenant, does hereby lease unto Tenant the Property, as designated in Section 1.c. This Lease is
what is commonly called a “net net net” lease, it being understood that Landlord shall receive all Rent as provided in Section
5 free and clear of any and all impositions, encumbrances, charges, obligations or expenses of any nature whatsoever in connection with
the ownership and operation of the Property. In addition to the Rent reserved hereunder, except as expressly provided herein to the contrary,
Tenant shall pay to the parties respectively entitled thereto all impositions, insurance premiums, operating charges, maintenance charges,
construction costs and any other charges, costs, and expenses which arise or may be contemplated under any provisions of this Lease during
the Term hereof. All of such charges, costs and expenses shall constitute Rent, and upon the failure of Tenant to pay any such costs,
charges or expenses, Landlord shall have the same rights and remedies as otherwise provided in this Lease for the failure of Tenant to
pay Rent owed hereunder. It is the intention of the parties hereto that this Lease shall not be terminable for any reason by the Tenant,
except as expressly provided herein to the contrary, and that Tenant shall in no event be entitled to any abatement of or reduction in
Rent payable hereunder this Lease except as herein expressly provided. Any present or future law to the contrary shall not alter this
agreement of the parties.
3 Term and Delivery of Property. The Lease Term, as designated in Section 1.d., shall commence on
the Commencement Date. Unless sooner terminated in accordance with, the terms hereof, the Term shall and without the ecessity for notice
from either party to the other terminate at 5:00 p.m. Mountain Standard time on the Expiration Date designated in Section 1.d.
4. Use
of Premises.
a. Use
by Tenant. Tenant shall occupy the Property throughout the Term and shall use the same only for the non-residential purpose(s) set
forth in Section 1.e. and for no other purposes whatsoever without the written consent of the Landlord. Tenant shall not use or occupy
the Property for any unlawful purpose or in any manner that will constitute waste or nuisance. Tenant shall comply in all material respects
with all present and future Laws over the Property, concerning the use, occupancy, and condition of the Property and all machinery, equipment
and furnishings therein. In the event that Tenant’s Permitted Use becomes impermissible under the Laws, Tenant will so notify Landlord
and will immediately and properly dispose of all materials and/or products on the Property in any manner permitted by the Laws. Tenant
will provide to Landlord upon request copies of any licenses relating to Tenant’s use of the Property. In no event shall Tenant
operate any business on the Property without having first provided Landlord with evidence Tenant has obtained all licenses required by
any Governmental Authority necessary to operate such business.
b. Tenant
Improvements. Tenant shall accept the Premises on the Commencement Date in its “as-is” condition, subject to all applicable
Laws, and Landlord shall have no obligation to perform or pay for any repair or other work therein.
c. Signage.
Tenant shall neither erect nor modify any sign on the Premises without the prior written consent of the Landlord, which shall not be
unreasonably withheld.
5. Rent.
Base Rent and Additional Rent are collectively, the “Rent.”
a. Base
Rent. Tenant shall pay Base Rent to Landlord as follows:
| Dates | |
Monthly
Base Rent | | |
Annual
Base Rent | |
| Lease Year
1 | |
$ | 8,600.00 | | |
$ | 103,200.00 | |
| Lease Year 2 | |
$ | 8,858.00 | | |
$ | 106,296.00 | |
| Lease Year 3 | |
$ | 9,123.74 | | |
$ | 109.484.88 | |
| Lease Year 4 | |
$ | 9,397.45 | | |
$ | 112,769.40 | |
| Lease Year 5 | |
$ | 9,679.38 | | |
$ | 116,152.56 | |
The
first “Lease Year” shall commence on the Commencement Date and end on the expiration of the twelfth (12th) full calendar
month thereafter. Each subsequent twelve (12)-month period shall constitute a Lease Year. Notwithstanding the foregoing references to
Annual Base Rent, if the initial or final month of the Term of this Lease is less than a calendar month, Monthly Base Rent for such partial
month shall be prorated at the rate of one-thirtieth (1/30) of the monthly amount due for each day, payable in advance. Tenant shall
pay the Monthly Base Rent on the first day of each calendar month during the Term. In addition, Tenant shall pay Landlord without offset
the Additional Rent as hereinafter set forth. Unless otherwise specifically provided, all sums shall be paid to Landlord at the address
designated in Section 1(a) or at such other address as Landlord shall designate in writing to Tenant. Landlord agrees to an abatement
or credit in full of the first month’s Base Rent in Lease Year 1; accordingly, no Base Rent shall be due and payable until the
second month of Lease Year 1.
b. Additional
Rent. In addition to Base Rent, Tenant shall pay Additional Rent to Landlord as follows:
i. CAM
Costs; Utilities; Property Taxes. During each month of the Lease
Term, on the same date that Monthly Base Rent is due, Tenant shall pay Landlord an amount equal to 1/12th of the annual cost, as estimated
by Landlord from time to time, of all common area maintenance (CAM) costs, property taxes, owners’ property association dues (if
any), and Tenant’s Proportionate Share of all other actual operating expenses for the Property, which at any time during the Term
hereof as assessed or imposed upon the Property or any part thereof (collectively, the “NNN Expenses”); provided,
however, that such NNN Expenses are exclusive of all costs of utilities billed directly to Tenant (which are the sole responsibility
of Tenant). Such NNN Expenses shall be paid in equal monthly installments concurrently with Monthly Base Rent. Tenant shall cause all
utilities to be placed in the name of Tenant and shall pay all utilities which at any time during the Term hereof are assessed or imposed
upon the Property or any part thereof. Tenant shall pay Tenant’s Proportionate Share of all utility expenses to either Landlord,
in the event Landlord is invoiced for such expenses, or directly to the vendor, if such expenses are billed to Tenant separately from
other tenants. Upon reasonable notice to Landlord, Tenant may have access to the utilities and/or communications room for repairs, maintenance
or inspection purposes. With respect to Additional Rent, Tenant’s “Proportionate Share” shall be 100%. No NNN Expenses
shall be assessed by Landlord in respect of any capital expenses which are incurred by Landlord solely for cosmetic improvements or to
improve or ‘beautify’ the Property, or to replace any element of the Property which is not reasonably at the end of its useful
life.
ii. Payment
of Additional Rent. Except as otherwise provided herein, Tenant shall
pay to Landlord all Additional Rent owed in equal monthly installments concurrent with Monthly Base Rent. Within ninety (90) days of
the end of each calendar year, Landlord shall compute actual NNN Expenses (the “Actual Costs”) for the preceding calendar
year and shall provide Tenant with a statement of the Actual Costs. In the event that Tenant’s payment of Additional Rent for said
calendar year totals less than the Tenant’s monthly payments in estimation of the Actual Costs, Tenant shall be obligated to pay
Landlord, within ten (10) days of receipt of statement, the difference between the Actual Costs and the monthly payments actually paid
by Tenant for said calendar year in estimation of the Actual Costs. In the event Tenant’s monthly payments actually paid in estimation
of the Actual Costs for said Calendar Year exceed the Actual Costs, such excess shall be credited toward Additional Rent. The Actual
Costs of the prior calendar year shall be presumed to be used for the purpose of calculating the estimated costs for the then-current
year, except to the extent that Landlord may reasonably determine that any of the NNN Expenses are likely to increase in the then-current
year and may adjust the estimated NNN Expenses accordingly upon written notice to Tenant. Landlord’s statement of Actual Costs
shall be final unless Tenant objects to any cost or expense included in such statement within fourteen (14) days after the delivery of
the statement (such period the “Tenant Objection Period”). If Tenant objects to any cost or expense included
in a Statement within the Tenant Objection Period and the parties are unable to resolve such objection within thirty (30) days after
the Tenant Objection Period, then either Party may refer the dispute to a nationally recognized public accounting firm whose decision
shall be conclusively binding upon Landlord and Tenant. Tenant shall pay the fees and expenses of the accountants described in the
preceding sentence, unless such accounting firm determines that Landlord overstated NNN Expenses by more than five percent (5%) for such
calendar year, in which case Landlord shall pay such fees and expenses. If it is finally determined that NNN Expenses were misstated
on such statement, then (i) Landlord shall apply such overpayment of such costs as a credit against Rent and, if the Lease has terminated,
refund any excess amounts to Tenant or (ii) Tenant shall pay to Landlord any underpayment of such costs, as the case may be, within thirty
(30) days after notification thereof. Tenant shall maintain the results of any such review confidential and shall not be permitted
to use any third party to perform such audit or inspection other than an independent firm of certified public accounts meeting the following
requirements: (1) with at least ten (10) years of experience reviewing lease expense reconciliations; (2) that is not compensated on
a contingency fee basis or in any other manner which is dependent upon the results of such audit or inspection (and Tenant shall deliver
the fee agreement or other similar evidence of such fee agreement to Landlord upon request); and (3) that agrees with Landlord in writing
to maintain the results of such review confidential. Nothing in this section shall be construed to limit, suspend, or abate Tenant’s
obligation to pay Rent when due, including Additional Rent.
iii. Late
Payment. If Tenant shall fail to pay, within five (5) days after
the same is due and payable, any Monthly Base Rent or any Additional Rent, Tenant shall pay to Landlord an amount equal to five percent
(5%) of the such unpaid amount of Monthly Base Rent or any Additional Rent, or portion thereof. In the event such amount(s) remain unpaid
as of the first day of the following month, for each month such amount(s) remain unpaid, Tenant shall remit to Landlord an amount of
an additional three percent (3%) of such unpaid amount of Monthly Base Rent or any Additional Rent, or portion thereof.
c. Base
Rent During Renewal Term(s). In the event Tenant exercises its right to renew this Lease, during the Renewal Terms, the Base Rent
for each consecutive Lease Year of each Renewal Term shall increase by three percent (3%) from the Base Rent of the immediately preceding
Lease Year.
6. Security
Deposit. Prior to the Commencement Date, Tenant shall deliver to Landlord $8,600 as the Security Deposit. The Security Deposit shall
be held by Landlord as security for the performance by Tenant of all of the provisions of this Lease. If Tenant fails to pay Rent or
other charges due hereunder, or otherwise defaults with respect to any provision of this Lease, Landlord may use, apply or retain all
or any portion of the Security Deposit for the payment of any Rent or other charge in default, or the payment of any other sum to which
Landlord may become obligated by reason of Tenant’s default, or to compensate Landlord for any loss or damage which Landlord may
suffer thereby. Landlord shall not be required to keep the Security Deposit separate from its general accounts. If Tenant performs all
of Tenant’s obligations hereunder, the Security Deposit, or so much thereof as has not theretofore been applied by Landlord, shall
be returned to Tenant without payment of interest for its use (or, at Landlord’s option to the last assignee, if any, of Tenant’s
interest hereunder) within sixty (60) days after the expiration or earlier termination of this Lease, and after Tenant has vacated the
Premises.
7. Insurance
and Indemnification.
a. Insurance
by Tenant. Tenant shall, at all times during the Term, at Tenant’s expense, obtain and keep in effect the following insurance
insuring Tenant, Landlord and all mortgagees and any other person or entity designated by Landlord as having an interest in the Property
(as their interests may appear):
i. Tenant
will maintain property insurance throughout the Term, for the furniture, fixtures, and equipment owned by Tenant. Such insurance coverage
must be as broad as ISO Causes of Loss -Special Form- against risks of direct physical loss or damage (commonly known as “all risk”)
for an amount adequate to replace, and at replacement cost coverage, all of Tenant’s equipment, fixtures, improvements, business
personal property, and any other property for which Tenant is responsible located in or about the Premises.
ii. Tenant
will maintain liability insurance throughout the Term, for the Premises (“Tenant’s Liability Insurance”), which
insurance will include protection against bodily injury (up to and including death), property damage, personal injury, fire legal liability,
and medical payment coverage issued by an insurance company qualified to do business in the State of Colorado, and will be written on
an occurrence basis. The limit of liability for Tenant’s Liability Insurance will be no less than $2,000,000 per occurrence and
may be derived by a Combined Single Limit (“CSL”) on the liability policy or in combination of $1,000,000 liability
CSL supported by a $1,000,000 or greater Umbrella Policy. Tenant’s Liability Insurance will: (i) name Landlord, its property
manager, and Mortgagee as additional insureds; (ii) be endorsed to be primary and non-contributory to any other similar insurance
of said additional insureds; (iii) be endorsed to include a waiver of subrogation in favor of additional insureds; and, (iv) provide
at least 30 days written notice be given to additional insureds of any cancellation, non-renewal or material change as respects the coverages
required by this Lease. The limits of insurance required in this Lease do not limit or restrict the limit of liability of Tenant. Prior
to the occupancy of the Premises and prior to the expiration of the then-current policy, Tenant will cause to be delivered to the Landlord
certificates of insurance evidencing that the insurance required under this Lease are so in effect. Tenant may obtain, at its sole discretion,
other insurance, coverages and endorsements customarily maintained by similar companies as Tenant as so reasonably requested from time
to time by Landlord. Tenant will maintain worker’s compensation insurance coverage as required by law and will afford a waiver
of subrogation on behalf of the Landlord and its property manager.
b. Insurance
by Landlord. Landlord shall maintain “All-Risk” property insurance at replacement cost, including loss of rents, on the
Property, and commercial general liability insurance policies covering the common areas of the Property, each with such terms, coverages
and conditions as are normally carried by reasonably prudent owners of properties similar to the Property.
c. Indemnification.
i. By
Tenant. Except for the negligence or willful misconduct of
Landlord, and to the extent permitted by Applicable Law, Tenant agrees to indemnify, protect, defend and hold harmless Landlord from
and against any and all claims suffered or claimed by any third party and arising from (i) the undertaking by Tenant of any alterations
or repairs to the Premises, (ii) the conduct of Tenant’s business on the Premises or other use of the Premises by Tenant, (iii)
any act or omission of Tenant in or about the Premises, (iv) any occurrence in, upon or at the Premises (including loss of life, personal
injury or damage to property), or (v) the presence of any hazardous material introduced to the Premises or the Premises by Tenant. In
case of any action or proceeding brought against the Landlord by reason of any such claim, upon notice from Landlord, Tenant covenants
to defend such action or proceeding by counsel chosen by Landlord, and reasonably acceptable to Tenant and Tenant’s insurance company.
ii. By
Landlord. Except for the negligence or willful misconduct
of Tenant, and to the extent permitted by Applicable Law, Landlord agrees to indemnify, protect, defend and hold harmless the Tenant
from and against any and all Claims suffered or claimed by any third party (other than the Tenant) and arising from any act or omission
of Landlord in or about the Premises. In case of any action or proceeding brought against the Tenant by reason of any such Claim, upon
notice from Tenant, Landlord covenants to defend such action or proceeding by counsel chosen by Tenant, and reasonably acceptable to
Landlord and Landlord’s insurance company.
d. Waiver
of Subrogation. Landlord and Tenant each agree that neither Landlord nor Tenant (and their successors and assignees) will have any
claim against the other for any loss, damage or injury resulting from an occurrence which is covered by insurance carried or required
to be carried by either party and for which recovery from such insurer is made, notwithstanding the negligence of either party in causing
the loss. Landlord and Tenant shall ensure that all policies of insurance shall expressly permit waiver of subrogation and shall furnish
the other party evidence of the same upon request.
e. Limited
Liability. Any liability of Landlord under this Lease shall be limited solely to Landlord’s interest in the Property, and any
rents, issues, profits, casualty and condemnation proceeds, or other income and equity therefrom, and in no event shall any personal
liability be asserted against the Landlord in connection with this Lease nor shall any recourse be had to any other property or assets
of the Landlord.
8. Damage
by Fire or other Casualty; Casualty Insurance.
a. Obligation
to Repair or Rebuild. If the Property shall be damaged or destroyed by fire or other casualty, Tenant shall promptly notify Landlord
(“Tenant’s Notice of Damage”) of any damage or destruction to the Property, and Landlord, subject to the mortgagee’s
consent and to the conditions set forth in this Section 8, shall, no later than 270 days thereafter, repair, rebuild or replace such
damage and restore the Property, subject to subsection f. below, to substantially the same condition in which they were immediately prior
to such damage or destruction; provided, however, that Landlord shall only be obligated to restore such damage which is covered by the
fire and other extended coverage policies.
b. Commencement
and Completion of Work. The work shall be commenced promptly and completed with due diligence but in no event later than 270 days
after the earlier date of Tenant’s Notice of Damage or the date upon which Landlord has actual knowledge of the casualty, taking
into account the time required by Landlord to affect a settlement with, and procure insurance proceeds from, the insurer, and for delays
beyond Landlord’s reasonable control.
c. Application
of Proceeds. If in Landlord’s reasonable opinion the insurance proceeds will not be adequate to complete such restoration,
Landlord shall have the right to terminate this Lease by sending a written notice of such termination to Tenant, the notice to specify
a termination date no less than ten (10) days after its transmission.
d. Tenant’s
Fixtures and Improvements. Landlord’s obligation or election to restore the Property under this Section 8 shall not include
the repair, restoration or replacement of the fixtures, improvements, alterations, furniture or any other property owned, installed,
made by, or in the possession of Tenant.
e. Abatement
of Rent. If the Property shall be damaged by fire or other casualty, in whole or in part, without the fault or negligence of Tenant,
the Base Rent and Additional Rent shall be abated proportionately to the extent and during the time the Property is rendered untenantable.
Tenant shall, at its own cost and expense, remove such of its furniture and furnishings and other belongings from the Property as Landlord
shall require in order to repair and restore the Property.
f. Landlord’s
Option Not to Restore. As soon as reasonably practicable, Landlord will give written notice to Tenant stating Landlord’s estimate
of the time necessary to repair or restore the Premises (“Landlord’s Notice of Repair Time”). If Landlord reasonably
estimates that repair or restoration of the Premises cannot be completed within three hundred (300) days from the time of Tenant’s
Notice of Damage, Landlord and Tenant may each terminate this Lease. Any option granted hereunder will be exercised by written notice
to the other party given within ten days after Landlord’s Notice of Repair Time. If either Landlord or Tenant exercises its option
to terminate this Lease, the Lease Term will expire ten (10) days after written notice by either Landlord or Tenant exercising such party’s
option to terminate this Lease.
9. Condemnation.
a. Termination.
(i) If all of the Property is covered by a condemnation; or (ii) if any of the Property is covered by a condemnation and, in Landlord’s
reasonable opinion, it would be impractical or the condemnation proceeds are insufficient to restore the remainder of the Property; then,
in any such event, this Lease shall terminate and all obligations hereunder shall cease as of the date upon which possession is taken
by the condemnor and the Rent herein reserved shall be apportioned and paid in full by Tenant to Landlord to that date and all Rent prepaid
for periods beyond that date shall forthwith be repaid by Landlord to Tenant.
b. Partial
Condemnation. If there is a partial condemnation and this Agreement has not been terminated pursuant to subsection a. hereof, Landlord
shall restore the Property and the improvements which are part of the Property to a condition and size as nearly comparable as reasonably
possible to the condition and size thereof immediately prior to the date upon which possession shall have been taken by the condemnor.
If the condemnation proceeds are more than adequate to cover the cost of restoration and Landlord’s expenses in collecting the
condemnation proceeds, any excess proceeds shall be retained by Landlord. If there is a partial condemnation and this Lease has not been
terminated by the date upon which the condemnor shall have obtained possession, the obligations of the Landlord and Tenant under this
Lease shall be unaffected by such condemnation except that there shall be an equitable abatement of the Base Rent in direct proportion
to the amount of the Property so taken.
c. Award.
In the event of a condemnation affecting Tenant, Tenant shall have the right to make a separate claim against the condemnor for removal
and relocation costs and expenses and the taking of Tenant’s tangible property; provided and to the extent, however, that such
claims or payments do not reduce the sums otherwise payable by the condemnor to Landlord except as aforesaid, Tenant hereby waves all
claims against the Landlord and against the condemnor including, without limitation, all claims for leasehold damages and diminution
in value of Tenant’s leasehold interest.
10. Repairs
and Maintenance; Alterations and Additions.
a. Alterations
and Additions. Tenant shall not do any painting or decorating or erect any partitions, or make any alterations, additions, changes
or repairs (hereinafter referred to as “Alterations and Additions”) to the Property without obtaining in each instance
Landlord’s prior written consent, which consent shall not be unreasonably withheld or delayed. All Alterations and Additions shall,
upon the making of such Alterations and Additions, immediately become the sole property of Landlord. Tenant hereby agrees to protect,
defend, indemnify and hold harmless Landlord, its agents and employees, with regard to the Property, from any and all liabilities, costs,
expenses and reasonable attorney’s fees of every kind and description including, but not limited to mechanic’s liens, which
may arise out of or be connected in any way with said Alterations or Additions. Any mechanic’s lien filed against the Property
or any notice which is received by either Landlord or Tenant for work claimed to have been furnished to Tenant shall be released and
discharged within ten (10) business days after such filing or receipt, whichever is applicable, at Tenant’s expense. All Alterations
and Additions shall comply with all insurance requirements and with all applicable Laws.
b. By
Landlord. Landlord shall make all necessary repairs, replacements and maintenance to the roof, exterior walls, foundation, structural
frame of the building and the parking and landscaped areas. Landlord shall in no event be responsible for the repair, replacement, or
maintenance of any other portion of the Property, or for any failure to repair or maintain any portion of the Property. Landlord shall
remove, at its sole expense, and on or before the Commencement Date, any and all HVAC units from the cultivation portion of the Property
that are currently non-working.
c. By
Tenant. Tenant, at its sole cost and expense and throughout the Term and any renewals or extensions thereof, shall keep and maintain
the Property in a neat, safe and orderly condition and shall make all necessary repairs and replacements thereto, including all plumbing
servicing the Property. Tenant accepts “as is” the existing HVAC, electrical and other mechanical facilities and systems
serving the Premises, and Landlord is not responsible for any repairs, replacement, improvements or other modifications thereto. Tenant
agrees to submit to Landlord complete plans and specifications, including engineering, mechanical, and electrical work covering any and
all contemplated Tenant work or repairs, if applicable, and any subsequent improvements or alterations of the Premises. The plans and
specifications shall be in such detail as Landlord may reasonably require, and in compliance with all Laws. As soon as reasonably feasible
thereafter, Landlord shall notify Tenant of any failures of Tenant’s plans to meet with Landlord’s approval. Tenant shall
cause Tenant’s plans to be revised to the extent necessary to obtain Landlord’s approval. Tenant shall not commence any Tenant
Work, or any of the Improvements, or alterations of Premises until Landlord has approved Tenant’s plans. Tenant shall procure all
necessary permits before undertaking any Tenant’s work or repairs. Tenant shall perform all of Tenant’s work or repairs in
a good and workmanlike manner. Tenant shall use materials of good quality and perform Tenant’s work or repairs only with contractors
previously approved of in writing by Landlord. Tenant’s work or repairs shall comply with all Laws. Tenant will pay the cost of
any repairs, replacement, improvements, or other modifications to the electrical system or heating and air conditioning system or other
mechanical facilities and systems of the Premises necessitated by such usage and Permitted Use, the cost of separate metering, if required
by Landlord, and the cost of any additional electrical service provided to Tenant. Landlord is not liable for any damage, loss or expense
incurred by Tenant by reason of any interruption, reduction (permanent or temporary) or failure of any utilities or services for the
Premises or the Building. Landlord may, with written notice to Tenant (except that no notice is required in the event of an emergency),
cut off and discontinue any utilities and services when such discontinuance is necessary in order to make repairs or alterations or if
otherwise required in connection with the fulfillment of Landlord’s obligations under this Lease, though such repairs and alterations
shall be completed within a commercially reasonable amount of time and Landlord shall use it best efforts to ensure the discontinuance
is as short as is commercially reasonable. Tenant is not entitled to any abatement of rent as a result of the Premises being rendered
unusable for their intended purpose due to any such failure, discontinuance, interruption or reduction, unless such failure, discontinuance,
interruption, or reduction in services extends beyond a commercially reasonably period of time. No failure, interruption or reduction
of utilities or services will be construed as an eviction or disturbance of possession by Landlord, and Tenant has no right to terminate
this Lease as a result thereof, unless such failure, discontinuance, interruption, or reduction in services extends beyond a commercially
reasonably period of time. Upon the expiration of the Term, Tenant shall yield and deliver up the Property in like condition as when
taken, ordinary wear and tear excepted.
d. Landlord
and Tenant may conduct an inspection of the Premises at the time of possession. A check-in inspection sheet may be completed at that
time and the information contained therein shall be sufficient and satisfactory proof of the condition of the Premises at the time of
possession, should a subsequent dispute arise at a later date as to the condition of the Premises at the time of move-in.
11. Utilities
and Services.
a. Utilities
and Services Furnished by Landlord. Provided Tenant is not in default hereunder, and subject to interruptions beyond Landlord’s
control, Landlord agrees to furnish or cause to be furnished to the Property, the utilities and services described below, subject to
the conditions and in accordance with the standards set forth in this Section 11.
i. None.
b. Utilities
and Services Furnished by Tenant. Tenant agrees to furnish or cause to be furnished to the Property all other utilities and services
required or otherwise desired by Tenant for Tenant’s use, subject to any necessary approval(s), whether described herein or otherwise
required.
c. Failure,
Stoppage or Interruption of Service; No Release from Obligations. Landlord shall not be liable for, and Tenant shall not be entitled
to any abatement or reduction of Rent by reason of, Landlord’s failure to furnish any of the foregoing services when such failure
is caused by accident, breakage, repairs, riots, strikes, lockouts, or other labor disturbance or labor dispute of any character, governmental
regulation, moratorium or other governmental action, inability by exercise of reasonable diligence to obtain electricity, water or fuel,
or by any other cause beyond Landlord’s immediate control or for stoppages or interruptions of any such services for the purpose
of making necessary repairs or improvements.
12. Governmental
Regulations. Tenant shall not violate any Laws, including without limitation those pertaining to (i) the manufacture, cultivation,
or distribution of retail marijuana and/or retail marijuana products in the course of Tenant’s business; (ii) the possession and
consumption of marijuana and/or retail marijuana or retail marijuana products; and, (iii) environmental matters, of any federal, state
or municipal government, relating to the Property or to the use or manner of use of the Property, nor shall Tenant perform any acts or
carry on any practices which may injure the Property or be a nuisance, disturbance or menace to any other tenants of the Property. Tenant
shall maintain appropriate licensing as required by applicable Laws in good standing and at all times remain within the limits allowed
by applicable Laws with regard to the possession, cultivation, extraction, distribution, acquisition, transportation, or use of marijuana.
Any violation of any Laws regarding marijuana by the Tenant shall be considered a material breach of the sublease and subject the Tenant
to all rights and remedies of the Landlord in the event of breach.
13. Landlord’s
Right of Entry.
a. Right
of Entry; No Release from Obligations. Tenant shall permit Landlord and the authorized representatives of Landlord, upon prior reasonable
notice by Landlord (except in the event of an emergency), to enter the Property at any times when accompanied by Tenant for the purpose
of (i) inspecting the Property or (ii) making any necessary repairs thereto and performing any work therein; except, however, that prior
notice shall not be required in the event of an emergency. Such entry shall be in accordance with applicable Laws.
b. Sale;
Mortgage; Prospective Tenants. Landlord shall have the right at all reasonable times and upon reasonable prior notice to enter and
to exhibit the Property for the purpose of sale or mortgage, and, during the last six (6) months of the Term of this Agreement, to enter
and exhibit the Property to any prospective tenant, subject to restrictions pursuant to the Marijuana Code on visitors entering certain
areas of the Property.
14. Quiet
Enjoyment. Tenant, upon paying the Base Rent, Additional Rent and other charges herein provided for, and observing and keeping all
covenants agreements and conditions of this Lease on its part to be kept, shall quietly have and enjoy the Property during the Term without
hindrance or molestation by anyone claiming by or through Landlord, subject, however, to the exceptions, reservations and conditions
of this Lease. Landlord hereby reserves the right to prescribe, at its sole discretion, reasonable rules and regulations (hereinafter
called the “Rules and Regulations”) governing the use and enjoyment of the Property; provided that the Rules and Regulations
shall not materially interfere with Tenant’s use and enjoyment of the Property in accordance with the provisions of this Agreement
for the permitted uses.
15. Assignment
and Subletting. Tenant agrees that it will not sublet the Property, or any part thereof, nor assign this Lease, or any interest therein,
without first obtaining the written consent of the Landlord, of which consent shall not be unreasonably withheld, conditioned, or delayed.
In no event shall any assignment or subletting to which Landlord may consent, release or relieve Tenant from its obligations to fully
observed or performed. Consent by Landlord to an assignment or sublease will not be construed to relieve Tenant from obtaining Landlord’s
prior written consent in writing to any further assignment or sublease. Landlord, at its sole, subjective discretion, shall be able to
assign this Lease to any third party without any approval(s) necessary from Tenant.
16. Surrender.
a. Condition
of Premises. At the expiration or earlier termination of the Term, Tenant shall promptly yield up, clean and neat, and in the same
condition, order and repair in which they are required to be kept throughout the term hereof, the Property all improvements, Alterations
and Additions thereto, and all fixtures and equipment which the Landlord owned and placed upon the Property prior to the Commencement
Date, ordinary wear and tear excepted.
b. Holding
Over. If Tenant, or any person claiming through Tenant, shall continue to occupy the Property after the expiration or earlier termination
of the Term or any renewal thereof, such occupancy shall be deemed to be under a month-to-month tenancy under the same terms and conditions
set forth in this Lease; except, however, that the Base Rent installments for each month during such continued occupancy shall be 200%
of the applicable amount set forth in Section 5. Anything to the contrary notwithstanding, any holding over by Tenant without Landlord’s
prior written consent shall constitute a default hereunder and shall be subject to all the remedies set forth in Section 18 hereof.
17. Defaults
– Remedies.
a. Defaults.
If the Tenant shall be in arrears in payment of any installment of Rent, or any portion thereof, or in default of any other covenants
of agreements set forth in this Agreement (“Default”), and the Default remains uncorrected for a period of five (5)
business days (thirty (30) days in case of a Default other than the failure to pay Rent) after the Landlord has given written notice
thereof pursuant to applicable Laws, then the Landlord may, at the Landlord’s option, undertake any of the following remedies without
limitation: (i) declare the term of the Agreement ended; (ii) terminate the Tenant’s right to possession of the Premises and reenter
and repossess the Premises pursuant to applicable provisions of the Colorado Forcible Entry and Detainer Statute; (iii) recover all present
and future damages, costs and other relief to which the Landlord is entitled including, but not limited, to the costs to recover and
repossess the premises, the expenses, and commissions; (iv) pursue breach of contract remedies; and/or (v) pursue any and all available
remedies in law or in equity. Pursuant to applicable Laws, including, without limitation, §§ 13-40-104(d.5)(e.5) and 13-40-107.5,
C.R.S., which is incorporated by this reference, in the event repeated or substantial default(s) under the Agreement occur, the Landlord
may terminate the Tenant’s possession upon a written Notice to Quit, without a right to cure (collectively, the “Remedies”).
Upon such termination, the Landlord shall have available any and all of the above-listed Remedies.
b. Cross-Default
Provision. Any breach or default of the MIPA may be deemed by Landlord to be a Default by Tenant under this Lease if such breach
or default under the MIPA remains uncorrected for a period of thirty (30) days, then the Landlord may, at the Landlord’s option,
undertake any and all of the Remedies without limitation.
18. Entire
Agreement. This Agreement represents the entire agreement between the parties hereto and there are no collateral or oral agreements
or understandings between Landlord and Tenant with respect to the Premises or the Property. This Lease supersedes all prior negotiations,
agreements, informational brochures, letters, promotional information and other statements and materials made or furnished by Landlord
or its agents. This Agreement shall not be modified in any manner except by an instrument in writing executed by the parties. The masculine
(or neuter) pronoun, singular number, shall include the masculine, feminine and neuter genders and the singular and plural number.
19. Liability
of Landlord. Neither Landlord nor any principal of Landlord nor any owner of the Property, whether disclosed or undisclosed, shall
have any personal liability with respect to any of the provisions of this Agreement or the Property.
20. Notices.
All notices, demands, requests, consents, certificates and waivers required or permitted hereunder from either party to the other
shall be in writing and sent by United States certified mail, return receipt requested, postage prepaid; by electronic mail; or by facsimile
transmission. Mailed notices shall be addressed to Landlord and Tenant at the address(es) designated in Sections 1.a.-b. hereof, respectively.
provided, however, notice to Tenant shall include a courtesy copy (which shall not constitute notice) to David R. Fishkin, General Counsel,
at dfishkin@treescann.com. Either party may specify an e-mail address or telephone number to receive a facsimile transmission, in the
manner set forth for giving notices to the other, and may also, at any time, specify a different address to which notices to it shall
be sent.
21. Taxes.
Tenant shall be liable for and shall pay at least ten (10) business days before delinquency and Tenant hereby agrees to indemnify
and hold Landlord harmless from and against any liability in connection with, all taxes levied against any personal property, fixtures,
machinery, equipment, apparatus, systems and appurtenances placed by or on behalf of Tenant in or about or utilized by Tenant in, upon
or in connection with the Property (“Equipment Taxes”). If any Equipment Taxes are levied against Landlord or Landlord’s
property or if the assessed value of Landlord’s property is increased by the inclusion therein of a value or appurtenances of Tenant,
and if Landlord, after written notice to Tenant pays the Equipment Taxes or taxes based upon such an increased assessment, Tenant shall
pay to Landlord upon demand, as Additional Rent hereunder, the taxes so levied against Landlord or the proportion of such taxes resulting
from such increase in the assessment. Notwithstanding the foregoing to the contrary, Tenant shall cooperate with Landlord to the extent
reasonably necessary to cause the fixtures, furnishing, equipment and other personal property to be assessed and billed separately from
the leased real property.
22. Guaranty.
This Lease is guaranteed by Standard Cann, Inc., a Colorado corporation, pursuant to the Guaranty of Lease attached hereto as Exhibit
A.
23. Right
of First Offer to Purchase. Provided that Tenant is not in Default at the time of exercise, Tenant shall have the one-time right
of first offer to purchase the Property on the following terms and conditions:
(a)
If, at any time during the Term of this Lease, Landlord elects to sell the Property in its entirety to any unaffiliated third-party purchaser,
Landlord shall provide written notice to Tenant of the terms and conditions upon which Landlord would be willing to sell the Property
(the “Landlord’s Notice”). Landlord’s Notice shall set forth the material economic terms and conditions
(including, without limitation, a statement regarding whether the Property will be sold free and clear of all deeds of trust, mortgages,
or other similar instruments affecting the Property) under which Landlord is willing to sell the Property to Tenant (the “Material
Terms”), but shall not constitute an agreement between the parties or an offer to sell such Property.
(b)
Tenant shall have then (10) days after receipt of Landlord’s Notice (the “Tenant Response Period”) to notify
Landlord in writing whether or not Tenant desires to purchase the Property on the terms stated in Landlord’s Notice (the “Tenant’s
Notice”). If Tenant notifies Landlord of Tenant’s desire to purchase the Property within the Tenant Response Period,
Landlord and Tenant shall promptly enter into a purchase and sale agreement for the Property on the Material Terms stated in Landlord’s
Notice.
(c)
If: (i) Tenant either: (A) elects not to purchase the Property on the terms and conditions stated in Landlord’s Notice; or (B)
fails to deliver Tenant’s Notice to Landlord within the Tenant Response Period (time being of the essence); or (ii) if Tenant delivers
a Tenant’s Notice, but Landlord and Tenant, through no fault of Landlord, fail to agree on and execute a purchase and sale agreement
within ten (10) days after the date of Landlord’s receipt of Tenant’s Notice (time being of the essence), then Tenant shall
be deemed to have permanently and irrevocably waived its right of first offer to purchase the Property, and Landlord shall have the right
thereafter, without any further notice to Tenant, to offer the Property for sale, and to sell the Property, to any party for a purchase
price not less than eighty percent (80%) of the purchase price stated in the Landlord’s Notice free and clear of the Tenant’s
right of first offer set forth in this Section 24, provided that any such transfer shall be subject to this Lease. This right of first
offer is personal to Beddor Claude LLC only and shall not be transferred or assigned to and cannot be exercised by any other third party.
In the event of clause (i) or (ii) herein, then notwithstanding anything to the contrary contained herein, and for the avoidance of doubt,
Tenant hereby acknowledges and agrees that this Lease shall remain in full force and effect and Tenant’s rights and obligations
under this Lease shall remain unchanged and upon any sale by Landlord to a third party, Tenant shall recognize the purchaser of the property
as the landlord under this Lease for all purposes in accordance with Section 24.
24. Miscellaneous.
a. Time
is of the essence of the Lease, and each and all of its provisions.
b. This
Agreement shall be construed as though the covenants herein between Landlord and Tenant are independent and not dependent and Tenant
shall not be entitled to any setoff of the Rent or other amounts owing hereunder against Landlord, if Landlord fails to perform its obligations
set forth herein, except as herein specifically set forth; provided, however, the foregoing shall in no way impair the right of Tenant
to commence a separate action against Landlord for any violation by Landlord of the provisions hereof so long as notice is first given
to Landlord and any holder of a mortgage or deed of trust covering the Property or any portion thereof whose address Tenant has been
notified in writing and so long as an opportunity has been granted to Landlord and such holder to correct such violation.
c. If
any court of competent jurisdiction holds any provision of this Agreement invalid or unenforceable, then the other provisions of this
Agreement will remain in full force and effect. Any provision of this Agreement held invalid or unenforceable only in part or degree
will remain in full force and effect to the extent not held invalid or unenforceable.
d. This
Agreement, and performance hereunder, shall be governed by and construed in accordance with the laws of the State of Colorado.
e. All
costs incurred by Landlord in connection with collecting any amounts and damages owing by the Tenant pursuant to the provisions of this
Agreement or to enforce any provision of this Agreement, including by way of example, but not limitation, reasonable attorneys’
fees from the date any such matter is turned over to an attorney, shall also be recoverable by Landlord in the event and to the extent
Landlord prevails in such action.
f. Tenant
shall not cause or permit any violation of the Americans with Disabilities Act (the “ADA”) to occur on, or about the
Premises by Tenant, its agents, employees, contractors or invitees. Tenant shall indemnity, defend and hold Landlord harmless from any
and all claims, judgments, damages, penalties, fines, costs, liabilities, or losses (including, without limitation, diminution in value
of the Premises, damages for the loss or restriction of use of rentable or usable space, damages arising from any adverse impact on marketing
of space, and sums paid in settlement of claims, attorneys’ fees, consultation fees and expert fees) that arise during or after
the Term as a result of such violation. This indemnification of Landlord by Tenant includes, without limitation, costs incurred in connection
with any investigation of site conditions or any remedial work required by any federal, state, or local governmental agency or political
subdivision because of any ADA violation present on or about the Premises. Tenant shall be permitted to make such alterations to the
Premises as may be necessary to comply with the ADA, at Tenant’s sole expense and upon the prior written consent of Landlord. Without
limiting the foregoing, if the presence of any ADA violation on the Premises caused or permitted by Tenant results in remedial work on
the Premises, Tenant shall promptly take all actions at its sole expense as are required by any authority to comply with the ADA; provided
that Landlord’s consent to such actions shall first be obtained, which shall not be reasonably withheld.
g. All
titles and captions are for convenience only and are not a part of this Lease.
h. This
Lease shall be binding on the parties, their successors and assigns.
i. Each
representative of either Party who is a signatory hereto on behalf of such Party, respectively, represents and warrants that he/she is
duly authorized to execute and deliver this Lease on behalf of such Party, and this is Lease is binding on such Party in accordance with
its terms.
j. Any
non-monetary obligation of Landlord or Tenant which is delayed or not performed due to Acts of God, acts of terrorism, strike, riot,
shortages of labor or materials, war (whether declared or undeclared), governmental laws, regulations or restrictions, governmental action
or inaction, any moratorium or other limit on issuing building permits or certificates of occupancy, or any other causes of any kind
whatsoever which are beyond Landlord’s or Tenant’s reasonable control, including, without limitation, delay by a third party
in completion of off-site improvements for the Building, shall not constitute a default hereunder and shall be performed within a reasonable
time after the end of such cause for delay or nonperformance.
k. The
failure of Landlord to insist upon the strict performance of any agreement, term, covenant, or condition hereof or to exercise any right
or remedy consequent upon a breach thereof shall not constitute a waiver of any such breach of such agreement, term, covenant or condition
hereof to be performed or complied with by Tenant, and no breach hereof shall be waived, altered or modified, except by written instrument
executed by Tenant.
l. This
Agreement may be executed in any number of counterparts and any party hereto may execute any such counterpart, each of which when executed
and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same instrument.
m. This
Agreement may be executed in any number of counterparts and any party hereto may execute any such counterpart, each of which when executed
and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same instrument.
[signature
page follows]
IN
WITNESS WHEREOF, the parties have executed this Lease intending to be legally bound as of the date first above written.
| TENANT: |
|
LANDLORD: |
| |
|
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BEDDOR CLAUDE LLC, d/b/a
Chonic
Therapy, a Colorado limited
liability company |
|
STREAMLINE MANAGEMENT LLC,
a Colorado limited liability
company |
| By: |
|
|
By: |
|
| Name: |
|
|
Name: |
|
| Title: |
|
|
Title: |
|
EXHIBIT
A
GUARANTY
OF LEASE
This
Guaranty of Lease (“Guaranty”) is made as of this ____ day of __________, 2025, by Standard Cann, Inc., a Colorado
corporation (“Guarantor”) to and in favor of STREAMLINE MANAGEMENT LLC, a(n) Colorado limited liability company
(“Landlord”) with reference to the following facts.
A. On
__________ ___, 2025, Landlord and BEDDOR CLAUDE LLC, d/b/a Chronic Therapy, a Colorado limited liability company (“Tenant”),
entered into that certain Commercial Lease Agreement for certain premises located at 10030 West 27th Avenue, Wheat Ridge,
Colorado 80215 (as modified, amended, extended or renewed the “Lease”);
B. Landlord
has required the Guarantor to execute this Guaranty (“Guaranty”) as a condition to the Landlord entering into the
Lease with the Tenant; and
C. Guarantor
has an ownership interest in Tenant and Guarantor will receive direct or indirect benefit from the Landlord entering into the Lease with
the Tenant.
NOW,
THEREFORE, in order to induce Landlord to enter into the Lease and for other good and valuable consideration, the Guarantor agrees
as follows:
1. Guarantor
absolutely, and unconditionally guarantees to Landlord the full and prompt payment of all Base Rent and Additional Rent and any and all
other sums and charges payable by Tenant under the Lease (collectively, the “Payment Obligations”) and further guarantees
the full and timely performance and observance of all of the covenants, terms conditions and agreements therein provided to be performed
and observed by Tenant (the “Performance Obligations” and together with the Payment Obligations are collectively,
the “Obligations”). In the event of a default under the Lease, Guarantor hereby covenants and agrees with Landlord:
(i) to make the due and full punctual payment of all Payment Obligations payable by Tenant under the Lease; and (ii) to effect prompt
and complete performance of all and each of the Performance Obligations, contained in the Lease on the part of Tenant to be kept, observed
and performed; and (iii) to indemnify and save harmless Landlord from any loss, costs or damages arising out of any failure by Tenant
to pay or perform any Obligation including, without limitation, attorneys’ fees and costs of collection. This Guaranty is a continuing
guaranty of payment and performance and not of collection and is not conditional or contingent upon any attempt to collect from Tenant
or upon any other condition or contingency.
2. In
the event of a default under the Lease, Guarantor waives any right to require Landlord to first: (a) proceed against Tenant or pursue
any rights or remedies with respect to the Lease; (b) proceed against or exhaust any security that Landlord holds from Tenant; or (c)
pursue any other remedy whatsoever. Landlord shall have the right to enforce this Guaranty regardless of the acceptance of additional
security from Tenant and regardless of the release or discharge of Tenant or any guarantor by Landlord or by others, or by operation
of law.
3. Guarantor
hereby expressly waives: (a) any right of setoff, counterclaim or deduction against amounts due under this Guaranty; and (b) notice of
the acceptance of this Guaranty and notice of default of Tenant under the Lease; and (c) the right to interpose all substantive and procedural
defenses of the law of guaranty, indemnification and suretyship, except the defenses of prior payment or prior performance.
4. Without
Landlord’s prior written consent and without limiting the generality of the foregoing, the liability of Guarantor under this Guaranty
shall not be deemed to have been waived, released, discharged, impaired or affected by (a) reason of any waiver or failure to enforce
or delay in enforcing any of the Obligations, or (b) the granting of any indulgence or extension of time to Tenant, or (c) the assignment
of the Lease, or the subletting of the Premises by Tenant, with or without Landlord’s consent, or (d) the expiration of the term
of the Lease, or (e) Tenant holding over beyond the term of the Lease, or (f) any merger or reorganization or the release or discharge
of Tenant or any other guarantor in any voluntary or involuntary receivership, bankruptcy, winding-up or other creditors’ proceedings,
or (g) the rejection, disaffirmance or disclaimer of the Lease by any party in any action or proceeding, or (h) the release of any collateral
held for the Obligations or release of any Guarantor or any other guarantor, or (i) any defect or invalidity of the Lease and this Guaranty
shall continue with respect to the periods prior thereto and thereafter. The liability of the Guarantor shall not be affected by any
repossession, reentry or reletting of the Premises by Landlord; provided, however, that the net payments received by Landlord after deducting
all costs and expenses of repossession and/or reletting the same (including, without limitation, any attorney fees, brokerage fees and
any reasonable costs or expenses incurred in redecorating, remodeling, or altering the Premises for reletting), shall be credited from
time to time by Landlord to the account of Tenant and Guarantor and Guarantor shall pay any balance owing to Landlord from time to time,
immediately upon being given written notice of demand by Landlord in the manner for providing notice set forth in the Lease.
5. The
liability of Guarantor under this Guaranty shall not be released by any modification or amendment to the Lease (including any extension
or renewal of the term of the Lease), and in the case of any such modification, the liability of Guarantor shall be modified in accordance
with the term of any such modification of the Lease. Guarantor waives any notice of the modification or amendment of the Lease.
6. Guarantor
shall pay Landlord’s reasonable attorneys’ fees and all costs and other expenses incurred in any collection or attempted
collection of this Guaranty or in any negotiations relative to the Obligations guaranteed under this Guaranty whether or not a lawsuit
is commenced (the “Collection Costs”). All rights and remedies of Landlord under this Guaranty shall be cumulative
and may be exercised singly or concurrently.
7. This
Guaranty shall remain in full force and effect until the payment or performance of all Obligations and the other amounts payable under
this Guaranty (whether or not the Lease shall have been terminated). Until the payment and performance of all Obligations and the amounts
payable under this Guaranty, Guarantor:
(a) Shall
have no right of subrogation against Tenant by reason of any payments or acts of performance by the Guarantor in compliance with the
obligations of the Guarantor under this Guaranty;
(b) Waives
any right to enforce any remedy which Guarantor now or hereafter shall have against Tenant by reason of any one or more payments or acts
of performance in compliance with the obligations of Guarantor under this Guaranty; and
(c) Subordinates
any liability or indebtedness of Tenant now or hereafter held by Guarantor to the obligations of Tenant to the Landlord under the Lease.
8. This
instrument may not be changed, modified, discharged or terminated orally or in any manner other than by an agreement in writing signed
by Guarantor and the Landlord.
9. All
of the terms, agreements and conditions of this Guaranty shall extend to and be binding upon Guarantor, and the heirs, executors, personal
administrators, and/or successors and assigns of Guarantor and shall inure to the benefit of and may be enforced by Landlord, its successors
and assigns, and the holder of any mortgage to which the Premises may be subject at any time or from time to time.
10. The
use of the singular herein shall include the plural and the use of any gender shall include all genders or neuter as the case may be.
This Guaranty is entered into in the State of Colorado and shall be governed by and construed in accordance with the laws of the State
of Colorado.
11. If
Guarantor consists of more than one person or entity, the liability of each such person or entity under this Guaranty shall be joint
and several.
12. Each
Guarantor warrants and represents that he/she has full power and authority to execute and deliver this Guaranty. This Guaranty has been
executed and delivered by Guarantor and constitutes the valid, binding and legal obligation of the Guarantor. Guarantor agrees that it
will, from time to time, within ten (10) business days of Landlord’s request, execute and deliver a statement certifying that this
Guaranty is unmodified and in full force and effect; provided, however, the failure of Guarantor to do so shall not affect the enforceability
of this Guaranty.
13. All
notices under this Guaranty shall be delivered by certified mail, return receipt requested, to the address of the parties first set forth
below their signatures. All notices shall be effective as of depositing the same in the U.S. mail.
14. If
any provision of this Guaranty or the application thereof to any person or circumstances shall, for any reason and to any extent, be
invalid or unenforceable, the remainder of this Guaranty and the application of that provision to other persons or circumstances shall
not be affected but rather shall be enforced to the extent permitted by law. This Guaranty shall be construed without regard to any presumption
or other rule requiring construction against the party causing this Guaranty to be drafted.
15. Guarantor
irrevocably submits to the nonexclusive jurisdiction of any Federal or State court sitting in Jefferson County, Colorado, over any suit,
action or proceeding arising out of or relating to this Guaranty. Guarantor irrevocably waives, to the fullest extent it may effectively
do so under applicable law, any objection it may now or hereafter have to the laying of the venue of any such suit, action or proceeding
brought in any such court and any claim that the same has been brought in an inconvenient forum.
16. GUARANTOR
HEREBY WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM INVOLVING ANY MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED
WITH (i) THE LEASE, INCLUDING ANY OF ITS TERMS, PROVISIONS, COVENANTS, CONDITIONS OR AGREEMENTS, (ii) THIS GUARANTY, INCLUDING ANY OF
ITS TERMS, PROVISIONS, COVENANTS, CONDITIONS AND AGREEMENTS, (iii) THE RELATIONSHIP OF LANDLORD AND TENANT, (iv) TENANT’S USE OR
OCCUPANCY OF THE PREMISES, OR (v) THE RIGHT TO ANY STATUTORY RELIEF OR REMEDY. GUARANTOR FURTHER WAIVES THE RIGHT TO INTERPOSE ANY PERMISSIVE
COUNTERCLAIM OF ANY NATURE IN ANY ACTION OR PROCEEDING COMMENCED BY LANDLORD TO OBTAIN POSSESSION OF THE PREMISES OR TO ENFORCE THE LEASE
OR THIS GUARANTY. THE WAIVERS SET FORTH IN THIS SECTION ARE MADE KNOWINGLY, INTENTIONALLY, AND VOLUNTARILY BY GUARANTOR. GUARANTOR FURTHER
ACKNOWLEDGES THAT IT HAS BEEN REPRESENTED (OR HAS HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF THIS GUARANTY AND IN THE MAKING
OF THIS WAIVER BY INDEPENDENT COUNSEL, SELECTED OF HIS OWN FREE WILL, AND THAT GUARANTOR HAS HAD THE OPPORTUNITY TO DISCUSS THESE WAIVERS
WITH COUNSEL. THIS PROVISION IS A MATERIAL INDUCEMENT TO LANDLORD IN AGREEING TO ENTER INTO THE LEASE.
[signature
page follows]
In
witness whereof, the Guarantor has executed this Guaranty as of the date set forth above.
| |
Standard Cann, Inc., a Colorado corporation |
| |
Address: |
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|
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STATE OF
____________ )
) SS:
COUNTY OF
__________ )
I,
_____________________________, a Notary Public, in and for the County and State aforesaid do hereby certify that ________________, personally
known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person and acknowledged
that he signed, sealed and delivered the said instrument as his free and voluntary act for the uses and purposes herein set forth.
Given
under my hand and notarial seal this ___ day of _______________, 2025.
| |
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Notary Public |
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My Commission Expires: |
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