Nevada
|
333-174705
|
27-3369810
|
||
(State or other jurisdiction of incorporation)
|
(Commission File Number)
|
(I.R.S. Employer Identification No.)
|
1435 Yarmouth Street
|
||
Boulder, Colorado
|
80304
|
|
(Address of principal executive offices)
|
(Zip Code)
|
Item 1.01.
|
1
|
|
Item 2.01.
|
1
|
|
1
|
||
3
|
||
11
|
||
21
|
||
28
|
||
29
|
||
31
|
||
33
|
||
34
|
||
37
|
||
39
|
||
39
|
||
40
|
||
40
|
||
40
|
||
Item 3.02.
|
40
|
|
Item 5.01.
|
40
|
|
Item 5.02.
|
41
|
|
Item 5.06.
|
41
|
|
Item 9.01.
|
41
|
·
|
Securing capital for the construction of processing centers. We estimate the cost to develop each facility, including equipping the facility with the necessary equipment, to be between $1,000,000 and $2,000,000.
|
·
|
Obtaining the necessary state and local licensure for each proposed facility.
|
·
|
Securing initial licensing, processing or sales arrangements, as applicable, with growers and dispensaries. Such arrangements may result from marketing efforts, relationships within the industry or the CLS Consulting business.
|
·
|
Constructing processing facilities. We anticipate that the construction of each facility can be completed in approximately four to six months after any applicable licensing and permitting requirements have been met. We currently anticipate, subject to the availability of adequate capital, that we will be able to open between two and three processing facilities within the next 24 months.
|
·
|
Expanding per-facility capacity and increasing revenues. After a twelve-month ramp up period, we expect that each processing facility will be able to process, depending on size, between 2,000 to 5,000 pounds of cannabis per month, with the revenue generated therefrom varying state-by-state and facility-by-facility depending upon state law requirements and other factors.
|
·
|
Developing a national brand of cannabis concentrates, which will be sold wholesale to dispensaries, through standardization of the testing, compliance and labeling process.
|
|
September 30,
2014
|
|
December 31,
2014
|
|||||
Current Assets
|
|
$
|
882,599
|
|
|
$
|
344,303
|
|
Current Liabilities
|
|
$
|
16,686
|
|
|
$
|
86,722
|
|
Working Capital (Deficit)
|
|
$
|
865,913
|
|
|
$
|
257,581
|
•
|
Present (either on the face of the statement where net income is presented or in the notes) the effects on the line items of net income of significant amounts reclassified out of accumulated other comprehensive income - but only if the item reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period; and
|
•
|
Cross-reference to other disclosures currently required under U.S. GAAP for other reclassification items (that are not required under U.S. GAAP) to be reclassified directly to net income in their entirety in the same reporting period. This would be the case when a portion of the amount reclassified out of accumulated other comprehensive income is initially transferred to a balance sheet account (e.g., inventory for pension-related amounts) instead of directly to income or expense.
|
Name and Address of Beneficial Owner
1
|
Amount and Nature of
Beneficial Ownership
2
|
Percentage of Class
3
|
||||||
Jeffrey I. Binder
|
5,000,000 | 24.7 | % | |||||
Raymond Keller
|
5,000,000 | 24.7 | % | |||||
Frank Koretsky
|
5,000,000 | 24.7 | % | |||||
Michael Abrams
|
250,000 | 1.2 | % | |||||
All directors and executive officers as a group (3 persons)
|
10,250,000 | 50.6 | % |
1
|
Except as otherwise indicated, the persons named in this table have sole voting, investment and dispositive power with respect to all shares of common stock listed.
|
2
|
Reflects the extinguishment of the 6,250,000 (post Reverse Split) shares of Common Stock owned by CLS Labs and the issuance of 15,000,000 shares of Common Stock to the stockholders of CLS Labs in connection with the Merger and the issuance of 250,000 shares of Common Stock to Michael Abrams pursuant to his employment agreement, as amended. Excludes any impact of stock options expected to be issued in connection with employment agreements for Mr. Binder and Mr. Abrams.
|
3
|
Percentages are based upon 20,250,000 shares of our common stock outstanding as of the Closing Date.
|
Name
|
Age
|
Title
|
Term Expires
|
||||
Jeffrey Binder
|
68 |
Chairman, President, Chief Executive Officer and Director
|
2017 | ||||
Frank Koretsky
|
63 |
Director
|
2016 | ||||
Michael Abrams
|
38 |
Chief Operating Officer
|
-- |
Name and Principal
Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Option
Awards
($)
|
Non-Equity
Incentive
Plan
Compensation
($)
|
Non-Qualified
Deferred
Compensation
Earnings
($)
|
All Other
Compensation
($)
|
Total
($)
|
||||||||||||||||||||||
Larry Adelt,
|
2014
|
- | - | - | - | - | - | - | ||||||||||||||||||||||
Former President and Chief Executive Officer 1 | 2013 | - | - | - | - | - | - | - |
1
|
Mr. Adelt resigned as an officer and director of the Company on November 12, 2014 following the sale of all of his shares of common stock in the Company to CLS Labs. On the same date, Jeffrey Binder was appointed Chairman, President and Chief Executive Officer of the Company. To date, Mr. Binder has not received any compensation from the Company for serving as an officer or director.
|
Name and Principal
Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Option
Awards
($)
|
Non-Equity
Incentive
Plan
Compensation
($)
|
Non-Qualified
Deferred
Compensation
Earnings
($)
|
All Other
Compensation
($)
|
Total
($)
|
||||||||||||||||||||||
Jeffrey Binder,
|
2014
|
- | - | - | - | - | - | - | ||||||||||||||||||||||
Chairman, President and Chief Executive Officer |
Plan Category
|
Number of shares to be issued upon exercise of
outstanding options, warrants and rights
|
Weighted-
average
exercise price
of outstanding
options,
warrants and
rights
|
Number of shares remaining available
for future issuance under equity compensation plans (excluding shares reflected in the first column)
|
|||||||||
Equity compensation plans approved by security holders
|
-- | -- | -- | |||||||||
Equity compensation plans not approved by security holders
|
--- | -- | (1) | |||||||||
Total
|
-- | -- |
1
|
Pursuant to their respective employment agreements, as amended, Jeffrey Binder and Michael Abrams are entitled to receive annual stock options, exercisable at the fair market value of our common stock on the date of grant, in an amount equal to 2% of our annual EBITDA up to $42.5 million and 4% of our annual EBITDA in excess of $42.5 million. We are currently unable to determine the number of shares that could be granted under these plans.
|
Exhibit No.
|
Description
|
|
2.1
|
||
3.1
|
Articles of Incorporation of Adelt Design, Inc. (incorporated by reference from Exhibit 3.1 in the Company’s Registration Statement filed with the SEC on June 3, 2011).
|
Exhibit No.
|
Description
|
|
3.2
|
Amended and Restated Articles of Incorporation of CLS Holdings USA, Inc. (incorporated by reference from Exhibit 1.1 in the Company’s Current Report on Form 8-K filed with the SEC on November 26, 2014).
|
|
3.3
|
Bylaws of Adelt Design, Inc. (incorporated by reference from Exhibit 3.1 in the Company’s Registration Statement filed with the SEC on June 3, 2011).
|
|
3.4
|
Amended and Restated Bylaws of CLS Holdings USA, Inc. (incorporated by reference from Exhibit 1.2 in the Company’s Current Report on Form 8-K filed with the SEC on November 26, 2014).
|
|
4.1
|
||
10.1
|
||
10.2
|
||
10.3
|
||
10.4
|
||
10.5
|
||
10.6
|
||
10.7
|
||
10.8
|
||
10.9
|
||
10.10
|
||
10.11 | ||
10.12 |
Exhibit No.
|
Description | |
21.1
|
||
23.1
|
CLS HOLDINGS USA, INC.
|
|||
Date: April 29, 2015
|
By:
|
/s/ Jeffrey I. Binder
|
|
Jeffrey I. Binder
|
|||
Chairman, President and Chief Executive Officer
(Principal Executive Officer and
Principal Financial Officer)
|
CLS LABS, INC., f/k/a RJF LABS, INC.
|
|
F-2
|
|
Consolidated Financial Statements for the year ended September 30, 2014
|
|
F-3
|
|
F-4
|
|
F-5
|
|
F-6
|
|
F-7
|
|
Consolidated Interim Financial Statements (Unaudited) for the three months ended December 31, 2014
|
|
F-12
|
|
F-13
|
|
F-14
|
|
F-15
|
|
F-16
|
September 30,
|
||||
2014
|
||||
ASSETS
|
||||
Current assets
|
||||
Cash and cash equivalents
|
$
|
808,159
|
||
Other current assets
|
5,000
|
|||
Prepaid expenses
|
69,440
|
|||
Total current assets
|
882,599
|
|||
Total assets
|
882,599
|
|||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||
Current liabilities
|
||||
Accounts payable and accrued liabilities
|
16,686
|
|||
Total current liabilities
|
16,686
|
|||
Commitments and contingencies
|
-
|
|||
Stockholders' equity
|
||||
Common stock, 75,000 share authorized, no par value, 300 shares issued and outstanding
|
1,000,000
|
|||
Subscription receivable
|
(2,070
|
)
|
||
Retained earnings
|
(132,017
|
)
|
||
Total stockholders' equity
|
865,913
|
|||
Total liabilities and stockholders' equity
|
$
|
882,599
|
May 1, 2014
|
||||
(inception) to
|
||||
September 30,
|
||||
2014
|
||||
Operating expenses:
|
||||
General and administrative
|
24,096
|
|||
Research and development
|
32,769
|
|||
Professional fees
|
50,152
|
|||
Commissions
|
25,000
|
|||
Total operating expenses
|
132,017
|
|||
Loss before provision for income taxes
|
(132,017
|
)
|
||
Provision for income taxes
|
-
|
|||
Net loss
|
$
|
(132,017
|
)
|
|
Net loss per share - basic and diluted
|
$
|
(440
|
)
|
|
Weighted average shares outstanding - basic and diluted
|
300
|
Total
|
||||||||||||||||||||
Stockholders'
|
||||||||||||||||||||
Common Stock
|
Subscription
|
Accumulated
|
Equity
|
|||||||||||||||||
Shares
|
Amount
|
Receivable
|
(Deficit)
|
(Deficit)
|
||||||||||||||||
Balance, May 1, 2014
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Issuance of founders shares
|
300
|
1,000,000
|
(2,070
|
)
|
-
|
997,930
|
||||||||||||||
Net loss for the year ended September 30, 2014
|
-
|
-
|
-
|
(132,017
|
)
|
(132,017
|
)
|
|||||||||||||
Balance, September 30, 2014
|
300
|
1,000,000
|
(2,070
|
)
|
(132,017
|
)
|
865,913
|
September 30,
|
||||
2014
|
||||
Prepaid legal fee
|
$
|
19,440
|
||
Prepaid consulting fees
|
25,000
|
|||
Other prepaid fees associated with future transaction
|
25,000
|
|||
Total other current assets
|
$
|
69,440
|
September 30,
|
||||
2014
|
||||
Federal and State Statutory Rate
|
35
|
%
|
||
Net operating loss carry forwards
|
46,206
|
|||
Valuation allowance for deferred tax assets
|
(46,206
|
)
|
||
Net deferred tax assets
|
-
|
December 31,
|
September 30,
|
|||||||
2014
|
2014
|
|||||||
ASSETS
|
(audited)
|
|||||||
Current assets
|
||||||||
Cash and cash equivalents
|
$
|
253,101
|
$
|
808,159
|
||||
Other current assets
|
-
|
5,000
|
||||||
Prepaid expense
|
87,455
|
69,440
|
||||||
Due from related parties
|
3,747
|
-
|
||||||
Total current assets
|
344,303
|
882,599
|
||||||
Intangible assets
|
7,224
|
-
|
||||||
Total assets
|
351,527
|
882,599
|
||||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current liabilities
|
||||||||
Accounts payable and accrued liabilities
|
86,722
|
16,686
|
||||||
Total current liabilities
|
86,722
|
16,686
|
||||||
Commitments and contingencies
|
-
|
-
|
||||||
Stockholders' equity
|
||||||||
Common stock, 75,000 shares authorized, no par value, 300 shares issued and outstanding
|
722,680
|
1,000,000
|
||||||
Subscription receivable
|
-
|
(2,070
|
)
|
|||||
Retained earnings
|
(457,875
|
)
|
(132,017
|
)
|
||||
Total stockholders' equity
|
264,805
|
865,913
|
||||||
Total liabilities and stockholders' equity
|
$
|
351,527
|
$
|
882,599
|
For the Three
|
||||
Months Ended
|
||||
December 31,
|
||||
2014
|
||||
Operating expenses:
|
||||
General and administrative
|
325,858
|
|||
Total operating expenses
|
325,858
|
|||
Loss before provision for income taxes
|
(325,858
|
)
|
||
Provision for income taxes
|
-
|
|||
Net loss
|
$
|
(325,858
|
)
|
|
Net income (loss) per share - basic and diluted
|
$
|
(1,086
|
)
|
|
Weighted average shares outstanding - basic and diluted
|
300
|
For the Three
|
||||
Months Ended
|
||||
December 31,
|
||||
2014
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
||||
Net income (loss)
|
$
|
(325,858
|
)
|
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||
Changes in assets and liabilities:
|
||||
Escrow
|
5,000
|
|||
Prepaid expenses
|
(18,015
|
)
|
||
Accounts payable and accrued expenses
|
70,036
|
|||
Due from related parties
|
(3,747
|
)
|
||
Net cash used in operating activities
|
(272,584
|
)
|
||
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||
Payments to acquire intangible assets
|
(7,224
|
)
|
||
Payments for investment in shell company
|
(295,250
|
)
|
||
Net cash used in investing activities
|
(302,474
|
)
|
||
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||
Proceeds from issuance of founders shares
|
2,070
|
|||
Contributed capital
|
17,930
|
|||
Net cash provided by financing activities
|
20,000
|
|||
Net increase in cash and cash equivalents
|
(555,058
|
)
|
||
Cash and cash equivalents at beginning of period
|
808,159
|
|||
Cash and cash equivalents at end of period
|
$
|
253,101
|
||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
|
||||
Interest paid
|
$
|
-
|
||
Income taxes paid
|
$
|
-
|
Total
|
||||||||||||||||||||
Stockholders'
|
||||||||||||||||||||
Common stock
|
Subscription
|
Accumulated
|
Equity
|
|||||||||||||||||
Shares
|
Amount
|
Receivable
|
(Deficit)
|
(Deficit)
|
||||||||||||||||
Balance, May 1, 2014
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Issuance of founders shares
|
300
|
1,000,000
|
(2,070
|
)
|
-
|
997,930
|
||||||||||||||
Net loss for the year ended September 30, 2014
|
-
|
-
|
(132,017
|
)
|
(132,017
|
)
|
||||||||||||||
Balance, September 30, 2014
|
300
|
1,000,000
|
(2,070
|
)
|
(132,017
|
)
|
865,913
|
|||||||||||||
Issuance of founders shares
|
2,070
|
-
|
2,070
|
|||||||||||||||||
Contributed capital
|
17,930
|
17,930
|
||||||||||||||||||
Investment in public shell
|
(295,250
|
)
|
(295,250
|
)
|
||||||||||||||||
Net loss for the three months ended December 31, 2014
|
(325,858
|
)
|
(325,858
|
)
|
||||||||||||||||
Balance, December 31, 2014
|
300
|
772,680
|
-
|
(457,875
|
)
|
264,805
|
December 31,
2014
|
September 30,
2014
|
|||||||
Prepaid legal fees
|
$
|
3,705
|
$
|
19,440
|
||||
Prepaid consulting fee
|
83,750
|
25,000
|
||||||
Other prepaid fees associated with future transaction
|
25,000
|
|||||||
Total other current assets
|
$
|
87,455
|
$
|
69,440
|
December 31,
2014
|
September 30,
2014
|
|||||||
Trade payables
|
$
|
40,943
|
$
|
16,686
|
||||
Payroll related
|
2,029
|
-
|
||||||
Accrued compensation
|
43,750
|
-
|
||||||
Accounts Payable and Accrued Liabilities
|
$
|
86,722
|
$
|
16,686
|
CLS LABS, INC.
By
/s/ Blanca Barker
Name:
Blanca Barker
Title:
Secretary
CLS HOLDINGS USA, INC.
By:
/s/ Jeffrey I. Binder
Name:
Jeffrey I. Binder
Title:
Chairman, President and CEO
|
EXECUTIVE
/s/ Jeffrey I. Binder
Jeffrey I. Binder
|
CLS LABS, INC.
By:
/s/ Jeffrey I. Binder
Name:
Jeffrey I. Binder
Title:
Chairman, President and CEO
CLS HOLDINGS USA, INC.
By:
/s/ Jeffrey I. Binder
Name:
Jeffrey I. Binder
Title:
Chairman, President and CEO
|
EXECUTIVE
/s/ Michael Abrams
Michael Abrams
|
A.
|
The willful breach or habitual neglect by Executive of his job duties and responsibilities after notice by the Company; or
|
B.
|
Conviction of any felony that should cause Executive to be unfit for continued employment by the Company or prevent Executive from performing his duties hereunder; or
|
C.
|
Commission of an act of “dishonesty,” which act directly or indirectly involves the Company (an act of Executive shall not be deemed to be “dishonest” if Executive took such action in Executive’s good faith belief that it was honest and in the best interest of the Company); or
|
D.
|
Any act or omission deemed as grounds for termination of employees as set forth in the Company’s personnel policies in existence at the time; or
|
E.
|
A material breach of this Agreement, after notice and an opportunity to cure.
|
CLS LABS, INC.
|
EXECUTIVE
|
By:
/s/ Blanca Barker
|
/s/ Jeffrey I. Binder
|
Name:
Blanca Barker
|
Jeffrey I. Binder
|
Title:
Secretary
|
CLS LABS, INC.
By:
/s/ Blanca Barker
Name:
Blanca Barker
Title:
Secretary
CLS HOLDINGS USA, INC.
By:
/s/ Jeffrey I. Binder
Name:
Jeffrey I. Binder
Title:
Chairman, President and CEO
|
EXECUTIVE
/s/ Jeffrey I. Binder
Jeffrey I. Binder
|
A.
|
The willful breach or habitual neglect by Executive of his job duties and responsibilities after notice by the Company; or
|
B.
|
Conviction of any felony that should cause Executive to be unfit for continued employment by the Company or prevent Executive from performing his duties hereunder; or
|
C.
|
Commission of an act of “dishonesty,” which act directly or indirectly involves the Company (an act of Executive shall not be deemed to be “dishonest” if Executive took such action in Executive’s good faith belief that it was honest and in the best interest of the Company); or
|
D.
|
Any act or omission deemed as grounds for termination of employees as set forth in the Company’s personnel policies in existence at the time; or
|
E.
|
A material breach of this Agreement, after notice and an opportunity to cure.
|
RJF LABS, INC.
|
EXECUTIVE
|
|
By:
/s/ Jeffrey Binder
|
/s/ Michael Abrams
|
|
Jeffrey Binder, President
|
Michael Abrams
|
·
|
Bolder Ventures, LTD
|
·
|
Ancient Alternatives, LLC
|
·
|
Ocean Ranch Resort, LLC
|
·
|
JCI, LLC
|
·
|
Green Hill Investments, LLC
|
·
|
CannAdvantage, Inc.
|
·
|
SilverFox, LLC
|
·
|
Seed to Sale, LLC
|
·
|
Green Life Solutions, LLC
|
·
|
GDP Distributions, LLC
|
·
|
Ideal Extraction Solutions, LLC
|
·
|
Seed to Staff, LLC
|
CLS LABS, INC.
By:
/s/ Jeffrey I. Binder
Name:
Jeffrey I. Binder
Title:
Chairman, President and CEO
CLS HOLDINGS USA, INC.
By:
/s/ Jeffrey I. Binder
Name:
Jeffrey I. Binder
Title:
Chairman, President and CEO
|
EXECUTIVE
/s/ Michael Abrams
Michael Abrams
|
|
Agricultural and horticultural growing facility, including extraction, conversion, assembly and packaging of cannabis and other plant materials, as permitted by and in compliance with any current and future State, city and local laws, rules, ordinances and regulations, as promulgated from time to time, and specifically allowing marijuana cultivation. Tenant shall be responsible for acquiring and maintaining all State of Colorado industry-specific licenses, permits and/or any other requirements to operate any business at the subject premises. In the event it is determined by any court or legislature that Federal Law preempts the Colorado Statutes permitting marijuana cultivation, Landlord may terminate this lease immediately upon written notice to Tenant. Tenant agrees to cease any and all marijuana cultivation activities at the premises upon receipt of notice from Landlord that the Colorado Laws permitting marijuana cultivation have been determined to have been preempted by Federal law.
|
PERIOD OF TERM
|
MONTHLY BASE RENT
|
4/1/2015 - 6/30/2015
|
$0.00 [Net/Net/Net]
|
7/1/2015 – 6/3
0
/2016
|
$14,392
.00
[Net/Net/Net]
|
7/1/2016 – 6/3
0
/2017
|
$14,823.76
[Net/Net/Net]
|
7/1/2017 – 6/3
0
/2018
|
$15,268.47 [Net/Net/Net]
|
7/1/2018 – 6/3
0
/2019
|
$15,726.53 [Net/Net/Net]
|
7/1/2019 – 6/3
0
/2020
|
$16,198.32 [Net/Net/Net]
|
7/1/2020 - 3/31/2021
|
$16,684.27 [Net/Net/Net]
|
4/1/2021 – 3/31/2022
|
$17,184.80 [Net/Net/Net]
|
4/1/2022 – 3/31/2023
|
$17,700.34 [Net/Net/Net]
|
4/1/2023 – 3/31/2024
|
$18,231.35 [Net/Net/Net]
|
4/1/2024 – 3/31/2025
|
$18,778.29 [Net/Net/Net]
|
4/1/2025 – 3/31/2026
|
$19,341.64 [Net/Net/Net]
|
4/1/2026 – 3/31/2027
|
$19,921.89 [Net/Net/Net]
|
4/1/2027 – 3/31/2028
|
$20,519.55 [Net/Net/Net]
|
4/1/2028 – 3/31/2029
|
$21,135.14 [Net/Net/Net]
|
4/1/2029 – 3/31/2030
|
$21,769.19 [Net/Net/Net]
|
4/1/2030 – 3/31/2031
|
$22,422.27 [Net/Net/Net]
|
TENANT:
CLS Labs Colorado, Inc. a Florida Corporation
By:
/s/ Jeffrey I. Binder
Name:
Jeffrey I. Binder
Title:
Chairman, President and Chief Executive Officer
|
LANDLORD:
Casimir-Quince , LLC, a Colorado Limited Liability Company
By:
/s/ Christopher F. Mayo
Name:
Christopher F. Mayo
Title:
Managing Member
|
LANDLORD:
|
|
WITNESSES:
|
CLS LABS COLORADO, INC., a Florida corporation
|
____________________________________
Print Name: ___________________________
|
By:
/s/ Jeffrey I. Binder
Print Name:
Jeffrey I. Binder
Title:
Chairman, President and Chief Executive Officer
|
____________________________________
Print Name: ___________________________
|
|
TENANT:
|
|
PICTURE ROCK HOLDINGS, a Colorado limited liability company
|
|
____________________________________
Print Name: ___________________________
____________________________________
Print Name: ___________________________
|
By:
/s/ Greg Friedman
Print Name:
Greg Friedman
Its:
Member and CFO
|
A.
|
License.
LICENSOR hereby grants to LICENSEE, an exclusive license, without the right to sublicense, for the Term of this Agreement as hereinafter defined, to practice and use the Process in conjunction with the manufacture, production, sale, and distribution of the Products, in the Territory using any and all know how that LICENSOR has or may subsequently acquire during the Term of this Agreement. Such license shall include the right to use any of LICENSOR’S intellectual property rights associated with or related to the Process or the use of the Process in manufacturing and producing the Products including but not limited to brands, trade names, trademarks, and other intellectual property. Licensee shall have the sole right to determine what Products to manufacture using the Process. However, it is specifically acknowledged by the LICENSEE that it is not acquiring any rights in or to the Process and as a material part of this exclusive license, LICENSEE shall make no effort to learn or otherwise make use of the Process except as provided herein.
|
B.
|
No Other Licenses
. The license granted under this Licensing Agreement is specifically set forth herein, and no licenses are granted by LICENSOR to LICENSEE by implication or estoppel.
|
C.
|
Limitation on Use.
LICENSEE shall not use the license granted herein for any purpose other than as authorized by this Licensing Agreement. Any proposed additions or modifications to the Process, Products or proposed new developments based on the Process or Products shall be submitted in writing to LICENSOR.
|
D.
|
Compliance.
LICENSEE shall package and label the Products in accordance with the Colorado Medical Marijuana Code and/or Colorado Retail Marijuana Code using mutually agreed upon brand names and labels as set forth in
Schedule "A
" attached hereto. Licensee shall not use any brand names other than the mutually agreed upon brand names in connection with the production, manufacture, advertising, sale, and distribution of the Products.
|
|
A. This Licensing Agreement and the provisions hereof, except as otherwise provided, shall terminate upon the earlier of the date that is ten (10) years from the date of execution of this Licensing Agreement by both parties (the “
Effective Date
”), or the date upon which LICENSOR'S lease of the Leased Real Property is terminated (the “
Term
”), and shall automatically be renewed for a term of twelve (12) months at the end of each term as long as the lease for the Leased Real Property is in effect (or such lesser period as remains under the lease for the Leased Real Property) unless written notice is provided by either party to the other, at least fifteen (15) days before the end of the Term.
|
A.
|
Compliance with Colorado Law
. LICENSEE agrees that it shall, at all times, comply with the C.R.S. 12-43.3-101 et. seq (“
Colorado Medical Marijuana Code
”), C.R.S. 12-43.4-101 et seq. (“
Colorado Retail Marijuana Code
)
,
and any other applicable state or local law
|
B.
|
Process
. LICENSEE shall not reverse engineer, reverse compile or disassemble any Process, or otherwise attempt to analyze any steps in the Process. The foregoing shall not apply to such activities conducted in the ordinary course of technical support of Products.
|
C.
|
Records and Reports
. LICENSEE will maintain accurate records of amounts and kinds of Products processed by use of the licensed Process and will submit monthly reports reflecting its operations under this agreement in such form as LICENSOR shall require from time to time.
|
D.
|
I
nspection of Premises, Records and Products
. LICENSOR shall have the right at all times to inspect the premises of LICENSEE (including all materials and supplies used by LICENSEE in its operations under this agreement), to audit LICENSEE’S records for the purpose of determining compliance with any or all portions of this agreement provided such inspection is permitted under the Colorado Medical Marijuana Code and/or Colorado Retail Marijuana Code, and to test LICENSEE'S Products to confirm the quality thereof provided such testing is in compliance with Colorado law.
|
E.
|
Testing of Products.
LICENSEE shall periodically send its Products to an independent Marijuana Testing Facility licensed by the State of Colorado and applicable local licensing authorities, at its sole cost, to confirm that LICENSEE'S are of the quality stated by LICENSEE and otherwise comply with applicable law.
|
A.
|
LICENSOR shall also be available by telephone, e-mail, fax or, if requested by LICENSEE, in person, in connection with LICENSEE’S use of the Process to develop and support the Products, including the use of reasonable commercial efforts: (I) to answer LICENSEE’S questions regarding the proper utilization and optimization of the Process; and (ii) to provide solutions, to correct any reproducible error in the Process.
|
A.
|
License Fee
.
LICENSEE agrees to pay LICENSOR
*
annually, payable in monthly installments of * no later than the fifth (5th) day of each month, in advance, to secure the licensing rights to use the Process to manufacture, produce and sell the Products (the “
License Fee
”). The License Fee is a payment independent of any other payments required to be paid between the Parties and is not creditable against any such payments.
|
B.
|
Survival
. LICENSEE’S obligations for the payment of the License Fee shall continue for so long as LICENSEE continues to use the Process to manufacture, sell or otherwise market the Licensed Products.
|
C.
|
Late Payments
. Late payments shall incur interest at the rate of ten percent (10%) per annum from the date such payments were originally due.
|
A.
|
Joint Efforts
. The Parties agree to work together to identify areas where joint-marketing efforts would benefit both parties, and upon mutual agreement shall implement such efforts.
|
B.
|
Non-Disclosure
. Neither party shall disclose the terms of this Agreement to any third party, other than its financial or legal advisors, or make any announcements regarding the nature of the relationship between the parties without the prior approval of the other party, except that a party may disclose the terms of this Agreement where required by law, provided that such party uses reasonable effort to obtain confidential treatment or similar protection to the fullest extent available to avoid public disclosure of the terms of this Agreement. A party required by law to make disclosure of the terms of this Agreement will promptly notify the other party and permit the other party to review and participate in the application process seeking confidential treatment. Under this provision, the parties agree that the terms of the agreement are also to be kept confidential, unless required by law, or otherwise agreed to by both parties.
|
A.
|
LICENSEE acknowledges that the Process is a valuable property of LICENSOR and qualifies as a trade secret within the meaning of the Colorado Uniform Trade Secrets Act. LICENSEE further acknowledges that LICENSOR is the sole and exclusive owner of the Process.
|
B.
|
This Agreement shall not be construed to give LICENSEE any vested right, title, or interest in the Process, the Products, or any trademarks or copyrighted materials of LICENSOR except to the extent and in the manner, time, and places LICENSEE is authorized subject to the provisions of this Agreement.
|
C.
|
LICENSOR may seek, obtain and, during the Term of this Agreement, maintain in its own name and at its own expense, appropriate intellectual property protection for the Process or the Products.
|
D.
|
LICENSEE acknowledges the legal validity and commercial value of the Process and the Products and Licensor’s related intellectual property, including but not limited to any state or federal registrations that LICENSOR owns, obtains, or acquires. LICENSEE shall not, any time, file any application for intellectual property protection with the United States Patent and Trademark Office, or with any other governmental entity for the Process or the Products. This shall include any related or substantially similar intellectual property related to the Process or Products or any proposed new intellectual property that has been developed using the Process licensed hereunder, including intellectual property developed by the employees of LICENSOR who are supervised by LICENSEE and work for have worked at LICENSEE'S Facility..
|
E.
|
In the event that a material breach of this Agreement by LICENSEE occurs or is threatened, the LICENSOR shall be entitled to injunctive relief restraining the act or threatened act which constitutes or would constitute a breach hereunder. In addition, the LICENSOR shall be entitled to other available relief for any such material breach.
|
F.
|
The parties agree to execute any documents reasonably requested by the other party to effect any of the above provisions.
|
A.
|
LICENSOR shall have the sole and exclusive right, but not the obligation, in its discretion, to institute and prosecute lawsuits against third persons for infringement of the rights licensed in this Agreement. All sums recovered in any such lawsuits, whether by judgment, settlement or otherwise, in excess of the amount of reasonable attorneys’ fees and other out of pocket expenses of such suit, shall be retained solely by LICENSOR.
|
B.
|
LICENSEE agrees to fully cooperate with LICENSOR in the prosecution of any such suit against a third party and shall execute all papers, testify on all matters, and otherwise cooperate in every way necessary and desirable for the prosecution of any such lawsuit. The LICENSOR shall reimburse the LICENSEE for any expenses incurred as a result of such cooperation.
|
A.
|
LICENSOR represents and warrants that it has the right and power to grant the licenses granted herein.
|
B.
|
LICENSEE shall be solely responsible for the manufacture, production, sale and distribution of the Products and will bear all related costs associated therewith.
|
C.
|
LICENSEE shall provide and maintain at it sole cost and expense during the term of this agreement commercial general liability insurance endorsed for
*
which insurance policy shall name LICENSOR as an additional insured and shall be written on an occurrence form coverage basis. Evidence of such coverage reasonably satisfactory to LICENSOR shall be delivered to LICENSOR upon request therefor. Such insurance shall be issued by reputable and sound insurance companies satisfactory in LICENSOR’s discretion.
|
D.
|
LICENSEE shall also comply with such guidelines, policies, and requirements as LICENSOR may give written notice from time to time related to the Process.
|
A.
|
LICENSEE shall, at its own expense, defend and indemnify LICENSOR for damages and reasonable costs incurred in any suit, claim or proceeding brought against LICENSOR or its subsidiaries based on (i) the manufacture, production, sale, and distribution of the Products by LICENSEE including, but not limited to product liability claims; (ii) modification of the Process by someone other than LICENSOR; (iii) LICENSEE’s continued use of the Process after notification that the Process may be infringing; (iv) LICENSEE’s use of the Process in a manner not permitted by Licensee; or (v) any matter relating to the Leased Employees.
|
A.
|
For purposes of this agreement, the term “Confidential Information” shall mean the following:
|
i.
|
Any information, formula, recipe, know-how, data, process, technique, design, drawing, program, formula or test data, work in process, engineering, manufacturing, marketing, financial, sales, supplier, customer, employee, investor or business information, whether in oral, written, graphic, or electronic form, or
|
ii.
|
Any document, diagram, drawing, computer program or other communication which is either conspicuously marked “confidential”, known or reasonably known by the other party to be confidential, or is of a proprietary nature and is learned or disclosed in the course of discussions, studies, or other work undertaken between the parties.
|
B.
|
During and after the term of this agreement, LICENSEE shall not use the Confidential Information except for the manufacture, sale and distribution of Products, as set forth herein, and shall not disclose the Confidential Information received under this agreement to any other person or entity other than its employees, and shall also require all its employees who receive such Confidential Information to sign written agreements requiring them not to disclose such Confidential Information during and after their tenure with LICENSEE. LICENSEE shall be responsible for a breach of this agreement by its employees.
|
C.
|
Upon termination of this agreement, LICENSEE shall promptly deliver to LICENSOR any and all Confidential Information in its possession or under its control.
|
D.
|
The parties agree that Confidential Information shall not include any of the following types of information:
|
i.
|
Information that is or becomes generally available to the public other than as a result of a disclosure by LICENSEE or its employees,
|
ii.
|
Information that was available to LICENSEE on a non-confidential basis prior to its disclosure to LICENSEE by LICENSOR or its agents, or
|
iii.
|
Information that becomes available to you on a non-confidential basis from a source other than LICENSOR or its agents, provided that such source is not bound by a confidentiality agreement with LICENSOR known to LICENSOR or its employees.
|
E.
|
LICENSEE shall not be liable for disclosure of Confidential Information if made in response to a valid order of a court or authorized agency of government; provided that ten (10) days’ notice first be given to LICENSOR so a protective order, if appropriate, may be sought by LICENSOR.
|
A.
|
Default and Termination
. LICENSOR shall have the right to immediately terminate this Agreement by giving ten (10) days written notice of a material breach by LICENSEE, followed by LICENSEE’s failure within the above-mentioned ten (10) day period to cure the breach. A material breach includes, but is not limited to:
|
a.
|
LICENSEE’s violation of the Colorado Retail Marijuana Code, Colorado Medical Marijuana Code or any other applicable state or local law; or
|
b.
|
LICENSEE’s filing of a petition in bankruptcy or is adjudicated a bankrupt or insolvent, or makes an assignment for the benefit of creditors, or an arrangement pursuant to any bankruptcy law, or if the LICENSEE discontinues its business or a receiver is appointed for the LICENSEE or for the LICENSEE’S business and such receiver is not discharged within thirty (30) days; or
|
c.
|
LICENSEE’s breach any of the provisions of this Agreement relating to the unauthorized assertion of rights in the Process; or
|
d.
|
LICENSEE’s failure to make timely payment of the License Fee when due two or more times during any twelve-month period; or
|
e.
|
A material change in the ownership or control of LICENSEE or material change of location; or
|
f.
|
LICENSEE’s attempt to grant or grant a sublicense or assign any right or duty under this Licensing Agreement without the written consent of LICENSOR; or
|
g.
|
LICENSEE'S default under the Lease after the expiration of any applicable notice and cure periods; or
|
h.
|
LICENSEE commits any act or omission that, in the sole discretion of LICENSOR, damages or reflects unfavorably, or otherwise detracts from the good reputation of LICENSOR
|
i.
|
A change in state or local laws or regulations, or the application thereof, that makes LICENSEE’s business or the production of the Products unlawful at the facility, or a change in federal enforcement priorities that make LICENSEE’s business reasonably impracticable.
|
B.
|
Effect of Termination
.
|
a.
|
Upon the expiration or termination of this Agreement, all of the rights of LICENSEE under this Agreement shall forthwith terminate and immediately revert to LICENSOR and LICENSEE shall immediately discontinue all use of the Process and the like, at no cost whatsoever to LICENSOR.
|
b.
|
After expiration or termination of this Agreement for any reason, LICENSEE shall immediately discontinue the use of the Process and manufacture, distribution, and sale of the Products and any packaging and advertising materials, official labels or trademarks unless expressly authorized in writing by LICENSOR.
|
A.
|
Governing Law
. This Agreement shall be governed in accordance with the laws of the State of Colorado.
|
B.
|
Notice
. Any notice required to be given pursuant to this Agreement shall be in writing and delivered via e-mail, personally to the other designated party at the above stated address, or mailed by certified or registered mail, return receipt requested or delivered by a recognized national overnight courier service. Either party may change the address to which notice or payment is to be sent by written notice to the other in accordance with the provisions of this paragraph.
|
C.
|
Assignability
. The provisions of the Agreement shall be binding upon and shall inure to the benefit of the parties hereto, their heirs, administrators, successors and assigns, provided, however, that the license granted hereunder is personal to LICENSEE and shall not be assigned by any act of LICENSEE or by operation of law without the written consent of LICENSOR.
|
D.
|
Prior Agreements
. This agreement contains the entire understanding between the parties relating to the subject matter of this agreement; and all prior proposals, discussions and writings between the parties and relating to the subject matter of this agreement are superseded by this agreement.
|
E.
|
Waiver
. No waiver by either party of any default shall be deemed as a waiver of prior or subsequent default of the same or other provisions of this Agreement.
|
F.
|
Severability
. If any term, clause or provision hereof is held invalid or unenforceable by a court of competent jurisdiction, such invalidity shall not affect the validity or operation of any other term, clause or provision and such invalid term, clause or provision shall be deemed to be severed from the Agreement and replaced by a similar provision that best reflects the intentions of the Parties and that is valid and enforceable.
|
G.
|
No Joint Venture
. Nothing contained herein shall constitute this arrangement to be employment, a joint venture or a partnership. It is understood that the relationship established by this agreement is a license and nothing more.
|
H.
|
Arbitration
. Except as provided for herein, any dispute or disagreement which may arise between LICENSOR and LICENSEE in connection with either any interpretation of this Agreement or the performance or nonperformance thereof shall be settled by an arbitrator that is mutually agreed upon by the Parties. All arbitration shall be subject to the Uniform Arbitration Act as set forth in C.R.S. 13-22-201 et seq. Unless otherwise agreed to by both parties, any arbitration shall be conducted in the city of Denver, CO in the United States of America. The judgment upon any award rendered by the arbitration tribunal may be entered in any court having jurisdiction thereof, for the purpose of judicial enforcement.
|
I.
|
Counterparts
. This Agreement may be executed in two counterparts, each of which shall be deemed an original, but both of which together shall constitute one and the same instrument. If this Agreement is executed in counterparts, no signatory hereto shall be bound until both the parties named below have duly executed or caused to be duly executed a counterpart of this Agreement.
|
J.
|
Agreement Subject to Government Approval
. The Parties acknowledge and agree that all provisions of this Agreement are subject to regulatory oversight and approval. In the event that any provision is determined to be non-compliant by any applicable regulatory authority, this Agreement shall be amended by the Parties within the timeframe given by the applicable regulatory authority or thirty (30) days, whichever occurs earlier. If the Parties are unable to negotiate appropriate amendments within the required timeframe, this Agreement shall terminate and be subject to the provisions of section 13 above.
|
LICENSOR
CLS LABS COLORADO, INC.
|
LICENSEE
PICTURE ROCK HOLDINGS, LLC
|
By:
/s/ Jeffrey I. Binder
|
By:
/s/ Alan Bonsett
|
Title:
Chairman, President and Chief Executive Officer
|
Title:
Member and CEO
|
Date:
4/17/15
|
Date:
4/17/15
|
1.
|
Lease; Delivery and Acceptance
.
|
(a)
|
Upon execution hereof, Lessor shall take all action necessary to commence building a fully equipped lab at the property located at 1955 Quince Street, Denver, Colorado ("
Leased Real Property
") including purchasing all equipment necessary to extract, convert and provide quality control of all cannabis products of Lessee. A complete list of the equipment to be installed at said location shall be agreed by and between the parties hereto and once so agreed, incorporated into this agreement as Schedule “A”. The contents of Schedule “A is hereinafter referred to as the “Equipment.”
|
(b)
|
Lessee agrees to Lease the Equipment on the terms and conditions, and for the lease term, as set forth in this Lease Agreement ("
Lease
"). Lessor will arrange for the delivery of the Equipment. When Lessee receives the Equipment, Lessee agrees to inspect it to determine if it is in good working order. This Lease will begin on the date when the Equipment is delivered and installed. The Equipment will be deemed irrevocably accepted by Lessee upon the earlier of: a) the delivery to Lessor of a signed Delivery and Acceptance Certificate (if requested by Lessor); or b)
10 days
after delivery and installation of the Equipment to Lessee if previously Lessee has not given written notice to Lessor of non-acceptance.
|
2.
|
Rent
.
Lessor shall lease the Equipment to Lessee in consideration for and at the rate of
*
per annum, payable in equal monthly lease payments of * per month
(“
Rent
”). Lease Payments shall be due on the 1st day of each month. If any Lease Payment or other amount payable to Lessor is not paid within five (5) days of its due date, Lessee will pay Lessor a late charge not to exceed 5% of each late payment (or such lesser rate as is the maximum rate allowable under applicable law).
|
3.
|
Term and Extension
.
This lease shall terminate upon the earlier of the date that is ten (10) years from the date established in Section 1(b) above, or the date upon which Lessor's lease of the Leased Real Property is terminated. Lessee shall have the option to renew this lease for a term of five (5) years (or such lesser period as remains under the lease for the Leased Real Property) upon written notice provided to Lessor not less than ninety (90) days before the end of the term as long as the lease for the Leased Real Property has been renewed for the same or a longer term. During the renewal term, if any Rent shall be reduced to
*
per month.
|
4.
|
Equipment Location; Use and Repair; Return
.
Lessee shall keep and use the Equipment only at its licensed marijuana cultivation facility and/or marijuana-infused products manufacturing facility. Lessee shall not move the Equipment to a new location without first obtaining Lessor’s written consent. Lessee shall keep the Equipment in compliance with all applicable state and local laws and regulations, including but not limited to the Colorado Retail Marijuana Code and Colorado Medical Marijuana Code, and will keep the equipment in good condition, except for ordinary wear and tear. Lessee acknowledges that Lessee has been instructed in and fully understands the safe operation of the leased equipment and agrees to observe all safety precautions. Lessee agrees to pay Lessor, on return of the leased Equipment, for all charges incidental to breakages, shortages, or damage, ordinary wear and tear excepted, to the Equipment during the term of this Lease. Lessee shall pay all taxes, penalties, fines and costs attributable to the operation and use of the Equipment. Lessee shall not make any alterations, additions, attachments or replacements to the Equipment without the written consent of Lessor, which shall not be unreasonably withheld. If the equipment needs repair, Lessee must notify Lessor of the issue, and Lessee shall be responsible for paying for all necessary repairs. All alterations, additions, attachments and replacements will become part of the Equipment and Lessor’s property at no cost or expense to Lessor. Lessor may inspect the Equipment at any reasonable time. In the event of termination of this Agreement, it shall contact Lessor to request a de-installation of the Equipment by an authorized service personnel of Lessor.
|
5.
|
Assignment and Subletting
.
Lessee agrees to keep the Equipment in Lessee’s custody and not to sublease or rent the Equipment without the written consent of Landlord, which shall not be unreasonably withheld.
|
6.
|
Title to Equipment
: Title to the leased equipment shall at all times remain in the Lessor and Lessee will at all times protect and defend, at its own cost and expense, the title of the Lessor from and against all claims, liens and legal processes of creditors of the Lessee and keep all leased equipment free and clear from all such claims, liens and processes. The Equipment is and shall remain personal property of the Lessor.
|
7.
|
Option to Own Portion of MIP License.
If during the term of this agreement, applicable state and local laws should change to permit, in whole or in part, the ownership or issuance of a marijuana-infused products license in Colorado (a "MIP License"), directly or indirectly, by or to a person or entity who is not a Colorado resident, at Lessor's request, Lessee shall, to the extent permitted by and in accordance with applicable laws, promptly transfer up to a 56% ownership interest in its MIP Licenses (or such lesser percentage as may be permitted by law, from time to time), directly or indirectly (which licenses shall be transferred to Lessee promptly after the date hereof)("
Lessee's Licenses
"), to Lessor or its designee or designees, if and only if Lessor or its applicable designee meets all applicable legal requirements to be an owner, directly or indirectly, in the Lessee's Licenses. Such transfer or transfers may occur in one or more increments to the maximum extent permitted by applicable laws as interpreted by legal counsel for Lessor. In exchange for such transfer or transfers, the Rent payable by Lessee shall be reduced proportionately. For example, if Lessee transferred 28% of its ownership in Lessee’s Licenses to Lessor, the Rent would be reduced to
*
per month. Notwithstanding the foregoing, this Section 7 shall only apply to the extent Lessee has not already transferred a total of 56% of its ownership in the Lessee's Licenses to Lessor, pursuant to this or any other Agreement between Lessee and Lessor, and the reduction in Rent shall occur upon and to the extent of the transfer of the Lessee's Licenses in addition to, and not in lieu of, any other monetary concessions provided by Lessor to Lessee under any other agreement between the parties.
|
8.
|
Default
.
There shall be deemed to be a breach of this lease: (a) if Lessee shall default in the payment of any rent hereunder and such default shall continue for a period of 10 days; (b) if Lessee shall default in the performance of any of the other covenants herein and such default shall continue uncured for 15 days after written notice thereof to Lessee by Lessor; (c) if Lessee materially violates the Colorado Medical Marijuana Code or Colorado Retail Marijuana Code; or (d) if Lessee ceases doing business as a going concern, or if a petition is filed by or against Lessee under the Bankruptcy Act or any amendment thereto. In the event of a breach of this Lease, as herein defined: (a) the Equipment shall upon Lessor's demand forthwith be delivered to Lessor at Lessee's expense at such place as Lessor shall designate and Lessor and/or its agents may, in accordance with the Colorado Medical Marijuana Code and Colorado Retail Marijuana Code, enter into any premises of or under control or jurisdiction of Lessee or any agent of Lessee where the Equipment may be or by Lessor is believed to be, and repossess all or any part of the Equipment.; and (b) all sums due and to become due hereunder shall, at Lessor's option, become payable forthwith, and the Lessor, in addition to being entitled to take possession of the leased equipment as hereinbefore described, also shall be entitled to recover immediately as and for damages for the breach of this lease and not as a penalty, an amount equal to the difference between the aggregate rent reserved hereunder for the unexpired term of the lease (hereinafter called “
Remaining Rentals
”) and the then aggregate rental value of all leased equipment for the unexpired term of the lease (hereinafter called “
Unexpired Rental Value of Leased Equipment
”), provided, however, that if any statute governing the proceeding in which such damages are to be proved, specifies the amount of such claim, Lessor shall be entitled to prove as and for damages for the breach an amount equal to that allowed under such statute. The provisions of this paragraph shall be without prejudice to any rights given to the Lessor by such statute to prove for any amounts allowed thereby. Lessor, upon any breach of this lease may sell the leased equipment or may release such equipment for a term and a rental which may be equal to, greater than or less than the rental and term herein provided, and any proceeds of such sale received within 60 days after Lessor receives possession of the leased equipment or any rental payments received under a new lease made within such 60 days for the period prior to the expiration of this lease, less Lessor's expenses of taking possession, storage, reconditioning and sale or releasing, shall be deemed and considered for the purposes of this paragraph as being the Unexpired Rental Value of Leased Equipment. If the Unexpired Rental Value of Leased Equipment exceeds the Remaining Rentals, Lessor shall be entitled to the excess. The provisions of this paragraph shall be without prejudice to Lessor's right to recover or prove in full damages for unpaid rent that accrued prior to the breach of the lease. In the event of a breach of this Lease, Lessor, at its option, may enforce by appropriate legal proceedings specific performance of the applicable covenants of this lease as well as any other remedy herein provided. Should any legal proceedings be instituted by Lessor to recover any moneys due or to become due hereunder and/or for possession of any or all of the leased equipment, Lessee shall pay a reasonable sum as attorney's fees.
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9.
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Indemnification
.
Lessee will indemnify and save lessor harmless from any and all liability, loss, damage, expense, causes of action, suits, claims or judgments arising from injury to person or property resulting from or based on the actual or alleged use, operation, delivery or transportation of any or all of the leased Equipment or its location or condition; and will, at its own cost and expense, defend any and all suits which may be brought against Lessor, either alone or in conjunction with others on any such liability or claim or claims and will satisfy, pay and discharge any and all judgments and fines that may be recovered against lessor in any such action or actions, provided, however, that Lessor will give lessee written notice of any such claim or demand.
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10.
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Loss or Damage
. If any leased equipment is totally destroyed, the liability of the Lessee to pay rent therefore may be discharged by paying to Lessor all the rent due thereon, plus all the rent to become due thereon less the net amount of the recovery, if any, actually received by Lessor from insurance or otherwise for such loss or damage. Lessor shall not be obligated to undertake, by litigation or otherwise, the collection of any claim against any person for loss or damage of the leased equipment. Except as expressly provided in this paragraph, the total or partial destruction of any leased equipment, or total or partial loss of use or possession thereof to Lessee, shall not release or relieve Lessee from the duty to pay the rent herein provided.
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11.
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Insurance
. Lessee shall provide and maintain at its expense (a) property insurance against the loss, theft or destruction of, or damage to, the Equipment for its full replacement value, naming Lessor as loss payee, and (b) public liability and third party property insurance, naming Lessor as an additional insured. Lessee shall provide Lessor with certificates or other evidence of such insurance when requested.
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12.
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Notices, Remedies and Waivers
: All notices relating hereto shall be delivered in person to an officer of the Lessor or Lessee or shall be mailed registered to Lessor or Lessee at its respective address above shown or at any later address last known to the sender. No remedy of Lessor hereunder shall be exclusive of any other remedy herein or by law provided, but each shall be cumulative and in addition to every other remedy. A waiver of a default shall not be a waiver of any other or a subsequent default.
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13.
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Agreement Contingent on Government Approval.
This Agreement is subject to the approval of the Marijuana Enforcement Division and applicable local government authorities. In the event that any provision is determined to be non-compliant by any applicable regulatory authority, this Agreement shall be amended by the Parties within the timeframe given by the applicable regulatory authority or thirty (30) days, whichever occurs earlier. If the Parties are unable to negotiate appropriate amendments within the required timeframe, this Agreement shall terminate and be subject to the provisions of section 4 above.
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Number of Shares of Restricted Stock
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Vesting Date
|
250,000
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October 1, 2015
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1.
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The Subscriber represents that:
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2.
|
The Subscriber understands and acknowledges that:
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$500,000.00 | April 17, 2015 |