Exhibit 10.8
 
EQUIPMENT LEASE AGREEMENT

This Equipment Lease agreement made this 17th day of April, 2015, by and between
CLS Labs Colorado, Inc. a Florida corporation (“Lessor”), and Picture Rock
Holdings, LLC, a Colorado limited liability company (“Lessee”).
 
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.

 

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* Portions of this document omitted pursuant to an application for an order for
confidential treatment pursuant to Rule 24b-2 under the Exchange Act.
Confidential portions of this document have been filed separately with the
Securities and Exchange Commission.
 
 
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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.

 
 
 
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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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*Portions of this document omitted pursuant to an application for an order for
confidential treatment pursuant to Rule 24b-2 under the Exchange Act.
Confidential portions of this document have been filed separately with the
Securities and Exchange Commission.
 
 
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9.  
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.

10.  
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.

11.  
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.

12.  
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.  
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.

(balance of page intentionally left blank –signature page follows)

 
 
 
 
 
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IN WITNESS WHEREOF, the parties have executed this agreement on the day and year
first set forth above.
 
 
LESSOR:
CLS LABS COLORADO, INC.

By:   /s/ Jeffrey I. Binder                  
                                                

Name:  Jeffrey I.
Binder                                                                        

Its:  Chairman, President and Chief Executive Officer                 

LESSEE:
PICTURE ROCK HOLDINGS, LLC

By: /s/ Greg
Friedman                                                                       

Name: Greg
Friedman                                                                        

Its: Member and
CFO                                                                       

 
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SCHEDULE A
LIST OF EQUIPMENT
 
TO BE ADDED BY ADDENDUM
 
 
 
 
 
 
 
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