Exhibit 10.1

AGREEMENT OF PURCHASE AND SALE

OF MEMBERSHIP INTEREST

AND JOINT ESCROW INSTRUCTIONS

 

TO:    Capstone Title Company          Escrow No. 151130                (“Escrow
Holder”)   

This AGREEMENT OF PURCHASE AND SALE AND JOINT ESCROW INSTRUCTIONS (“Agreement”)
is made and entered into as of this         day of July, 2015, by and among EAST
WEST SECURED DEVELOPMENT, LLC, an Arizona limited liability company, as seller
(“Seller”), and Medbox, Inc., a Nevada corporation, as buyer (“Buyer”).

R E C I T A L S:

A. Seller owns one hundred percent (100%) of the membership interest (the
“Interest”) in EWSD I, LLC, an Arizona limited liability company (the
“Company”);

B. The Company is the purchaser under that certain Contract to Buy and Sell Real
Estate (Land) – Property with No Residences (“PSA”) dated July 13, 2015, between
Company and Southwest Farms, Inc. (“Southwest”);

C. Pursuant to the PSA, the Company anticipates closing its purchase of that
certain real property described as 214 East 39th Lane, Highway 96, Pueblo,
Colorado 81006, the legal description of which is set forth on Exhibit A hereto
(the “Farm”) from Southwest on August 7, 2015 (the “Farm Closing Date”) pursuant
to that certain ESCROW No. 151130 with Escrow Holder (the “Farm Escrow); and

D. The parties hereto desire that simultaneously with the Company’s closing of
its purchase of the Farm (the “Farm Closing”), Seller shall sell the Interest to
Buyer and Buyer shall purchase the Interest from Seller pursuant to the Escrow
Instructions contained in this Agreement (the “Interest Escrow”).

NOW THEREFORE, in consideration of the mutual covenants and agreements herein
contained and for other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, Seller and Buyer hereby agree that
the terms and conditions of this Agreement and the instructions to Escrow Holder
with regard to the Interest Escrow created pursuant hereto are as follows:

A G R E E M E N T:

1. Purchase and Sale. Seller hereby agrees to sell to Buyer, and Buyer hereby
agrees to purchase from Seller, all of Seller’s right, title and interest in the
Interest contingent upon Seller’s purchase of the Farm from Southwest as
described in this Agreement, and the other closing conditions set forth herein,
subject to the terms herein.

 

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2. Purchase Price. The purchase price (“Purchase Price”) for the Interest shall
consist of (i) $500,000 to be paid at the closing hereunder (the “Interest
Closing”) by first releasing and immediately applying the Deposit (as defined
below) to the Farm Purchase Price (defined below) in accordance with the PSA and
this Agreement and the balance of such $500,000, if any, to be paid to Seller at
the Interest Closing through immediately available funds paid through the
Interest Escrow in cash; plus (ii) the Buyer’s promise to pay to Seller a 3%
royalty on the adjusted gross revenue, if any, from operation of the Farm for
the three year period beginning on January 1, 2016, such royalty to be paid 1/2
in cash and 1/2 in Buyer common shares the number of such shares to equal the
quotient obtained by dividing the amount of the cash portion of the payment by
the volume-weighted average price of Buyer’s common shares for the thirty
trading days prior to the due date of the payment (the “Royalty Payment”).
Adjusted gross revenue shall mean gross revenue after deduction of the Colorado
state sales tax imposed on cannabis, which tax currently is 30%, and shall
include the proceeds, if any, from the sale of any portion of or interest in the
Farm (including the water and mineral rights or interests therein), less all
expenses incurred in connection with any such sale.

3. Payment of Purchase Price. The Purchase Price shall be paid by Buyer as
follows:

(a) Initial Deposit. Pursuant to a certain Secured Promissory Note (the “Company
Note”) dated July 10, 2015 between Seller and Company as co-borrowers and Buyer
as lender, on July 10, 2015 Buyer deposited with Escrow Holder the sum of One
Hundred Thousand Dollars ($100,000) (the “Initial Deposit”). Escrow Holder is
hereby instructed to hold the Initial Deposit in accordance with this Agreement.

(b) Additional Deposits. On the date hereof and on each subsequent Friday for up
to three consecutive weeks (i.e., July 24, July 31 and August 7) also pursuant
to the Company Note, Buyer shall also deposit with Escrow Holder the sum of One
Hundred Thousand Dollars ($100,000) (for a maximum aggregate additional deposit
of Four Hundred Thousand Dollars ($400,000) (the “Additional Deposit” and,
together with the Initial Deposit, and to the extend such deposits have been
made, the “Deposit”). Escrow Holder is hereby instructed to hold the Deposit in
accordance with this Agreement.

(c) Requirements for Deposit. Escrow Holder shall hold the Deposit in an account
at a bank.

(d) Application of Deposit. At the Farm Closing, the Deposit shall be applied on
behalf of the Company to the payment of the purchase price for the Farm to be
paid by the Company to Southwest under the PSA (the “Farm Purchase Price”).

(i) Refund of Deposit. The Deposit shall be released by Escrow Holder to
Southwest as a release of the Earnest Money (as defined in the PSA) in
accordance with the PSA unless the Company has a Right to Terminate (as defined
in the PSA) and timely terminates the PSA, in which event the Deposit shall be
refunded to Buyer promptly upon such termination; provided, however, that Seller
shall be liable to ensure, consistent with the Company Note, that the

 

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Deposit shall be returned to Buyer if Buyer hereafter terminates this Agreement
pursuant to a termination right contained herein (in which event neither party
shall have any further rights or obligations under this Agreement except for
those obligations which are specifically stated to survive any such termination
(collectively, the “Surviving Obligations”), which shall survive such
termination). Notwithstanding anything in this Agreement to the contrary, in
each instance that this Agreement requires that the Deposit is to be refunded or
released to Buyer, such requirement shall also mean that Seller shall cause the
Company to take all steps necessary to accomplish such refund or release, and in
all instances, the Seller shall be ultimately responsible, consistent with the
Company Note, to pay to Buyer the amount of the Deposit to be so refunded or
released in the event the Deposit is not refunded or released to Buyer within
thirty (30) days from the date the refund or release was due.

(e) Closing Funds. On or before the Interest Closing, Buyer shall deposit or
cause to be deposited with Escrow Holder, in immediately available funds, an
amount, if any, equal to the cash portion of the Purchase Price for the Interest
minus the Deposit (collectively, the “Balance of the Purchase Price”) referred
to herein as the “Closing Funds”).

4. Escrow.

(a) Opening of Escrow. With regard to the Interest Escrow, Buyer and Seller
agree to execute, deliver and be bound by any reasonable or customary
supplemental escrow instructions of Escrow Holder or other instruments as may
reasonably be required by Escrow Holder in order to consummate the purchase and
sale of the Interest contemplated by this Agreement. Any such supplemental
instructions shall not conflict with, amend or supersede any portions of this
Agreement. To the extent of any inconsistency between the provisions of such
supplemental instructions and the provisions of this Agreement, the provisions
of this Agreement shall control.

(b) Closing. For purposes of this Agreement, the Interest Closing shall be
deemed to have occurred when

(i) the “Special Warranty Deed” (as defined in the PSA) has been recorded as
required by the PSA and Farm Escrow;

(ii) all other terms of the PSA have been complied with in full (including
without limitation the delivery to the Company of all deliverables required to
be made by Southwest thereunder, including without limitation, bills of sale,
tax certificates, assignments of leases, contracts, licenses, entitlement,
approvals, authorizations, certificates and permits, general assignments, and
keys to all entrance doors to all buildings on the Farm (collectively, “PSA
Closing Deliverables”), and issuance to the Company of the title insurance
policy all as required by the PSA); and

(iii) the Interest has been delivered to Buyer all in accordance with the terms
hereof.

 

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If the Farm Closing has not occurred by August 7, but the Farm Closing under the
PSA has been extended then Seller may, by giving written notice to Buyer and
Escrow Holder prior to August 8, 2015, extend the date for the Interest Closing
to a date that is the earlier of (x) a date coterminous with the extension of
the Farm Closing and (y) August 15, 2015 after which Buyer may terminate this
Agreement and Seller must refund the Deposit to Buyer consistent with the
Company Note.

5. Conditions to Closing.

(a) Conditions to Buyer’s Obligations. Buyer’s obligation to consummate the
transaction contemplated by this Agreement is subject to the satisfaction, in
Buyer’s sole, absolute and subjective discretion, of the following conditions
for Buyer’s benefit (or Buyer’s waiver thereof, it being agreed that Buyer may
waive any or all of such conditions) on or prior to the dates designated below
for the satisfaction of such conditions. In the event Buyer terminates this
Agreement and the Interest Escrow due to the non-satisfaction of any of such
conditions, then Buyer shall be entitled to the return of the Deposit (less the
escrow and title cancellation fees and charges), and both Seller and Buyer shall
be relieved of all further obligations and liabilities under this Agreement
(except for the Surviving Obligations, which shall survive any such
termination).

(i) Contingency Matters. Buyer shall have until 5 p.m. Pacific Time on the day
before the Farm Closing Date (currently anticipated to be August 7, 2015) (such
period of time shall be referred to herein as the “Contingency Period”) to
satisfy itself, in Buyer’s sole, absolute and subjective discretion, as to the
following matters:

(A) Buyer’s Review of the Farm Title Related Matters. Buyer shall be satisfied
with all aspects of the Farm and its condition and suitability for Buyer’s
intended use thereof, including without limitation, the form and substance of
the title insurance policy to be issued in connection with the Farm Closing, the
zoning and the availability of all permits, licenses, variances and the like
necessary for Buyer’s intended use thereof. Subject to the immediately following
paragraph, during the term of this Escrow, Buyer and its agents shall have the
right to enter upon the Farm (Seller shall secure from Southwest permission to
enter upon the Farm for this purpose), and to make such inspections, surveys and
tests as may be necessary in Buyer’s discretion. Buyer shall use care and
consideration in connection with any of its inspections or tests.

(B) Seller Financing Prior to the end of the Contingency Period, Seller shall
have caused Southwest to remove Section 9(a)(xiii) from the promissory note
representing the Seller Financing (as defined below) and Section 6.1(k) of the
deed of trust securing the Seller Financing.

 

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If, during the Contingency Period, Buyer determines that it is dissatisfied, in
Buyer’s sole, absolute and subjective discretion, with any aspects of the Farm,
or its condition or suitability for Buyer’s intended use (including without
limitation, the form and substance of the title insurance policy to be issued in
connection with the Farm Closing) or Seller has failed to comply with
Section 5(a)(i)(B) hereof, then Buyer may terminate this Agreement and the
Interest Escrow by delivering written notice of termination to Seller before the
expiration of the Contingency Period, in which event (i) this Agreement and the
Interest Escrow created pursuant hereto shall terminate and be of no further
force or effect (except for the Surviving Obligations, which shall survive any
such termination), Unless Buyer delivers affirmative written notice to Seller
prior to the expiration of the Contingency Period electing to terminate this
Agreement, Buyer shall be deemed to have elected to waive its termination rights
set forth in this Section 5(a) effective as of the expiration of the Contingency
Period.

(ii) Seller’s Obligations. As of the Interest Closing, Seller shall have
performed all of the obligations and covenants required to be performed by
Seller under this Agreement.

(iii) Seller’s Representations and Warranties. All of Seller’s representations
and warranties contained in or made pursuant to this Agreement shall have been
true and correct in all material respects when made.

(b) Conditions to Seller’s Obligations. Seller’s obligation to consummate the
transaction contemplated by this Agreement is subject to the satisfaction, in
Seller’s sole, absolute and subjective discretion, of the following conditions
for Seller’s benefit (or Seller’s waiver thereof, it being agreed that Seller
may waive any or all of such conditions) on or prior to the Interest Closing. In
the event Seller terminates this Agreement and the Escrow due to the
non-satisfaction of any of such conditions, so long as Seller is not in breach
under this Agreement, then the Deposit may be released to Seller as liquidated
damages as more particularly set forth in Section 12 below.

(i) Buyer shall have timely performed all of the obligations required by the
terms of this Agreement to be performed by Buyer.

(ii) All of Buyer’s representations and warranties contained in or made pursuant
to this Agreement shall have been true and correct in all material respects when
made.

6. Deliveries to Escrow Holder

(a) By Seller. On or before the Interest Closing, Seller shall deposit or cause
to be deposited with Escrow Holder the following documents and instruments:

(i) Deliveries. Such documents and instruments as may be reasonably requested by
Escrow Holder to consummate the transactions contemplated herein.

 

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(ii) The Interest. Certificates evidencing the Interest duly endorsed in blank
or accompanied by duly executed membership interest transfer powers together
with a fully executed Arizona Corporations Commission Form Articles of Amendment
making Buyer the sole member of the Company (collectively, “Documents of
Assignment of Interest”),

(b) By Buyer. Buyer shall deposit or cause to be deposited with Escrow Holder,
on or before the Interest Closing, the Closing Funds as provided in Section 3(e)
above together with the following documents and instruments:

(i) Deliveries. Such documents and instruments as may be reasonably requested by
Escrow Holder to consummate the transactions contemplated herein.

7. Deliveries to Buyer Outside of Escrow. At the Closing, Seller shall deliver
to Buyer:

(a) All PSA Closing. Deliverables, and all intangible property, architectural
plans and specifications, lease files, and books and records pertaining to the
Company and/or Farm.

8. Costs and Expenses. Buyer shall have no expenses in connection with the Farm
Escrow. Buyer shall pay the escrow fees charged by Escrow Holder in connection
with the Interest Escrow. Each party shall pay its own attorney’s fees in
connection with the negotiation of this Agreement. Buyer shall be responsible
for all of its due diligence costs. If, as a result of no fault of Buyer or
Seller, the Interest Escrow fails to close, then (except as otherwise provided
in this Agreement) Buyer shall pay Escrow Holder’s cancellation fees and charges
in connection with that Escrow alone. If such Escrow fails to close as a result
of either party’s default hereunder, such defaulting party shall be solely
responsible for any escrow cancellation charges charged by Escrow Holder for
such Escrow.

9. Disbursements and Other Actions by Escrow Holder. Prior to or simultaneous
with the Interest Closing, Escrow Holder shall promptly undertake all of the
following in the manner indicated:

(a) Funds. Disburse from funds deposited by Buyer with Escrow Holder towards
payment of all items chargeable to the account of Buyer pursuant hereto in
payment of such costs, including, without limitation, the payment of the
Purchase Price to or for the benefit of Seller, and disburse the balance of such
funds, if any, to Buyer.

(b) The Interest. Deliver the Documents of Assignment of Interest to Buyer.

10. Seller’s Representations and Warranties.

(a) In consideration of Buyer entering into this Agreement and as an inducement
to Buyer to purchase the Interest from Seller, Seller, Brian Loiselle, Todd
Johnson, Eric Loiselle and D. J. Martin hereby makes the following
representations and warranties to Buyer as of the date of this Agreement, each
of which is material and being relied upon by Buyer:

 

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(i) Organization. Each of the Seller and the Company have been duly organized,
and are validly existing and in good standing, under the laws of the State of
Arizona.

(ii) Authority. Seller has the legal right, power and authority to enter into
this Agreement and to consummate the transactions contemplated hereby, and the
execution, delivery and performance of this Agreement have been duly authorized
by all required limited liability company action. The person executing this
Agreement on behalf of Seller has the power and authority to do so.

(iii) Subsidiaries. The Company has no subsidiaries.

(iv) Employees. The Company has no employees and since its inception has not had
any employees.

(v) Title to Interest The only issued and outstanding equity of the Company
consists of the Interest. The Interest has been duly authorized, is validly
issued, fully paid and non-assessable. Seller is the sole record and beneficial
owner of the Interest, has good, valid and marketable title to the Interest,
free and clear of all Liens and has the power and authority to sell, transfer,
assign and deliver the Interest as provided in this Agreement. Upon consummation
of the transactions contemplated by this Agreement, Buyer shall be the record
and beneficial owner of the Interest and have good, valid and marketable title
to the Interest, free and clear of all Liens. No other person has any right,
title or interest in the Company. Seller has never sold, conveyed, pledged,
assigned, transferred or otherwise encumbered all or any portion of the
Interest. Except as created by this Agreement, Seller has not granted or
conveyed any outstanding rights or options to any person or entity to acquire
any ownership interest in the Interest or the Company. Seller has not incurred
any obligations or liabilities or entered into any contract, pledge or agreement
that would be binding upon or affect the Interest or the Company after the
Interest Closing. “Lien” means any mortgage, lien, pledge, encumbrance, security
interest, deed of trust, option, encroachment, reservation, order, decree,
judgment, condition, restriction (including, in the case of real property,
easements, rights of way, covenants, leases, licenses, zoning and setback
requirements and other variances, but not including restrictions imposed by
securities laws), charge, claim or other third-party rights of any kind in the
nature of the foregoing.

(vi) No Violation. The execution, delivery, and performance by Seller of this
Agreement and the consummation of the transactions hereunder by Seller will not
result in a material breach or violation of, or, with or without notice or lapse
of time or both, constitute a material default under, or conflict in any
material respect with, or result in the creation of any lien on the Interest
under, any laws applicable to Seller or Company or any contract or instrument to
which Seller or Company is a party or to which Seller or Company or the
property, assets or business of either is bound.

 

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(vii) PSA. There is no breach by the Company, nor to Seller’s or Company’s
knowledge, by Southwest, under the PSA, and no facts or circumstances exist
which now or with the passage of time would give a party under the PSA the right
to terminate the PSA or require the release of the Earnest Money (as defined in
the PSA) to Southwest.

(viii) Governmental Approval. No action by or in respect of, declaration, filing
or registration with, or notice to, or authorization, consent or approval or
permit of, any Governmental Authority is necessary or required for, or in
connection with, the valid and lawful authorization, execution, delivery, and
performance by Seller of the transactions contemplated thereby. Governmental
Authority means any United States federal, state or local or any foreign
government, or political subdivision thereof, or any multinational organization
or authority or any authority, agency or commission entitled to exercise any
administrative, executive, judicial, legislative, police, regulatory or taxing
authority or power, any court or tribunal (or any department, bureau or division
thereof), or any arbitrator or arbitral body.

(ix) Litigation. There are no Actions related to the Interest, the Company, the
Farm or otherwise to which Seller is a party (either as plaintiff or defendant)
pending or threatened that, individually or collectively, would be reasonably
likely to result in a Material Adverse Effect, or that question the validity of
the Farm Sale or of any action taken or to be taken pursuant to or in connection
with the provisions of this Agreement. There are no outstanding judgments,
orders, decrees, citations, fines or penalties or written notices of violation
against Seller affecting the Interest, the Farm or otherwise under any Legal
Requirement that, individually or collectively, would be reasonably likely to
result in a Material Adverse Effect. “Action” means any claim, action, cause of
action or suit (whether in contract or tort or otherwise), litigation (whether
at law or in equity and whether civil or criminal), controversy, assessment,
arbitration, investigation, hearing, charge, complaint, demand, notice or
proceeding to, from, by or before any Governmental Authority. “Material Adverse
Effect” means with respect to the Interest or the Farm, any change in, or effect
thereon that, when considered either singly or in the aggregate, would result in
a material adverse effect on the condition (financial or otherwise) or
operations of the Company or the Farm taken as a whole.

(x) Assets and Liabilities of Company. The Company currently has no assets
except the PSA, and no Liabilities except those existing under the PSA. Upon the
Interest Closing, the Company will have no assets except the Farm, the PSA
Closing Deliverables and the Title Policy on the Farm, and no Liabilities except
the Southwest Financing and the Company Debt. “Liability” means any liability or
obligation (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). “Southwest Financing” means the
Company’s purchase money debt to Southwest secured by the Farm in the amount of
approximately $3.67 million which the

 

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Company has agree to repay at 5% per annum with 30 year amortization and a 3
year balloon. “Company Debt” means the Company’s debt to Seller in the amount of
$800,000 which has been paid over to Southwest as a partial payment of the
purchase price for the Farm which the Company has agreed to repay at 6% per
annum with 30 year amortization and a 3 year balloon pursuant to a certain
promissory note a copy of which is attached as Exhibit B hereto.

(xi) Compliance with Laws. Each of the Seller and the Company have complied, and
are now complying, in all material respects, with all laws applicable to them or
their business, properties or assets.

(xii) Property Vacant. There are no parties in possession of the Farm other than
Southwest and no leases, subleases, licenses or other occupancy agreements
giving rights to the Farm to any party.

(xiii) Taxes. Since its formation the Company has been a “disregarded entity”
for Federal, State and local income taxes, and no election has been made to
treat it otherwise. Since its inception the Company has not engaged in any
business transactions other than the acquisition of the Farm. All Tax Returns
required to be filed on or before the Interest Closing by the Company have been,
or will be, timely filed. Such Tax Returns are, or will be, true, complete and
correct in all respects. All Taxes due and owing by the Company have been timely
paid whether or not shown on a tax return. The Company has withheld and paid
each Tax required to have been withheld and paid by it in connection with
amounts paid or owing to any employee, independent contractor, creditor,
customer, equity holder or other party, and each has complied with all
information reporting and backup withholding provisions of applicable law. The
Company is not a party to any Action by any taxing authority. There are no
pending or threatened Actions against of the Company or by any taxing authority.
Seller has delivered to Buyer copies of all federal, state, local and foreign
income, franchise and similar tax returns, examination reports, and statements
of deficiencies assessed against, or agreed to, by the Company for all Tax
periods from its inception.

(b) Each of the representations and warranties set forth in Paragraph 10 of this
Agreement (collectively, “Seller’s Representations”) shall be deemed to have
been remade at and as of the Interest Closing with the same force and effect as
if first made on and as of the Interest Closing and shall survive the Closing.

11. Buyer’s Representations and Warranties. In consideration of Seller entering
into this Agreement and as an inducement to Seller to sell the Interest to
Buyer, Buyer makes the following representations and warranties, each of which
is material and is being relied upon by Seller:

(a) Authority. Buyer has the legal right, power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby, and the
execution, delivery and performance of this Agreement have been duly authorized
by all required corporate action. The person(s) executing this Agreement on
behalf of Buyer have the power and authority to do so.

 

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(b) Permitted Assignee. If the original Buyer hereunder has assigned its
interest in this Agreement, such assignment has been made in compliance with
this Agreement.

Each of the representations and warranties set forth in this Paragraph 11
(collectively, “Buyer’s Representations”) shall be deemed to have been remade at
and as of the Interest Closing with the same force and effect as if first made
on and as of the Interest Closing. Buyer’s Representations shall survive the
Closing.

12. LIQUIDATED DAMAGES. IF BUYER FAILS TO CLOSE IN BREACH OF THIS AGREEMENT,
THEN IN ANY SUCH EVENT, SELLER MAY TERMINATE THIS AGREEMENT AND SELLER AND BUYER
SHALL THEREUPON BE RELEASED FROM THEIR OBLIGATIONS HEREUNDER, EXCEPT THOSE THAT
SURVIVE A TERMINATION OF THIS AGREEMENT. IF, AS A RESULT OF SUCH TERMINATION BY
SELLER, NEITHER THE COMPANY, SELLER OR ANY AFFILIATE OF SELLER OR THE COMPANY,
PURCHASE OR ACQUIRE THE FARM WITHIN ONE YEAR FROM THE DATE OF SUCH TERMINATION
(“FAILED PURCHASE”), THEN BUYER AND SELLER AGREE THAT BASED UPON THE
CIRCUMSTANCES NOW EXISTING, KNOWN AND UNKNOWN, IT WOULD BE IMPRACTICAL OR
EXTREMELY DIFFICULT TO ESTABLISH SELLER’S DAMAGE BY REASON OF A FAILED PURCHASE.
ACCORDINGLY, BUYER AND SELLER AGREE THAT IN THE EVENT OF DEFAULT BY BUYER UNDER
THIS AGREEMENT THAT RESULTS IN A FAILED PURCHASE, IT WOULD BE REASONABLE AT SUCH
TIME OF THE FAILED PURCHASE TO AWARD SELLER, AS SELLER’S SOLE AND EXCLUSIVE
REMEDY AT LAW AND EQUITY, “LIQUIDATED DAMAGES” EQUAL TO THE AMOUNT OF THE
DEPOSIT.

THEREFORE, IF BUYER FAILS TO CLOSE IN DEFAULT OF THIS AGREEMENT, AND AS A
RESULT, SELLER TERMINATES THIS AGREEMENT, SELLER MAY INSTRUCT THE ESCROW HOLDER
OF THE SAME WHEREUPON ESCROW HOLDER SHALL CONTINUE TO HOLD THE DEPOSIT UNTIL THE
DATE THAT IS ONE YEAR AFTER THE DATE OF SUCH TERMINATION, AT WHICH TIME THE
PARTIES SHALL NOTIFY THE ESCROW HOLDER WHETHER OR NOT A FAILED PURCHASE HAS
OCCURRED. IF A FAILED PURCHASE HAS OCCURRED, ESCROW HOLDER SHALL RELEASE THE
DEPOSIT TO SELLER AND CANCEL THE ESCROW. IF A FAILED PURCHASE HAS NOT OCCURRED,
ESCROW HOLDER SHALL RELEASE THE DEPOSIT TO BUYER AND CANCEL THE ESCROW. UPON
ESCROW HOLDER’S RELEASE OF THE DEPOSIT IN ACCORDANCE WITH THIS SECTION, BUYER
SHALL BE RELIEVED FROM ALL OBLIGATIONS AND LIABILITIES HEREUNDER WITH NO
EXCEPTION.

SELLER AND BUYER ACKNOWLEDGE THAT THEY HAVE READ AND UNDERSTAND THE PROVISIONS
OF THIS PARAGRAPH 12 AND BY THEIR INITIALS IMMEDIATELY BELOW AGREE TO BE BOUND
BY ITS TERMS.

 

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13. Buyer’s Remedies. If Seller shall default under this Agreement, then Buyer,
may either, at its sole discretion and election, in addition to whatever other
remedies it may have in law or equity:

(a) deliver written notice to Seller that Buyer elects to terminate this
Agreement, in which event, consistent with the Company Note, Buyer shall be
entitled to a return of the Deposit and the parties shall have no further
obligations under this Agreement except for the Surviving Obligations which
shall survive such termination; or

(b) provided that Buyer is not otherwise in default under this Agreement, bring
an action against Seller to seek specific performance of Seller’s obligations
hereunder within sixty (60) days following the scheduled Closing Date. Such
action for specific performance will not be construed to require Seller to cure
any title defect (except as specifically provided in Paragraph 5 of this
Agreement), cure any untrue representation, comply with any covenant hereunder,
cure any physical condition existing at the Interest, or cause any third party
to take any action with respect to the Interest or Seller.

14. Indemnification. Notwithstanding Section 14 hereof, Seller, Company, Brian
Loiselle, Todd Johnson, Eric Loiselle and D. J. Martin shall jointly and
severally indemnify and defend Buyer and its respective officers and directors,
agents and representatives (such persons referred to herein individually as a
“Buyer Indemnified Person” and collectively as “Buyer Indemnified Persons”)
against, and shall hold each of them harmless from, any and all costs, claims,
damage, loss, liability and expense (including, without limitation, reasonable
expenses of investigation and reasonable attorneys’ fees and expenses in
connection with any action, suit, proceeding, plus any assessments, interest and
penalties thereon) (collectively, and after subtracting the amount of any
insurance proceeds recoverable with respect thereto, “Loss”) incurred or
suffered by any Buyer Indemnified Person arising out of any misrepresentation or
breach, or any allegation thereof, of any representation, warranty, covenant or
agreement made or to be performed by Seller, Company, Brian Loiselle or Todd
Johnson pursuant to this Agreement to the extent such Loss derives from, applies
or relates to the Interest or the Company.

15. Notices. Any demand, request or notice which either party hereto desires or
may be required to make or deliver to the other shall be in writing and shall be
deemed given upon receipt if delivered personally or by electronic mail
(provided that any notice given by electronic mail is also given by one of the
other methods permitted herein), or on the next business day if delivered by
overnight mail, or on the date of receipt or rejection as shown on the returned
receipt if deposited in the United States Mail in registered or certified form,
return receipt requested, addressed as follows:

 

To Buyer:   Medbox, Inc.   8439 West Sunset Boulevard   West Hollywood, CA 90069
  Attn: Jeff Goh, President

 

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With a copy to:   Manatt, Phelps & Phillips, LLP To Seller:   East West Secured
Development, LLC

Notice of change of address shall be given by written notice in the manner
detailed in this Paragraph 15. Rejection or other refusal to accept or the
inability to deliver because of changed address of which no notice was given
shall be deemed to constitute receipt of the notice, demand, request or
communication sent.

16. Brokers. Buyer and Seller represent and warrant to one another that neither,
respectively, was represented in connection with the sale of the Interest
hereunder by any broker, finder or other person in connection herewith. If any
claims for brokers’ or finders’ fees for the consummation of this Agreement
arise, then Buyer hereby agrees to indemnify, save harmless and defend Seller
from and against such claims if they shall be based upon any actual or alleged
statement or representation or agreement by Buyer, and Seller hereby agrees to
indemnify, save harmless and defend Buyer if such claims shall be based upon any
actual or alleged statement, representation or agreement made by Seller.

17. Legal Fees. In any dispute between the parties arising out of this
Agreement, the prevailing party shall be awarded its attorney fees and costs
incurred in connection with the dispute, including fees and costs incurred in
any appeal. All such attorney fees and costs shall be deemed to have accrued on
commencement of any legal action or proceeding and this section shall be
enforceable whether or not such legal action or proceeding is prosecuted to
judgment. For purposes of this section, and to the fullest extent permitted by
law, “prevailing party” includes a party against whom a legal action is filed
and later voluntarily dismissed in whole or in part, regardless of the reason or
motivation for such dismissal.

18. Assignment. Buyer shall not assign, transfer or convey its rights and/or
obligations under this Agreement and/or with respect to the Interest without the
prior written consent of Seller, which consent Seller may withhold in its sole
and absolute discretion; provided that Buyer shall have the right to assign this
Agreement, without Seller’s consent, to any entity controlled, controlled by or
under common control with Buyer. Any attempted assignment without the prior
written consent of Seller (when Seller’s consent is required) shall be void and
Buyer shall be deemed in default hereunder. Any assignment of this Agreement by
Buyer shall not relieve the assigning party from its liability under this
Agreement.

 

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19. Miscellaneous.

(a) Confidentiality. Buyer agrees to keep confidential the content of any
materials provided by Seller, as well as the results of its due diligence
activities, except for such disclosures as may be required by law or disclosures
made to Buyer’s employees, partners, employees, lenders, investors, accountants,
attorneys and advisors. This confidentiality provision shall expire upon the
Closing. Upon any termination of this Agreement, Buyer shall return to Seller
all such documents and materials provided to Buyer by Seller together with all
reports and other written materials assembled by Buyer as part of its due
diligence activities (excluding any internally-prepared analyses). Buyer’s
documents shall be delivered to Seller AS-IS, without representation or
warranty.

(b) Required Actions of Buyer and Seller. Buyer and Seller agree to execute such
instruments and documents and to diligently undertake such actions (at no cost
to the undertaking party except as otherwise expressly provided herein) as may
be reasonably required in order to consummate the purchase and sale herein
contemplated and shall use good faith efforts to accomplish the Closing in
accordance with the provisions hereof.

(c) Time of Essence. Time is of the essence of each and every term, condition,
obligation and provision hereof. All references herein to a particular time of
day shall be deemed to refer to Pacific Standard Time.

(d) Counterparts. This Agreement may be executed in multiple counterparts, each
of which shall be deemed an original, but all of which, together, shall
constitute one and the same instrument and may be delivered by PDF file or other
electronic means.

(e) Captions. Any captions to, or headings of, the paragraphs or subparagraphs
of this Agreement are solely for the convenience of the parties hereto, are not
a part of this Agreement, and shall not be used for the interpretation or
determination of the validity of this Agreement or any provision hereof.

(f) No Obligations to Third Parties. Except as otherwise expressly provided
herein, the execution and delivery of this Agreement shall not be deemed to
confer any rights upon, nor obligate any of the parties thereto, to any person
or entity other than the parties hereto.

(g) Amendment to this Agreement. The terms of this Agreement may not be modified
or amended except by an instrument in writing executed by all of the parties
hereto.

(h) Waiver. The waiver or failure to enforce any provision of this Agreement
shall not operate as a waiver of any future breach of any such provision or any
other provision hereof.

(i) Applicable Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of California.

 

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(j) Entire Agreement. This Agreement supersedes any prior agreements,
negotiations and communications, oral or written, and contains the entire
agreement between Buyer and Seller as to the subject matter hereof. No
subsequent agreement, representation, or promise made by either party hereto, or
by or to an employee, officer, agent or representative of either party shall be
of any effect unless it is in writing and executed by the party to be bound
thereby.

(k) Partial Invalidity. If any portion of this Agreement as applied to either
party or to any circumstances shall be adjudged by a court to be void or
unenforceable, such portion shall be deemed severed from this Agreement and
shall in no way effect the validity or enforceability of the remaining portions
of this Agreement.

(1) Successors and Assigns. Subject to the provisions of Paragraph    hereof,
this Agreement shall be binding upon and shall inure to the benefit of the
successors and assigns of the parties hereto.

(m) Business Days. In the event any date described in this Agreement relative to
the performance of actions hereunder by Buyer, Seller and/or Escrow Holder falls
on a Saturday, Sunday or legal holiday, such date shall be deemed postponed
until the next business day thereafter. All references in this Agreement to the
term “days” shall mean calendar days except as otherwise provided herein to the
contrary.

(n) Submission of Agreement. Submission of this Agreement to Buyer for
examination or signature does not constitute a reservation, right or option to
purchase the Interest, and will not be effective as a binding purchase and sale
agreement or otherwise until full execution by and delivery to both Buyer and
Seller.

(o) Ambiguities. Each party to this Agreement has substantial experience with
the subject matter of this Agreement and has each fully participated in the
negotiation and drafting of this Agreement and has been advised by counsel of
its choice with respect to the subject matter hereof. Accordingly, this
Agreement shall be construed without regard to the rule that ambiguities in a
document are to be construed against the drafter.

(p) Loiselle Indemnity. Buyer shall indemnify and defend Brian Loiselle against,
and shall hold him harmless from, any and all costs, claims, damage, loss,
liability and expense (including, without limitation, reasonable expenses of
investigation and reasonable attorneys’ fees and expenses in connection with any
action, suit, proceeding, plus any assessments, interest and penalties thereon)
(collectively, and after subtracting the amount of any insurance proceeds
recoverable with respect thereto, “Loss”) incurred or suffered by him arising
out of any claim made by Southwest against him under the Southwest Financing,
unless any such claim, or any failure to pay or other default under such
Financing is caused by any breach or wrongful act of Brian Loiselle.

 

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(q) No Trading. Seller, Company, Brian Loiselle and Todd Johnson acknowledge and
agree that each may possess Confidential Information about Buyer which
constitutes “material nonpublic information” as such term is used under
applicable federal and state securities laws and trading on the basis of such
information may constitute a violation of Section 10b-5 of the Exchange Act.
Accordingly, such parties agree that they will not buy or sell any of Buyer’s
securities, or otherwise enter into any transaction relating to Buyer’s
securities, between the date of this Agreement and forty-eight (48) hours
following the public announcement of the transactions contemplated by this
Agreement by Buyer.

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first written above.

“Buyer”

Medbox, Inc.

a Nevada corporation

 

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“Seller”

East West Secured Development, LLC

An Arizona limited liability company

 

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And, with respect to Sections 10, 12 and 19 hereof:

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