lowell_ex10-1





  Exhibit 10.1











 



LEASE AGREEMENT

 

 


139
ZABALA ROAD



SALINAS, CALIFORNIA

 



 



LANDLORD:

 



 



TINHOUSE, LLC,



a Delaware limited liability company,



d/b/a Tinhouse Partners, LLC

 



“Landlord”

 



TENANT:

 



CYPRESS HOLDING COMPANY, LLC



a Delaware limited liability company

 



“Tenant”

 



GUARANTORS:

 



INDUS HOLDING COMPANY,



a Delaware corporation



&



EDIBLE MANAGEMENT, LLC,



a California limited liability company

 


“Guarantors”

 


 














 










 



LEASE AGREEMENT

 


TABLE OF
CONTENTS

 


	


SECTION

	
 

	


PAGE


	


NUMBER

	
 

	


NO.


	

1
BASIC
LEASE PROVISIONS

	


6


	

1.1

	


Date of Lease

	


6


	

1.2

	


Landlord

	


6


	

1.3

	


Tenant

	


6


	

1.4

	


Guarantors

	


6


	

1.5

	


Description and Address of Leased Premises

	


6


	

1.6

	


Use of Leased Premises

	


7



	

1.7

	


Compliance with MMRSA and Monterey County Medical Marijuana Laws
and Regulations

	


7


	

1.8

	


Lease Term.

	


8


	

1.9

	


Rent and Security Deposit

	


9



	

1.10

	


Rent and Security Deposit

	


9


	

1.11

	


Landlord’s Address

	


10


	

1.12

	


Tenant’s Address

	


10


	

1.13

	


Lease Year

	


10


	

2
LEASED
PREMISES

	


10


	

3
USES

	


10


	

3.1

	


Permitted Uses

	


10


	

3.2

	


Covenant of Continuous Operation

	


10


	

3.3

	


Liens

	


11


	

3.4

	


Rules and Regulations

	


11


	

3.5

	


Signage

	


13


	

3.6

	


Compliance with Insurance Requirements

	


13


	

3.7

	


Hazardous Materials

	


14


	

3.8

	


Compliance with Governmental Regulations

	


16


	

4
TERM
AND HOLDING OVER

	


16


	

4.1

	


Basic Term and Extensions

	


16


	

4.2

	


Holding Over

	


17


	

5
RENT

	


17


	

5.1

	


Minimum Monthly Rent

	


17







 




 

i








 






 


	

5.2

	


Prepaid Rent

	


17


	

5.3

	


Definition of Rent

	


17


	

6
POSSESSION

	


18


	

7
PAYMENT
OF TAXES AND ASSESSMENTS BY TENANT

	


18


	

7.1

	


Tenant’s Obligation to Pay Impositions

	


19


	

7.2

	


Definition of Impositions

	


19


	

7.3

	


Personal Property Taxes

	


19


	

8
ASSIGNMENT
AND SUBLETTING

	


19


	

8.1

	


Definition of Transfer

	


19


	

8.2

	


Landlord’s Consent Required

	


20


	

8.3

	


Request for Consent to Transfer

	


20


	

8.4

	


Reasonable Consent

	


21


	

8.5

	


Effects of Transfer

	


22


	

8.6

	


Documentation of Transfer

	


23


	

9
RIGHTS
AND OBLIGATIONS UNDER THE BANKRUPTCY CODE

	


23


	

10
ALTERATIONS

	


24


	

10.1

	


Restriction on Alterations

	


24


	

10.2

	


Restoration of Leased Premises

	


24


	

11
ABANDONMENT

	


24


	

12
UTILITIES

	


25


	

13
CONDITION
OF LEASED PREMISES

	


25


	

13.1

	


Condition of Leased Premises upon Acceptance of
Possession

	


25


	

13.2

	


Tenant’s Maintenance and Repair Obligations

	


25


	

13.3

	


Payment for Work Done for Tenant’s Account

	


26


	

13.4

	


Landlord’s Maintenance and Repair Obligations

	


26


	

14
INTENTIONALLY
DELETED

	


26


	

15
ADDITIONAL
RENT

	


27


	

15.1

	


Share of Common Expenses

	


27


	

15.2

	


Tenant’s Obligations

	


27


	

16
ENTRY
BY LANDLORD

	


29


	

17
INSURANCE,
LIABILITY, AND INDEMNIFICATION

	


30


	

17.1

	


Tenant’s Insurance

	


30


	

17.3

	


Landlord’s Liability

	


34


	

17.4

	


Tenant’s Indemnity

	


35







 




 

ii








 






 


	

17.5

	


Waiver of Subrogation

	


35


	

18
SURRENDER

	


35


	

18.1

	


Condition of Leased Premises upon Surrender

	


36


	

18.2

	


Acceptance of Surrender by Landlord

	


36


	

19
SUBORDINATION
AND ATTORNMENT

	


36


	

20
ESTOPPEL
CERTIFICATE

	


36


	

21
SALE
BY LANDLORD

	


37


	

22
DAMAGE
OR DESTRUCTION

	


37


	

23
CONDEMNATION

	


37


	

24
ATTORNEYS’
FEES

	


38


	

25
TENANT’S
DEFAULT AND LANDLORD’S REMEDIES

	


38


	

25.1

	


Tenant’s Default

	


38


	

25.2

	


Landlord’s Remedies

	


38


	

26
WAIVER

	


44


	

27
SUCCESSORS
AND ASSIGNS

	


44


	

28
NOTICES

	


44


	

29
QUIET
ENJOYMENT

	


44


	

30
SECURITY
DEPOSIT

	


44


	

30.1

	


Tenant’s Rights in Security Deposit

	


45


	

30.2

	


Landlord’s Rights in Security Deposit

	


45


	

31
LATE
CHARGES

	


45


	

32
INTERPRETATION

	


46


	

33
RELATIONSHIP
OF THE PARTIES

	


46


	

34
SEVERABILITY

	


46


	

35
QUITCLAIM

	


46


	

36
OTHER
PAYMENTS TO BE CONSTRUED AS RENT

	


46


	

37
INTEREST

	


47


	

38
CONDITIONS

	


47


	

39
JURISDICTION;
ALTERNATIVE DISPUTE RESOLUTION

	


47


	

39.1

	


Mediation

	


47


	

39.2

	


Arbitration For All Disputes Except Non-Payment of
Rent

	


47


	

40
TIME

	


48


	

41
CORPORATE
AUTHORITY

	


48


	

42
LANDLORD
EXCULPATION

	


48







 




 

iii








 






 


	

43
ENTIRE
AGREEMENT

	


48


	

44
NO
RESERVATION OF PREMISES

	


48


	

45
UNAVOIDABLE
DELAY

	


49


	

46
USA
PATRIOT ACT COMPLIANCE

	


49


	

47
BROKER

	


49


	

48
CONTINUING
LEASE GUARANTY

	


50



	

49
INTENTIONALLY
OMITTED

	


50


	

50
DISABILITY
ACCESS INSPECTION

	


50


	

51
COUNTERPARTS

	


50


	

52
CONFIDENTIALITY

	


50


	

53
JOINT
AND SEVERAL LIABILITY OF TENANT

	


51


	

54
EARLY
TERMINATION IN THE EVENT OF FEDERAL INTERVENTION

	


51


	

55
CHANGES
TO CALIFORNIA STATE MEDICAL MARIJUANA LAWS

	


51


	

56
TERMINATION
OF PRIOR LEASE AND LEASE GUARANTY

	


52







 



EXHIBITS

 


A. Building Floor
Plan.

 


B. Acknowledgment of
Commencement Estoppel Agreement.

 


C. Condition of
Leasehold Space (Landlord’s Work and Tenant’s
Work).

 


D. Form of Statement
of Completion.

 



ADDENDA

 

Addendum
I:    Lease Guaranty.

 




 

iv
















 







LEASE AGREEMENT

 




1.


BASIC LEASE PROVISIONS.





 


The
words and figures set forth in this Section 1 are part of this
“Lease” wherever
reference is made thereto, except to the extent (if any) that they
are expressly modified elsewhere in this Lease.


 


1.1 Date
of Lease. April 1, 2017

 


1.2 Landlord.
Tinhouse, LLC, a Delaware limited liability company, d/b/a Tinhouse
Partners, LLC

 


1.3 Tenant.
Cypress Holding Company, LLC, a Delaware limited liability
company.

 


1.4 Guarantors.
Indus Holding Company, a Delaware corporation and Edible
Management, LLC, a California limited liability
company

 


1.5 Description
and Address of Leased Premises.

 


Real
property consisting of approximately four hundred forty-five
thousand, three hundred eleven (445,311) square feet of land
(hereinafter referred to as the “Leased Premises”) improved with
(i) greenhouses containing approximately two hundred twenty-seven
thousand three hundred fifty-six (227,356) square feet (the
“Greenhouses”),
and (ii) a warehouse /shop/office building containing approximately
six thousand thee hundred seventy-five (6,375) square feet (the
“Warehouse” and
together with the Greenhouses the “Buildings”) as shown on the
building floor plan (the “Building Floor
Plan’’) attached hereto as Exhibit A, commonly referred to as 139
Zabala Road in the County of Monterey (“County”), and State of California
(the “State”),
assessor’s parcel nwnber 107-051-003-000. The Leased Premises
also contains hoop houses containing approximately twenty-three
thousand eight hundred eight (23,808) square feet (“Hoop Houses’’). The
Greenhouses and Warehouse collectively comprise approximately two hundred
thirty-three thousand seven hundred thirty-one (233,731) square
feet (“Rentable Square
Feet” or “Rentable Square Footage’’).
The parties hereby agree that the Hoop Houses shall not be included
in the Rentable Square Footage and hereby agree and stipulate as to
the Rentable Square Footage of the Buildings (i.e., 233,731) and
agree that neither party shall have the right to remeasure the
Leased Premises.

 


“Greenhouse #2” shall mean the
approximately sixty-seven thousand, eight hundred sixty-nine
(67,869) square foot greenhouse located on the Leased Premises, and
depicted on Exhibit A
attached hereto, and “Studio” shall mean that certain
portion of the Warehouse depicted on Exhibit A attached hereto.

 





 

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Cypress Holding Company Lease Agreement


 






 

 


1.6 Use
of Leased Premises. The Leased Premises shall be used for
the following “Permitted
Use” and for no other use whatsoever without
Landlord’s prior written consent, which Landlord may withhold
in its sole and absolute discretion: any lawful use including
medical marijuana commercial activity, provided the same is
expressly subject to and in strict compliance with California State
laws and regulations and City and/or Monterey County (as
applicable) zoning, registration, licensing requirements and
applicable rules and regulations for medical marijuana commercial
activity. Notwithstanding anything to the contrary herein, under no
circumstances shall the Permitted Use include any activities
related or incidental to, or involve, or include, either directly
or indirectly, activities relating to marijuana or cannabis for
recreational (as opposed to medicinal) purposes, whether pursuant
to the 2016 Adult Use of Marijuana Act or otherwise. At all times,
Tenant shall abide by the California Attorney General’s
“Guidelines for the Security and Non-Diversion of Marijuana
Grown for Medical Use” dated August 2008. Tenant may not use
volatile solvents under the Permitted Use. To the extent any part
of the Permitted Use shall be deemed illegal by City, County or
State laws or regulations, Tenant shall be obligated to cease such
use immediately in accordance with Section 54, and any continued
unlawful use thereafter shall subject Tenant to the indemnification
provisions set forth in Section 3.7d hereof. Furthermore, Tenant
shall only commence and conduct the Permitted Use at the Leased
Premises upon receipt of applicable permits, entitlements and
conditional use variances (to the extent that any of the foregoing
are required presently or in the future by the City or County) and
any applicable licenses from the State pursuant to the Medical
Marijuana Regulation and Safety Act (California Business &
Professions Code Sec. 19300, et
seq.; the “MMRSA”) to conduct such operations
(collectively, the “Licenses”). Prior to
Tenant’s commencement of the Permitted Use,
Tenant shall be required to provide to Landlord evidence of
Tenant’s receipt of all necessary Licenses and shall provide
to Landlord evidence of timely receipt of any renewals of all such
Licenses during the Term. Any failure to provide timely evidence of
Tenant’s receipt and the effectiveness of the Licenses shall
constitute a default under the Lease. Licenses granted to Tenant by
State, City, and/or County agencies or authorities shall not
immunize Tenant from its obligation to comply with California
Health and Safety Code sections governing medical marijuana, case
law interpreting the same, or the MMRSA. Prior to Tenant’s
commencement of the Permitted Use, Tenant shall be obligated to
provide Landlord with a general business plan detailing the lawful
nature of the Permitted Use under State and local laws and
regulations, that also includes the permitting process for the same
(the “Business
Plan”). Tenant’s deviation from the Business
Plan during the Term in any material respect without first securing
Landlord’s express written permission shall constitute a
default under the Lease.

 


1.7 Compliance
with MMRSA and Monterey County Medical Marijuana Laws and
Regulations. At all times during the Term, Tenant shall
comply with all applicable present and future MMRSA and Monterey
County medical marijuana laws, regulations, and ordinances
including, but not limited to, Tenant’s responsibility to pay
all Monterey County taxes assessed against Tenant based on the
Permitted Use. Specifically, in order to commence and engage in the
Permitted Use under this Lease, Tenant shall secure:

 


a. Subsequent
to the operative date of Monterey County Code Chapter 21.67 and in
accordance with any applicable deadlines therein, all permits,
licenses or entitlements required thereunder;

 


 




 

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Cypress Holding Company Lease Agreement


 






 

 


b. Subsequent
to the operative date of Monterey County Code Chapter 21.67 and in
accordance with any applicable deadlines therein, a commercial
medical cannabis permit pursuant to Monterey County Code Chapter
7.90; and

 


c. Upon
implementation of the MMRSA, state license(s) to conduct the
Permitted Use.

 


Prior
to Tenant’s submission to Monterey County or to any
California State agency of any applications for any permits,
licenses, or entitlements required under Monterey County Code
Chapters 21.67 or 7.90 or under the MMRSA, Tenant shall first
submit such applications to Landlord for Landlord’s review
and audit (“Applications”). Tenant may only
submit such Applications to Monterey County or to any California
State agency upon Landlord’s express written approval and
consent to the same.

 


At
Landlord’s request, Tenant shall provide Landlord with true
and accurate copies of:

 


a.    
All Applications;

 


b. All
written correspondences between Tenant and Monterey County and/or
any California State agency governing any aspect of the Permitted
Use;

 


c. Tenant’s
business and operational plans including, but not limited to, any
and all security measures used by Tenant on or at the Leased
Premises, Tenant’s operational manuals, if any, governing the
Permitted Use, and Tenant’s financial and tax reports and/or
filings; and

 


d. Any
written notices of violation or warnings regarding the same related
to the Permitted Use and Tenant’s compliance with State or
local laws and regulations issued to Tenant by Monterey County or
by any California State agency, including any State or local law
enforcement agencies, governing the Permitted Use and/or
Tenant’s occupancy of the Leased Premises.

 


Tenant
shall immediately notify Landlord in writing of any notification of
any kind to Tenant from either Monterey County or any California
State agency regarding the Permitted Use that could adversely
impact Tenant’s ability to continue the Permitted Use on the
Leased Premises, Tenant’s corporate structure,
Landlord’s ability to lease the Leased Premises to Tenant for
the Permitted Use, Landlord’s ownership of the Leased
Premises, Landlord’s investors, the Leased Premises itself,
or Landlord’s lender(s). At Landlord’s request, Tenant
shall provide Landlord with written copies of any written
notifications regarding any of the foregoing adverse
impacts.

 


1.8 Lease
Term. This Lease shall be effective as of April 1, 2017 (the
“Effective
Date”). Landlord shall deliver the
Premises to Tenant on the Effective Date (the “Delivery Date”).This Lease shall terminate on December
31, 2027 (the “Termination
Date”). The period from the Effective Date until the
termination date and any extension thereof will be referred to
herein as the “Initial
Term”, “Lease Term” or “Term”. As a confirmation of said
Effective Date, the parties shall execute an Acknowledgment of
Commencement as set forth in the form attached as Exhibit B.

 

 




 

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Cypress Holding Company Lease Agreement


 






 

 


1.9 Rent
and Security Deposit.

 


a. Minimum
Monthly Rent. Minimum Monthly Rent shall initially be
assessed at a rate of Seven Dollars ($7.34) per Rentable Square
Foot of Buildings included in the Leased Premises per annum [One
Hundred Forty-Two Thousand Nine Hundred Sixty-Five and 46/100
Dollars ($142,965.46), per month].

 


b. Rent
Commencement Date. The accrual of Minimum Monthly Rent shall
commence on April 1, 2017 (the “Rent Commencement
Date”).

 


c. Aged
Rents. As June 13, 2017, Tenant owes to Landlord for
Impositions in the sum of Eleven Thousand Seven Hundred Seventy and
001100th Dollars ($11,770.00).

 


d. Security
Deposit. One Hundred Sixteen Thousand Eight Hundred
Sixty-Five and 501100th Dollars ($116,865.50) which sum is
currently being held by Landlord as a portion of the Security
Deposit required hereunder.

 


e. Reimbursement
of Professional Services. As Additional Rent, Tenant shall
pay to Landlord within three (3) business days after the Effective
Date the sum of Nineteen Thousand Seven Hundred Twenty-Nine and
001100th Dollars ($19,729.00) attributable to the following
professional service expenses incurred by Landlord in connection
with facilitating obtaining Tenant’s permits and entitlements
required for Tenant’s Permitted Use(a) Mil Des Wright -
Architecture/Design ($8,850), (b) Whitson Engineers - Civil
Engineering ($7,179.40), and (c) Miracles Unlimited - Electrical
Engineering ($4,000). Landlord may credit a commensurate amount of
the Tenant Allowance due to Tenant for payment of these
Services.

 


1.10 Extension
Option. Tenant shall have five (5) options (the
“Extension
Options”) to extend the Initial Term of the Lease each
for an additional period of five (5) years (the “Extension Term(s)”), on the same
terms and conditions contained herein, except for adjustment of the
Minimum Monthly Rent as provided below. If this Lease is still in
full force and effect and if Tenant shall not then be in default
beyond applicable notice and cure periods, then Tenant shall
exercise the Extension Option, if at all, by giving written notice
of its exercise thereof no later than one hundred eighty (180) days
prior to the Termination Date as to the first Extension Option and
no later than one hundred eighty (180) days prior to the expiration
of the each succeeding Extension Term. Notwithstanding the
foregoing, Tenant shall not forfeit an Extension Option prior to
the expiration of the then-current Lease Term, unless Landlord
shall provide notice to Tenant of such Extension Option following
the 180th day prior to the expiration of the then-current Lease
Term and Tenant shall fail to exercise such Extension Option within
ten (10) days after such notice. If Tenant is in default beyond any
applicable notice and cure periods at the time the Extension
Term(s) are to commence, then Landlord shall have the right, in its
sole discretion, to declare Tenant’s Extension Option(s) null
and void and shall have the right to immediately terminate this
Lease. If the Extension Options are exercised pursuant to the terms
hereof, then the Initial Term together with the Extension Terms
shall be deemed the “Lease
Term” or “Term”.

 

 




 

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Cypress Holding Company Lease Agreement


 






 

 


1.11 Landlord’s
Mailing Address, Telephone, and Facsimile Num hers for Payment of
Rent (Including Additional Rent Under Section 15) and for Notices
and All Other Correspondence:

 


Tinhouse Partners,
LLC


[Redacted -
Address, Telephone and Facismile Numbers, and Email
Address]

 





1.12 Tenant’s
Mailing Address, Telephone, Facsimile Numbers, and E-mail address
for Notices:

 


Cypress
Holding Company, LLC


[Redacted -
Address, Telephone and Facismile Numbers, and Email
Address]

 


1.13 Lease
Year.

 


The
term “Lease
Year” shall be defined to mean that period commencing
on the first day of the month next following the Delivery Date
(unless the Delivery Date is the first day of the month, in which
case commencing on the Delivery Date) and continuing for a period
of one year, and each year thereafter (except that the final Lease
Year may be less than a full Lease Year if the Lease shall
terminate or otherwise expire prior thereto).

 




2.


LEASED PREMISES.





 


Landlord hereby
leases to Tenant, and Tenant hereby hires from Landlord, the Leased
Premises as described in Section 1.5 of the Basic Lease Provisions.
By accepting possession of the Leased Premises, Tenant shall be
deemed to have accepted the Leased Premises as being in
“as-is” condition. Tenant acknowledges that neither
Landlord nor any agent of Landlord has made any representation or
warranty with respect to the Leased Premises or with respect to the
suitability of the Leased Premises for the conduct of
Tenant’s business, nor has Landlord agreed to undertake any
modification, alteration or improvement to the Leased Premises
except as expressly provided in this Lease. Notwithstanding
anything in this Lease to the contrary, Tenant shall have the
right, in its sole discretion and at its sole cost and expense, to
remove the Hoop Houses.

 




3.


USES.





 


3.1 Permitted
Uses. The Leased Premises shall be used solely for the
purpose(s) set forth in Section 1.6 of the Basic Lease Provisions,
and for no other purpose.

 


3.2 Covenant
of Continuous Operation. Tenant shall keep its Leased
Premises in a neat, clean and orderly condition. If the Leased
Premises are destroyed or partially condemned and this Lease
remains in full force and effect, Tenant shall continue operation
of its business at the Leased Premises to the extent reasonably
practical from the standpoint of good business judgment during any
period of reconstruction. To the extent reasonably practical,
Tenant shall not permit the Leased Premises to become vacant or
unoccupied.

 




 

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Cypress Holding Company Lease Agreement


 






 

 


3.3 Liens.
Tenant shall pay for all labor and services performed for, and all
materials used by or furnished to Tenant or Tenant’s agents
and keep the Leased Premises free from any liens arising out of
work performed, materials furnished, Tenant’s use of the
Leased Premises or obligations incurred by Tenant or with respect
to the Leased Premises. Tenant shall indemnify, hold harmless and
defend Landlord, Landlord’s agents, members, principals and
employees from and against any liens, demands, claims, judgments or
encumbrances (including all attorneys’ fees) arising out of
any work or services performed for or materials used by or
furnished to Tenant or with respect to Tenant’s use of the
Leased Premises. If any such lien shall at any time be filed
against the Leased Premises, or any portion thereof, Tenant shall
either cause the same to be discharged of record or bonded over
within ten (10) business days after the date of notice to Tenant of
the same. If Tenant shall fail to discharge such lien within such
period or fail to furnish such security, then, in addition to any
other right or remedy of Landlord resulting from Tenant’s
said default, Landlord may, but shall not be obligated to,
discharge the same either by paying the amount claimed to be due or
by procuring the discharge of such lien by giving security or in
such other manner as is, or may be, prescribed by law. Tenant shall
repay to Landlord on demand all sums disbursed or deposited by
Landlord pursuant to the foregoing provisions of this Section 3.3,
including Landlord’s costs, expenses and reasonable
attorneys’ fees incurred by Landlord in connection therewith,
with interest thereon at the Interest Rate.

 


In the
event Tenant in any way violates or fails to comply with State or
local laws or regulations governing the Permitted Use which results
in a lien or liens of any kind assessed against the Leased Premises
or Landlord, including any failure by Tenant to timely pay all
applicable State and/or local taxes associated with the Permitted
Use, Tenant shall repay to Landlord on demand all sums disbursed or
deposited by Landlord in satisfaction of the lien(s) including
Landlord’s cost, expenses and reasonable attorneys’
fees incurred by Landlord in connection therewith, with interest
thereon at the Interest Rate.

 


3.4 Rules
and Regulations.

 

a. Rules
and Regulations. In addition to such use restrictions as may
be set forth in any documents described in Section 1.7 above,
Tenant shall strictly abide by the following rules and
regulations:

 




(1)

The sidewalks,
exits, and entrances shall not be obstructed by Tenant or used for
any purpose other than for ingress to and egress from the Leased
Premises. The exits, entrances, and roof are not for the use of the
general public and the Landlord shall in all cases retain the right
to control and prevent access thereto by all persons whose presence
(as determined at the sole discretion of Landlord) shall be
prejudicial to the safety, character, reputation and interests of
the Building and its tenants, provided that nothing herein
contained shall be construed to prevent such access to persons with
whom the Tenant normally deals in the ordinary course of
Tenant’s business unless such persons are engaged in illegal
activities;





 


 




 

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Cypress Holding Company Lease Agreement


 






 

 




(2)

If Tenant alters
any lock or installs any new or additional locks or any bolts on
any door of the Leased Premises, then Tenant shall promptly provide
Landlord with key(s) for any such new locks;





 




(3)

The toilet rooms,
urinals, wash bowls and other apparatus shall not be used for any
purpose other than that for which they were constructed and no
foreign substance of any kind whatsoever shall be thrown therein;
the expense of any breakage, storage, or damage resulting from the
violation of this rule shall be borne by the Tenant who, or whose
employees or invitees, shall have caused it;





 




(4)

Tenant shall not
overload the floor of the Leased Premises;





 




(5)

Tenant shall not
use, keep or permit to be used or kept any noxious, toxic or
volatile gasses or substances in the Leased Premises, or permit or
suffer the Leased Premises to be occupied or used in a manner
offensive or objectionable to the Landlord by reason of noise,
odors and/or vibrations. Tenant shall not make or permit to be made
any unseemly or disturbing noises or disturb or interfere with
neighbors;





 




(6)

Tenant shall not
use or keep in the Leased Premises any kerosene, gasoline or
inflammable, volatile or combustible fluid or similar material, if
unrelated to the Pe1mitted Use;





 




(7)

Landlord will
direct electricians as to where and how telephone, cable, and
electrical wires are to be introduced;





 




(8)

Tenant upon
termination of its tenancy, shall deliver to the Landlord the keys
of the offices;





 




(9)

Tenant agrees that
it shall comply with all fire and security regulations that may be
issued from time to time by Landlord;





 




(10)

Tenant shall not do
or permit: (i) the use or maintenance of any objectionable noises,
odors, or other nuisances in, on or about the Leased Premises; or
(ii) the commission of any waste in or upon the Leased
Premises;





 




(11)

Tenant shall not do
or permit anything on the Leased Premises that will: (i) cause
damage to the Building, or (ii) cause the Leased Premises to be
overloaded; and





 




(12)

Tenant shall not
install any exterior lighting or plumbing fixtures, shades, or
awnings, or make any exterior decoration, penetration, painting,
installation of a satellite dish or similar devices on the roof or
exterior walls of the Leased Premises, or make any changes to the
front of the Building, without the prior written consent of the
Landlord.





 


 




 

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b. Exterior
Sales and Solicitations. Tenant shall not, without the prior
written consent of the Landlord:

 




(1)

Place, construct or
maintain, in or on the Leased Premises, any advertising media
including but not limited to neon lights, search lights, flashing
lights, loud speakers, phonographs or other similar visual or audio
media that is visible or audible outside of the Leased Premises;
or





 




(2)

Solicit business
in, on, or about or display or sell merchandise outside the Leased
Premises or otherwise violate the provisions of the documents
described in Section 1.7.





 


3.5 Signage.
Tenant shall not, without the prior written consent of Landlord,
which shall be subject to its sole discretion, place, construct,
maintain, or hang on, or within thirty-six inches (36”) of
the glass panes or supports of the windows of the Leased Premises,
the doors, or the exterior walls or roof of the Building, or on any
portion of the Leased Premises outside of the Building, any signs
(including, but not limited to, ‘“going out of
business” signs), neon lighting, advertisements, names,
insignias, trademarks, descriptive material, neon or flashing
lights, or any other similar advertising item directed to an
exterior audience. Any exterior signage or other items described in
the preceding sentence shall: (i) be installed and maintained at
Tenant’s sole expense; (ii) match existing site signage in
color, material, size, shape and style; (iii) comply with the
applicable provisions (if any) of the documents described in
Section 1.7; (iv) be subject to Landlord’s prior written
approval; and (v) be subject to approval by any applicable
government agencies, including local law agencies. Landlord or its
representative shall have the right to remove any signs or other
matter installed without Landlord’s or its
representatives’ permission, without being liable to Tenant
by reason of such removal, and to charge the cost of removal to
Tenant as additional rent hereunder, payable within ten (10) days
of written demand by Landlord. Notwithstanding the foregoing,
Tenant shall be allowed to have Tenant’s business name
affixed to the Building and/or in addition to having it affixed to
a freestanding sign, if any, in accordance with the current
governmental regulations, ordinances and laws for the City of
Salinas (if applicable) and County of Monterey. The cost of the
production and installation of any signage shall be borne solely by
the Tenant. However, Landlord reserves the right to direct the
production and materials of the signage and to determine by whom
the sign(s) shall be produced.

 


3.6 Compliance
with Insurance Requirements. No use shall be made or
permitted to be made of the Leased Premises, and no acts done
therein, which will increase the existing rate of insurance upon
the Leased Premises in which said Leased Premises may be located
(once said rate is established), or cause the cancellation of any
insurance policy covering said Leased Premises or any part thereof,
nor shall Tenant permit to be kept, used or sold in or about said
Leased Premises any article which may be prohibited by standard
form of fire insurance policies. Tenant shall, at its sole cost,
comply with any and all requirements pertaining to the use of said
Leased Premises, of any insurance organization or company necessary
for the maintenance of reasonable fire and commercial general
liability insurance covering said Leased Premises and the Building.
If applicable and if requested by Landlord, and if required by any
insurance organization or governmental agency, Tenant agrees to
install and maintain in good order an Ansul system and such other
adequate fire protection systems as Landlord may deem
necessary.

 

 




 

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3.7 Hazardous
Materials.

 

a. Definition
of Hazardous Materials. As used herein, “Hazardous Materials” shall mean any oil, petroleum
products, carcinogens, reproductive toxins, flammable or explosive
materials, asbestos, pollutants, contaminants, urea formaldehyde,
Freon, or other radioactive, hazardous, toxic, or infectious
wastes, or other materials or substances defined in any applicable
laws or regulations as hazardous, toxic, or controlled
substances.


 

b. Use
of Hazardous Materials. Tenant shall not use, suffer, or
permit any Hazardous materials to be used, stored, produced,
transported, or disposed of on or from the Leased Premises.
Notwithstanding the preceding sentence, Tenant shall be entitled to
use, store, and dispose of such Hazardous Materials as may be
customarily employed in connection with Tenant’s intended use
permitted under Section 1.6 of the Basic Lease Provisions; provided
that Tenant’s use of such Hazardous Materials is: (i)
reasonably and directly related to Tenant’s operations at the
Leased Premises (and not to Tenant’s operations in other
locations); (ii) in full compliance with all applicable laws,
regulations, ordinances, or guidelines concerning the management,
use, handling, generation, storage, transpiration, presence,
discharge or disposal of any Hazardous Materials (“Hazardous Materials Laws”), which
compliance shall be at Tenant’s sole expense; and (iii)
subject to Landlord’s prior written consent, issued subject
to Landlord’s sole discretion. Landlord may withdraw its
consent to such activities or the presence of any Hazardous
materials at any time for any reason; provided, however, if Tenant
operates the Leased Premises in a lawful manner under the Permitted
Use and does not subject Landlord to any liability associated with
such use, Landlord hereby consents to the presence of the Hazardous
materials that accompany the Permitted Use. For purposes of
clarification, should Landlord become aware, including but not
limited to receipt of notification from any Federal, State or local
agency indicating that Tenant’s operation is unlawful or
subjecting the Leased Premises to potential forfeiture, Landlord
may withdraw its consent hereunder.

 


Tenant
shall at its own expense procure, maintain in effect and comply
with all conditions of any and all permits, licenses and other
governmental and regulatory approvals required for Tenant’s
use or storage of Hazardous materials at the Leased Premises.
Tenant shall cause any and all Hazardous materials to be taken away
or removed from the Leased Premises, which shall be transpo1ted
solely by duly-licensed haulers to duly-licensed facilities for
final disposal of such material and wastes, and shall deliver to
Landlord copies of any Uniform Hazardous Waste Manifests associated
with such disposal. Prior to expiration or earlier termination of
this Lease, Tenant shall cause all Hazardous materials in any way
caused or associated with Tenant to be removed from the Leased
Premises and transported for use, storage, or disposal in
accordance and in compliance with all applicable Hazardous
Materials Laws.

 


Tenant
is hereby advised that there are certain notice requirements under
Hazardous materials Laws (including, not by way of limitation,
Proposition 65) that may be applicable to Tenant, compliance with
which shall be Tenant’s sole responsibility. Tenant should
consult its counsel with respect to its responsibilities under
Hazardous materials Laws.

 


 




 

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c. Notices
to Landlord Regarding Hazardous Materials. Prior to the
Effective Date, Tenant shall provide to Landlord a written list of
any Hazardous Material that will or may be present at the Leased
Premises, and copies of any and all material Safety Data Sheets
associated therewith. Tenant shall update said list on a regular
basis (no less frequently than annually), disclosing any changes in
the types or amounts of such Hazardous materials.

 


Tenant
shall immediately notify Landlord in writing of: (i) any release or
suspected release of Hazardous materials on, in, under, about, from
or around the Leased Premises, whether caused by Tenant or any
other person; (ii) any remedial or mitigation action Tenant
institutes or proposes with respect to any Hazardous Materials in
any way connected with the Leased Premises; (iii) any enforcement,
cleanup, removal, remedial or other governmental or regulatory
action instituted, completed or threatened pursuant to any
Hazardous Materials Laws; (iv) any claims made or threatened by any
person against Tenant of the Leased Premises relating to damage,
contribution, cost recovery compensation, loss or injury resulting
from or claimed to result from any Hazardous Materials; and (v) any
reports made to or by any governmental agency or any lender arising
out of or in connection with any complaints, notices, warnings or
asserted violations in connection therewith and any reports made by
any environmental consultants or engineers which pertain to the
Leased Premises or the property on which it is located. Tenant
shall also supply to Landlord as promptly as possible, and in any
event within five (5) business days after Tenant first receives or
sends the same, copies of all claims, reports, complaints, notices,
warnings or asserted violations relating in any way to the use or
presence of Hazardous Material on the Leased Premises.

 


Tenant
shall not take any remedial action in response to the presence of
any Hazardous Materials in or about the Leased Premises, and shall
not enter into any settlement agreement, consent, decree, or other
compromise(s) in respect to any claims relating to any Hazardous
Materials or Hazardous Materials Laws in any way connected with the
Leased Premises without first notifying Landlord of Tenant’s
intention to do so and affording Landlord ample opportunity to
appear, intervene or otherwise appropriately assert and protect
Landlord’s interest with respect thereto.

 

d. Indemnification
of Landlord. Tenant shall indemnify, defend (by counsel
reasonably acceptable to Landlord), protect, and hold Landlord, and
each of Landlord’s partners, members, shareholders, officers,
employees, agents, consultants, attorneys, successors and assigns,
free and harmless from and against any and all claims, liabilities,
penalties, forfeitures, losses or expenses (including reasonable
attorney’s fees) for Tenant’s violation of present and
future State and/or local laws and regulations, including
applicable provisions of Monterey County Code, governing the
Permitted Use, and for death of or injury to any person or damage
to any property whatsoever, arising from or caused in whole or in
part, directly or indirectly, by Tenant or its employees, agents,
assignees, contractors, subcontractors or other(s) acting for or on
behalf of Tenant (whether or not their acts or omissions are
negligent, intentional, willful or unlawful) and related to (i) the
presence in, on, under, around or about the Leased Premises or the
discharge or release in or from the Leased Premises of any
Hazardous Materials due to the use, analysis, storage,
transportation, disposal, release, discharge or generation of
Hazardous Materials to, in, on, under, around, about or from the
Leased Premises; (ii) Tenant’s failure to comply with any
Hazardous Materials Laws, including losses from State or Federal
prosecution, local ordinance violations, and losses from any
illegal conduct of Tenant, or its agents, contractors, employee or
patrons; or (iii) any and all other claims, liabilities, penalties,
forfeitures, losses or expenses (including reasonable
attorney’s fees) for death of or injury to any person or
damage to or taking of any property whatsoever, arising from or
caused in whole or in part, directly or indirectly, by Tenant or
its employees, agents, assignees, contractors, subcontractors or
other(s) acting for or on behalf of Tenant (whether or not their
acts or omissions are negligent, intentional, willful or unlawful).
Tenant’s obligations hereunder shall include, without
limitation, and whether foreseeable or unforeseeable, all costs
associated with any applicable penalties, fines, and/or legal
action(s) that may be assessed or brought against Landlord under
State and/or local laws and regulations, including under Monterey
County Code, governing the Permitted Use, and all costs of any
required or necessary repair, cleanup, detoxification, or
decontamination of the Leased Premises, and the preparation and
implementation of any closure remedial action to other required
plans in connection therewith. Notwithstanding any other provision
of this Lease, said obligations shall survive the expiration or
earlier termination of the term of this Lease.

 


 




 

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e. Additional
Insurance or Financial Capacity. If at any time it
reasonably appears to Landlord that Tenant is not maintaining
sufficient insurance or other means of financial capacity to enable
Tenant to fulfill its obligations to Landlord hereunder regarding
Hazardous Materials (whether or not such obligations are accrued,
liquidated, conditional or contingent), then Tenant shall procure
and thereafter maintain in full force and effect such insurance or
other form of financial assurance, with or from companies or
persons and in forms reasonably acceptable to Landlord, as Landlord
may from time to time reasonably request.


 

f. Landlord’s
Representations. Landlord represents that, to the best of
its knowledge, as of the date hereof the Leased Premises are in
compliance with applicable Hazardous Materials Laws. Landlord shall
be solely responsible for and shall indemnify, defend, and hold
Tenant harmless from all costs and expenses incurred by Tenant or
claims asserted against Tenant as a result of the knowing falsity
of the foregoing representation. Except as expressly set forth in
this Section, Tenant acknowledges and agrees that no
representations or warranties (oral or written) have been made by
or on behalf of Landlord with respect to the condition of the
Leased Premises or the parcel of which they are a part, including
(not by way of limitation) with respect to Hazardous Materials, all
of which representations are expressly disclaimed by
Landlord.

 


3.8 Compliance
with Governmental Regulations. Tenant shall comply with and
conform to all laws and ordinances, municipal, State and Federal,
other than the specific exception of the Federal Controlled
Substances Act, and any and all lawful requirements and orders of
any properly constituted local, State or Federal authority, present
or future, in any way relating to the condition, alteration,
Permitted Use or occupancy of the Leased Premises throughout the
entire term of this Lease and any holding over, and to the perfect
exoneration from liability of Landlord, doing such work as may be
required at Tenant’s sole expense. Without limiting the
foregoing, Tenant agrees that it will not at any time use or occupy
the Leased Premises in violation of the certificate of occupancy
issued with regard to the Leased Premises. Notwithstanding the
foregoing, Landlord and Tenant acknowledge that it is the express
intent of the parties that this Lease shall be interpreted and
enforced pursuant to the laws of the State of California. The
judgment or finding of any court of competent jurisdiction or the
admission of Tenant in any action or proceeding against Tenant,
whether Landlord be a party thereto or not, that Tenant has
violated any of the foregoing laws, ordinances, requirements or
orders in the use of the Leased Premises, shall be conclusive of
that fact as between Landlord and Tenant.

 




4.


TERM AND HOLDING OVER.





 


4.1 Initial
Term and Extensions. The Lease Term shall be as set forth in
Section 1.8 of the Basic Lease Provisions. Tenant shall have no
right to renew or otherwise extend the term of this
Lease.

 

 




 

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4.2 Holding
Over. If Tenant holds over after the expiration of the Lease
Term hereof, with or without the express or implied consent of
Landlord, such tenancy shall be tenancy at sufferance only, and
shall not constitute a renewal hereof or an extension for any
further term, and in such case Tenant shall pay two hundred percent
(200%) of the Minimum Monthly Rent in effect just prior to
expiration or termination, including Additional Rent and
adjustments as hereinabove provided and otherwise upon the
covenants and conditions in this Lease contained, until either
party gives the other thirty (30) days written notice of
termination, reciting therein the effective date of cancellation.
In addition, should Tenant hold over after the expiration or sooner
termination of this Lease, guarantors’ (if applicable)
obligations hereunder shall extend and apply with respect to the
full and faithful performance and observance of all of the
covenants, terms, and conditions of the Lease and of any such
modification thereof. Landlord hereby expressly reserves the right
to require Tenant to surrender possession of the Leased Premises to
Landlord as provided in this Lease upon the expiration or other
termination of this Lease. The provisions of this Section 4.2 shall
not be deemed to limit or constitute a waiver of any other rights
or remedies of Landlord provided herein or at law. If Tenant fails
to surrender the Leased Premises upon the termination or expiration
of this Lease, in addition to any other liabilities to Landlord
accruing therefrom, Tenant shall protect, defend, indemnify and
hold Landlord harmless from all loss, costs (including reasonable
attorneys’ fees) and liability resulting from such failure,
including, without limiting the generality of the foregoing, any
claims made by any succeeding tenant founded upon such failure to
surrender, and any lost profits to Landlord resulting
therefrom.

 




5.


RENT.





 


Tenant
agrees to pay the Rent herein reserved at the time herein set
forth, without deduction or offset, prior notice or demand, in
lawful money of the United States of America, to Landlord at the
address set forth in Section 1.11 of the Basic Lease Provisions, or
to such other person or at such other place, or both, as Landlord
may from time to time designate in writing.

 


5.1 Minimum
Monthly Rent. The “Minimum Monthly Rent” shall be as
set forth in Section 1.9 of the Basic Lease Provisions, subject to
adjustment as set forth in that Section. Tenant shall pay to
Landlord the :Minimum Monthly Rent without offset or reduction, in
advance, on the first day of each and every month of the Lease Term
beginning on the Rent Commencement Date (as defined in Section 1.9b
of the Basic Lease Provisions). If the Rent Commencement Date
should fall on a date other than the first day of the month, then
the first payment of Minimum Monthly Rent shall be payable on the
Rent Commencement Date and prorated based on a 30-day
month.

 


5.2 Prepaid
Rent. Prior to the Effective Date, Tenant shall pay to
Landlord the sum stated in Section 1.9c of the Basic Lease
Provisions as “Prepaid
Rent” for the months designated therein.

 


5.3 Definition
of Rent. All of the payments described in the foregoing
Sections 5.1 through 5.2 plus Impositions, Additional Rent,
maintenance costs, and any other charges and reimbursements payable
to Landlord under this Lease are hereinafter collectively referred
to as “Rent.”

 

 




 

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5.4 Increases
in Minimum Monthly Rent Due to Changes in Ownership/Control.
Notwithstanding anything to the contrary in this Lease, in the
event of a Change of Control of Cypress Manufacturing Company, or
in the event of a Transfer (as defined in Section 8 below) to an
entity of which Robert Weakley is not the Control Person, then
Minimum Monthly Rent shall automatically increase as of the date of
such Change of Control or Transfer (such date being referred to
herein as the “Rent Increase
Trigger Date’’) as follows:

 

a. If
the Rent Increase Trigger Date occurs during the Initial Term, then
Minimum Monthly Rent (MMR) shall increase by an amount calculated
as follows: Two percent (2%) of Minimum Monthly Rent then in effect
(calculated on an annually compounding basis at 2% per year)
multiplied by the number of Lease Years (n) which have lapsed
during the Initial Term prior to the Rent Increase Trigger
Date.


 


Increased Minimum
Monthly Rent= Original MMR * (1+2%)^(n)


 


By way
of example, if the Rent Increase Trigger Date occurred during the
fifth (5th) Lease Year, then Minimum Monthly Rent would increase to
$129,028.93 ($1,548,347.20 per annum).


 

b. If
the Rent Increase Trigger Date occurs during the Extension Terms,
then Minimum Monthly Rent shall increase by an amount calculated as
follows: Four percent (4%) of Minimum Monthly Rent then in effect
(calculated on an annually compounding basis at 4% per year for
each year of the Extension Term) multiplied by the number of Lease
Years (n) which have lapsed during the Extension Term prior to the
Rent Increase Trigger Date. By way of example, if the Rent Increase
Trigger Date occurred during the fifteenth (15th) Lease Year (i.e.,
during the 5th Lease Year of the Extension Term), then Minimum
Monthly Rent would increase to $142,184.73 ($1,706,216.80 per
annum).


 

c. In
the event Minimum Monthly Rent increases as set forth in Section
5.4.a or 5.4.b above, then on each anniversary of the Rent Increase
Trigger Date, Minimum Monthly Rent shall increase by an additional
two percent (2%) if the Rent Increase Trigger Date occurred during
the Initial Term and by four percent (4%) if the Rent Increase
Trigger Date occurred during the Extension Term.

 


As used
herein, “Change of
Control” means any change in ownership, whether
occurring due to any equity transfer or other transaction, as a
consequence of which Robert Weakley is not the Control Person. For
purposes hereof, Robert Weakley shall be deemed to be the Control
Person of Tenant for so long as Tenant is a California mutual
benefit company and provided that Tenant is managed by an entity of
which Robert Weakley is the Control Person. Robert Weakley shall be
the “Control Person” of any entity of which he shall be
the largest equity owner and actively engaged in the
business.

 




6.


POSSESSION.





 


Possession of the
Leased Premises shall be tendered to Tenant on the Effective Date.
If Landlord is unable to deliver possession of the Leased Premises
by the date specified for the commencement of the term as a result
of causes beyond its reasonable control and/or force
majeure/Unavoidable Delay, Landlord shall not be liable for any
damage caused for failing to deliver possession, and this Lease
shall not be void or voidable.

 

 




 

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7.


PAYMENT OF TAXES AND ASSESSMENTS BY TENANT.





 


7.1 Tenant’s
Obligation to Pay Impositions. Tenant shall reimburse
Landlord as more specifically provided in Section 15 below for all
Impositions (as defined in Section 7.2 below), which are assessed,
levied, imposed or become a lien upon the Leased Premises and which
become payable during the term of this Lease, plus any extensions
or any holding over.

 


7.2 Definition
of Impositions. As used in this Lease, the term
“Impositions”
shall include, not by way of limitation, any taxes, fees, levies,
assessments whether general or special, regular or supplemental,
ordinary or extraordinary, unforeseen as well as foreseen, of any
kind or nature, and/or reassessments, or other charges imposed as
the result of a transfer, either partial or total, of
Landlord’s interest in the Leased Premises.
“Impositions” shall also include Commercial Cannabis
Business Taxes assessed pursuant to County Ordinance No. 5274
(Chapter 7.100 of the County Code) (the “Cannabis Business Tax”) and any
and all similar taxes, assessments or fees imposed on
Tenant’s Permitted Use. “Impositions” shall not
include inheritance taxes levied on or computed by reference to
Landlord’s personal net income, or as a whole on all of
Landlord’s investments.

 


7.3 Personal
Property Taxes. In addition to the Impositions to be paid by
Tenant as provided in this Section 7 and Section 15 below, Tenant
shall pay directly (or reimburse Landlord upon demand) any and all
taxes levied, imposed or assessed upon the Collateral (as defined
in Section 25) and any and all other personal property or inventory
at the Leased Premises, whether State or local taxes, and upon
issuance by the State of California and Monterey County of
Tenant’s license, permit, and/or entitlement to operate the
Leased Premises for the Permitted Use, as applicable, plus the full
amount of any sales or use taxes imposed on the Rent and/or
Tenant’s operation of its business in the
Premises.

 




8.


ASSIGNMENT AND SUBLETTING.





 


Landlord may assign
this lease at any time upon notice to Tenant. The remainder of this
Section shall apply to assignment and subletting by
Tenant.

 


8.1 Definition
of Transfer. As used herein, “Transfer” shall mean any one or
more of the following:

 

a. any
assignment, subletting, mortgage, pledge, hypothecation, or
encumbrance, or other transfer of any interest in this Lease, or of
all or any portion of Tenant’s interest in the Leased
Premises under this Lease;


 

b. suffering
or permitting (whether by entry into any license, concession
agreement, or otherwise) all or any part of the Leased Premises to
be used by any third party other than Tenant, its authorized
agents, employees, qualified patient members and/or caregivers, and
invitees and visitors (who are not using any portion of the Leased
Premises to conduct a business other than that of Tenant);
or

 


 




 

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c. if
Tenant is an entity, the transfer (by sale, gift, inheritance, or
otherwise, and voluntarily or by operation of law) of more than
fifty percent (50%) of the partnership interests, voting stock,
membership interests, management and/or directorship rights, or
otherwise transfer of a controlling interest in such entity;
provided, however, that a transfer of such an interest as part of a
corporate merger or consolidation of related corporations shall not
constitute a Transfer for purposes of this Lease; provided that the
surviving corporation agrees in a writing delivered to Landlord (in
form and content acceptable to Landlord) to assume all of
Tenant’s obligations under this Lease pursuant to Section 8.6
below.

 


8.2 Landlord’s
Consent Required. Tenant shall not, voluntarily, by
operation of law or otherwise, make any Transfer without
Landlord’s prior written consent, and any attempted Transfer
without such consent being first had and obtained shall be wholly
void and shall, at Landlord’s election, constitute a default
under this Lease. Landlord may withhold its consent to any
mortgage, pledge, hypothecation or encumbrance of the Lease (each,
an “Encumbrance”), Tenant’s
leasehold interest or any interest therein in Landlord’s sole
and absolute discretion. Landlord’s consent shall be
evidenced by a writing signed by Landlord, and the acceptance of
Rent by Landlord from any person other than Tenant, or other
conduct by Landlord absent such a writing, shall not be deemed to
be a waiver by Landlord of any provision of this Lease or to be a
consent to any Transfer. Notwithstanding the foregoing, Landlord
hereby consents to the sublease of the Leased Premises to Cypress
Manufacturing Company, a California not-for-profit company
(“Cypress Manufacturing
Company”) subject to and conditioned upon Cypress
Manufacturing Company’s written agreement to be bound by all terms and
conditions under this Lease, including, without limitation,
Sections 3 and 17 hereof.

 


8.3 Request
for Consent to Transfer.

 

a. Contents
of Request for Consent. Tenant shall submit in writing to
Landlord for Landlord’s review and approval sixty (60) days
prior to the effective date of the proposed Transfer:

 




(1)

The name and legal
composition of the proposed transferee;





 




(2)

The nature of the
proposed transferee’s business to be carried on in the Leased
Premises;





 




(3)

The terms and
provisions of the proposed Transfer, including copies of the
instrument(s) by which the Transfer is to be effected and any other
agreements between Tenant and the proposed transferee concerning
the Transfer; and





 




(4)

Such financial
information as Landlord may request concerning the proposed
transferee, including without limitation, financial history, credit
rating, and business experience.





 


 




 

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By
submission of its request for consent to the Transfer, Tenant
agrees to reimburse Landlord for its actual out-of-pocket fees and
costs incurred in conjunction with the review of any requested
Transfer.

 


8.4 Reasonable
Consent. Landlord shall not unreasonably withhold its
consent to a proposed Transfer (except that Landlord may withhold
its consent to any Encumbrance in its sole and absolute
discretion).

 

a. Reasonable
Grounds Regarding Landlord’s Consent. Tenant
acknowledges that Landlord has entered into this Lease in reliance
on the particular skills, knowledge, and experience of Tenant
and/or its principal officer with respect to the conduct of
business in the Leased Premises, that Landlord has made a
substantial investment in the Leased Premises, and that the
willingness of Landlord to put that investment at risk under the
terms of this Lease is based upon Landlord’s judgment of
Tenant’s abilities and business prospects. Accordingly,
Tenant agrees that the following shall constitute (not by way of
limitation) reasonable grounds for Landlord’s refusal to
consent to a proposed Transfer:

 




(1)

If Tenant fails to
submit the request for consent to the Transfer, and the supporting
information, as provided in Section 8.3;





 




(2)

If Tenant is, or
has been (as the case may be) in default under this Lease at any of
the following-listed times: (i) when the request for approval of
the Transfer is made or is being reviewed by Landlord, (ii) when
the Transfer is to become effective, or (iii) more than five (5)
times during the Lease Term prior to request for approval of the
Transfer;





 




(3)

If, in
Landlord’s sole judgment: (i) the quality of professional
service or business is likely to be in any material way adversely
affected during the term of this Lease; (ii) the proposed
transferee (if an individual) does not have a good credit rating
and FICA score of at least 700; (iii) the audited financial net
worth of the proposed transferee for the previous fiscal year is
less than $1,000,000.00 for an individual or $5,000,000 for a
corporation, as verifiable in Landlord’s reasonable business
judgment; (iv) if, in the event that the proposed transferee is a
corporation, proposed transferee has a Dunn & Bradstreet Rating
Classification of “lA” orless and a D&B Composite
Credit Appraisal of “2” or worse; (v) if, in the event
that Tenant is a corporation or limited liability partnership,
Tenant has not provided an acceptable personal guaranty of the
Tenant’s obligations under the Lease, or (vi) if
Landlord’s review of the proposed Transfer discloses other
material information reasonably unsatisfactory to Landlord;
and





 




(4)

If the proposed use
is different than the Permitted Use, unless approved by
Landlord.





 


 




 

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b. Conditions
to Landlord’s Consent. Anything to the contrary
notwithstanding contained herein or elsewhere in this Lease, except
in the event of a sublease of a portion of the Leased Premises by
Tenant, Landlord, as additional consideration for approval of a
proposed Transfer, shall be entitled:

 




(1)

To receive any and
all additional rent payable in connection therewith,
and/or





 




(2)

To require
increases in :Minimum Monthly Rent payable to Landlord consistent
with the then current Minimum Monthly Rent rate for a new lease for
similar Leased Premises and to require that the transferee enter
into a written amendment of this Lease accordingly increasing the
Minimum Monthly Rent; and/or





 




(3)

To modify such
other provisions of this Lease as Landlord may require to bring
this Lease into compliance with its current leasing practice,
including without limitation cancellation of any options to extend
the term granted hereunder, if any; and/or





 




(4)

To assume the Lease
and consummate the proposed Transfer on the same terms and
conditions (excluding any differences in Rent or other financial
terms) as specified in Tenant’s notice of the proposed
Transfer, such option to be exercised by Landlord within thirty
(30) days after receipt of a written notice of proposed Transfer;
and/or





 




(5)

To require that the
transferee post a Security Deposit in an amount to be reasonably
determined by Landlord; and/or





 




(6)

To terminate this
Lease and recapture the Leased Premises, such option to be
exercised by Landlord within thirty (30) business days after
receipt of a written notice of proposed Transfer; provided,
however, that in the event that Landlord elects to exercise the
option set forth in this Section 8.4b(6), then Tenant may elect by
written notice to Landlord given within ten (10) days of delivery
of Landlord’s notice of election to terminate to forego the
proposed Transfer and to retain the Leased Premises for the balance
of the term of this Lease on the terms and conditions herein set
forth.





 


8.5 Effects
of Transfer.

 

a. Tenant’s
Obligations. No consent by Landlord to any Transfer shall
relieve Tenant or its guarantor (if any) of any obligation to be
performed by Tenant under this Lease, whether occurring before or
after such consent or such Transfer, unless otherwise agreed to by
Landlord in writing; provided, however, that Landlord’s
assumption of the Lease pursuant to Section 8.4b(4),
Landlord’s written approval of the transfer pursuant to the
criteria set forth in Section 8.4 above, or termination of the
Lease pursuant to Section 8.4b(5), shall relieve Tenant and its
guarantor (if any) of obligations accruing under this Lease after
the effective date of such assumption or termination, with the
exception of any obligations arising prior to such assumption or
termination and not yet paid or otherwise resolved.

 


 




 

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b. Consents
Required for Other Transfers. Landlord’s consent to
one Transfer shall not be deemed to constitute consent to any other
Transfer and shall not relieve Tenant or the transferee, as the
case may be, from the obligation to obtain Landlord’s written
consent to any other Transfer.


 

c. Assignment
of Rents. Tenant hereby irrevocably assigns to Landlord all
Rent and other sums from any such Transfer and agrees that
Landlord, as assignor and as attorney-in­fact for Tenant, or a
receiver for Tenant appointed upon Landlord’s application,
may collect such Rent and other sums and apply the same as provided
in Section 25 upon Tenant’s default.

 


8.6 Documentation
of Transfer. Each Transfer to which Landlord’s consent
has been given shall be effected by an instrument in writing in a
form reasonably satisfactory to Landlord, which shall be executed
by Tenant and each transferee. In such writing, each Transferee
shall agree for the benefit of Landlord herein to assume, to be
bound by the terms of this Lease (except for payment of Rent), and,
in the event of a Transfer of all of Tenant’s interest in
this Lease, to assume and to perform all of the terms, covenants,
and conditions of this Lease to be kept and performed by Tenant,
including the payment directly to Landlord of all amounts due or to
become due under this Lease and under the instruments of the
Transfer. One fully executed counterpart of such written instrument
shall be delivered to Landlord.

 




9.


RIGHTS AND OBLIGATIONS UNDER THE BANKRUPTCY CODE.





 


Upon
the filing of a petition by or against Tenant under the United
States Bankruptcy Code, and in the absence of a Bankruptcy Court
order directing otherwise, Tenant, as debtor in possession, and any
trustee who may be appointed by the Bankruptcy Court, agree as
follows: (i) to perform each and every obligation of Tenant under
this Lease until such time as this Lease is either rejected or
assumed pursuant to the provisions of United States Bankruptcy
Code; (ii) to pay monthly in advance on the first day of each month
as reasonable compensation for use and occupancy of the Leased
Premises the sum set forth in the Basic Lease Provisions as Rent
and all other charges otherwise due pursuant to this Lease; (iii)
to reject or assume this Lease within sixty (60) days after the
filing of a petition under any Chapter of the Bankruptcy Code; (iv)
to give Landlord at least forty-five (45) days prior written notice
of any abandonment of the Leased Premises, and that any such
abandonment is to be deemed a rejection of this Lease; and (v) to
do all other things of benefit to Landlord otherwise required under
the Bankruptcy Code.

 


Included within and
in addition to any other conditions or obligations imposed upon
Tenant or its successor in the event of assumption and/or
assignment made in connection with such a proceeding under the
United States Bankruptcy Code are the following: (i) the cure of
any monetary defaults and the reimbursement of any loss within not
more than thirty (30) days of assumption and/or assignment; (ii)
the deposit of an additional sum equal to three (3) months’
Minimum Monthly Rent to be held as a security deposit; (iii) the
use of the Leased Premises solely as set forth in Section 1.6 and
Section 3 of this Lease, (iv) the reorganized debtor or assignee of
such debtor in possession or of Tenant’s trustee shall have
demonstrated in writing that it has sufficient background
(including, but not limited to, substantial business experience and
financial ability) to operate a business in the Leased Premises in
the manner contemplated in this Lease and to meet all other
reasonable criteria of Landlord as did Tenant upon execution of
this Lease; (v) the prior written consent of any mortgagee to which
this Lease has been assigned as collateral security; and (vi) the
Leased Premises, at all times, remains a single Leased Premises and
business and no physical changes of any kind may be made to the
Leased Premises unless in compliance with the applicable provisions
of this Lease.

 


 




 

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No
default under this Lease by Tenant, either prior to or subsequent
to the filing of such a petition, shall be deemed to have been
waived unless expressly done so in writing by Landlord. The
provisions of this Section 9 shall also apply to any guarantor of
this Lease.

 




10.


ALTERATIONS.





 


10.1 Restriction
on Alterations. Tenant shall not make, or suffer to be made,
any alterations of the Leased Premises, or any part thereof,
without the prior written consent of Landlord, which consent shall
not be unreasonably withheld. Landlord shall respond to any written
request from Tenant for Landlord’s consent to alterations
within five (5) business days after receipt of such written request
and in such response shall either grant its consent or provide the
basis for Landlord withholding its consent. Notwithstanding the
foregoing, Tenant shall be permitted to make non-structural
interior alterations not exceeding $10,000.00 without the prior
written consent of Landlord, provided that such improvements are in
strict compliance with all applicable regulations, codes, laws and
ordinances. Tenant agrees that all additions or improvements of
whatsoever kind or nature made to the Leased Premises shall belong
to and become the property of Landlord upon the completion thereof.
Roof and/or exterior wall penetrations are expressly prohibited
without Landlord’s prior written consent. Tenant shall give
Landlord written notice of any planned alterations, whether or not
requiring Landlord’s consent, at least fifteen (15) days
prior to commencement of the work, so that Landlord may post
appropriate notices of non-responsibility and Tenant shall keep the
Leased Premises free and clear of mechanics’ and
materialmen’s liens in connection with any work performed by
or on behalf of Tenant, and Tenant shall indemnify, defend, and
hold Landlord harmless against loss from any such work or any such
lien. In the event that any such lien is filed against the Leased
Premises, Tenant shall cause the same to be removed of record (by
payment or by posting of an appropriate bond as provided by
statute) within thirty (30) days after such filing.

 


10.2 Restoration
of Leased Premises. Tenant shall remove such of its
alterations as Landlord may specify in writing at the expiration or
termination of this Lease, and shall repair any damage caused by
such removal or by removal of any of the Collateral which Landlord
directs Tenant to remove pursuant to Section 18 or which Tenant
otherwise has the express right to remove as set forth herein, and
Tenant shall, at Landlord’s direction, restore the Leased
Premises to substantially their condition when Tenant received
possession, reasonable wear and tear excepted.

 




11.


ABANDONMENT.





 


With
the exception of Section 54, Tenant shall not vacate or abandon the
Leased Premises at any time during the term hereof; and if Tenant
shall abandon, vacate or surrender the Leased Premises, or be
dispossessed by process of law or otherwise, such event shall, at
Landlord’s election, constitute a default under this Lease.
Subject to Landlord’s rights in the Collateral pursuant to
Section 18, below, any personal property belonging to Tenant and
left on said Leased Premises shall be deemed to be abandoned, at
the option of Landlord, or Landlord may store the same, with the
exception of any inventory belonging to Tenant, in the name of
Tenant and at Tenant’s expense. The term
“abandon” as used herein shall include vacation of the
Leased Premises for a period of more than ten (10) consecutive
normal business days.

 

 




 

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12.


UTILITIES.





 


Tenant
shall pay, prior to delinquency, any and all charges and/or
assessments for gas, electricity, water, sewage, air conditioning,
and telephone service or other services that may be used in or for
the Leased Premises (including, but not limited to, all permit
fees, water and sewer “hook-up”,
“capacity’’, or “allocation” fees and
utility assessments as described by Section 2.2.6 of Exhibit C attached hereto). Tenant shall
reimburse Landlord for such utility charges in the same manner as
payments of Additional Rent (as set forth in said Section
15).

 




13.


CONDITION OF LEASED PREMISES.





 


13.1 Condition
of Leased Premises upon Acceptance of Possession. Except as
expressly set forth in this Lease and in the Condition of Leasehold
Space exhibit attached hereto as Exhibit C, Landlord shall not be
obligated to provide or pay for any improvement, remodeling or
refurbishment work or services related to the improvement,
remodeling or refurbishment of the Leased Premises, and Tenant
shall accept the Leased Premises in its “AS IS”
condition on the Effective Date.

 


13.2 Tenant’s
Maintenance and Repair Obligations. During the term of this
Lease and any holding over, Tenant shall, at its sole cost and
expense:

 

a. Keep
the Leased Premises and every part thereof in a clean and wholesome
condition;


 

b. Cause
all health and police and state and local law regulations
applicable to the Leased Premises and/or Tenant’s operations
thereon to be at all times fully complied with, including making
any alterations or improvements to the Leased Premises necessitated
by the Americans With Disabilities Act or similar state statutes,
or as a result of other requirements of any statute or governmental
authority;


 

c. Maintain
and repair the Leased Premises including the Buildings and other
improvements upon and about the Leased Premises, so as to keep the
same in good, safe, and sanitary order and condition including,
without limitation, the maintenance, repair and replacement, of any
store front, doors, signs, entrances and exits, interior walls,
ceilings, floors, fire sprinklers, window casements, glazing,
heating and air conditioning system serving the Leased Premises
(including contracting with a service company for the monthly
maintenance thereof, and a copy of the service contract shall be
furnished to Landlord within ninety (90) days of delivery of the
Leased Premises), security system, plumbing, pipes, sewer and
utility lines, electrical wiring and conduits, parking area,
driveways, retaining walls, landscaped areas, loading docks,
courts, ramps and sidewalks. If Tenant refuses to contract for said
maintenance of heating and air conditioning equipment, Landlord may
contract for this maintenance and bill Tenant for the cost plus
twenty (20%) percent overhead, as additional rent and Tenant agrees
to reimburse Landlord for these costs, as additional rent, within
ten (10) days of Landlord’s billing;

 


 




 

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d. Maintain
and repair all partitions, doors, door jambs, door closers, door
hardware, fixtures, equipment and appurtenances thereof (including
electrical, lighting, heating and plumbing, and plumbing fixtures,
and any air conditioning system, including leaks around ducts,
pipes, vents, or other parts of the air conditioning, heating or
plumbing systems which protrude through the roof) in good order,
condition and repair, including replacements (including reasonable
periodic painting as determined by Landlord);


 

e. Replace
all broken glass, and Tenant assumes all risk of glass breakage at
the Leased Premises;


 

f. Repair
any damages to the structural portions of the
Buildings;


 

g. If
applicable, install and maintain in good working order at all times
devices as necessary to ensure that the sewage and drainage system
shall not have stoppages; and in the event of stoppages created by
Tenant’s operations, Tenant shall pay or reimburse Landlord
for the cost of clearing said stoppages; and


 

h. Make
any repair or replacement necessary, at its sole cost and expense,
for any and all damages caused by a forced entry or attempted
forced entry.

 


13.3 Payment
for Work Done for Tenant’s Account. Tenant shall pay
promptly when due all claims for work and materials furnished in
connection with its maintenance, repair, restoration or alteration
(pursuant to Section 10) of the Leased Premises. Tenant shall keep
the Leased Premises and the property of which they are a part free
and clear of mechanics’ and materialmen’s liens in
connection therewith, and Tenant shall indemnify, defend, and hold
Landlord harmless against loss from any such work or any such lien.
In the event that any such lien is filed against the Leased
Premises or the property of which they are a part, Tenant shall
cause the same to be removed of record (by payment or by posting of
an appropriate bond as provided by statute) within thirty (30) days
after such filing.

 


13.4 Landlord’s
Maintenance and Repair Obligations. It being the intention
of the parties that this Lease shall be what is commonly referred
to as a ‘‘triple net lease”, and Tenant shall be
responsible for all expenses of every kind and nature, including
capital improvements as well as operating expenses, Landlord shall
have absolutely no obligation to repair, maintain, restore or
replace, as applicable any aspect of the Leased Premises or the
Buildings located thereon.

 




14.


SECURITY.





 


Tenant
shall provide sufficient levels of security (in compliance with all
present and future applicable State and local laws and regulations)
for the Leased Premises twenty-four (24) hours per day, 365 days
per year during the Term, which obligation shall include, without
limitation, strict compliance with the California Attorney
General’s “Guidelines for the Security and
Non-Diversion of Marijuana Grown for Medical Use” dated
August 2008 pursuant to Section 1.6 above.

 

 




 

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15.


ADDITIONAL RENT.





 


In
addition to the maintenance and repair obligations set forth in
Section 13 above, and the Rent heretofore specified, Tenant shall
pay to Landlord as “Additional Rent” the sums
described in this Section 15.

 


15.1 Expenses.

 

a. From
and after the Rent Commencement Date during the term, Tenant shall
self- maintain the Leased Premises and directly pay for all of the
following-listed expenses (except for those expenses incurred by
Landlord, including but not limited to impositions and
Landlord’s insurance costs, in which case Tenant shall
reimburse Landlord as set forth in this Lease):

 




(1)

Parking lot repair
or resurfacing expenses;





 




(2)

Impositions, as
provided in Section 7;





 




(3)

Utility costs, as
provided in Section 12;





 




(4)

Insurance costs, as
provided in Section 17;





 




(5)

Exterior surfaces
and roof of the Building; and





 




(6)

All other items or
services needed to maintain the Premises (including the Building
and parking lot) in a neat, safe, and sanitary condition,
including, without limitation, performance of Landlord’s
Compliance Inspections,





 


15.2 Tenant’s
Obligations. Additional Rent shall include all monetary
items for which Tenant is responsible under this Lease, including,
not by way of limitation, attorneys’ fees, as provided in
Section 24, and Landlord’s expenses of curing Tenant’s
defaults, as provided in Sections 17.ld and
25.2c.b(2).

 


15.3 Payment
of Cannabis Business Tax. Pursuant to the County’s
Commercial Cannabis Business Tax ordinance (i.e., Monterey County
Code Chapter 7.100 - 7.100.300, as the same may be modified and
amended from time to time, the “Cannabis Tax Ordinance”), the
Cannabis Business Tax is imposed on a fiscal year basis (July 1
through June 30th of the following calendar year) and shall be due
and payable in quarterly installments, or in the Treasurer-Tax
Collector’s discretion, such shorter report and payment
periods for any taxpayer the Treasurer-Tax Collector deems
necessary to insure collection of the Cannabis Business Tax (such
shorter payment periods being referred to herein as the
“Shorter Cannabis Payment
Period(s)”). In order to ensure Tenant’s timely
payment of the Cannabis Business Tax, Tenant hereby agrees that
notwithstanding anything to the contrary in this Lease, Tenant
shall pay to Landlord, as Additional Rent, the Cannabis Business
Taxes due throughout the Term as follows:

 


 




 

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a. During
the first two (2) fiscal quarters occurring during the Term for
which the Cannabis Business Tax is due (i.e., January 1, 2017 -
March 31, 2017 and April 1, 2017 - June 30, 2017), Tenant shall not
be required to pay the Cannabis Business Tax due to Landlord in
advance but rather shall pay such Cannabis Business Taxes directly
to the County prior to delinquency and shall provide Landlord with
written proof of payment in full of such Cannabis Business Taxes
concurrent with Tenant’s payment of such taxes to the
County.


 

b. During
the third (3rd) fiscal quarter during the Term for which the
Cannabis Business Tax is due (i.e., July 1, 2017 - September 30,
2017), Tenant shall pay into an escrow account or other account
pledged to the Landlord and as to which Tenant has no access other
than to pay the required Cannabis Business Taxes to the County,
which may be interest bearing or invested in cash equivalent
investment reasonably acceptable to the Landlord (the
“Restricted
Account”) in advance on the first day of each calendar
month during such third (3rd) fiscal quarter, an amount equal to
one-third (1/3) of the total estimated Cannabis Business Tax due
for such third (3rd) fiscal quarter. Tenant shall provide to
Landlord in writing Tenant’s good faith calculation as to the
estimated amounts due for the third (3rd) fiscal quarter, which
shall be on the form prescribed by the Treasurer-Tax Collector
pursuant to the Cannabis Tax Ordinance (“Required Tax Payment Form”). Within ten (10) days after
the end of the third (3rd) fiscal quarter, Tenant shall provide to
Landlord a completed and duly executed Required Tax Payment Form
for the third (3rd) fiscal quarter together with the additional
amount, if any, of Cannabis Business Taxes due for such third (3rd)
fiscal quarter and Landlord shall (to the extent received from
Tenant) deliver or authorize the escrow holder or administrator of
the Restricted Account, as applicable, delivery of the Required Tax
Payment Form and Cannabis Business Tax due to the County prior to
delinquency.


 

c. After
the third (3rd) fiscal quarter and continuing for the remainder of
the Term for which the Cannabis Business Tax is due (i.e., from and
after October 1, 2017), Tenant shall deposit into the Restricted
Account in advance on the first day of each Minimum Assessment
Period (as defined below), an amount equal to the total estimated
Cannabis Business Tax due for such Minimum Assessment Period.
Tenant shall provide to Landlord in writing Tenant’s good
faith calculation as to the estimated amount due for the Minimum
Assessment Period, which shall be on the Required Tax Payment Form.
Within ten (10) days after the end of the applicable fiscal
quarter, Tenant shall provide to Landlord a completed and duly
executed Required Tax Payment Form together with the additional
amount, if any, of Cannabis Business Taxes due for such fiscal
quarter and Landlord shall (to the extent received from Tenant)
deliver or authorize the escrow holder or administrator of the
Restricted Account, as applicable, delivery of the Required Tax
Payment Form and Cannabis Business Tax due to the County prior to
delinquency. As used herein, “Minimum Assessment Period” is the
period of time for which the Cannabis Business Tax will be assessed
and owed if cultivation (as defined in the Cannabis Tax Ordinance)
occurs during any portion of such period, in adherence with the
proration of Cannabis Business Taxes for a partial fiscal year
pursuant to the Cannabis Tax Ordinance and including such shorter
period as to which such assessment would apply in the event of any
cessation and/or surrender or termination of the cultivation
license and/or “County permit” (as defined in the
Cannabis Tax Ordinance) during any applicable period. The parties
agree to cooperate with one another in good faith to obtain
clarification, through modification of the ordinance or official
interpretive guidance from County officials, as to the period for
which Landlord may be responsible for unpaid Cannabis Business
Taxes, including by a lien on the Leased Premises, with respect to
any period for which cultivation has ceased and/or the cultivation
license and/or County permit, as applicable, has been surrendered
or terminated, and to adjust the requirements with respect to the
periodic deposit and advance payment of Cannabis Business Taxes
into the Restricted Account accordingly.

 


 




 

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d. If
during the Term the Treasurer-Tax Collector institutes or permits a
Shorter Cannabis Payment Period, then Tenant shall pay to Landlord
the estimated Cannabis Business Taxes on the first day of each such
Shorter Cannabis Payment Period in lieu of the applicable payment
periods contemplated in Subsections 15.3(b) and (c),
above.

 


If the
estimated amounts of Cannabis Business Taxes paid by Tenant to
Landlord exceed the actual amounts due, then Landlord shall hold
such excess amount in trust for Tenant and shall credit such excess
payments to the Cannabis Business Tax which shall be due for the
following fiscal quarter to the amounts which shall otherwise be
due and payable to Landlord by Tenant.

 


Tenant
shall be solely responsible for all penalties and interest which
may be levied by the County as a result of Tenant’s failure
to timely deliver the Cannabis Business Tax to Landlord as set
forth herein. Tenant agrees and
acknowledges that time is of the essence with respect to its
payment of the Cannabis Business Tax and therefore, if
Tenant fails to timely remit the Cannabis Business Tax to Landlord
as required herein, the same shall constitute a default by Tenant
hereunder (subject only to a five (5) business day cure period
following notice from Landlord) and Landlord shall have the option,
in its sole discretion, but without obligation, to pay such
Cannabis Business Tax to the County on Tenant’s behalf in
which event Tenant shall reimburse Landlord for all such amounts
paid by Landlord together with any late charges due pursuant to
this Lease, any late penalties assessed by the County, and interest
shall immediately begin to accrue at the Interest Rate upon payment
of such amounts by Landlord and shall continue to accrue until
Landlord is reimbursed in full. In addition, if Tenant fails to pay
the Cannabis Business Tax due to Landlord within fifteen (15) days
of the due date therefor as set forth in this Section 15.3, then
Landlord shall have the right, and Tenant hereby expressly
authorizes Landlord, to immediately enter upon the Leased Premises
without terminating this Lease or the tenancy created hereby and
without claim by Tenant for trespass or other cause of action
relating to Landlord’s entry, and to destroy and remove all
Cannabis (as defined in the Cannabis Tax Ordinance) in order to
cause all “cultivation” (as defined in the Cannabis Tax
Ordinance) to cease and/or the County permit (as defined in the
Cannabis Tax Ordinance) surrendered or terminated (to the extent
such surrender or termination complies with applicable law) and
therefore, to cease the continued accrual and assessment of the
Cannabis Business Tax on the Permitted Use conducted at the Leased
Premises.

 


Notwithstanding
the foregoing to the contrary, if the Cannabis Tax Ordinance is
ever amended such that, in Landlord’s sole but good faith
business judgment, liability for non-payment of the Cannabis
Business Tax rests solely with Tenant and in no event shall
Landlord, its partners, members, owners, lenders, agents, and
employees be liable for Tenant’s delinquent payment or
non-payment of the Cannabis Business Tax and in no event shall the
Leased Premises be subject to lien or foreclosure resulting from
Tenant’s failure to timely pay the Cannabis Business Tax,
then Tenant’s obligation to pay the Cannabis Business Tax to
Landlord in advance as provided in this Section 15.3 shall cease
and Tenant shall instead pay all Cannabis Business Taxes directly
to the County as and when due; provided, however, if the Cannabis
Tax Ordinance is ever further amended such that the County has
recourse against Landlord or the Leased Premises in the event of
non-payment of Cannabis Business Tax.es, then Tenant’s
obligation to pay to Landlord the Cannabis Business Taxes in
advance as Additional Rent as set forth in this Section 15.3 shall
be automatically reinstated.

 

 




 

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16.


ENTRY BY LANDLORD.





 


Landlord reserves
the right to enter the Leased Premises for the following
purposes:

 

a. At
any and all reasonable times and with reasonable notice during
business hours, provided the same does not unreasonably interfere
with the Permitted Use activity nor threaten to violate
Tenant’s right to maintain its trade secrets: (i) to inspect
the same, conduct tests, inspections and surveys concerning
Hazardous Materials, and to monitor Tenant’s compliance with
its obligations concerning Hazardous Materials or other obligations
under this Lease, or (ii) to post upon the exterior walls of the
Leased Premises “for sale” signs and, during the last
ninety (90) days of the Lease term, “for rent” signs,
or (iii) to show the Leased Premises to prospective purchasers,
lenders, investors or tenants (provided, with respect to other
tenants, only during the last twelve (12) months of the Lease Term
or such other time that Tenant is in default hereunder);
and


 

b. During
normal business hours, or in the event of an emergency, at any time
to make any necessary repairs to the Leased Premises and perform
any work therein which: (i) may be necessary to comply with
any laws, ordinances, rules or regulations of any public authority
or of the Insurance Commissioner or Landlord’s Insurance
Carrier or of any similar body, if Tenant does not make or cause
such repairs to be made or performed or cause such work to be
performed promptly after receipt of written demand from Landlord,
or (ii) Landlord may deem necessary to prevent waste or
deterioration in connection with the Leased Premises if Tenant does
not make or cause such repairs to be made or performed or cause
such work to be performed promptly after receipt of written demand
from Landlord. Nothing herein contained shall create any duty on
the part of Landlord to do any such work, which is to be performed
by Tenant under any provision of this Lease, nor shall it
constitute a waiver of Tenant’s default in failing to do the
same. No exercise by Landlord of any rights herein reserved shall
entitle Tenant to any damage for any injury or inconvenience
occasioned thereby nor to any abatement of Rent.


 

c. During
normal business hours at any time to inspect the Leased Premises
and Permitted Use to ensure Tenant’s compliance with all
present and future State and local medical marijuana laws and
rules, including Monterey County Code laws and rules governing the
Permitted Use (collectively, “Landlord’s Compliance
Inspections”).


 

d. Immediately
upon Tenant’s failure to pay the required Cannabis Business
Tax within fifteen (15) days of the date due pursuant to Section
15.3, above.

 




17.


INSURANCE, LIABILITY, AND INDEMNIFICATION.





 


17.1 Tenant’s
Insurance. Tenant shall, at its sole cost and expense, cause
to be placed in effect immediately prior to the Delivery Date, and
shall maintain in full force and effect during the term of this
Lease and any renewals thereof, policies of insurance as described
in this Section 17.1. The provisions of this Section 17.1 are
minimum insurance requirements, and to the extent (if any) that the
documents referred to in Section 1.7 impose higher or additional
requirements regarding insurance or to the extent that additional
insurance is required pursuant to Section 3.7e, then Tenant’s
insurance shall satisfy such higher or additional requirements of
those documents. Notwithstanding the requirements of this Section
17, the parties acknowledge that insurance coverage availability
may be subject to limitations for the Permitted Use, and Tenant
shall procure such required insurance coverages as shall be
commercially available to Tenant.

 


 




 

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a. Required
Coverage. The insurance coverages required to be carried by
Tenant are as follows:

 




(1)

Liability Insurance. Commercial general
liability (“CGL”) insurance in an amount
normally carried by Tenant in Tenant’s normal
“blanket” policy, but in any event not less than: (i)
$5,000,000 combined single limit bodily injury and property damage
for injury and/or death to any number of persons in any one
accident and not less than $6,000,000 general aggregate, (ii)
$2,000,000 Products and Completed Operations Aggregate, and
(iii) $5,000,000 Personal & Advertising Injury Limit.
Pesticide Applicator Endorsement coverage shall be maintained by
Tenant. Annually, the policy limits of said commercial general
liability insurance shall be reviewed and adjusted to a limit as
recommended by Landlord’s insurance carrier. Said limit shall
be set at an amount which is reasonable given the nature of
Tenant’s use, but in no event shall said coverage be less
than the minimum amounts set forth above. Such coverage can be
satisfied through a combination of primary and excess/umbrella
policies; provided, however, the general aggregate limit shall
apply separately at each of Tenant’s locations. The CGL
carrier must provide a written guaranty that it will write the
policy to insure losses to cannabis businesses in California and to
the Tenant in particular. Notwithstanding the minimum amounts set
forth above, if Tenant or its contractors maintain greater limits,
then the specifications set forth herein shall not limit the amount
of recovery available to Landlord. Legal defense costs incurred
pursuant to Section 17.4 shall fall outside of the policy limits
set forth herein.





 


Tenant’s
insurance carried hereunder shall not contain any of the following
exclusions or endorsements: (i) Third Party Over Actions, (ii)
Assault and Battery, (iii) Contractual Liability Limitation or its
equivalent (coverage shall apply but not be limited to
Tenant’s liability obligations herein), (iv) amendment
of lnsured Contract definition (CG 21 39 or its equivalent),
(v) Limitation of Coverage to Designated Premises or Project
(CG 21 44), (vi) any Insured vs. Insured exclusion.

 




(2)

Use Insurance. Use, Occupancy and
Contents Insurance, insurance covering all glass and windows, and,
if liquor is to be sold on the Leased Premises, Dram Shop
Insurance.





 




(3)

Workers’ Compensation Insurance.
Workers’ Compensation Insurance, covering employees working
in the Leased Premises, as required by law. Where a PEO or leased
employees are utilized, Tenant shall require its leasing company to
provide worker’s compensation insurance for said leased
workers and such policy shall be endorsed to provide an Alternate
Employer Endorsement.





 


 




 

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(4)

Property Insurance. The property
insurance carried by Tenant hereunder shall insure all equipment
(indoor and outdoor cultivation and manufacturing equipment) and
other property used in connection with the Permitted Use including
the Collateral (to the extent it is not deemed a fixture under
California law), Business Personal Property, Trade Fixtures, Signs,
stock and inventory, crop (indoor plants, seeds, seedlings/clones,
vegetative, flowering and finished stock for their full replacement
cost value, on an Agreed Amount basis. The property coverage
contemplated herein shall be provided on an “All Risk”
or Special Form Causes of Loss ISO Form CP 10 30 or its equivalent.
Business Income and Extra Expense coverage shall be provided in an
amount of not less than 80% of Tenant’s gross annual income
at the Leased Premises, less non­ continuing expenses and
provided on an Agreed Value basis (ISO Special Form Causes of
Loss). Boiler & Machinery coverage (Equipment Breakdown
coverage) shall be provided on all operations at the Leased
Premises on a comprehensive form endorsement (or its equivalent).
Landlord shall be named as the loss payee under such
policy.





 




(5)

Business Auto Liability. Tenant shall
maintain such coverage in the minimum amount of $2,000,000 Combined
Single Limit with Symbol 1 - Any Auto.





 




(6)

Contractors and Independent Contractors.
Tenant shall require all contractors and independent contractors
working at the Leased Premises (including, without limitation, any
security personnel) to obtain the following insurance coverages in
not less than the minimum amounts set forth below and shall provide
certificates of insurance demonstrating such coverage is in effect
to Landlord prior to said contractors and independent
contractors’ entry. All such contractors and independent
contractors’ insurance shall waive any right of recovery
against an entity that is an Additional Insured.





 



Commercial General Liability (Occurrence Basis)




● 

$2,000,000
Products/Completed Operations Aggregate








●

$2,000,000 General
Aggregate








●

$1,000,000 Each
Occurrence








●

$1,000,000 Personal
& Advertising Injury








●

Per Location
Aggregate or Per Project Aggregate











Automobile Liability (Any Auto-Symbol 1)




● 

$1,000,000 Combined
Single Limit







Workers’ Compensation and Employer’s Liability
(Statutory Requirements)




● 

$1,000,000 Each
Accident






 




 

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●

$1,000,000 Each
Employee for Injury by Disease








●

$1,000,000
Aggregate for Injury by Disease








●

Where a PEO or
leased employees are utilized, insurer will provide an Alternate
Employer Endorsement.







Umbrella Liability




●

$1,000,000 General
Aggregate








●

$1,000,000 Each
Occurrence







Professional Liability (if ANY Professional Services are provided -
Medical Provider, Attorney, CPA, Consultant, etc.)




● 

$1,000,000 Each
Occurrence/Aggregate







Environmental Liability or Contractor’s Pollution Liability
(if exposure exists)




● 

$1,000,000 Each
Occurrence/ Aggregate







Builder’s Risk




● 

Total Contract
Value






b. Required
Attributes of Insurance. All of the insurance required to be
carried by Tenant hereunder shall satisfy the following
criteria:

 




(1)

Joint Coverage. Such policies, except
for workers’ compensation insurance, shall be issued naming
Landlord (and Landlord’s lender, if requested) as Additional
Insured pursuant to the ISO Form CG 20 11 01 96 (or its equivalent)
endorsement and the policies shall be written with no exclusion for
the acts or omissions of the Additional Insured(s). The Additional
Insured Endorsement must accompany the Certificate
of Insurance naming Cypress Manufacturing Company, Inc., Cypress
Holding Company, LLC and Tinhouse Partners, LLC as an Additional
Insured. The Additional Insured coverage must be primary and
non-contributory.





 




(2)

Blanket Policies. Such coverages may be
furnished by Tenant under a blanket policy carried by it; provided
that any such blanket policy shall contain an endorsement naming
Landlord as additional insured, which makes specific reference to
the Leased Premises, and which guarantees a minimum limit available
for the Leased Premises equal to the insurance amounts required in
this Lease.





 




(3)

Carriers’ Qualifications. Each of
the insurance carriers shall at all times during the term of this
Lease: (i) be reasonably satisfactory to Landlord; (ii) be licensed
to sell such insurance in the State of California; and (iii) have a
policyholder’s rating of not less than “A/10” in
the most current edition of Bests Insurance Reports. Any exceptions
to this requirement must be granted in writing by
Landlord.





 


 




 

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(4)

Primary and Non-Contributory. All
insurance carried by Tenant as required hereunder shall: (i)
contain a cross-liability endorsement; (ii) contain a provision
that such policy and the coverage evidenced thereby shall be
primary and non-contributing with respect to any policies carried
by Landlord or any investor in or mortgagee of Landlord and that
any coverage carried by Landlord shall be excess insurance; and
(iii) be written on an “occurrence” basis and not on a
“claims-made” basis.





 

c. Insurance
Certificates. Tenant shall provide copies of the insurance
policies, appropriately authenticated by the insurer, or original
insurance certificates reasonably acceptable to Landlord,
evidencing the insurance coverages called for above. Such copies of
policies or certificates shall be furnished to Landlord upon
execution of this Lease. The policies or certificates shall contain
a provision that the insurer will not cancel or refuse to renew the
policies, or change in any material way the nature or extent of the
coverage provided by such policies without first giving Landlord
thirty (30) days prior written notice. Thirty (30) days prior to
expiration of any policies of insurance carried by Tenant, Tenant
shall provide proof of continuing coverage.


 

d. Tenant’s
Failure to Provide Insurance. In the event that Tenant fails
to procure, maintain, and/or pay for any of the insurance required
by this Lease at the times and for the durations specified herein,
then Landlord shall have the right, but not the obligation, at any
time and from time to time, and without notice, to procure such
insurance and/or pay the premiums for such insurance, in which
event Tenant shall repay Landlord, as Additional Rent, all sums so
paid by Landlord together with interest thereon and any costs or
expenses incurred by Landlord in connection therewith, without
prejudice to any other rights and remedies of Landlord under this
Lease. Failure of Tenant to obtain or maintain the insurance
coverages hereinabove described or to pay the premiums thereon or
reimburse Landlord when due shall, at Landlord’s election,
carry with it the same consequences as failure to pay any
installment of Rent.

 


17.2 Landlord’s
Insurance. During the Term, and subject to its right to
reimbursement from Tenant has provided herein, Landlord shall
maintain property insurance, keeping the Leased Premises insured
for the benefit of Landlord, for its full replacement value,
against loss or damage by fire, including rent loss coverage in the
amount of one (1) year’s Rent obligation hereunder. The
property insurance carried by Landlord hereunder shall insure the
Buildings, the Tenant Improvements and Betterments, including any
alterations, additions and changes made by Tenant. Boiler &
Machinery coverage (Equipment Breakdown coverage) shall be provided
on all operations at the Leased Premises on a comprehensive form
endorsement (or its equivalent). Ordinance and Law, Earthquake
Sprinkler Leakage and Backup of Sewers and Drains coverage shall be
maintained (to the full replacement value of the Buildings). The
property coverage contemplated herein shall be provided on an
“All Risk” or Special Form Causes of Loss ISO Form CP
10 30 or its equivalent. Tenant shall reimburse Landlord as
Additional Rent for all premiums incurred by Landlord in obtaining
the insurance provided in this Section 17.2. Such payment shall be
made to Landlord within thirty (30) days after written demand
therefor which demand shall be accompanied by an invoice evidencing
the premium due (or previously paid) by Landlord. Tenant’s
failure to reimburse Landlord when due shall, at Landlord’s
election, carry with it the same consequences as failure to pay any
installment of Rent. In order for Landlord to accurately determine
the replacement cost value of the Leased Premises for purposes of
obtaining the insurance to be maintained by Landlord pursuant to
this Section 17.2, Tenant shall deliver to Landlord within ten (10)
days after written request by Landlord, a schedule of values for
all improvements, alterations, fixtures , performed by or on behalf
of Tenant and the value of all Collateral placed upon the Leased
Premises by Tenant.

 

 




 

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17.3 Landlord’s
Liability. Regardless of whether or not insurance coverage
is carried for such losses, Landlord shall not be liable for any
damage done to the Leased Premises or to any of the fixtures,
merchandise, property or equipment therein contained, whether owned
by Tenant or by any other person, due to the overflowing or
breaking of steam or water pipes, drains, boilers, basins, toilets,
lavatories or gutters or from smoke, fire, odor, earthquake,
explosion, gas, electricity, lighting and wiring, or from any other
cause and whether having its origin in the Leased Premises hereby
leased or elsewhere. Tenant, as a material part of the
consideration to be rendered to Landlord, hereby waives all claims
against Landlord for injury to any person or for damages to goods,
wares, and merchandise in, upon or about said Leased Premises from
any cause arising at any time.

 


17.4 Tenant’s
Indemnity. Tenant, as a material part of the consideration
to be rendered to Landlord, shall indemnify, protect, defend and
hold Landlord harmless from any and all damage or injury to any
person or to the goods, wares and merchandise of any person arising
from the use of the Leased Premises by or under Tenant (including
the use of Hazardous Materials), or from the failure of Tenant to
maintain the Leased Premises in the manner herein required.
Notwithstanding any other provision of this Lease, Tenant’s
covenants to indemnify, defend, and hold harmless in this Section
or in other Sections of this Lease shall survive the expiration or
earlier termination of this Lease as to actions, events, or
conditions that existed as of the date of such expiration or
termination and in no event shall Tenant’s indemnity
obligations be limited by the amount of insurance carried by
Tenant.

 


17.5 Waiver
of Subrogation. Each of Landlord and Tenant hereby waives
its right of recovery against the other for any damages caused by
an occurrence insured against by Landlord or Tenant, and the rights
of any insurance carrier to be subrogated to the rights of the
insured under the applicable policy, to the extent allowed by the
respective insurance carrier. Landlord and Tenant each covenant
that at the Effective Date their respective insurance policies will
contain waiver of subrogation endorsements, and that if such
endorsements, for any reason whatsoever, are about to become
unavailable, they will give the other party not less than thirty
(30) days prior written notice of such impending
unavailability.

 




18.


SURRENDER.





 


At the
expiration of the term hereof, or the earlier termination of this
Lease including early termination pursuant to Section 54, Tenant
shall (subject to Landlord’s lien rights set forth herein)
remove its interior and exterior signs, its inventory, and any
personal property which does not constitute the Collateral and
surrender the Leased Premises to Landlord. Tenant shall have no
right to remove any Collateral upon the expiration or earlier
termination of this Lease, it being agreed and acknowledged by
Tenant that all Collateral shall become the property of Landlord
(solely except and unless Landlord elects at its option and in its
sole discretion not to take ownership of the Collateral, or any
portion thereof, in which event any such Collateral which Landlord
elects not to take ownership of shall be promptly removed by
Tenant). Tenant shall, at Landlord’s request and at no cost
to Landlord provide a duly executed Assignment and Bill of Sale to
Landlord in order to memorialize the conveyance of Tenant’s
rights and interest in and to the Collateral to Landlord and Tenant
shall be solely responsible for the payment of any and all taxes
and fees which may be due and owing in connection with the
conveyance of the Collateral to Landlord. Notwithstanding anything
in this Lease to the contrary, if Tenant is not in default upon the
expiration of the Term, then Tenant shall have the right to remove
such Collateral (i) to the extent it is not deemed a fixture under
California law, (ii) paid for by Landlord (whether through the
Tenant Allowance or otherwise), and (iii) which was not supplied,
furnished, or otherwise present on the Leased Premises on the Lease
Commencement Date (collectively, the “Landlord Supplied FF&E”) or is
not a replacement of the Landlord Supplied FF&E. A list of all
Landlord Supplied FF&E is attached as Schedule 1 to the
Acknowledgement of Commencement Estoppel Agreement attached hereto
as Exhibit B.

 

 




 

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18.1 Condition
of Leased Premises upon Surrender. At such time, Tenant
shall surrender the Leased Premises in broom clean condition,
including repair necessitated by the removal of Tenant’s
alterations and Collateral, if any, as provided in Section 10.2,
reasonable wear and tear excepted. Tenant shall not defer needed
and reasonably necessary items of maintenance and repair in the
final months of this Lease, but shall perform the same throughout
and including the last day of the term of the Lease so that when
possession is returned to Landlord, Landlord will not be required
to perform repairs and maintenance that should have been taken care
of by Tenant under its duty to maintain and make repairs to the
Leased Premises. All property of any kind not removed from the
Leased Premises shall be deemed abandoned by Tenant. If the Leased
Premises are not surrendered at the end of the Lease Term, Tenant
shall indemnify Landlord against loss or liability resulting from
delay by Tenant in surrendering the Leased Premises including but
not limited to any loss arising from any claim made by any
succeeding tenant founded on such delay.

 


18.2 Acceptance
of Surrender by Landlord. No act or conduct of Landlord,
whether consisting of the acceptance of the keys to the Leased
Premises or otherwise, shall be deemed to be or constitute an
acceptance of the surrender of the Leased Premises by Tenant prior
to the expiration of the term hereof, except for Landlord’s
acceptance of surrender evidenced by a written acknowledgment
thereof signed by Landlord.

 




19.


SUBORDINATION AND ATTORNMENT.





 


At
Landlord’s option, this Lease shall be subordinated to any
mortgage or deed of trust which is now or shall hereafter be placed
upon the Leased Premises, and Tenant agrees to execute and deliver
any instrument which may be necessary to further effect the
subordination of the Lease to any such mortgage or deed of trust;
provided, however, that such instrument of subordination shall
provide, or the mortgagee or beneficiary of such mortgage or deed
of trust otherwise shall agree in writing in recordable form
delivered to Tenant, that so long as Tenant is not in default under
this Lease, foreclosure of any such mortgage or deed of trust or
sale pursuant to exercise of any power of sale thereunder shall not
affect this Lease but such foreclosure or sale shall be made
subject to this Lease which shall continue in full force and
effect, binding on Tenant and the transferee. Tenant shall attorn
to the transferee as if said transferee was Landlord under this
Lease.

 




20.


ESTOPPEL CERTIFICATE.





 


Tenant
shall, at any time upon not less than ten (10) days prior request
by Landlord, execute, acknowledge and deliver to Landlord a written
estoppel certificate, in form satisfactory to Landlord, certifying
that this Lease is unmodified and in full force and effect (or, if
there have been modifications, that the same is in full force and
effect as modified and stating the modifications) and, if
applicable, the dates to which the Rent and any other charges have
been paid in advance. Any such statement delivered pursuant to this
Section may be relied upon by third persons, including a
prospective purchaser or encumbrancer of the Leased
Premises.

 


Tenant’s
failure to execute and deliver an estoppel certificate within
twenty (20) days after Tenant’s receipt of Landlord’s
written request therefore shall be conclusive upon Tenant that this
Lease is in full force and effect, without modification except as
may be represented by Landlord, that there are no uncured defaults
in Landlord’s performance, that not more than one
month’s rental has been paid in advance, and that all other
statements required to be made in the estoppel certificate are
conclusively made.

 

 




 

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21.


SALE BY LANDLORD.





 


In the
event of a sale or conveyance by Landlord of the Leased Premises,
upon the execution of a written assumption by the purchaser of
Landlord’s obligations under this Lease, the same shall
operate to release Landlord from any liability arising thereafter
from any and all of the covenants and conditions, expressed or
implied, herein contained in favor of Tenant, and in such event,
Tenant agrees to look solely to the successor in interest of
Landlord in and to this Lease. If any security has been given by
Tenant to secure the faithful performance of all or any of the
covenants of this Lease on the part of Tenant, or if any Rent has
been prepaid by Tenant, then Landlord may transfer and/or deliver
the security and such prepaid Rent to the transferee, and upon
proper written notice to Tenant, as provided by law, Landlord shall
be discharged from any liability arising thereafter in reference
thereto. Tenant shall attorn to the new Landlord.

 




22.


DAMAGE OR DESTRUCTION.





 


In the
event of damage or destruction of the Leased Premises, Tenant shall
give immediate written notice to Landlord and Tenant shall
forthwith and with all due diligence repair the same and restore
the Leased Premises to substantially the same condition in which
they existed prior to such damage or destruction, and such damage
or destruction shall in no way annul or void this Lease. If the
damage or destruction is caused by a casualty covered by insurance,
the proceeds of the insurance, provided in Section 17 shall be used
for such repair or reconstruction and both parties shall execute
such documents as may be necessary to effect such payment. Rent
payments shall continue while the Leased Premises are being
replaced or restored for resumption of business operations.
California Civil Code section 1932(2) provides that the
“hirer of a thing” may terminate the hiring upon
partial or total destruction of the thing hired and Civil Code
section 1933(4) provides that the “hiring of a thing”
terminates by the destruction of the thing hired. Such statutes
conflict with provisions of this Lease; accordingly, Tenant waives
any rights it has or could have under these provisions or any
similar laws, rules or regulations.

 


In the
event that this Lease is terminated under provisions of the above
Section the entire proceeds of the insurance but not including any
awards specifically attributable to the loss of any trade fixtures
or personal property of Tenant, shall belong to Landlord. Both
parties shall execute such documents as the insurance company may
require.

 




23.


CONDEMNATION.





 


If
title to all of the Leased Premises is taken for any public or
quasi-public use under any statute, or by right of eminent domain,
or by private purchase in lieu of eminent domain, or if title to so
much of the Leased Premises is so taken that a reasonable amount of
reconstruction of the Leased Premises will not result in the Leased
Premises being reasonably suitable for Tenant’s continued
occupancy for the uses and purposes for which the Leased Premises
are leased, then, in either such event, this Lease shall terminate
at Landlord’s option as provided in written notice on the
date of such taking.

 


 




 

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All
compensation awarded or paid upon a total or partial taking of the
fee title of the Leased Premises shall belong to Landlord, whether
such compensation be awarded or paid as compensation for diminution
in value of the leasehold or of the fee, Tenant not being entitled
to any award for the value of this Lease; provided, however, that
Landlord shall not be entitled to any award made to Tenant in
respect of Tenant improvements or Tenant’s business,
including for depreciation to and cost of removal of stock and
fixtures, and from the entire award, Tenant shall be entitled to
the value of the appropriation of its trade fixtures and any amount
included therein with respect to Tenant’s removal or
relocation costs or damages to Tenant’s personal
property.

 




24.


ATTORNEYS’ FEES.





 


In the
event of the bringing of any action by either party hereto against
the other under, with respect to, or arising out of, this Lease,
including any action for relief from stay or other proceedings in
bankruptcy or any proceeding to enforce a judgment with respect to
this Lease, then the prevailing party shall be entitled to recover
from the other reasonable attorney’s fees, which shall be
determined by the court.

 


Should
Landlord become a party defendant to any litigation concerning this
Lease or any part of the Leased Premises by reason of any act or
omission of Tenant and not because of any act or omission of
Landlord, then Tenant shall indemnify, protect, defend and hold
Landlord harmless from all costs, expenses, and liability by reason
thereof, including reasonable attorneys’ fees and all costs
incurred by Landlord in such litigation.

 


In
addition, Tenant shall reimburse Landlord, as Additional Rent, for
any attorneys’ fees or costs reasonably incurred by Landlord,
whether or not suit be instituted, with respect to any default of
Tenant under the terms of this Lease.

 




25.


TENANT’S DEFAULT AND LANDLORD’S REMEDIES.





 


25.1 Tenant’s
Default. Tenant shall be in default under this Lease if
Tenant fails to perform any of its obligations hereunder and (i) if
the failure is in the payment of Rent, Additional Rent, or any
other failure which can be cured by the payment of money, the
failure continues uncured for a period of five (5) days after
written notice thereof from Landlord, or (ii) if the failure is in
any of the other provisions of this Lease (except for failures
associated with a default of Section 1.6 or 3.7b hereof, for which
there shall be no cure period) and such failure continues uncured
for a period of thirty (30) days after written notice thereof from
Landlord, unless such cure is not capable of completion within
thirty (30) days, in which case Tenant shall be afforded such
additional time as may be reasonably necessary to complete the cure
provided Tenant commences the cure within thirty (30) days of
Landlord’s notice and diligently pursues such cure to
completion, or, in the event of a threatened injury to life or
property due to such failure, continues for such lesser period as
Landlord may specify in such written notice.

 


25.2 Landlord’s
Remedies. In the event of a default by Tenant then, besides
any other rights and remedies of Landlord at law or equity,
Landlord shall have the following rights and remedies. All remedies
herein conferred on Landlord shall, to the fullest extent permitted
by law, be deemed cumulative and no one exclusive of the other or
of any other remedy conferred by law or in equity, and nothing
herein shall prevent Landlord from pursuing any and all other
remedies it may have upon Tenant’s default.

 


 




 

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a. Election
to Continue or Terminate Lease. Landlord shall have the
right to elect either to continue or terminate this Lease, as
follows:

 




(1)

Continuation of Lease. Landlord shall
have the remedy described in California Civil Code Section 1951.4
(Landlord may continue this Lease in effect after Tenant’s
breach and abandonment and recover rent as it becomes due, if
Tenant has the right to sublet or assign, subject only to
reasonable limitations). Accordingly, if Landlord does not elect to
terminate this Lease on account of any default by Tenant, Landlord
may, from time to time, without terminating this Lease, enforce all
of its rights and remedies under this Lease, including the right to
recover all Rent as it becomes due.





 




(2)

Termination of Lease. Landlord shall
have the right to terminate this Lease, by giving written notice of
termination to Tenant or, if Tenant’s address is unknown, by
posting such notice on the Leased Premises. Absent such written
notice, no acts of Landlord (including entering, repairing,
preparing to re-let, or re-letting the Leased Premises) shall be
construed as an election to terminate the Lease. In the event that
Landlord elects to terminate this Lease, then Landlord shall be
entitled to its statutory unlawful detainer remedy, and Landlord
shall recover from Tenant an award of damages equal to the sum of
the following:





 




(a)

the worth at the
time of award of the unpaid Rent (for purposes of this Section
25.2a(2)(a) “Rent” shall include Rent,
Additional Rent, and all other sums owed under this Lease) which
had been earned at the time of termination;





 




(b)

the worth at the
time of award of the amount by which the unpaid Rent which would
have been earned after termination until the time of award exceeds
the amount of such Rent loss that Tenant affirmatively proves could
have been reasonably avoided;





 




(c)

the worth at the
time of award of the amount by which the unpaid Rent for the
balance of the Lease Term after the time of award exceeds the
amount of such Rent loss that Tenant affirmatively proves could be
reasonably avoided;





 




(d)

any other amount
necessary to compensate Landlord for all the detriment either
proximately caused by Tenant’s failure to perform
Tenant’s obligations under this Lease or which in the
ordinary course of things would be likely to result
therefrom;





 




(e)

all other amounts
in addition to or in lieu of the foregoing as may be permitted from
time to time under applicable law; and





 


 




 

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(f)

the unamortized
amount of the Tenant Allowance (amortized on a straight-line basis
of the initial Lease Term).





 


The
phrase “worth, at the time of award” will be computed
as follows: (i) as used in sub­ Sections (a) and (b) of the
preceding Section, that amount will be computed by allowing
interest at the then-maximum rate of interest allowable under law
which could be charged Tenant by Landlord; and (ii) as used in
Section (c) thereof, that amount will to be computed by discounting
at the then-current discount rate of the U.S. Federal Reserve Bank
of San Francisco at the time of award, plus one percent
(1%).

 

b. Additional
Remedies. In addition to the right to continue or terminate
this Lease as provided above, Landlord shall have the following
rights and remedies:

 




(1)

Specific Performance. Landlord shall
have the right to obtain specific performance of any and all
covenants or obligations of Tenant to be kept and performed under
this Lease, other than the payment of Monthly Minimum Rent or
Additional Rent; and





 




(2)

Landlord’s Right to Cure. Landlord
shall have the right, but not the obligation, to cure
Tenant’s default, in which event Tenant shall immediately pay
to Landlord as Additional Rent the costs of such cure.





 




(3)

Security Interest and Agreement. In the
event of Tenant’s default, in addition to any rights granted
Landlord pursuant to this Lease or any other relevant California
statute, in exchange for use of the Leased Premises under this Lease
(hereafter, “Obligations”), Tenant hereby
grants to Landlord a continuing lien against and a security
interest in the following personal property and trade fixtures in
which Tenant has rights of ownership or transfer rights including,
but not limited to: goods including fixtures, accessions,
furniture, equipment used in Tenant’s ordinary course of
business, proceeds, inventory (but expressly excluding any
cannabis), lights (whether or not permanently attached to the
structure and including light depravation shades and related
automations), heating and cooling equipment and systems (cooling,
heating and exhaust fans, air conditioning and heater units),
tables, potting equipment, water catchment and/or filtration
systems, water storage tanks, boiler(s), well pump and related
equipment, inlet shutters, climate and irrigation management
systems and controls (timers, control boxes, and related computer
hardware and software management systems), CO2 systems (tanks,
generator, distribution components), solar shades, pH adjustment /
fertilizer dosing systems and monitoring (including any general
fertilizer preparation equipment, as well as pesticides application
systems and soil treatment systems and steam sanitation equipment),
growing tables, storage and drying racks (including pulley systems
and components), storage containers, mobile office/construction
trailer, security alarm and video surveillance systems (including
cameras, wiring, DVR, and monitors) and security fencing,
electrical generator and gas and electrical systems, including any
solar or alternative power source provided that such system is not
leased from a third party, all communication systems that are
attached and/or installed at the Leased Premises (but expressly
excluding walking-talkies and cell phones), now or hereafter
located on or within the Leased Premises (hereafter “Collateral”).





 


 




 

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Tenant
may replace the Collateral with items of equal or better quality,
but shall not otherwise remove it from the Premises without
Landlord’s consent.

 


This
Lease constitutes a security agreement creating a security interest
in the Collateral in favor of Landlord, and Tenant authorizes
Landlord to file a Form UCC-1 Financing Statement and/or Fixture
Filing to perfect the security interest of Landlord in the
Collateral and proceeds thereof under the laws of the State of
California. Tenant hereby authorizes Landlord to file one or more
financing statements and amendments thereto describing the
Collateral and containing any other information required by the
applicable Uniform Commercial Code. Tenant specifically agrees that
this authorization shall be applicable to any financing statements
and/or amendments pre-filed by Landlord prior to the authentication
of this Lease by Tenant.

 


Upon
the occurrence of any default of this Lease by Tenant, Landlord may
declare all Obligations secured hereby immediately due and payable
and shall have, in addition to any remedies provided herein or by
any applicable law or in equity, all the remedies of a secured
party under the California Uniform Commercial Code.
Landlord’s remedies include, but are not limited to, to the
extent permitted by law, the right to (a) peaceably by its own
means or with judicial assistance enter the Tenant’s premises
and take possession of the Collateral without prior notice to
Tenant or the opportunity for a hearing, (b) render the Collateral
unusable, (c) dispose of the Collateral on the Premises, and (d)
require Tenant to assemble the Collateral and make it available to
Landlord a place designated by Landlord. Unless the Collateral is
perishable or threatens to decline speedily in value or is of a
type customarily sold on a recognized market, Landlord will give
Tenant reasonable notice of the time and place of any public sale
thereof or of the time after which any private sale or any other
intended disposition thereof is to be made. The requirements of
commercially reasonable notice shall be met if such notice is sent
to Tenant at least five (5) days before the time of the intended
sale or disposition. Expenses of retaking, holding, preparing for
sale, selling or the like shall include Landlord’s reasonable
attorney’s fees and legal expenses, incurred or expended by
Landlord to enforce any payment due it under this Lease either as
against Tenant, or in the prosecution or defense of any action, or
concerning any matter growing out of or connection with the subject
matter of this Lease and the Collateral pledged hereunder. Tenant
waives all relief from all appraisement or exemption laws now in
force or hereafter enacted.

 


 




 

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Tenant
represents, warrants and covenants to Landlord that: (a) Tenant has
good, marketable and indefeasible title to the Collateral, has not
made any prior sale, pledge, grant of security, encumbrance,
assignment or other disposition of any of the Collateral, and the
Collateral is free from all encumbrances and rights of setoff of
any kind except the lien in favor of Landlord created by this
Agreement; (b) except as herein provided, Tenant will not hereafter
without Landlord’s prior written consent sell, pledge, grant
security, encumber, assign or otherwise dispose of any of the
Collateral or permit any right of setoff, lien or security interest
to exist thereon except to Landlord; (c) Tenant will defend the
Collateral against all claims and demands of all persons at any
time claiming the same or any interest therein; and (d)
Tenant’s exact legal name, type of entity, state of
organization and organizational identification number, if
applicable, is as accurately and correctly set forth in this Lease.
Tenant shall not change its name, its type of entity, its state of
organization, or its organizational identification number without
providing Landlord at least thirty (30) days prior written notice
of each and every such proposed change.

 


Tenant
further covenants that it shall:

 




(a)

from time to time
and at all reasonable times allow Landlord, by or through any of
its officers, agents, attorneys, or accountants, to examine or
inspect the Collateral, and obtain valuations and audits of the
Collateral, at Tenant’s expense, wherever located. Tenant
shall do, obtain, make, execute and deliver all such additional and
further acts, things, deeds, assurances and instruments as Landlord
may require to vest in and assure to Landlord its rights hereunder
and in or to the Collateral, and the proceeds thereof, including
waivers from landlords, warehousemen and mortgagees;





 




(b)

keep the Collateral
in good order and repair at all times and immediately notify
Landlord of any event causing a material loss or decline in value
of the Collateral, whether or not covered by insurance, and the
amount of such loss or depreciation;





 




(c)

only use or permit
the Collateral to be used in accordance with all applicable state,
county and municipal laws and regulations; and





 




(d)

have and maintain
insurance at all times with respect to all Collateral against risks
of fire (including so called extended coverage), theft, sprinkler
leakage, and other risks (including risk of flood if any Collateral
is maintained at a location in a flood hazard zone) as Landlord may
reasonably require, in such form, in the minimum amount of the
outstanding principal of the Note and written by such companies as
may be reasonably satisfactory to Landlord. Each such casualty
insurance policy shall contain a standard Lender’s Loss
Payable Clause issued in favor of Landlord under which all losses
thereunder shall be paid to Landlord as Landlord’s interest
may appear. Such policies shall expressly provide that the
requisite insurance cannot be altered or canceled without at least
thirty (30) days prior written notice to Landlord and shall insure
Landlord notwithstanding the act or neglect of Tenant. Upon
Landlord’s demand, Tenant shall furnish Landlord with
evidence of insurance as Landlord may require. In the event of
failure to provide insurance as herein provided which shall also
constitute a default of this Lease, Landlord may, at its option,
obtain such insurance and Tenant shall pay to Landlord, on demand,
the cost thereof. Proceeds of insurance may be applied by Landlord
to reduce the Obligations or to repair or replace Collateral, all
in Landlord’s sole discretion.





 


 




 

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(e)

If any of the
Collateral is, at any time, in the possession of a bailee, Tenant
shall promptly notify Landlord thereof and, if requested by
Landlord, shall promptly obtain an acknowledgment from the bailee,
in form and substance satisfactory to Landlord, that the bailee
holds such Collateral for the benefit of Landlord and shall act
upon the instructions of Landlord, without the further consent of
Tenant.





 


Tenant
will not sell or offer to sell or otherwise transfer or grant or
allow the imposition of a lien or security interest upon the
Collateral or use any portion thereof in any manner inconsistent
with this Lease or with the terms and conditions of any policy of
insurance thereon.

 


At its
option, Landlord may, but is not required to: discharge taxes,
liens, security interests or such other encumbrances as may attach
to the Collateral; pay for required insurance on the Collateral;
and pay for the maintenance, appraisal or reappraisal, and
preservation of the Collateral, as determined by the secured party
to be necessary. Tenant will reimburse Landlord on demand for any
payment so made or any expense incurred by Landlord pursuant to the
foregoing authorization, and the Collateral also will secure any
advances or payments so made or expenses so incurred by
Landlord.

 


All
notices, demands, requests, consents, approvals and other
communications required or permitted hereunder must be in writing
and will be effective upon receipt in accordance with Section
25.

 


No
delay or omission on Landlord’s part to exercise any right or
power arising hereunder will impair any such right or power or be
considered a waiver of any such right or power, nor will
Landlord’s action or inaction impair any such right or power.
Landlord’s rights and remedies hereunder are cumulative and
not exclusive of any other rights or remedies which Landlord may
have under other agreements, at law or in equity.

 

c. Waivers
With Respect to Remedies.

 




(1)

Redemption. Tenant hereby waives all
rights (if any) conferred by Section 3275 of the Civil Code of
California and by Sections 1174(c) and 1179 of the Code of Civil
Procedure of California and any other laws and rules of law from
time to time in effect during the Lease Term providing that Tenant
shall have any right to redeem, reinstate or restore this Lease
following its termination by reason of Tenant’s default;
and





 




(2)

Jury Trial. Landlord and Tenant hereby
waive trial by jury in any action or proceeding arising out of or
relating to this Lease and the right to file therein any
cross-complaints, counterclaims or cross-claims against the other,
other than those which may be compulsory.





 

 




 

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26.


WAIVER.





 


No
covenant or condition of this Lease shall be deemed waived, except
by the written consent of Landlord or Tenant, as appropriate, and
any forbearance or indulgence by the party entitled to performance
shall not constitute a waiver of the covenant or condition to be
performed. Until complete performance of such covenant or
condition, the party entitled to performance shall have the right
to invoke any remedy available to it under this Lease or by law,
despite such forbearance or indulgence. The subsequent acceptance
of Rent hereunder by Landlord shall not be deemed to be a waiver of
any preceding default by Tenant of any term, covenant or condition
of this Lease, other than the failure of Tenant to pay the
particular Rent so accepted, regardless of Landlord’s
knowledge of such preceding default at the time of acceptance of
such Rent.

 




27.


SUCCESSORS AND ASSIGNS.





 


This
Lease shall inure to the benefit of and be binding upon the heirs,
executors, administrators, successors and assigns of the respective
parties hereto, always providing that nothing in this Section
contained shall impair any of the provisions herein above set forth
inhibiting assignment or other Transfer without the prior written
consent of Landlord.

 




28.


NOTICES.





 


Wherever in this
Lease one party hereto is required or permitted to give a notice,
request, demand, consent or approval to the other, such
communication shall be given in writing and shall be delivered
either personally, by a nationally or regionally known overnight
courier service (e.g. Federal Express, UPS) with proof of delivery,
or by facsimile or email .pdf attachment provided that a hard copy
of such notice is sent concurrently by a nationally known overnight
courier service to Landlord or Tenant as set forth in Sections 1.11
or 1.12, respectively, of the Basic Lease Provisions. Either party
may change its address for notice by written notice given to the
other in the manner hereinabove provided. Any such communication
shall be deemed to have been duly given on the date personally
delivered or delivered by courier service or, if delivered by mail
as provided above, on the third business day after
mailing.

 




29.


QUIET ENJOYMENT.





 


Landlord covenants
and warrants that upon Tenant’s paying the Rent and
Additional Rent, and observing and performing all of the terms,
covenants and conditions to be observed and performed by Tenant
hereunder, Tenant may peaceably and quietly enjoy the Leased
Premises.

 




30.


SECURITY DEPOSIT.





 


Tenant
shall be required to pay a “Security Deposit” as set forth in
Section 1.9d of the Basic Lease Provisions (or as a condition of
transfer as set forth in 8.4 of this Lease), which will be held by
Landlord to secure Tenant’s performance under this
Lease.

 

 




 

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30.1 Tenant’s
Rights in Security Deposit. The Security Deposit shall not
be mortgaged, assigned, transferred or encumbered by Tenant, and
any such act on the part of Tenant shall be without force and
effect, and shall not be binding upon Landlord, and shall, at
Landlord’s election, constitute an event of default under
this Lease. Should Tenant comply with all of said terms and
promptly pay all Rent and all other sums payable by Tenant when due
to Landlord, said Security Deposit shall be returned in full to
Tenant (or, at Landlord’s option, to the last assignee of
Tenant’s interest hereunder) at the expiration of the term of
this Lease.

 


30.2 Landlord’s
Rights in Security Deposit. If any Rent or other sums due
hereunder shall be overdue and unpaid, or should Landlord make
payments on behalf of Tenant, or should Tenant fail to perform any
of the terms of this Lease, then Landlord may at its option and
without prejudice to any other remedy which Landlord may have on
account thereof, appropriate and apply said Security Deposit or so
much thereof as may be necessary to compensate Landlord toward the
payment of Rent or other sums due Landlord or for the loss or
damage sustained by Landlord due to such default on the part of
Tenant. In the event Tenant fails to occupy the Leased Premises in
accordance with the terms of this Lease, Landlord’s remedies
shall include, without limitation thereto, retention of all sums
deposited herewith or otherwise paid pursuant to this Lease.
Further, Landlord may apply the Security Deposit to repair damages
to the Leased Premises caused by Tenant or to clean the Leased
Premises upon termination of this Lease. In any and all such
events, Tenant shall within ten (10) days of demand, therefore,
restore said Security Deposit to the original sum
deposited.

 


In the
event of bankruptcy or other debtor-creditor proceedings against
Tenant, such Security Deposit shall be deemed to be applied first
to the payment of Rent and other sums due Landlord for all periods
prior to the filing of such proceedings.

 


The
Security Deposit shall not bear interest, nor shall Landlord be
required to keep such sums separate from its general
funds.

 




31.


LATE CHARGES.





 


Tenant
hereby acknowledges that late payment by Tenant to Landlord of Rent
or other sums due hereunder shall cause Landlord to incur costs not
contemplated by this Lease, the exact amount of which will be
extremely difficult to ascertain. Such costs include, but are not
limited to, processing and accounting charges. Accordingly, if any
installment of Rent or any other sums due from Tenant shall not be
received by Landlord or Landlord’s assignee within six (6)
days after the date due, then Tenant shall pay to Landlord a late
charge equal to five percent (5%) of such overdue amount plus any
attorney’s fees incurred by Landlord by reason of
Tenant’s failure to pay Rent and/or other sums when due
hereunder; provided that any payment postmarked by the 5th of the
month shall be presumed to be mailed in a timely manner. The
parties hereby agree that such late charge represents a fair and
reasonable estimate of the cost that Landlord will incur by reason
of the late payment by Tenant. Acceptance of such late charges by
Landlord shall in no event constitute a waiver of Tenant’s
default with respect to such overdue amounts, nor prevent Landlord
from exercising any of the other rights and remedies granted
hereunder. In addition, Tenant shall pay to Landlord interest at
the Interest Rate on any delinquent payments, commencing thirty
(30) days after the date payment was due and continuing until
paid.

 

 




 

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32.


INTERPRETATION.





 


The
words “Landlord” and “Tenant” as used
herein shall include the plural as well as the singular, and the
neuter shall include the masculine and feminine genders, and if
there be more than one Tenant, the obligations hereunder imposed
upon Tenant shall be joint and several. Except as the context may
otherwise require, the word “including” shall be
construed as though immediately followed by the phrase
“without limitation”. The marginal headings or titles
to the Sections of this Lease are not part of this Lease and shall
have no effect upon the construction or interpretation of any part
of this Lease, but are intended for the convenience of the parties
only.

 




33.


RELATIONSHIP OF THE PARTIES.





 


The
relationship of the parties hereto is that of Landlord and Tenant,
and it is expressly understood and agreed that Landlord does not in
any way nor for any purpose become a partner of Tenant or a joint
venturer with Tenant in the conduct of Tenant’s business or
otherwise, and that the provisions of any agreement between
Landlord and Tenant, relating to Rent, are made solely for the
purpose of providing a method whereby the Rent payments are to be
measured and ascertained.

 




34.


SEVERABILITY.





 


If any
term or provision of this Lease shall, to any extent, be determined
by a court of competent jurisdiction to be invalid or
unenforceable, the remainder of this Lease shall not be affected
thereby, and each term and provision of this Lease shall be valid
and enforceable to the fullest extent permitted by law. It is the
intention of Landlord and Tenant hereto that if any provision of
this Lease is capable of two constructions, one of which would
render the provision void and the other of which would render the
provision valid then the provision shall have the meaning which
renders it valid.

 




35.


QUITCLAIM.





 


Where
requested by Landlord, at the expiration or earlier termination of
this Lease, Tenant shall execute, acknowledge and deliver to
Landlord, within five (5) days after written request from Landlord
to Tenant, any quitclaim deed or other document required by any
reputable title company to remove the cloud of this Lease from the
real property subject to this Lease=.

 




36.


OTHER PAYMENTS TO BE CONSTRUED AS RENT. .





 


Failure
of Tenant to pay any personal property taxes, Impositions,
utilities, Insurance premiums, or any other obligations of Tenant
under the terms of this Lease which can be satisfied by the payment
of money by Tenant shall be deemed to be, and shall carry the same
consequences as, failure to pay any installment of
Rent.

 

 




 

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37.


INTEREST.





 


Any
amount owing from one party to the other under this Lease which is
not paid within thirty (30) days of the date when due shall
thereafter bear interest at the Interest Rate. As used herein, the
term “Interest Rate” means a per annum rate of interest
equal to the lesser of (i) ten percent (10%) per annum over the
then most recent annual prime or reference rate of interest
announced by Bank of America N.A. (or in the event Bank of America
N.A. ceases to publish a prime or reference rate, the prime rate of
a comparable national banking institution reasonably agreed upon by
the parties), or (ii) the maximum rate permitted by applicable
law.

 




38.


CONDITIONS.





 


It is
agreed between the parties hereto that all of the agreements herein
contained on the part of Tenant, whether technically covenants or
conditions, shall be deemed to be conditions at the option of
Landlord, conferring upon Landlord, in the event of default under
any of said agreements, the right to terminate this
Lease.

 




39.


JURISDICTION; ALTERNATIVE DISPUTE RESOLUTION.





 


Tenant
hereby consents and agrees that the courts of the City, County and
State as set forth in Section 1.5 of the Basic Lease Provisions
shall have jurisdiction over its person in actions arising under or
relating to this Lease, and Tenant agrees that any action brought
by it arising out of or relating to this Lease shall be filed in
said County. Landlord and Tenant agree that said City and County
shall for all purposes be considered the place in which this Lease
was entered into, notwithstanding the order in which, or the
location or locations at which, it may have been executed or
delivered. Notwithstanding the foregoing, the parties agree to the
following dispute resolution protocols with respect to mediation
for all disputes and arbitration for all disputes other than
non-payment of rent and Section 25.2(b)(3) and any and all
corresponding security agreements and instruments attached hereto,
referenced, and/or incorporated herein, as follows:

 


39.1 Mediation.
In the event of any dispute in relation to non-payment of rent or
otherwise arising out of or relating to this Lease that cannot be
resolved by direct negotiation, the parties agree to submit the
dispute to mediation before a neutral mutually selected by the
parties. In the event a neutral cannot be agreed upon, either party
may submit the matter to JAMS/San Jose, who will select a neutral
and conduct the mediation hearing. A party that fails to mediate in
good faith waives any and all right it might otherwise have to
reimbursement of attorney’s fees and costs under this
Lease.

 


39.2 Arbitration
For All Disputes Except Non-Payment of Rent. Any dispute,
claim or controversy, except the non-payment of Rent, arising out
of or relating to this Lease or the breach, termination,
enforcement, interpretation or validity thereof, including the
determination of the scope or applicability of this agreement to
arbitrate, shall be determined by arbitration in San Jose before
one arbitrator. The arbitration shall be administered by JAMS
pursuant to its Comprehensive Arbitration Rules and Procedures
pursuant to JAMS’ Streamlined Arbitration Rules and
Procedures. Any arbitration proceeding brought by the parties under
this provision shall be confidential. Judgment on the Award may be
entered in any court having jurisdiction. This clause shall not
preclude parties from seeking provisional remedies in aid of
arbitration from a court of appropriate jurisdiction.

 

 




 

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40.


TIME.





 


Time is
of the essence of this Lease and each and all of its
provisions.

 




41.


CORPORATE AUTHORITY.





 


If
Tenant is a corporation, Tenant shall deliver to Landlord on
execution of this Lease a certified copy of a resolution of its
board of directors authorizing the execution of this Lease and
naming the officers that are authorized to execute this Lease on
behalf of the corporation.

 




42.


LANDLORD EXCULPATION.





 


It is
expressly understood and agreed that notwithstanding anything in
this Lease to the contrary, and notwithstanding any applicable law
to the contrary, the liability of Landlord and the Landlord’s
members, owners, agents, employees, and partners (including any
successor landlord) (collectively, the “Landlord
Parties”) and any recourse by Tenant against Landlord or the
Landlord Parties shall be limited solely and exclusively to an
amount which is equal to the ownership interest of Landlord in the
Building in which the Leased Premises is located (excluding any
proceeds thereof), and neither Landlord, nor any of the Landlord
Parties shall have any personal liability therefor, and Tenant
hereby expressly waives and releases such personal liability on
behalf of itself and all persons claiming by, through or under
Tenant.

 




43.


ENTIRE AGREEMENT.





 


This
instrument, along with any exhibits and attachments attached or
referenced hereto constitutes the entire agreement between Landlord
and Tenant relative to the Leased Premises. Except as contained
herein, no person purporting to hold the authority to bind Landlord
to any statement, covenant, warranty, or representation shall be
deemed to have such authority, and Tenant agrees that it is not
reasonable for Tenant to have assumed that any person had or has
such authority. This agreement and the exhibits and attachments may
be altered, amended, or revoked only by an instrument in writing
signed by both Landlord and Tenant. Landlord and Tenant agree that
all prior or contemporaneous oral agreements between and among
themselves and their agents, including any leasing agent or lender,
and representatives relative to the leasing of the Leased Premises,
are merged in and revoked or superseded by this
agreement.

 




44.


NO RESERVATION OF PREMISES.





 


Submission of this
Lease shall not be deemed to be a reservation of the Leased
Premises. This Lease is subject to the review and mutual acceptance
of the final terms, conditions and related documents by Landlord.
Landlord shall not be bound hereby until Landlord delivers to
Tenant an executed copy of this Lease for the Leased Premises
signed by Landlord, having already been signed by Tenant. Landlord
reserves the right to exhibit and lease the Leased Premises to the
other prospective Tenants until such time as the delivery to Tenant
of this executed Lease.

 

 




 

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45.


UNAVOIDABLE DELAY.





 


With
the exception of Section 54, in the event that either party hereto
shall be delayed or hindered in or prevented from the performance
of any act required hereunder by reason of strikes, lockouts,
adverse weather (including rain), inability to procure labor or
materials, failure of power, restrictive governmental laws or
regulations, riots, insurrection, war, fire or other casualty or
other reason of a similar nature beyond the reasonable control of
the party delayed in performing work or doing the act required
under the terms of this Lease, then performance of such act shall
be excused for the period of the delay and the period from the
performance of any such act shall be extended for a period
equivalent to the period of such delay (any such delay is herein
referred to as an “Unavoidable Delay”). In no event
shall Tenant’s inability to satisfy a monetary obligation
hereunder constitute or be subject to Unavoidable
Delay.

 




46.


USA PATRIOT ACT COMPLIANCE.





 


Tenant
represents to Landlord that Tenant is not (and is not engaged in
this transaction on behalf of) a person or entity with which
Landlord is prohibited from doing business pursuant to any law,
regulation or executive order pertaining to national security
(“Anti-Terrorism
Laws”). “Anti-Terrorism Laws”,
as referenced above, shall specifically include, but shall not be
limited to, the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and obstruct Terrorism Act
of 2001, Pub. L. No. 107-56 (aka, the USA Patriot Act); Executive
Order 13224; the Bank Secrecy Act, 31 U.S.C. Section 5311 et. seq.;
the Trading with the Enemy Act, 50 U.S.C. App. Section 1 et. seq.;
the International Emergency Economic Powers Act, 50 U.S.C. Section
1701 et. seq.; sanctions and regulations promulgated pursuant
thereto by the Office of Foreign Assets Control
(“OFAC’’),
as well as laws related to the prevention and detection of money
laundering in 18 U.S.C. Sections 1956 and 1957, except, without
extension or relation to the Federal Controlled Substances
Act.

 




47.


BROKER.





 


The
parties represent that they have not engaged any real estate broker
or finder, and that no commissions or finder’s fees are due
in connection with this transaction. Landlord and Tenant shall each
hold the other harmless in the event of any breach of or
incorrectness of this representation.

 




48.


CONTINUING LEASE GUARANTY.





 


As a
condition to the effectiveness of this Lease, Tenant shall deliver
to Landlord concurrent with its delivery of this Lease, a guaranty
of Tenant’s obligations under this Lease in the form attached
hereto as Addendum I (the “Lease Guaranty”), which Lease
Guaranty has been duly executed by Indus Holding Company, a
Delaware corporation (“Indus”) and Edible Management,
LLC, a California limited liability company (“Edible”) as the Guarantors. Indus
and Edible’s obligations as Guarantors pursuant to the Lease
Guaranty shall be joint and several.

 

 




 

49









139 Zabala Road, Salinas CA



Cypress Holding Company Lease Agreement


 






 

 




49.


INTENTIONALLY OMITTED.





 




50.


DISABILITY ACCESS INSPECTION.





 


The
Leased Premises has not undergone inspection by a Certified Access
Specialist (CASp) (as that term is defined in California Civil Code
Section 55.52) within the meaning of California Civil Code Section
1938, and Landlord is not providing any representations or
warranties regarding whether the Leased Premises meets all
applicable construction-related accessibility standards. Further,
Tenant hereby acknowledges and agrees that, prior to the mutual
execution and delivery of this Lease, Landlord has disclosed to
Tenant the following disclosures required by California Civil Code
Section 1938: (i) as of the Effective Date, Landlord has not had
the Leased Premises inspected by a Certified Access Specialist
(CASp) (as that term is defined in California Civil Code Section
55.52); and (ii) “A Certified Access Specialist (CASp) can
inspect the subject premises and determine whether the subject
premises comply with all of the applicable construction-related
accessibility standards under state law. Although state law does
not require a CASp inspection of the subject premises, the
commercial property owner or lessor may not prohibit the lessee or
tenant from obtaining a CASp inspection of the subject premises for
the occupancy or potential occupancy of the lessee or tenant, if
requested by the lessee or tenant. The parties shall mutually agree
on the arrangements for the time and manner of the CASp inspection,
the payment of the fee for the CASp inspection, and the cost of
making any repairs necessary to correct violations of
construction-related accessibility standards within the
premises.” Therefore and notwithstanding anything to the
contrary contained in this Lease, Landlord and Tenant hereby agree
that, (a) Tenant may, at its option and at its sole cost, cause a
CASp to inspect the Leased Premises and determine whether the
Leased Premises complies with all of the applicable
construction-related accessibility standards under state law, (b)
the parties shall mutually coordinate and reasonably approve of the
timing of any such CASp inspection so that Landlord may, at its
option, have a representative present during such inspection, (c)
if Tenant elects to perform a CASp inspection, then such CASp
inspection shall be performed at Tenant’s sole cost and
expense, and a copy thereof shall be provided to Landlord. If such
CASp inspection notes any deficiencies, then within sixty (60) days
after receipt of the CASp inspection, Tenant shall remedy all such
deficiencies at Tenant’s sole cost and expense, and Tenant
shall obtain and provide to Landlord a copy of the CASp compliance
certificate (which shall, without limitation, confirm the
correction of all deficiencies noted in the CASp
inspection).

 




51.


COUNTERPARTS.





 


This
Lease may be executed in one or more counterparts (which may be
facsimile or .pdf e-mail counterparts followed by originals), each
of which will be deemed an original and all, taken together, will
constitute one and the same instrument.

 




52.


CONFIDENTIALITY.





 


Except
as set forth in the Estoppel Certificate described in Section 20
above, neither party shall disclose the economic terms of this
Lease to any third person without the prior written consent of the
other party hereto, specifically consenting to the particular
instance of such disclosure. Notwithstanding the preceding
sentence: (i) Tenant may disclose the Lease terms to any proposed
assignee (or its representatives and agents) permitted by the terms
of this Lease; and (ii) Landlord may disclose the Lease terms to
any prospective member, partner, co-venturer, lender, or purchaser
with respect to some or all of the Leased Premises (or such
person’s representatives and agents).

 

 




 

50









139 Zabala Road, Salinas CA



Cypress Holding Company Lease Agreement


 






 

 




53.


JOINT AND SEVERAL LIABILITY OF TENANT.





 


All
obligations of Tenant under this Lease are joint and several.
Landlord shall have the right, in its discretion, to enforce
Landlord’s rights under this Lease against each entity
signing this Lease as Tenant, individually, or against all of such
entities collectively, so that any one of the entities signing this
Lease as Tenant shall be bound to the provisions of this Lease and
shall be required to: 1) pay all Rent and other amounts from time
to time owed by Tenant under this Lease; and 2) perform all
obligations of Tenant under this Lease.

 




54.


EARLY TERMINATION IN THE EVENT OF FEDERAL INTERVENTION OR IF STATE
OR LOCAL LAWS RENDER TENANT’S USE UNLAWFUL.





 


This
Lease shall automatically terminate and shall be null, void and of
no force or effect if Federal, State, County or municipal legal
authorities notify either Landlord or Tenant that Tenant’s
use of the Leased Premises is not in compliance with Federal,
State, County or municipal law, or that Tenant is subject to any
civil or criminal sanctions or actions due to its use or occupancy
of the Leased Premises, or that Tenant is not authorized to conduct
its business activities on the Leased Premises. Notice from
Federal, State, County, or municipal legal authorities giving rise
to this Section 54 shall include, but not be limited to, any
official or departmental letters, correspondences, raids, arrests,
seizures, forfeiture notice, or any notice of any kind from or by
any Federal, State, County or municipal authorities addressed to
Tenant or Landlord that legal action or the threat of legal action,
whether civil, administrative, or criminal, is pending against
Tenant or Landlord as a result of Tenant’s use and operation
of the Leased Premises. If the Department of Justice makes any
changes to its federal enforcement priorities as set forth in its
enforcement memorandum entitled “Guidance Regarding Marijuana
Enforcement,” dated August 29, 2013, whether through issuance
of a subsequent enforcement memorandum or otherwise, that have a
direct adverse impact on the continued conduct of the business
activities on the Leased Premises, Landlord shall have the right,
in its sole but reasonable discretion, to require the curtailment
or modification of the Permitted Use hereunder or effect such other
modifications hereto or the termination of this Lease, as may
reasonably be required in response to changes in federal law
enforcement actions.. In the event of any required modification or
early termination pursuant to this section, Landlord shall incur no
liabilities, personal or otherwise, to Tenant, and in case of
termination neither party shall have any further obligation to the
other.

 




55.


CHANGES TO CALIFORNIA STATE MEDICAL MARIJUANA LAWS AND
REGULATIONS.





 


In the
event Tenant elects during the Term of this Lease to pursue a
license or licenses to operate at the Leased Premises under the
MMRSA or under the 2016 California Control, Regulate and Tax Adult
Use of Marijuana ballot initiative (“AUMA”) should it pass, Landlord
reserves the exclusive right to immediately amend this Lease in
order to ensure its compliance with either the MMRSA or the AUMA
and their corresponding regulations.

 

 




 

51









139 Zabala Road, Salinas CA



Cypress Holding Company Lease Agreement


 






 

 




56.


TERMINATION OF PRIOR LEASE AND LEASE GUARANTY.





 


Landlord and Tenant
hereby agree and acknowledge that (a) Landlord’s affiliate
Zabala Nurseries, LLC and Tenant’s affiliate Cypress
Manufacturing Company entered into that certain Lease Agreement
dated October 19, 2016 in connection with Leased Premises
(“Prior Lease”)
and (b) Guarantors provided that certain Lease Guaranty dated
October 19, 2016 in favor of Zabala Nurseries, LLC in connection
with the Prior Lease (the “Prior Guaranty”). Tenant, Landlord
and Guarantors have agreed to amend and restate the Prior Lease and
Prior Guaranty, each in its entirety, as more particularly set
forth herein upon the full execution and delivery of this Lease and
the Lease Guaranty required hereunder. To that end, upon
Landlord’s receipt of fully executed original counterparts of
the Lease and Lease Guaranty required hereunder, the Prior Lease
and Prior Guaranty shall automatically terminate and shall be of no
further force or effect and Landlord, Tenant and Guarantors shall
be relieved from all obligations under the Prior Lease and Prior
Guaranty. Landlord and Tenant also hereby acknowledge and agree
that that certain letter agreement between Zabala Nurseries, LLC
and Cypress Manufacturing Company dated December 15, 2016, is
hereby null and void and of no further force or
effect.

 


[signatures
on following page(s)]

 




 

52








 






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

 


	

Tenant:

	
 

	

CYPRESS
HOLDING COMPANY, LLC, a Delaware limited liability
company


	
 

	
 

	
 


	
 

	
 

	
 


	
 

	
 

	

By:

	


“Robert Weakley”





	
 

	
 

	

Name:

	

Robert
Weakley


	
 

	
 

	

Its:

	

CEO


	
 

	
 

	
 


	
 

	
 

	
 







 


 


	

Landlord:

	
 

	

TINHOUSE,
LLC, a Delaware limited liability company, d/b/a TINHOUSE PARTNERS,
LLC


	
 

	
 

	
 


	
 

	
 

	
 


	
 

	
 

	

By:

	


“Christopher Orosco”





	
 

	
 

	

Name:

	

Christopher
R. Orosco


	
 

	
 

	

Its:

	

Member


	
 

	
 

	
 


	
 

	
 

	

By:

	


“Patrick Orosco”





	
 

	
 

	

Name:

	

Patrick
W. Orosco


	
 

	
 

	

Its:

	

Member







 


 




 

53








 






 

 


EXHIBIT A




BUILDING FLOOR
PLAN

 


[Redacted
- Commercially sensitive information]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 




 








 






 


EXHIBIT B


 


ACKNOWLEDGMENT OF COMMENCEMENT
ESTOPPEL AGREEMENT

 



LANDLORD: Tinhouse, LLC, a Delaware limited liability
company, d/b/a Tinhouse Partners, LLC

 



TENANT: Cypress Holding Company, LLC

 



LOCATION OF PREMISES: 139 Zabala Road, Salinas, California
(the “Premises’’) For the Lease dated: April 1,
2017

 


This is
to certify:

 




1.

That the
undersigned Tenant occupies the Premises.





 




2.

That the Lease Term
will commence on ____________, 201_.





 




3.

That the Rent
Commencement Date will be April 1, 2017.





 




4.

That rent has been
prepaid in the amount of $____________ by Tenant to
Landlord.





 




5.

That a Security
Deposit has been paid in the amount of $____________ by Tenant to
Landlord.





 




6.

That as of this
date hereof, the undersigned Tenant is entitled to NO credit,
offset, or deduction in rent.





 




7.

That all
construction to be performed by Landlord is complete and has been
approved by Tenant.





 




8.

That the
undersigned Tenant claims no right, title, or interest in the above
described Premises, or right to the possession of said Premises
other than under the terms of said Lease, and that there are no
written or oral agreements affecting tenancy other than the
Lease.





 




9.

A list of the
Landlord Supplied FF&E is attached hereto as Schedule 1.





 


[Signatures
on the following page.]

 




 









139 Zabala Road, Salinas CA



Cypress Holding Company Lease Agreement



Exhibit B Page 2


 






	

Tenant:

	
 

	

CYPRESS
HOLDING COMPANY, LLC, a Delaware limited liability
company


	
 

	
 

	
 


	
 

	
 

	
 


	
 

	
 

	

By:

	
 


	
 

	
 

	

Name:

	

Robert
Weakley


	
 

	
 

	

Its:

	

CEO


	
 

	
 

	
 


	
 

	
 

	
 







 


 


	

Landlord:

	
 

	

TINHOUSE,
LLC, a Delaware limited liability company, d/b/a TINHOUSE PARTNERS,
LLC


	
 

	
 

	
 


	
 

	
 

	
 


	
 

	
 

	

By:

	
 


	
 

	
 

	

Name:

	

Christopher
R. Orosco


	
 

	
 

	

Its:

	

Member


	
 

	
 

	
 


	
 

	
 

	

By:

	
 


	
 

	
 

	

Name:

	

Patrick
W. Orosco


	
 

	
 

	

Its:

	

Member









 









139 Zabala Road, Salinas CA



Cypress Holding Company Lease Agreement



Schedule 1 Page 1


 










SCHEDULE 1


 



Landlord Supplied FF&E

 


[Redacted
- Commercially sensitive information]

 




 









139 Zabala Road, Salinas CA



Cypress Holding Company Lease Agreement



Exhibit C Page 1


 





 



EXHIBIT
C


 



CONDITION OF LEASEHOLD
SPACE



(Landlord’s Work and Tenant’s Work) -
“AS-IS” CONDITION

 




1.


Landlord’s Work.





 


1.1 Scope.
Landlord shall be responsible only for the performance of the work
described in Section
1.2 (“Landlord’s Work”), which shall be performed in
accordance with plans and specifications prepared by
Landlord’s architect. All other work, whether or not
designated as part of “Tenant’s Work” under
Section 2, shall be
performed by Tenant at Tenant’s sole cost and expense or, if
Landlord so elects, shall be performed by Landlord and reimbursed
by Tenant upon demand by Landlord.

 


1.2 Description
of Landlord’s Work. It
is hereby acknowledged that the Leased Premises are to be delivered
in an “as-is” condition, and that Landlord shall not be
required to perform any work on the Leased Premises, including in
the event that there exists a discrepancy between this Exhibit C
and the actual delivery condition of the Leased Premises.
Landlord shall not be responsible for, nor shall Landlord construct
any additional improvements in the Leased Premises, unless agreed
to by Landlord and Tenant in writing. Any such changes agreed to by
Landlord and Tenant shall be the sole cost and expense of Tenant
unless otherwise agreed to in writing by Landlord and Tenant.
Additional costs incurred which are Tenant’s responsibility
shall be paid for in advance of the work being performed unless
waived by Landlord in writing.

 


1.3 Acceptance
of Landlord’s Work. Upon execution of this Lease,
Tenant agrees that the Leased Premises is substantially complete.
Upon full execution of this Lease, Tenant and Landlord agree that
Landlord’s work is satisfactory to Tenant and shall execute
Exhibit B which is attached
to this Lease establishing the Effective Date. Landlord makes no
representations or warrantees about the condition of the Leased
Premises. Tenant hereby waives any right or claim arising out of
the condition of the Leased Premises, of the improvements or
appurtenances thereto, and Landlord shall not be liable for any
latent or patent defects therein.

 




2.


Tenant’s Work





 


2.1 Commencement
and Performance of Tenant’s Work. Upon execution of
this Lease, Tenant shall, subject to Section 1.7, at its sole cost
and expense, immediately proceed to perform “Tenant’s Work” (as defined in Section 2.2 below) and place
and install Tenant’s personal property, trade fixtures,
equipment and merchandise, including, without limitation, the
Collateral (“Tenant’s Property”) in the
Leased Premises. Tenant’s Work, and the installation of
Tenant’s Property, shall be performed in compliance with all
present and future State and local laws and regulations, including
Monterey County Code, and those reasonable rules established by
Landlord or Landlord’s architect or contractors. Upon final
completion of Tenant’s Work, Tenant shall furnish Landlord
with all certificates, permits and approvals relating thereto that
may be required by any governmental authority or insurance company.
Landlord shall have no responsibility for any loss of or damage to
any of Tenant’s Property so installed or left on the Leased
Premises. Tenant’s entry onto the Leased Premises shall be
subject to all of the provisions of the Lease, and at all times
after such entry, Tenant shall maintain or cause to be maintained
in effect insurance complying with the Lease.

 


 




 









139 Zabala Road, Salinas CA



Cypress Holding Company Lease Agreement



Exhibit C Page 2


 






 

 


2.2 Description
of Tenant’s Work. “Tenant’s Work” includes all
work, of any kind or nature whatsoever (other than Landlord’s
Work), required to complete the construction of, and improvements
in, the Leased Premises and to permit Tenant to open for business
and use the Leased Premises for the purpose set forth in the Lease,
including, without limitation, the purchase, installation and/or
performance, as appropriate, of the following:

 


2.2.1 Fixtures
and furnishings.

 


2.2.2 Special
lighting fixtures.

 


2.2.3 Tenant’s
signs, both interior and exterior (if approved).


 




2.2.4    
All
work other than that which is specifically designated as
Landlord’s Work. 

  




2.2.5 Any
and all other items required by Tenant.

 


2.2.6 All
State and local permit, licensing, and entitlement fees, sewer
hook-up fees and utility connection fees and assessments, whether
billed directly by governmental authorities or prepaid by Landlord
(in which event such amount shall be reimbursed by Tenant to
Landlord upon demand).

 


2.2.7 All
construction related debris will be removed from premises by
Tenant.

 


2.2.8 All
gas lines required by Tenant.

 


2.2.9 Any
required changes to the existing fire sprinkler
system.

 


2.3 Standards
of Construction. Tenant shall not be allowed to make any
roof penetrations without the prior written consent of Landlord.
Unless otherwise agreed in writing by Landlord, any roof
penetrations shall be made by Landlord’s roofing contractor,
and shall be paid by Tenant. All of Tenant’s Work shall be
designed by a qualified, licensed architect and shall be performed
under the supervision of such architect by financially sound and
bondable contractors of good reputation, in accordance with
Tenant’s plans which shall be approved in writing by Landlord
prior to Tenant’s commencement of Tenant’s Work
(“Tenant’s Plans”). All contractors performing
Tenant’s Work shall be subject to Landlord’s prior
approval, and Tenant shall not use any contractor not approved in
writing by Landlord. In connection with giving its consent,
Landlord may require that any contractor, or major subcontractors,
provide payment and completion bonds in such amount and with
sureties acceptable to Landlord. All work shall be performed in a
good and workmanlike manner, diligently prosecuted to completion,
using new materials of good quality. Tenant shall notify Landlord
at least twenty (20) days prior to the commencement of any portion
of Tenant’s Work, so that Landlord may post, file and/or
record a notice of non-responsibility or other notice required
under applicable mechanics’ lien laws. Upon completion of
Tenant’s Work, Tenant shall record in the office of the
County Recorder of the County in which the Leased Premises is
located a notice of completion or any other notice required or
permitted by applicable mechanics’ lien laws to commence the
running of, or terminate, any period for the filing of liens or
claims, and shall deliver to Landlord any certificate of occupancy
or other equivalent evidence of completion of Tenant’s Work
in accordance with the requirements of applicable law.
Tenant’s Work shall be performed in compliance with all
applicable laws, codes, rules and regulations of all governmental
and quasi­ governmental authorities with jurisdiction. All
contractors performing any portion of Tenant’s Work shall
maintain insurance which meets the requirements of the
Lease.

 


 




 









139 Zabala Road, Salinas CA



Cypress Holding Company Lease Agreement



Exhibit C Page 3


 






 

 


2.4 Cost
of Tenant’s Work. Tenant shall pay all costs and
expenses (including permit fees and other governmental fees and
exactions) due for, or purporting to be due for, all work, labor,
services, materials, supplies or equipment furnished, or claimed to
be furnished, to or for Tenant in connection with the performance
of Tenant’s Work, and Tenant shall keep the Leased Premises
free of all mechanics’, materialmen’s and other liens
arising therefrom. Tenant may contest any such lien, but only if
Tenant first procures and posts, records and/or files a bond or
bonds issued by a financially sound, qualified corporate surety in
conformance with the requirements of applicable law for the release
of such lien from the Leased Premises. Tenant shall pay and fully
discharge any contested claim or lien within five (5) days after
entry of final judgment adverse to Tenant in any action to enforce
or foreclose such lien. However, notwithstanding any such contest,
Landlord shall have the right at any time to pay any lien imposed
hereunder if in Landlord’s reasonable judgment such payment
is necessary to avoid the forfeiture, involuntary sale or loss of
any interest of Landlord. Tenant shall indemnify, defend, protect
and hold Landlord harmless of and from any and all loss, cost,
liability, damage, injury or expense (including attorneys’
fees) arising out of or in connection with claims or liens for
work, labor, services, materials, supplies or equipment furnished,
or claimed to be furnished, to or for Tenant in, upon or about the
Leased Premises.

 


2.5 Tenant
Allowance. Landlord agrees to pay to Tenant, if Tenant is
not then in default, an aggregate sum of Three Million and No/100
Dollars ($3,000,000.00) (the “Tenant Allowance”), pursuant to
the following terms and conditions:

 


2.5.1 Payment
of the Allowance. During the course of construction of
Tenant’s Work, Tenant may deliver to Landlord not more
frequently than once (1) every thirty (30) days for disbursement
(each, a “Disbursement
Request”) from the Tenant Allowance (not
including the Final Retention) which shall include, as applicable:
(i) a duly executed statement from Tenant or Tenant’s
contractor (“Contractor”) showing the schedule of values, by
trade, the percentage of completion of Tenant’s Work,
detailing the portion of Tenant’s Work completed and the
portion not completed (the “Statement of
Completion”) in the form attached hereto as
Exhibit D; (ii) invoices from all of Tenant’s agents,
consultants, contractors and vendors, as applicable, for labor
rendered and materials delivered to the Leased Premises with
respect to the requested disbursement of the Tenant Allowance; and
(iii) executed conditional mechanic’s lien releases from
Tenant’s Contractor and all of Tenant’s agents along
with unconditional mechanics lien releases with respect to payments
made pursuant to Tenant’s prior Disbursement Requests
hereunder, if applicable. The mechanic lien releases shall be in
form compliant with California Civil Code sections 8132, 8134,
8136, and 8138, as applicable. Promptly and in any event not later
than thirty (30) days following such request for disbursement from
Tenant, Landlord shall deliver a check directly to the Contractor
(or applicable Tenant’s agents) in payment of the lesser of:
(a) the amounts so requested by Tenant, less a ten percent (10%)
retention (the aggregate amount of such retentions to be known as
the “Final
Retention”), and (b) the balance of any remaining
available portion of the Tenant Allowance (not including the Final
Retention). Notwithstanding the foregoing, if any particular
expense item which is the subject of the Disbursement Request has
been completed in full or paid for in full and with respect to any
element of the work has been completed in full and the required
deliverables set forth above have been delivered to Landlord, then
Landlord shall not withhold the Final Retention but shall instead
pay to Tenant the full amount of the Disbursement Request relating
to the fully completed portion of the work or materials delivered,
as applicable. As of August 31, 2017 Landlord has paid to Tenant
Disbursements in the amount of One Million Four Hundred Sixty-Six
Thousand Eight Hundred Forty-Nine and 36/100ths Dollars
($1,466,849.36) with a retention in the amount of Fifty-Nine
Thousand Eighteen and 50/100ths Dollars ($59,018.50). Landlord has
further paid directly to Tenant’s vendors the amount of Three
Hundred Fifty-Two Thousand Five Hundred Twenty-Five and 63/100
($352,525.63).

 


 




 









139 Zabala Road, Salinas CA



Cypress Holding Company Lease Agreement



Exhibit C Page 4


 






 

 


2.5.2 Landlord’s
payment of such amounts shall not be deemed Landlord’s
approval or acceptance of the work furnished or materials supplied
as set forth in Tenant’s payment request. The Tenant
Allowance monies will be paid to Tenant only for Tenant’s
payment for so-called “hard costs” incurred in
connection with the performance of Tenant’s Work in the
Leased Premises, including the cost of raw materials, labor, and
permanent fixtures which shall run with and not be removed from the
land. For purposes of payment of the Tenant Allowance,
Tenant’s Work does not include inventory, supplies,
Tenant’s moveable property (excluding black-out shades and
canopy light fixtures), so-called “soft costs” such as
permitting fees or fees incurred for design professionals, or the
cost of training Tenant’s employees. The terms of this
provision will be a condition precedent to Tenant’s right to
receive the Tenant Allowance, and no portion of said sum shall vest
in Tenant, nor shall Tenant sell, assign, encumber or create a
security interest in the Tenant Allowance prior to full compliance
with the terms of this provision. The Tenant Allowance provided for
herein is for the purpose of constructing or improving qualified
long-term real property (within the meaning of Section ll0(c)(l) of
the Internal Revenue Code of 1986, as amended (the
“Code”)) for use in Tenant’s trade or
business (within the meaning of Section 110(c)(3) of the Code)
located at the Leased Premises. All improvements, additions,
property and fixtures constructed, acquired or installed by Tenant
at the Leased Premises and purchased with the Tenant Allowance (the
“Landlord-Funded
Improvements”) shall become the sole property of
Landlord upon the termination of this Lease. The Landlord-Funded
Improvements shall not include any construction, improvement,
addition, property or fixture that is not purchased with the Tenant
Allowance (“Tenant
Improvements”); nor shall the Landlord-Funded
Improvements include any of Tenant’s security systems, trade
fixtures, removable equipment (except as otherwise provided herein)
or merchandise to be sold. Tenant shall not be required to remove
the Landlord-Funded Improvements at the time that Tenant vacates
the Leased Premises. All Landlord-Funded Improvements shall be
treated as nonresidential real property owned by Landlord for tax
purposes (including for purposes of depreciation under Section
168(e)(2)(B) of the Code and determining gain or loss under Section
168(i)(8)(B) of the Code).

 


2.5.3 Final
Retention. Tenant shall request the Final Retention from
Landlord in writing upon satisfaction of all conditions set forth
below and upon satisfaction of said conditions and written request
from Tenant, a check for the Final Retention shall be promptly
delivered by Landlord to Tenant, but in no event longer than thirty
(30) days following the last to occur of: (i) Tenant delivers to
Landlord duly executed unconditional mechanics lien releases in
statutory form which lien releases shall cover an aggregate amount
paid by Tenant equal to or greater than the Tenant Allowance, (ii)
Tenant’s architect or Contractor delivers to Landlord a duly
executed certificate certifying that the construction of
Tenant’s Work paid for by the Tenant Allowance has been
substantially completed pursuant to the Landlord approved
Tenant’s Plans, (iii) the Rent Commencement Date has occurred
and Tenant has paid to Landlord the first month of Rent due and
owing pursuant to the Lease, and (iv) Tenant supplies Landlord with
evidence that all required governmental approvals required for
Tenant to legally occupy and operate in the Leased Premises have
been obtained including a final (or temporary) certificate of
occupancy (or the local equivalent thereof). If Landlord fails to
pay the Tenant Allowance within the time period described in this
Section 2.5, then and in that event, Tenant shall have the right to
deduct the Tenant Allowance from Tenant’s payment of Minimum
Monthly Rent next owing, until the Tenant Allowance has been so
reimbursed to Tenant.

 


[Signatures
on the following page.]

 




 









139 Zabala Road, Salinas CA



Cypress Holding Company Lease Agreement



Exhibit C Page 5


 






	


Tenant:

	
 

	

CYPRESS
HOLDING COMPANY, LLC, a Delaware limited liability
company


	
 

	
 

	
 


	
 

	
 

	
 


	
 

	
 

	

By:

	


“Robert Weakley”





	
 

	
 

	

Name:

	

Robert
Weakley


	
 

	
 

	

Its:

	

CEO


	
 

	
 

	
 


	
 

	
 

	
 







 


 


	


Landlord:

	
 

	

TINHOUSE,
LLC, a Delaware limited liability company, d/b/a TINHOUSE PARTNERS,
LLC


	
 

	
 

	
 


	
 

	
 

	
 


	
 

	
 

	

By:

	


“Christopher Orosco”





	
 

	
 

	

Name:

	

Christopher
R. Orosco


	
 

	
 

	

Its:

	

Member


	
 

	
 

	
 


	
 

	
 

	

By:

	


“Patrick Orosco”





	
 

	
 

	

Name:

	

Patrick
W. Orosco


	
 

	
 

	

Its:

	

Member







 


 




 









139 Zabala Road, Salinas CA



Cypress Holding Company Lease Agreement



Exhibit D Page 1 


 






 


EXHIBIT D


 



FORM OF STATEMENT OF
COMPLETION

 


STATEMENT OF
COMPLETION

 


	

Invoice
No.

	

10569,
10571, 10577, 10578, 10579, 10580


	

Project:

	

Greenhouse
2 Alterations


	

Date of
Issuance:

	

February
27, 2017


	

Owner:

	

Tinhouse
Partners, LLC


	

Tenant:

	

Cypress
Holding Company, LLC


	

Contractor:

	

Gordon
Paluck Electric


	

Contract
Date:

	
 


	

Work
Commencement:

	
 


	

Partial
Completion:

	
 


	

Substantial
Completion:

	
 


	

Final
Completion:

	
 


	

% of
Work Completed:

	
 







 


The
undersigned contractor certifies that to contractor’s
knowledge , information and belief that the work covered by the
statement has been completed as stated above.

 


	

By:

	
 


	
 

	

[Signature]


	
 


	

[Print
Name]


	
 


	

Its:

	
 







 

 


 

 




 








 






 



ADDENDUM I

 



LEASE GUARANTY

 


In
consideration the execution of that written Lease Agreement
(hereinafter referred to as the “Lease”), dated as April 1, 2017,
by and between Tinhouse, LLC, a Delaware limited liability company,
d/b/a Tinhouse Partners, LLC (as “Landlord”) and Cypress Holding Company, LLC, a
Delaware limited liability company (as “Tenant”) of those premises commonly known as
139 Zabala Road in the City of Salinas, County of Monterey, State
of California (the “Premises”), Indus Holding Company,
a Delaware corporation (“Indus”), Edible Management, LLC, a
California limited liability company (“Edible”), and Robert Weakley and
Michaela Weakley (Robert and Michaela being referred to herein
collectively as “Weakley” and Weakley, Indus and Edible
being referred to herein collectively as “Guarantor”) does hereby guarantee
unconditionally unto Landlord, its successors and assigns, the
prompt payment by Tenant of the rental and all other sums in said
Lease reserved in the manner and at the time therein prescribed and
the faithful performance by Tenant of all of the terms, covenants
and conditions therein provided to be performed by
Tenant.

 


1. Guarantor hereby
agrees and acknowledges that Landlord has informed Guarantor that
Landlord is entering into the Lease in direct reliance upon and on
the condition that Indus has and will build and maintain a tangible
financial net worth and ability to effectively guaranty
Tenant’s obligations under the Lease. Within ten (10)
business days after the effective date of the Lease, Indus shall
provide to Landlord the most current financials of the Indus and
Edible, which shall be certified by such parties’ chief
financial officers. In connection with such reliance, Guarantor
hereby acknowledges that during the Lease term, Indus shall
maintain its ownership interest of Caldixie Corp., a Delaware
corporation (“CalDixie”); Altai Brands,
Inc., a Delaware corporation (“Altai”); and Cypress
Holding Company, LLC, a Delaware limited liability company
(“Cypress Holding
Co.”) (or merge any such entity directly into
Guarantor), provided; however, that if the cultivation business is
producing sufficient cash flow to service the ongoing obligations
of Tenant, including under the Lease, in the reasonable
determination of Landlord, then any disposition of distribution
operations by Indus which are required to maintain compliance with
state laws applicable to the cannabis business shall not be
prohibited pursuant to this guaranty. Guarantor shall at all times
while this guaranty is in effect maintain a tangible financial net
worth and ability to effectively guaranty Tenant’s
obligations under the Lease. Guarantor’s violation of the
above shall constitute and be deemed an event of default by Tenant
under the Lease and a breach by Guarantor hereunder. Guarantor
hereby represents and warrants that any and all financial
statements, balance sheets, net worth statements and other
financial data which have heretofore been furnished to Landlord
with respect to Guarantor fairly and accurately present the
financial condition of Guarantor as of the date they were furnished
to Landlord and, since that date, there has been no material
adverse change in the financial condition of
Guarantor.

 


2. Indus and Edible
(as applicable) shall provide, subject to reasonable
confidentiality protections, (i) a copy of each such
Guarantor’s most recently filed federal income tax return
with all accompanying schedules not later than thirty (30) days
after filing thereof and at the request of Landlord in writing,
copies of the most recently filed federal income tax returns of all
affiliates and subsidiaries of each Guarantor, and (ii) to the
extent applicable, copies of all debt or equity/stock offerings and
corresponding valuations when new debt or stock is issued for Indus
and Edible, as applicable, not later than thirty (30) days after
any such equity/stock offerings, debt or stock is issued, as
applicable. If at any time Guarantor is a publicly-traded
corporation, delivery of Guarantor’s last published financial
information shall be satisfactory for purposes of this
subsection.

 


 




 








 






 

 


3. Guarantor hereby
represents and warrants to Landlord that (i) the corporate
structure of Indus is as set forth in this Section 3; (ii) Indus
has three wholly owned subsidiaries: CalDixie, Altai and Cypress
Holding Company, LLC.; (iii) Cypress Holding Company holds the
leasehold interest in 20 Quail Run and associated personal property
and subleases 20 Quail Run to Cypress Manufacturing Company; (iv)
Altai and CalDixie were formed to hold intellectual property
relating to the Altai and Dixie product brands, and to license such
rights to Tenant, as further described below; (v) Altai and
CalDixie have no operations or other assets or liabilities; (vi)
Indus and its subsidiaries, Altai and CalDixie, have entered into
intercompany agreements that have been structured to comply with
California not-for-profit restrictions on cannabis manufacturing
and sales activities; (vii) Cypress Manufacturing Company, is the
principal operating company to whom Indus and its subsidiaries have
licensed intellectual property rights and to whom Indus provides
loans; (viii) Cypress is obligated to repay such loans/advances and
to pay license fees to Indus and its subsidiaries; (ix) such
arrangements set forth in clauses (vi) through (viii) inclusive
were intended to provide economic benefit to Indus from the
intellectual property and funding made available to Tenant within a
legally compliant structure; (x) Edible provides management
services to Indus and Tenant and is controlled by Robert Weakley
and Mark Ainsworth who are its controlling owners; (xi) in the
event any new entities are formed which have a financial interest
in or otherwise benefit from the operations at the Premises and are
owned (partially or fully) or otherwise controlled (directly or
indirectly) by any officers, directors, owners or members of
Guarantor or Tenant, then any and all such new entities shall (a)
be wholly owned and controlled by Indus, or (b) if not wholly owned
and controlled by Indus, automatically be deemed a
“Guarantor” hereunder and shall, at Landlord’s
request, execute and deliver a guaranty of Tenant’s
obligations under the Lease in the same form as this guaranty; and
(xii) Guarantor hereby represents that as of the date of this
guaranty there are no such entities which shall benefit from the
operations at the Premises other than Guarantor, CalDixie, Altai,
Cypress Manufacturing Company, and Tenant, or, such entities shall
sign a separate guaranty of lease in a form materially the same as
this guaranty. Guarantor hereby agrees and acknowledges that
Guarantor will gain significant financial and other benefits
deriving from the execution of the Lease by Landlord and Tenant,
and Tenant’s use and occupancy of the Premises for purposes
permitted by the Lease.

 


4. This guaranty is a
continuing one and shall terminate only upon payment by Tenant of
all of the rental and other sums in said Lease reserved and upon
performance by Tenant of all duties and obligations therein
contained, with respect to the original term and any extensions,
until released as set forth below.

 


5. This guaranty shall
not be released, extinguished, modified or in any way affected by
failure on the part of the Landlord to enforce any or all of the
rights or remedies of Landlord against Tenant or any other person,
whether pursuant to the terms of said Lease or at law or in equity.
The Guarantor further agrees that it shall not be necessary for
Landlord, in order to enforce this guaranty, to institute suit or
exhaust its legal remedies against Tenant. This guaranty may be
immediately enforced upon any default by Tenant and the insolvency
of Tenant shall be deemed a default.

 


 




 








 






 

 


6. This guaranty shall
be binding upon the heirs, executors, administrators, and
successors of the Guarantor and may not be assigned without the
express written consent of Landlord. Indus hereby agrees and
covenants that if during the term of the Lease (and this guaranty)
Indus (or its assets) is ever acquired, transferred or conveyed,
either directly or indirectly (in a single transaction or a series
of related transactions) to any person, group or entity, then as a
condition to the effectiveness of such acquisition, disposition
and/or conveyance or change in control (whether through a stock
offering or otherwise) of Indus or its assets, as applicable, the
acquiring person or entity shall expressly assume all obligations
and duties of Indus as Guarantor set forth herein and failure of
such acquiring entity to expressly assume all such obligations and
duties shall result in an immediate breach of this guaranty and a
default under the Lease, without requirement of notice from
Landlord or opportunity to cure by Guarantor or
Tenant.

 


7. The Guarantor
waives notice: (a) of any default by Tenant (i) in payment of
Tenant of any of the rental or other sums hereby guaranteed and
(ii) in performance by Tenant of the terms, covenants and
conditions of said Lease and (b) of acceptance by Landlord of this
guaranty.

 


8. This guaranty shall
not be canceled, impaired, or otherwise affected by any deviation
from or alteration of the terms, covenants or conditions of said
Lease or by any permitted assignment or subletting of all or any
part of the interest of Tenant or Landlord therein. The Guarantor
agrees that Landlord may from time to time extend the time for
performance or otherwise modify, alter or change said Lease and any
or all provisions thereof and may extend the time for payment of
the rental and other sums hereby guaranteed and may receive and
accept notes, checks and other instruments for the payment of money
made by Tenant and extensions and renewals thereon without in any
way releasing or discharging the Guarantor from any obligations
hereunder. Notice of presentment of any such note or notes and/or
notice of default in the payment thereof at maturity and/or protest
or notice of protest thereof is expressly waived.

 


9. Guarantor hereby
irrevocably waives: (1) any notice of acceptance of this guaranty
by Landlord; (ii) any notice of Tenant’s default under the
Lease; (iii) any notice of any demand being made upon Tenant to
perform any obligation or cure any default under the Lease; (iv)
any notice of any waiver, or extension of the period for
performance, of any term, provision, covenant, warranty or other
obligation of Tenant; (v) any notice of any consent to any
substitute performance by Tenant in respect to any term, provision,
covenant, warranty or other obligation of Tenant; and (vi) any
notice of any accrual of Guarantor’s liability under this
guaranty. Without limiting the foregoing, with respect to the
obligations of Tenant under the Lease guaranteed hereunder,
Guarantor hereby expressly waives any and all benefits which might
otherwise be available under California Civil Code Sections 2809,
2810, 2819, 2821, 2839, 2845, 2848, 2849, 2850, 2899 and
3433.

 


10. It is specifically
acknowledged by Guarantor that all of the obligations of Tenant
under the Lease specifically survive any subletting or assignment
by Tenant of the Lease to any related or unrelated entity.
Similarly, it is acknowledged by Guarantor that the guaranty and
all of Guarantor’s obligations hereunder shall survive any
assignment or subletting by Tenant to any person or entity, and
Guarantor hereby waives, in such event, any right it may otherwise
have to insist that Landlord first pursue recovery under the Lease
from such assignee or Tenant.

 


 




 








 






 

 


11. In the event that
Landlord prevails in any action commenced by Landlord against the
Guarantor to enforce any of the terms or conditions of this
guaranty, Landlord shall be entitled to recover from the Guarantor
reasonable attorney’s fees and Landlord’s costs, which
shall be fixed as part of the costs by the court or judge thereof
in which such action shall be pending.

 


12. Guarantor hereby
represents and warrants to Landlord that the undersigned are
authorized to execute this guaranty on behalf of the Guarantor and
have been vested with all requisite authority to execute this
guaranty and bind Guarantor as set forth herein.

 


13. Each of the
undersigned Guarantors shall be jointly and severally liable for
all obligations of Tenant under the Lease and all obligations of
“Guarantor” under this
guaranty.

 


14. This guaranty shall
inure to the benefit of Landlord, its successors and assigns and
shall bind the successors and assigns of the
undersigned.

 


15. Notwithstanding
anything to the contrary herein, Landlord hereby agrees and
acknowledges that: (i) Weakley’s liability (in their personal
capacity) as Guarantor pursuant to this guaranty (the “Weakley Guaranty”) shall be
capped at a maximum amount of Three Million Dollars ($3,000,000.00)
regardless of the total liability of Guarantor hereunder, and (ii)
if all of the following conditions are satisfied, then the Weakley
Guaranty shall be deemed in abeyance and of no force and effect
after the expiration of the sixtieth (60th) month following the
Rent Commencement Date (“5th Anniversary Date”) if (1) as of the 5th Anniversary
Date, Tenant is not in default, (2) there shall not have been more
than four (4) events of default by Tenant under the Lease prior to
the 5th Anniversary Date, (3) Tenant provides evidence to
Landlord’s reasonable satisfaction that the cultivation
business at the Premises is producing sufficient cash flow to
service the ongoing obligations of Tenant (including under the
Lease), and (4) Indus has and maintains a verifiable tangible
financial net worth of not less than Five Million Dollars
($5,000,000.00), which net worth shall be demonstrated to Landlord
upon request at any time Tenant is in default under the Lease and
up to one additional time per year by way of financial statements,
balance sheets, net worth statements and/or other financial data
acceptable to Landlord in its good faith business judgment.
Notwithstanding the abeyance of the Weakley Guaranty as set forth
in clause (ii) above, if Indus’ verifiable tangible financial
net worth drops below Five Million Dollars ($5,000,000.00), then
the same shall not constitute a per se default under the Lease or
this Guaranty but the Weakley Guaranty shall automatically revive
and shall continue in full force and effect until such time as
Indus’ verifiable tangible net worth increases to or above
Five Million Dollars ($5,000,000). Landlord and Guarantor further
agree that if Guarantor is in strict compliance with all of the
terms and conditions set fo1th herein, including, without
limitation Sections 1, 2, 3 and 6, and Indus is sold, then the
Weakley Guaranty may be replaced and superseded by a replacement
personal guarantor reasonably acceptable to Landlord, after which
point the Weakley Guaranty shall be deemed forever terminated and
of no further force nor effect.

 


16. To facilitate
execution, this guaranty may be executed in as many counterparts as
may be convenient or required. It shall not be necessary that the
signature of, or on behalf of, each party, or that the signature of
all persons required to bind any party, appear on each counterpart.
All counterparts shall collectively constitute a single instrument.
It shall not be necessary in making proof of this guaranty to
produce or account for more than a single counterpart containing
the respective signatures of, or on behalf of, each of the parties
hereto. Any signature page to any counterpart may be detached from
such counterpart without impairing the legal effect of the
signatures thereon and thereafter attached to another counterpart
identical thereto except having attached to it additional signature
pages.

 


 




 








 






 

 


17. Guarantor
specifically understands that (A) Landlord and Tenant have reserved
the right to amend or modify the Lease without the need to obtain
the prior consent of Guarantor and (B) such amendments or
modifications may affect the scope of the obligations of guarantor.
Guarantor specifically waives any defense or claim based on the
foregoing amendments or modifications and agrees that no such
actions shall in any way release, diminish, discharge or affect the
absolute nature of the obligations of Guarantor. As a result,
Guarantor agrees that this guaranty is absolute, present and
unconditional and shall remain in full force and effect and shall
extend to any (1) renewal, extension, indulgence, modification or
amendment of the Lease; (2) Tenant holdover period; and (3)
assignment, subletting, or other transfer of Tenant’s
interests in the Lease, whether or not Guarantor consented to
foregoing and regardless of the materiality of the
same.

 


18. This guaranty will
continue unchanged by any bankruptcy, reorganization or insolvency
of Landlord or any successor or assignee thereof or by any
disaffirmance or abandonment by a trustee of Tenant. Guarantor
hereby waives any defense based upon any legal disability of Tenant
or any discharge or limitation of the liability of Tenant arising
by operation of law or any bankruptcy, reorganization,
receivership, insolvency, or debtor-relief proceeding. Guarantor
hereby agrees that this guaranty is enforceable notwithstanding the
bankruptcy of the Tenant, a former Tenant, an assignee, a
subtenant, a Guarantor or any replacement Guarantor and that
Landlord is not required to pursue claims in the bankruptcy (nor is
Landlord required to file a proof of claim) prior to pursuing its
rights under the guaranty. The undersigned hereby assign to
Landlord any rights Guarantors may have to file a claim and proof
of claim in any bankruptcy or similar proceeding of Tenant and any
awards or payments thereon to which the undersigned would otherwise
be entitled.

 


[signatures
on following page]

 




 








 






IN
WITNESS WHEREOF, the undersigned has executed this guaranty this
1st day of April, 2017.

 


	


GUARANTOR:


	
 


	

Indus
Holding Company,



	
a Delaware
corporation 



	
 
 



	

By:

	

“Robert
Weakley”





	
 

	

Robert
Weakley


	

Title:

	

Chief
Executive Officer







 


 


	

Edible
Management, LLC, a California limited liability
company


	
 


	
 


	

By:

	

“Robert
Weakley”





	
 

	

Robert
Weakley


	

Title:

	

CEO


	
 

	
 


	
 

	
 


	
 

	

“Robert
Weakley”





	
 

	

Robert
Weakley, an Individual


	
 

	
 


	
 

	
 


	
 

	

“Michael
Weakley”





	
 

	

Michael
Weakley, an Individual







 




 








 







First Addendum to Lease Agreement

 


This
first addendum to Lease Agreement (“Addendum”) is made
this 26th day of September, 2017, and adds to and amends that Lease
Agreement dated April 1, 2017 (“Lease”) between
Tinhouse, LLC (“Landlord”) and Cypress Holding Company,
LLC (“Tenant”). Should there be any conflict between
the Lease and this Addendum, this Addendum shall govern and
control.

 


The
Lease is hereby amended as follows as mutually agreed upon by the
Parties:

 


Any
reference in the Lease to either the Medical Marijuana Regulation
and Safety Act or to the 2016 California Control, Regulate and Tax
Adult Use of Marijuana is now collectively changed to the Medicinal
and Adult-Use Cannabis Regulation and Safety Act
(“MAUCRSA”).

 


Any
commercial medical cannabis activity undertaken at the Leased
Premises by Tenant shall be conducted in accordance and compliance
with the MAUCRSA , and Tenant shall continue to follow all of its
existing obligations and duties to Landlord pursuant to Sections
1.6 and 1.7 of the Lease in the context of the
MAUCRSA.

 


Notwithstanding
the stated Permitted Use and the provisions of Sections 1.6 and 1.7
of the Lease, Tenant shall not to be in default of Sections 1.6 or
1.7 of the Lease so long as its marijuana commercial activity at
the Leased Premises is conducted in compliance with applicable
California state and local laws governing the same including, but
not limited to, the MAUCRSA and Monterey County laws and
regulations.

 


Tenant
may engage in adult-use marijuana commercial activity at the Leased
Premises so long as Tenant applies for and receives all necessary
state and local licensing and permitting for such activity pursuant
to the MAUCRSA and Monterey County laws and regulations, and so
long as such activity is in compliance with the MAUCRSA and
Monterey County lavvs and regulations. In the event Tenant pursues
local and state licensure for any adult-use marijuana commercial
activity at the Leased Premises, Tenant shall follow and comply
with all of its existing duties, obligations, and those standards
for disclosures to Landlord set forth in the Lease.

 


In the
event Tenant elects during the Term to pursue a license or licenses
to operate at the Leased Premises under the MAUCRSA, Landlord
reserves the exclusive right to immediately amend the Lease in
order to ensure its compliance with the MAUCRSA and its
corresponding regulations.

 


To the
extent Tenant’s adult-use marijuana commercial activity at
the Leased Premises is deemed illegal by State or County laws or
regulations at any time during the Term, Tenant shall be obligated
to cease such use immediately in accordance with Section 54 of the
Lease, and any continued unlawful use thereafter shall constitute
an immediate default by Tenant under the Lease without the
requirement of notice or the opportunity to cure and shall subject
Tenant to the indemnification provisions set forth in Section
3.7(d) of the Lease. Section 54 of the Lease also applies to any
adult-use marijuana commercial activity undertaken by Tenant at the
Leased Premises.

 


All
other provisions in the Lease remain unchanged and are in full
force and effect.

 


[signature
page follows]

 




 








 






	


Tenant:

	
 

	

CYPRESS
HOLDING COMPANY, LLC, a Delaware limited liability
company


	
 

	
 

	
 


	
 

	
 

	
 


	
 

	
 

	

By:

	


“Robert Weakley”





	
 

	
 

	

Name:

	

Robert
Weakley


	
 

	
 

	

Its:

	

CEO


	
 

	
 

	
 


	
 

	
 

	
 







 


 


	


Landlord:

	
 

	

TINHOUSE,
LLC, a Delaware limited liability company, d/b/a TINHOUSE PARTNERS,
LLC


	
 

	
 

	
 


	
 

	
 

	
 


	
 

	
 

	

By:

	


“Christopher Orosco”





	
 

	
 

	

Name:

	

Christopher
Orosco


	
 

	
 

	

Its:

	

Member


	
 

	
 

	
 


	
 

	
 

	

By:

	


“Patrick Orosco”





	
 

	
 

	

Name:

	

Patrick
Orosco


	
 

	
 

	

Its:

	

Member







 

 


 


 




 








 







SECOND ADDENDUM TO LEASE AGREEMENT

 


THIS
SECOND ADDENDUM TO LEASE AGREEMENT (“Second Addendum”) is entered into
as of April 1, 2019 (“Second
Addendum Effective Date”), by and between TINHOUSE,
LLC, a Delaware limited liability company, d/b/a Tinhouse Partners,
LLC (“Landlord”), and CYPRESS HOLDING COMPANY, LLC, a Delaware
limited liability company (collectively, “Tenant”). Landlord and Tenant are
sometimes collectively referred to herein as the
“Parties”, and
individually, as a “Party”.

 



RECITALS

 



A.            Landlord
and Tenant entered into that certain Lease Agreement dated April I,
201 7, as amended by that certain First Addendum to Lease Agreement
dated September 26, 2017 (collectively, the “Lease”), wherein Landlord agreed
to lease to Tenant and Tenant agreed to lease from Landlord certain
real property more particularly described therein as the
“Premises”. All initially-capitalized terms used and
not otherwise defined herein shall have the same meanings given
such terms in the Lease.

 


B. Landlord
and Tenant now desire to amend the Lease, all as more specifically
set forth herein.

 



AGREEMENT

 


NOW, THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties agree as follows:

 


1. AMENDMENT OF
SECTION 1.10. Section 1.5 of the Lease is hereby amended and
replaced with the following:

 


“Description and Address of Leased
Premises. Real property consisting of approximately four
hundred forty-five thousand, three hundred eleven (445,311) square
feet of land (hereinafter referred to as the “Leased Premises”) improved with (i) greenhouses
containing approximately two hundred forty-eight thousand two
hundred twenty-seven (248,227) square feet (the “Greenhouses”), and (ii) a
warehouse/shop/office/dry room building containing approximately
six thousand thee hundred seventy-one (6,371) square feet (the
“Warehouse” and together with the Greenhouses
the “Buildings”) as shown on the building floor
plan (the “Building Floor
Plan”) attached hereto as Exhibit A, commonly referred to as 139
Zabala Road in the County of Monterey (“County”), and State of California (the
“State”), assessor’s parcel number 107-0
51-00 3-000 . The Leased Premises also contains hoop houses
containing approximately twenty-three thousand eight hundred eight
(23,808) square feet (“Hoop Houses”). The Greenhouses and Warehouse
collectively comprise approximately two hundred fifty-four thousand
five hundred ninety-eight (254,598) square feet (“Rentable Square Feet” or “Rentable Square Footage”). The
parties hereby agree that the Hoop Houses shall not be included in
the Rentable Square Footage and hereby agree and stipulate as to
the Rentable Square Footage of the Buildings (i.e.,
254,598).

 


 




 








 






 

 


“Greenhouse #2” shall mean the approximately
sixty-nine thousand , two hundred ninety-three (69,293) square foot
greenhouse located on the Leased Premises , and depicted on
Exhibit A attached
hereto.”

 


2. AMENDMENT OF
SECTION 1.8. The third sentence in Section 1.8 of the Lease
is hereby amended and replaced with the following:

 


“This Lease
shall terminate on December 31, 2034 (the “Termination Date”).”

 


3. AMENDMENT OF
SECTION 1.9.A. Section 1.9.a. of the Lease is hereby amended
and replaced with the following:

 


“Minimum Monthly Rent. Minimum Monthly
Rent shall initially be assessed in the amount of One Hundred
Forty-Two Thousand Nine Hundred Sixty-Five and 46/l00ths Dollars
($142,965.46) per month.”

 


4. ADDITION OF SECTION
1.9.f. The following shall be added as Section 1 .9.f. of
the Lease:

 


“Rental Increases: Minimum Monthly Rent
shall increase as follows:

 


(i) Commencing on April
l, 2019 and continuing until March 31, 2020: One Hundred
Seventy-One Thousand Ninety and 50/100ths Dollars ($171,090.50) per
month.

 


(ii) Commencing
on April 1, 2020 and continuing until March 31, 2027, on April 1st
of each year during such period Minimum Monthly Rent shall increase
to an amount equal to the Minimum Monthly Rent due and payable in
the preceding 12-month period multiplied by a fraction, the
numerator of which shall be the Consumer Price Index as of the most
recent reported date prior to such adjustment, and the denominator
of which shall be the Consumer Price Index as of twelve (12) months
prior thereto. The Consumer Price Index shall be deemed to mean the
U.S. Bureau of Labor Statistics, [Revised] Consumer Price Index for
all Urban Consumers (CPI-U), US City Average, Selected Data
(1982-84 = 100), not seasonally adjusted.” If such index
shall be discontinued, then any successor consumer price index of
the United States Bureau of Labor Statistics, or an alternate means
of cost price measurement, shall be used.

 


(iii) Commencing
on April 1, 2027 and continuing on each April I thereafter
throughout the Lease Term and any Extension Term(s), Minimum
Monthly Rent shall increase by two percent (2%) over the Minimum
Monthly Rent payable for the prior 12-month
period.”

 


5. AMENDMENT OF
SECTION 1.10. The first sentence in Section 1.10 of the
Lease is hereby amended and replaced with the
following:

 


“Tenant shall
have five (5) options (the “Extension Options”) to extend the Initial Term of the
Lease each for an additional period of five (5) years (the
“Extension
Term(s)”), on
the same terms and conditions contained herein, except for
adjustment of the Minimum Monthly Rent which shall be as provided
in Section 1.9.f. above.”

 


 




 








 






 

 


6. AMENDMENT OF
SECTION 3.7.b. The second sentence in Section 3.7.b of the
Lease is hereby amended as follows :

 


The
phrase “Landlord’s sole discretion” is hereby
amended and restated as “Landlord’s reasonable
discretion.”

 


7. AMENDMENT OF
SECTION 5.4. Section 5.4 of the Lease is hereby amended and
replaced with the following:

 


“5.4 Increases in Minimum Monthly Rent.
Minimum Monthly Rent shall automatically increase pursuant to the
terms and conditions set forth in Section 1.9.f,
above.”

 


8. AMENDMENT OF
SECTION 13.2. Section 13.2 of the Lease is hereby amended
and replaced with the following:

 


“Tenant shall
self-maintain the Leased Premises (including, without limitation,
plumbing, pipes, sewer and utility lines, electrical wiring and
conduits, HYAC and other building and utility systems) and directly
pay for all of maintenance and repair of the Leased Premises and
other improvements upon and about the Leased Premises so as to keep
the same in good, safe, and sanitary order and condition and in
compliance with all health and police regulations including making
any alterations or improvements to the Leased Premises necessitated
by the Americans with Disabilities Act or similar state statute s,
or as a result of other requirements of any statute or governmental
authority. If Tenant refuses or fails to so maintain and repair the
Leased Premises, then Landlord may elect (without any obligation)
to perform such maintenance and repairs on Tenant’s behalf
and bill Tenant for the cost plus ten ( l 0%) percent overhead, as additional
rent and Tenant agrees to reimburse Landlord for these costs, as
additional rent, within ten ( I 0) days of Landlord’s
billing.”

 


9. AMENDMENT OF
SECTION 13.4. Section 13.4 of the Lease is hereby amended
and replaced with the following:

 


“Land lord
shall not be obligated to make any improvements or repairs in or
upon the Leased Premises during the term of this Lease, it being
the intention that this Lease shall be what is commonly referred to
as a “triple net lease”, and Tenant shall be
responsible for all expenses of every kind and nature, including
capital improvements as well as operating
expenses.”

 


10. AMENDMENT OF
SECTION 15.1(5). Section 15.1(5) of the Lease is hereby
amended and replaced with the following:

 


“Intentionally
omitted.”

 


11. AMENDMENT OF
SECTION 54. Section 54 of the Lease is hereby amended and
replaced with the following :

 


 




 








 






 

 


“EARLY TERMINATION
IN THE EVENT OF FEDERAL INTERVENTION OR IF STATE OR LOCAL LAWS
RENDER TENANT’S USE UNLAWFUL. Landlord shall have the right, in its
sole and absolute discretion, to tem1inate the Lease if Federal,
State, or City legal or government authorities notify either
Landlord or Tenant that Tenant’s use of the Leased Premises
is not in compliance with Federal, State, or City law, or that
Tenant or Landlord is subject to any civil or criminal sanctions or
actions due to Tenant’s use or occupancy of the Leased
Premises, or that Tenant is not authorized to conduct the Permitted
Use on the Leased Premises. Notice from Federal, State, or City
legal or government authorities giving rise to this Section 54
shall include, but not be limited to, any official or departmental
or agency letters, correspondences, raids, arrests, seizures,
forfeiture notice, or any notice of any kind from or by any
Federal, State, or City legal or government authorities addressed
to Tenant or Landlord that legal action or the threat of legal
action, whether civil, administrative, or criminal, is pending
against Tenant or Landlord as a result of Tenant’s use and/or
operation of the Leased Premises. If Tenant receives any such
notices as aforementioned, Tenant shall provide Landlord with a
copy of any such notice within two (2) business days following
Tenant’s receipt thereof. If Congress fails to renew or
repeals the Rohrabacher­ Blumenauer Amendment at any time
during the Term, Landlord shall have the right, in its sole but
reasonable discretion, to require the elimination and cessation of
the Permitted Use hereunder . In the event of any termination
pursuant to this Section 54, Landlord shall incur no liabilities,
personal or otherwise, to Tenant, and in case of termination
neither party shall have any further obligation to the
other.”

 


Additionally, if
for any reason (including, without limitation, the application of
any express agreement of indemnification between Landlord and the
County of Monterey, California (the “County”)) Landlord is required to indemnify,
defend and/or hold harmless the County and/or its agents, officers
and employees from any claim, action or proceeding against them to
attack, set aside, void or annul the County’s approval of a
Use Permit for the development of the Leased Premises, then Tenant
shall defend, indemnify and hold harmless the Landlord and its
agents, officers, members, employees and representatives therefrom.
The foregoing obligation of Tenant shall include the obligation to
reimburse Landlord for any court costs and attorneys’ fees
which Landlord may be required to pay as a result of such claim,
action or proceeding.

 


12. AMENDMENT OF
EXHIBIT A. Exhibit A of the Lease is hereby amended and
replaced with the Building Floor Plan attached hereto to this
Second Amendment as Exhibit A.

 


13. ADDITION OF EXHIBIT
C SECTION 5.6. The following shall be added as Section 2.6
of Exhibit C of the Lease:

 


“2.6   Second Tenant Allowance.
Landlord agrees to pay to Tenant, if Tenant is not then in default,
an aggregate sum of Two Million Two Hundred Fifty Thousand and
No/100 Dollars ($2,250,000.00) (the “Second Tenant
Allowance”),
pursuant to the following terms and conditions:

 


 




 








 






 

 


2.6.1   Payment of the Second
Allowance. During the course of construction of
Tenant’s Work, Tenant may deliver to Landlord not more
frequently than once (l) every thirty (30) days for disbursement
(each, a “Disbursement
Request”) from
the Second Tenant Allowance (not including the Final Retention)
which shall include, as applicable: (i) a duly executed statement
from Tenant or Tenant’s contractor (“Contractor”) showing the schedule of values, by
trade, the percentage of completion of Tenant’s Work,
detailing the portion of Tenant’s Work completed and the
portion not completed (the “Statement of
Completion”) in
the form attached hereto as Exhibit D; (ii) invoices from all of
Tenant’s agents, consultants, contractors and vendors, as
applicable, for labor rendered and materials delivered to the
Leased Premises with respect to the requested disbursement of the
Second Tenant Allowance; and (iii) executed conditional
mechanic’s lien releases from Tenant’s Contractor and
all of Tenant’s agents along with unconditional mechanics
lien releases with respect to payments made pursuant to
Tenant’s prior Disbursement Requests hereunder, if
applicable. The mechanic lien releases shall be in form compliant
with California Civil Code sections 8132, 8134, 8136, and 813 8, as
applicable . Promptly and in any event not later than thirty (30)
days following such request for disbursement from Tenant, Landlord
shall deliver a check directly to the Contractor (or applicable
Tenant’s agents) in payment of the lesser of: (a) the amounts
so requested by Tenant, less a ten percent (10%) retention (the
aggregate amount of such retentions to be known as the
“Final Retention
“), and (b) the
balance of any remaining available portion of the Second Tenant
Allowance (not including the Final Retention). Notwithstanding the
foregoing, if any particular expense item which is the subject of
the Disbursement Request has been completed in full or paid for in
full and with respect to any element of the work has been completed
in full and the required deliverables set forth above have been
delivered to Landlord, then Landlord shall not withhold the Final
Retention but shall instead pay to Tenant the full amount of the
Disbursement Request relating to the fully completed portion of the
work or materials delivered, as applicable.

 


2.6.2   Landlord’s
payment of such amounts shall not be deemed Landlord’s
approval or acceptance of the work furnished or materials supplied
as set forth in Tenant’s payment request. The Second Tenant
Allowance monies will be paid to Tenant only for Tenant’s
payment for so-called “hard costs” incurred in
connection with the performance of Tenant’s Work in the
Leased Premises, including the cost of raw materials, labor, and
permanent fixtures which shall run with and not be removed from the
land . For purposes of payment of the Second Tenant Allowance,
Tenant’s Work does not include inventory, supplies,
Tenant’s moveable property (excluding black-out shades and
canopy light fixtures), so-called “soft costs” such as
permitting fees or fees incurred for design professionals, or the
cost of training Tenant ‘s employees. The terms of this
provision will be a condition precedent to Tenant’s right to
receive the Second Tenant Allowance, and no portion of said sum
shall vest in Tenant, nor shall Tenant sell, assign, encumber or
create a security interest in the Second Tenant Allowance prior to
full compliance with the terms of this provision. The Second Tenant
Allowance provided for herein is for the purpose of constructing or
improving qualified long-term real property (within the meaning of
Section 10(c)(l) of the Internal Revenue Code of 1986, as amended
(the “Code”)) for use in Tenant’s trade or
business (within the meaning of Section 1 I0(c)(3) of the Code)
located at the Leased Premises. All improvements, additions,
property and fixtures constructed , acquired or installed by Tenant
at the Leased Premises and purchased with the Second Tenant
Allowance (the “Landlord-Funded
Improvements”)
shall become the sole property of Landlord upon the termination of
this Lease. The Landlord-Funded Improvements shall not include any
construction, improvement, addition, property or fixture that is
not purchased with the Second Tenant Allowance (“Tenant Improvements”); nor shall the Landlord-Funded
Improvements include any of Tenant’s security systems, trade
fixtures, removable equipment (except as otherwise provided herein)
or merchandise to be sold. Tenant shall not be required to remove
the Landlord­ Funded Improvements at the time that Tenant
vacates the Leased Prem is es. All Landlord­ Funded
Improvements shall be treated as nonresidential real property owned
by Landlord for tax purposes (including for purposes of
depreciation under Section 168(e)(2)(B) of the Code and determining
gain or loss under Section 168(i)(8)(B) of the Code).

 


 




 








 






 

 


2.6.3.   Final Retention. Tenant shall
request the Final Retention from Landlord in writing upon
satisfaction of all conditions set forth below and upon
satisfaction of said conditions and written request from Tenant, a
check for the Final Retention shall be promptly delivered by
Landlord to Tenant , but in no event longer than thirty (30) days
following the last to occur of: (i) Tenant delivers to Landlord
duly executed unconditional mechanics lien releases in statutory
from which lien releases shall cover an aggregate amount paid by
Tenant equal to or greater than the Second Tenant Allowance, (ii)
Tenant’s architect or Contractor delivers to Landlord a duly
executed certificate certifying that the construction of
Tenant’s Work paid for by the Second Tenant Allowance has
been substantially completed pursuant to the Landlord approved
Tenant’s Plans, (iii) the Rent Commencement Date has occurred
and Tenant has paid to Landlord the first month of Rent due and
owing pursuant to the Lease, and (iv) Tenant supplies Landlord with
evidence that all required governmental approvals required for
Tenant to legally occupy and operate in the Leased Premises have
been obtained including a final (or temporary) certificate of
occupancy (or the local equivalent thereof). If Landlord fails to
pay the Second Tenant Allowance within the time period described in
this Section 2.6, then and in that event, Tenant shall have the
right to deduct the Second Tenant Allowance from Tenant’s
payment of Minimum Monthly Rent next owing, until the Second Tenant
Allowance has been so reimbursed to Tenant.”

 


14. CLARIFICATION OF
SUBLESSEE ENTITY. The entity referred to in the Lease
(including but not limited to that reference found in Section 8.2)
as ‘Cypress Manufacturing Company, a California
not-for-profit company’ is now registered with the State of
California as ‘Cypress Manufacturing Company, a general stock
corporation’. All references to Cypress Manufacturing Company
shall include and refer to the entity in both its past and current
structure Tenant represents that the requirements provided in
Section 8.2 relating to control of Cypress Manufacturing continue
to be met.

 


15. BALANCE OF TENANT
ALLOWANCE. Landlord and Tenant mutually agreed to apply a
credit against Tenant’s obligation to pay Rent in the amount
of Three Hundred Seventy Thousand Two Hundred Ninety and 18/l00ths
Dollars ($370,290.18) (the “Rent Credit”), and to
offset such Rent Credit by an equal debit to the unpaid balance of
the Tenant Allowance held by Landlord as provided in Section 2.5 of
Exhibit C of the Lease. After adjustment for the Rent Credit, the
remaining balance of the Tenant Allowance was One Hundred Two
Thousand Seven Hundred Nine and 77/l00ths Dollars ($102,709.77)
(the “Tenant Allowance
Balance”). The Tenant Allowance Balance was
paid in full by Landlord to Tenant on March 26, 2019.

 


16. TERMINATION OF
INDIVIDUAL GUARANTIES. The Lease is presently guaranteed by
Indus Holding Company, a Delaware corporation (“Indus”), Edible Management,
LLC, a California limited liability company (“Edible”), and Robert
Weakley and Michaela Weakley (Robert and Michaela being referred to
herein collectively as “Weakley”, and Weakley,
Indus and Edible being referred to herein collectively as the
“Guarantors”)
pursuant to that certain Lease Guaranty dated as of April l, 2017
(“Guaranty”).
Indus has informed Landlord that Indus is in the process of
consummating a reverse takeover transaction whereby, among other
things, Indus will become the subsidiary of a Canadian public
company in order to pursue an offering of stock on the Canadian
Securities Exchange, and that, upon completion of the stock
offering, Indus or Indus’ corporate successor will have a
market capitalization equal to or in excess of Four Hundred Million
US Dollars ($400,000,000). Based upon the information provided by
Indus, but effective only upon completion of the stock offering of
Indus as described above, Landlord hereby agrees that Weakley shall
be removed as a Guarantor and released from its obligations under
the Guaranty. Nothing herein shall terminate the Guaranty by Indus
or Edible, or otherwise release or modify the obligations of Indus
or Edible as Guarantors of the Lease.

 


 




 








 






 

 


17. INDEMNITY.
If for any reason (including, without limitation, the application
of any express agreement of indemnification between Landlord and
the County of Monterey, California (the “County”)) Landlord is
required to indemnify, defend and/or hold harmless the County
and/or its agents, officers and employees from any claim, action or
proceeding against them to attack, set aside, void or annul the
County’s approval of a Use Permit for the development of the
Leased Premises, then Tenant shall defend, indemnify and hold
harmless the Landlord and its agents, officers, members, employees
and representatives therefrom. The foregoing obligation of Tenant
shall include the obligation to reimburse Landlord for any court
costs and attorneys’ fees which Landlord may be required to
pay as a result of such claim, action or proceeding.

 


18. SEVERABILITY.
If any term or provision of this Second Addendum shall, to any
extent, be determined by statute or by a court of competent
jurisdiction to be invalid or unenforceable, the remainder of this
Second Addendum shall not be affected thereby, and each term and
provision of this Second Addendum shall be valid and enforceable to
the fullest extent permitted by law.

 


19. AUTHORITY.
Each of the individuals who have executed this Second Addendum
represents and warrants that he or she is duly authorized to
execute this Second Addendum on behalf of Landlord and Tenant, as
the case may be; that all corporate, partnership, trust or other
action necessary for such Party to execute and perform the terms of
this Second Addendum have been duly taken by such Party; and that
no other signature and/or authorization is necessary for such Party
to enter into and perform the terms of this Second
Addendum.

 


20. SUCCESSORS AND
ASSIGNS. This Second Addendum shall be binding upon and
shall inure to the benefit of the Parties and their respective
successors and assigns.

 


21. ENTIRE
AGREEMENT. The Lease as modified by this Second Addendum
contains all of the agreements and understandings relating to the
leasing of the Premises and the obligations of Landlord and Tenant
in connection with such leasing.

 


22. EFFECT OF
AMENDMENT. Except as expressly amended hereby , the terms
and provisions of the Lease are unmodified and in full force and
effect. In the event of any inconsistencies between the terms of
the Lease and the terms of this Second Addendum, the terms of this
Second Addendum shall govern and control.

 


23. COUNTERPARTS.
This Second Addendum may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

 


24. SECOND ADDENDUM
CONTINGENCY. Notwithstanding anything to the contrary
herein, this Second Addendum, may be rescinded by written notice
delivered by Landlord to Tenant within thirty (30) days after the
Second Addendum Effective Date in which event this Second Addendum
shall be deemed of no force or effect.

 



[Remainder of Page Intentionally Left Blank]

 




 








 






IN WITNESS WHEREOF, the Parties hereto
have executed this Second Addendum as of the day and year first
above written.

 



LANDLORD:

 



TINHOUSE, LLC, a Delaware limited liability company, d/b/a TINHOUSE
PARTNERS, LLC

 


	

By:

	


“Christopher Orosco”





	

Name:

	

Christopher
R. Orosco


	

Its:

	

Member


	
 


	
 


	

By:

	


“Patrick Orosco”





	

Name:

	

Patrick
W. Orosco


	

Its:

	

Member







 


 


 

 


	


TENANT:



CYPRESS  HOLDING COMPANY, LLC,


	
a Delaware limited
liability company


	
 


	

By:

	


“Robert Weakley”





	

Name:

	

Robert
Weakley


	

Its:

	

CEO







 




 


[SIGNATURES
FOLLOW ON NEXT PAGE]


 








 






CONFIRMATION
AND CONSENT OF GUARANTORS

 


The
undersigned Guarantors hereby (i) approve and consent to the
foregoing Second Addendum to Lease Agreement and all prior
amendments to the Lease, (ii) agree to its terms, and (iii) agree
that the Personal Guaranty dated as of December 16, 2015 and/or
March 2017 given by the undersigned remains in full force and
effect with respect to the Lease, as amended by the Second Addendum
and all prior amendments thereto shall cover and incorporate all of
the terms, conditions, obligations and liabilities of Tenant under
the foregoing Second Addendum in addition to all of the terms,
conditions, obligations and liabilities under the Lease as amended
by the Second Addendum and all prior amendments
thereto.

 


	


“Robert
Weakley”                                      





Robert Weakley, an Individual, Guarantor

	


“Mark
Ainsworth”                                      





Mark Ainsworth, an Individual, Guarantor


 







 


	


Indus Holding Company, a Delaware corporation


	
 


	
 


	

By:

	


“Robert Weakley”





	
 

	

Robert
Weakley, President







 


 


	


Edible Management, LLC, a California limited liability
company


	
 


	
 


	

By:

	


“Robert Weakley”





	
 

	

Robert
Weakley, President







 




 








 





  



EXHIBIT A 


 



BUILDING FLOOR PLAN

 


[Redacted
- Commercially sensitive information]