Exhibit
10.5


 


AMENDED
AND RESTATED AGREEMENT AND PLAN OF MERGER OF 

DIEGO PELLICER, INC., 

A
WASHINGTON CORPORATION, 

and


DIEGO
PELLICER WORLDWIDE INC., 

A
DELAWARE CORPORATION


  


This
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER (this “Agreement”), dated as of April 19, 2014 is
made by and between Diego Pellicer, Inc., a Washington corporation (“Diego Washington”), and
Diego Pellicer Worldwide Inc., a Delaware corporation (“Diego Washington”). Diego Delaware
and Diego Washington are sometimes referred to in this Agreement as the “Constituent Companies." This Agreement
amends, restates, replaces and supersedes in its entirety that certain Agreement and Plan of Merger between the Constituent Companies
dated as of January 23, 2014 (the “Prior Agreement").


 


RECITALS


 


A.           The
Constituent Companies hereby agree that it is in their mutual best interests to amend and restate the Prior Agreement, and to
replace it with this Agreement. The Constituent Companies hereby agree that the Prior Agreement shall be of no further force or
effect.


 


B.            Diego
Delaware is a corporation, duly organized and validly existing under the laws of the State of Delaware. As of the date of this
Agreement, pursuant to Diego Delaware's Certificate of Incorporation, as amended (the “Certificate of Incorporation”),
Diego Delaware has authorized: (i) 87,000,000 shares of Common Stock, par value $0.0001 per share, of which 13,520,000 are issued
and outstanding, and 2,480,000 are reserved for issuance under Diego Delaware's 2013 Equity Incentive Plan; and (ii) 13,000,000
shares of Preferred Stock, par value $0.0001 per share, which is designated Series A Preferred Stock, and 776,106 of which are
issued and outstanding.


 


C.            Diego
Washington is a corporation, duly organized and validly existing under the laws of the State of Washington. As of the date of
this Agreement, pursuant to Diego Washington's Articles of Incorporation, as amended (the "Articles of Incorporation"),
Diego Washington has authorized: (1) 33,700,000 shares of Common Stock, of which 7,300,000 are issued and outstanding,
and 2,800,000 are reserved for issuance under Diego Washington's 2013 Equity Incentive Plan; and (ii) 6,300,000 shares of Series
A Preferred Stock authorized, and 133,333 of which are issued and outstanding.


 


D.            The
stockholders Diego Delaware have entered into certain agreements binding themselves to vote in favor of the Merger with certain
exceptions.


 


E.             The
board of directors of each of Diego Delaware and Diego Washington have approved this Agreement and have directed that this Agreement
be executed by the undersigned officers.


 






    	 



    	 



    

 


AGREEMENT


 


In
consideration of the mutual agreements and covenants set forth herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Diego Delaware and Diego Washington hereby agree as follows:


 


1.           Merger


 


1.1           Merger.
Subject to the fulfillment of the conditions set forth in Section 1.2
below, and in accordance with the provisions of this Agreement, the Delaware General Corporation Law (the “DGCL”)
and the Washington Business Corporation Act (the “WBCA”), at Diego Delaware's sole discretion,
Diego Washington shall be merged with and into Diego Delaware (the "Merger"), and the separate existence
of Diego Washington shall cease and Diego Delaware shall be the surviving Company.


 


1.2           Conditions
Precedent. In no event shall Diego Delaware take any action to consummate the Merger until either: (i) the production, processing
and retailing of cannabis for recreational use in the United States becomes legally permissible for privately owned entities under
United States federal law; or (ii) Diego Washington or Diego Delaware receives the written consent of the Washington State Liquor
Control Board providing that Diego Washington, or its corporate successor, may continue to be a licensed cannabis retailer and/or
own cannabis retail entities in the State of Washington while also maintaining shareholders, directors, officers, and employees
who are residents of states other than the State of Washington (the “Condition Precedent”). Neither
party shall be obligated to take any action to consummate the Merger if the other party is in violation of any of the covenants
set forth in this Agreement. If Diego Delaware desires to consummate the Merger following the fulfillment of the Condition Precedent,
then Diego Delaware shall notify Diego Washington in writing not less than 60 days prior to the date that Diego Delaware files
the Certificate of Merger in connection with the consummation of the Merger (the “Consummation Notice”).
Notwithstanding the prior fulfillment of the Condition Precedent and delivery of the Consummation Notice, neither party
shall take any action to consummate the Merger if either party demonstrates, through reasonable and substantial evidence, to the
other party not later than 45 days following Diego Washington's receipt of the Consummation Notice that either party to this Agreement
or any of their respective directors, officers, employees or stockholders is more likely to become subject to federal criminal
charges as a result of the consummation of the Merger than they would be if the Merger was not consummated. If the consummation
of the Merger is rejected by Diego Washington pursuant to the terms of this Section 1.2 or Section 1.3 below, Diego Delaware may
submit a new Consummation Notice to Diego Washington at any time not less than 90 days after the date of rejection of the previous
Consummation Notice.


 


1.3         Disqualifying
Events. In no event shall Diego Washington be required to consummate or approve the Merger if; on the date of delivery of
any Consummation Notice:


 


(a)       Diego
Delaware is unable, or admits in writing its inability, to pay its debts generally as they mature;


 


(b)       Diego
Delaware has been dissolved or liquidated;


 






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(c)       Diego
Delaware has commenced a voluntary or involuntary case or other proceeding seeking liquidation, reorganization or other relief
with respect to itself or its debts under any bankruptcy, insolvency or other similar law nor or hereafter in effect or consented
to any such relief or to the appointment of or taking possession of its property by any official in an involuntary case or other
proceeding commenced against it; or


 


(d)       Diego
Delaware is subject to any outstanding injunction, order, decree, ruling, or charge, or is a party, or is threatened to be made
a party, to any such action, suit, proceeding, hearing, or investigation of, in, or before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction or before any arbitrator that is likely to have a Material Adverse
Effect (as defined below) on the business of Diego Delaware. For purposes of this section, "Material Adverse Effect"
shall mean the amount in controversy is greater than 10% of Diego Delaware's total assets.


 


1.4         Filing
and Effectiveness. Unless earlier abandoned pursuant to Sections 1.2 or 4.5 of this Agreement, or rejected pursuant to Section
1.3 of this Agreement, the Merger shall become effective upon completion of the following actions:


 


(a)       Diego
Washington's receipt of the Consummation Notice from Diego Delaware;


 


(b)       Adoption
and approval of this Agreement and the Merger by the respective shareholders of each of the Constituent Companies in accordance
with the applicable requirements of the DGCL, the WBCA and the bylaws of Diego Delaware and Diego Washington;


 


(c)       The
satisfaction or waiver of the Condition Precedent, the other terms of Section 1.2, and all of the conditions precedent to the
consummation of the Merger as specified in this Agreement;


 


(d)       The
Constituent Companies' receipt of all third party consents necessary for the legal consummation of the Merger as reasonably determined
by their respective boards of directors;


 


(e)       The
filing with the Secretary of State of Delaware of an executed Certificate of Merger meeting the requirements of the DGCL (the
“Certificate of Merger”); and


 


(f)       The
filing with the Secretary of State of Washington of executed Articles
of Merger meeting the requirements of the WBCA (the “Articles of Merger”).


 


The
date and time when the Merger becomes effective is referred to in this Agreement as the “Effective Time of the Merger.”
Copies of the Certificate of Merger and the Articles of Merger shall be held by each of the Constituent Companies and may be filed
by either of them upon the satisfaction of the terms and conditions of this Section 1.4.


 






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1.5         Effect
of the Merger. At the Effective Time of the Merger, the separate existence of Diego Washington shall cease and Diego Delaware,
as the surviving company, (a) shall continue to possess all of its assets, rights, powers and property as constituted immediately
prior to the Effective Time of the Merger, (b) shall be subject to all actions previously taken by its board of directors on its
behalf and Diego Washington's board of directors, (c) shall succeed, without other transfer, to all of the assets, rights, powers
and property of Diego Washington in the mariner more fully set forth in Title 8 Section 259 of the DGCL and Sections 23B.11.060
and 23B.11.100 of the WBCA, (d) shall continue to be subject to all of the debts, liabilities and obligations of Diego Delaware
as constituted immediately prior to the Effective Time of the Merger, (e) shall succeed, without other transfer, to all of the
debts, liabilities and obligations of Diego Washington in the same manner as if Diego Delaware had itself incurred them, all as
more fully provided under the applicable provisions of Title 8 Section 259 of the DGCL and Sections 23B.11.060 and 23B.11.100
of the WBCA, and (f) the Surviving Bylaws (as defined below) shall be effective for Diego Delaware as the surviving company, and
the Bylaws of Diego Washington shall have no further force or effect.


 


1.6         Assignment
and Assumption of Tax Liabilities. Upon the Effective Time of the Merger, in addition
to the effects on the assets, rights, powers and property, and the debts, liabilities and obligations of the parties hereto occurring
by operation of law as set forth in Section 1.5 above, Diego Washington hereby assigns, and Diego Delaware hereby assumes, all
of Diego Washington's on-going tax liabilities incurred prior to the Effective Time of the Merger.


 


2.          Charter
Documents, Directors and Officers


 


2.1         Certificate
of Incorporation. The Certificate of Incorporation of Diego Delaware as in effect immediately
prior to the Effective Time of the Merger shall continue in full force and effect as the Certificate of Incorporation of Diego
Delaware (the “Surviving Certificate of Incorporation”) until duly amended in accordance
with the provisions thereof and applicable law.


 


2.2         Bylaws.
The Bylaws of Diego Delaware as in effect immediately prior to the Effective Time of the Merger shall continue in full force
and effect as the Bylaws of Diego Delaware (the “Surviving Bylaws”) until duly amended
in accordance with the provisions thereof and applicable law.


 


2.3         Directors
and Officers. The members of the board of directors of Diego Delaware as of immediately
prior to the Effective Time of the Merger shall be the members of the board of directors of Diego Delaware, and members of the
board of directors shall serve until their successors shall have been duly elected and qualified or as otherwise provided by applicable
law, the Certificate of Incorporation or the Surviving Bylaws. The Chief Executive Officer of Diego Delaware as of immediately
prior to the Effective Time of the Merger shall be the Chief Executive Officer of Diego Delaware, and the Secretary of Diego Delaware
as of immediately prior to the Effective Time of the Merger shall be the Secretary of Diego Delaware, each of whom shall serve
until their successors shall have been duly appointed or as otherwise provided by applicable law or the Surviving Bylaws.


 






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3.          Manner
of Conversion of Securities


 


3.1          Conversion
of Shares. 


 


In exchange for all outstanding shares of Diego Washington,


 


	 	a)	At
    the Effective Time of the Merger, Diego Delaware shall deliver to Diego Washington 1,386,667 shares of Diego Delaware common
    stock.


 


	 	b)	In
    addition to a) above, in exchange for reduced consideration in the eventual Merger, Diego Delaware shall offer up to 1,066,661
    shares of Diego Delaware Series A stock to the current cash investors, note holders and Series A investors in amounts as listed
    on Exhibit A to this Agreement. Any shares not issued to those listed on Exhibit A will be added to the 1,386,667 shares in
    a) above.


 


	 	c)	Except
    as required by 3.6 below, in no event will Diego Delaware issue more than 2,453,328 shares, the "Merger Shares"
    to effect the purposes of this Agreement.


 


	 	d)	If
    after eight (8) years from the effective date of this Agreement, Diego Delaware has not consummated the Merger, the then remaining
    Diego Washington shareholders will have the right, but not the obligation, upon surrender of their Diego Washington equity
    interests, to exchange their pro rata, as if fully converted as in 3.3 below, equity interest in Diego Washington into their
    pro rata share of the remaining Merger Shares held by Diego Delaware that have not previously been issued under the terms
    of this paragraph 3.1.


 


	 	e)	If
    the language of a), b), c) and d) above does not properly effectuate or is somehow contrary to a conversion of shares and
    merger of the companies then each company shall execute an addendum to, or replacement for, this agreement that will accomplish
    the purpose of these paragraphs and at the same time allow for the intended merger.


 


No
fractional shares of Diego Delaware shall be issued upon the Conversion. In lieu of Diego Delaware issuing any fractional shares
upon the Conversion, Diego Delaware shall pay to any holders of Diego Washington Stock who would otherwise receive a fraction
of a share of Diego Delaware an amount equal to the product obtained by multiplying the value of one share of Diego Washington
Stock (determined by the quotient of the Diego Washington Enterprise Value divided by the number of shares of Diego Washington
Stock issued and outstanding) by the fraction of a share not issued pursuant to the previous sentence.


 


3.2         Dissenting
Shareholders. Any issued and outstanding shares of Diego Washington Stock held by persons who object to the Merger and comply
with Sections 23B.13.010 and 23B.13.020 and any other applicable provision of the WBCA as in effect at the Effective Time of the
Merger concerning the right of shareholders of Diego Washington to dissent from the Merger and demand payment of the fair value
of their Diego Washington Stock (the "Dissenting Shareholders") shall not be converted as described above,
but shall have the right to receive such consideration as may be determined to be due to such Dissenting Shareholders pursuant
to Sections 23B.13.210 through 23B.13.250 and any other applicable provision of the WBCA.


 






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3.3       Convertible
Securities. At the Effective Time of the Merger, each outstanding
warrant, option, or other security issued by Diego Washington that is exercisable for or convertible into shares of Diego Washington
Stock shall be converted into and exchanged for a substantially similar security entitling the holder thereof to acquire that
number of Diego Delaware's Common Stock that such security would have been exercisable for or convertible into had it been exercised,
exchanged, or converted immediately prior to the Merger. For purposes of clarity, this Section 3.3 shall not apply to the Diego
Washington Stock converted into and exchanged for Diego Delaware's Series A stock in the Merger pursuant to Section 33 above.


 


3.4        Certificates
of the Surviving Company. At the Effective Time of the Merger,
each certificate representing Diego Washington Stock or other securities of Diego Washington shall be deemed to evidence Diego
Delaware's Common Stock or other securities of Diego Delaware for which such Diego Washington Stock or other securities were converted,
subject to new or additional legends that Diego Delaware may require with respect to such certificates following the Effective
Time of the Merger. Each holder of an outstanding certificate representing shares of Diego Washington Stock or other securities
of Diego Washington may, at such holder's option, surrender the same for cancellation to Diego Delaware, and each such holder
shall be entitled to receive in exchange therefor a certificate or certificates representing the number of Diego Delaware's Common
Stock or other securities of Diego Delaware into which such holders' Diego Washington Stock or other securities were converted
as herein provided. The registered owner on the books and records of Diego Delaware of any shares of Diego Washington Stock or
other securities represented by such outstanding certificate shall, until such certificate shall have been surrendered for transfer
or conversion or otherwise accounted for to Diego Delaware, have and be entitled to exercise any voting and other rights with
respect to and to receive the distributions upon Diego Delaware's Common Stock or other securities represented by such outstanding
certificate as provided above.


 


3.5       Legends.
Each certificate representing shares of Diego Delaware's Common
Stock so issued in the Merger shall bear the same legends, if any, with respect to the restrictions on transferability as the
certificates of shares of Diego Washington Stock so converted and given in exchange therefor, unless otherwise determined by the
board of directors of Diego Delaware in compliance with applicable laws.


 


3.6         Adjustments
for Subdivisions or Combinations of Common Stock. In the event
the outstanding shares of capital stock of Diego Delaware shall be subdivided (by stock split, by payment of a stock dividend
or otherwise) into a greater number of shares of capital stock of Diego Delaware, the numbers of shares in 3.1 above shall, concurrently
with the effectiveness of such subdivision, be proportionately increased or decreased.


 


4.           General


 


4.1         Covenants
of Diego Delaware.


 


(a)    Diego
Delaware covenants and agrees that it will reserve, and at all times prior to the Effective Time of the Merger, keep in reserve,
enough shares of Diego Delaware's Common Stock to effectuate the Merger.


 






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(b)    Diego
Delaware covenants and agrees that, immediately following the Effective Time of the Merger, it will:


 


(i)         Qualify
to do business as a foreign corporation in the State of Washington and appoint an agent for service of process; and


 


(ii)        Take
such other actions as may be required by the Revised Code of Washington.


 


4.2         Covenants
of Constituent Companies.


 


(a)    The
Constituent Companies each covenant and agree that all issuances of shares of capital stock or any equity equivalents will be
for fair market value (as reasonably determined by such issuing company's board of directors), and that they will not waste any
corporate assets.


 


(b)    The
Constituent Companies each covenant and agree that, prior to the Effective Time of the Merger, each Constituent Company's respective
board of directors will not authorize or approve any cash dividends or distributions with respect to such Constituent Company's
capital stock or equity securities.


 


(c)    The
Constituent Companies each covenant and agree to use commercially reasonable efforts to have all holders of their equity securities
become bound by a drag-along provision substantially similar to that set forth in that certain Diego Pellicer Worldwide Inc. Voting
Agreement dated effective as of September 27, 2013, as the same may be amended from time to time.


 


4.3         Further
Assurances. From time to time, as and when required by Diego Delaware or by its successors or assigns, there shall be executed
and delivered on behalf of Diego Washington such deeds and other instruments, and there shall be taken or caused to be taken by
it such further and other actions as shall be appropriate or necessary in order to vest or perfect in or conform of record or
otherwise by Diego Delaware the title to and possession of all the property, interests, assets, rights, privileges, immunities,
powers, franchises and authority of Diego Washington and otherwise to carry out the purposes of this Agreement, and the officers
and directors of Diego Delaware are fully authorized in the name and on behalf of Diego Washington or otherwise to take any and
all such action and to execute and deliver any and all such deeds and other instruments.


 


4.4         Amendment.
Neither this Agreement nor any term hereof may be amended, waived, discharged, or terminated other than by a written instrument
referencing this Agreement and signed by each of the Constituent Companies.


 


4.5         Termination.
This Agreement shall terminate on the date that is 5 years after the date of submission of the first Consummation Notice that
is not rejected on the grounds that either party to this Agreement or any of their respective directors, officers, employees or
stockholders is more likely to become subject to federal criminal charges, or be more likely to lose one or more of their licenses
required to conduct business as a result of the consummation of the Merger than they would be if the Merger was not consummated.


 






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4.6         Registered
Office. The address of Diego Delaware's registered office in the State of Delaware is
2711 Centerville Road, Suite 400, Wilmington, Delaware 19904, County of New Castle. The name of its registered agent at such address
is Corporation Service Company.


 


4.7         Agreement.
Executed copies of this Agreement will be on file at the principal place of business of Diego Delaware at 3496 Fairview Way,
West Linn, OR 97068 and copies thereof will be furnished to any member of either Constituent Company, upon request and without
cost.


 


4.8         Governing
Law. This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall
be governed, construed and interpreted in accordance with the laws of the State of Delaware, without giving effect to principles
of conflicts of law.


 


4.9         Independent
Counsel. Each of the parties hereto have had the opportunity to engage independent counsel and affirm that they have satisfied
themselves as to the fairness of this agreement and hold the firm Carincross and Hempleman harmless as to their involvement with
the crafting of this agreement.


 


(signature
page follows)


 






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The
undersigned authorized representatives of each of the Constituent Companies have executed and acknowledged this Agreement as of
the date first set forth above.


 





	 	DIEGO PELLICER WORLDWIDE INC.,

    a Delaware corporation
	 	 	 
	 	By:	 
	 	 	Name:
    Ron Throgmartin
	 	 	Title:
    Chief Executive Officer
	 	 	 
	 	DIEGO PELLICER, INC., 

    a Washington corporation
	 	 	 
	 	By:	 
	 	 	Name:
    Peter Norris
	 	 	Title:
    Chief Executive Officer







 


 


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