Document:

Exhibit
10. 15 

 

FIRST
AMENDMENT TO AGREEMENT AND

PLAN OF MERGER AND REORGANIZATION

 

THIS
FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER AND REORGANIZATION (the “Amendment”) is made effective
as of June 7, 2019 (the “First Amendment Effective Date”) by and among HARVEST HEALTH & RECREATION,
INC., a corporation organized under the laws of British Columbia, Canada (the “Parent”), HARVEST CALIFORNIA
ACQUISITION CORP., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”), FALCON
INTERNATIONAL, CORP., a Delaware corporation (the “Company”), and each of the shareholders of the Company
who executes a counterpart signature to this Amendment (each a “Company Stockholders” and collectively,
the “Company Stockholders”), for the limited purposes as set forth herein. The Parent, Merger Sub, the
Company and the Company Stockholders may be collectively referred to herein as the “Parties” and individually
as a “Party”).

 

BACKGROUND

 

A.
The Parent, Merger Sub, the Company and the Company Stockholders are the parties to that certain Plan of Merger and Reorganization
dated as of February 14, 2019 (the “Agreement”); and

 

B.
The parties desire to amend certain parts of the Agreement as set forth below.

 

NOW,
THEREFORE, in consideration of the execution and delivery of the Agreement and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

 

1.
Section 1.01 of the Agreement is hereby amended by deleting Section 1.01(ooo) and replacing it with the following:

 

(ooo)
“Material Adverse Effect” means any event, occurrence, fact, condition or change that is, or could reasonably
be expected to become materially and substantially adverse to (a) the business, results of operations, financial condition or
assets of the Company, or (b) the ability of the Company Stockholders to consummate the Contemplated Transactions; provided, however,
that “Material Adverse Effect” shall not include any event, occurrence, fact, condition, or change, directly or indirectly,
arising out of or attributable to: (i) any changes, conditions or effects in the United States economy or securities or financial
markets in general; (ii) changes, conditions or effects that generally affect the industries in which the Company operates; (iii)
any change, effect or circumstance resulting from an action required or permitted by this Agreement, any change, effect or circumstance
resulting from any action taken with written consent of the Parent, which consent will not be unreasonably withheld or delayed
or conditioned, and any change, effect or circumstance required by Law; or (iv) conditions caused by acts of terrorism or war
(whether or not declared); provided further, however, that any event, occurrence, fact, condition, or change referred to in clauses
(i), (ii) or (iv) immediately above shall be taken into account in determining whether a Material Adverse Effect has occurred
to the extent that such event, occurrence, fact, condition, or change has a disproportionate effect on the Company compared to
other participants in the industries in which the Company conducts its business.

 

    	-1-

    	 

    

 

2.
Section 1.01of the Agreement is hereby amended by adding the following new Section 1.01(ccccc):

 

(ccccc)
“HSR Act” has the meaning set forth in Section 3.04(c).

 

3.
Section 2.02 of the Agreement is hereby amended by deleting the first sentence of the existing Section 2.02 in its entirety and
replacing it with the following two sentences:

 

Section
2.02. Closing. The consummation of the Contemplated Transactions (the “Closing”) shall take place on a
date to be specified by the Parties, as promptly as reasonably practicable (but in no event later than the third Business Day)
after satisfaction or waiver (by the Party for whose benefit the condition exists and to the extent permitted by Law) of the conditions
to closing as set forth in Article VI, or on such other date and at such other time as the Parties shall agree in writing. The
date on which the Closing occurs is referred to in this Agreement as the “Closing Date”.

 

4.
Section 2.05 of the Agreement is hereby amended by deleting the existing Section 2.05 in its entirety and replacing it with the
following:

 

Section
2.05. Merger Sub Stock. At the Effective Time, all outstanding shares of common stock, par value $0.01 per share, of Merger
Sub issued and outstanding immediately prior to the Effective Time shall be converted into and become, collectively, one validly
issued, fully paid and nonassessable share of common stock, no par value per share, of the Surviving Corporation and (ii) the
Surviving Corporation may issue up to 15,500,000 shares of its common stock to the Parent at an aggregate subscription price in
an amount representing the fair market value of the Merger Consideration as mutually determined by Parent and Merger Sub in consideration
for the Parent paying the Merger Consideration to the Company Stockholders.

 

5.
Section 2.06 of the Agreement is hereby amended by deleting the existing Section 2.06 in its entirety and replacing it with the
following:

 

Section
2.06 Merger Consideration

 

(a)
On the terms and subject to the conditions set forth in this Agreement, including, and in reliance on the representations, warranties
and covenants of the parties hereto, the aggregate consideration to be paid to the Company Stockholders in the Merger shall be
One Hundred Fifty Five Million US Dollars (US$155,000,000) payable on the Closing Date plus the Earnout Payment payable to the
Company Stockholders pursuant to Section 2.06(c), on the terms set forth therein, if applicable (collectively, the “Merger
Consideration”). The Merger Consideration shall be paid on the Closing Date in Multiple Voting Shares of the Parent.
The number of Multiple Voting Shares to be issued on the Closing Date (the “Exchange Shares”) shall
be determined by dividing the amount of the Merger Consideration (adjusted to Canadian dollars by multiplying the total Merger
Consideration by the daily average exchange rate published by the Bank of Canada on the date immediately prior to the Closing
Date) by 100 times the lower of (A) CAD$10.98; or (B) a price equal to the greater of (I) the closing price of the Parent’s
Subordinate Voting Shares on the CSE on the Business Day prior to the Closing Date (the “Closing Date Price”);
or (II) CAD$9.333.

 

    	-2-

    	 

    

 

(b)
The Merger Consideration and Exchange Shares shall be represented by one or more certificates or may be uncertificated, at the
election of the Parent and shall be made only in whole shares of Parent’s Multiple Voting Shares, and any fractional Multiple
Voting Shares shall be rounded down to the nearest whole share of Multiple Voting Shares.

 

(c)
The Company Stockholders shall be entitled to a one-time payment equal to Eighty-Five Million US Dollars (US$85,000,000) (the
“Earnout Payment”) which payment shall be added to the Merger Consideration, payable in Exchange Shares
on the Closing Date pursuant to Section 2.06(a), in the event the Company and its Subsidiaries on a consolidated basis generate
at least US$5.5 million in monthly gross revenues for any three consecutive month period between the Effective Date and the Closing
Date, and increase consumer package good (“CPG”) sales month-over-month during that same time period.

 

6.
The Preamble to Article III is hereby amended by deleting the existing language and replacing it with the following:

 

Except
as set forth in the correspondingly numbered Section of the Disclosure Schedules, the Company Stockholders and the Company represent
and warrant to Parent that the statements contained in this Article III are true and correct as of the Effective Date:

 

7.
Section 3.04(c) of the Agreement is hereby amended by deleting the existing Section 3.04(c) in its entirety and replacing it with
the following:

 

(c)
Except (i) for applicable requirements, if any, of the Securities Act. (ii) for the filing and recordation of appropriate merger
documents as required by the DGCL and (iii) the requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
(the “HSR Act”), neither the Company Stockholders nor the Company is or shall be required to give notice
to, or obtain Consent from, any Person in connection with the execution and delivery of this Agreement or the consummation or
performance of any of the Contemplated Transactions, or in order to be able to continue the business of the Company following
the Closing in substantially the same manner as conducted prior to the Closing (other than California State or Cathedral City
cannabis rules and regulations, as to which the Company makes no representation).

 

8.
Section 4.02 of the Agreement is hereby amended by deleting the existing Section 4.02 in its entirety and replacing it with the
following:

 

Section
4.02 No Conflicts; Consents. The execution, delivery and performance by Parent and Merger Sub of this Agreement and the other
Transaction Documents to which they are a party, and the consummation of the Contemplated Transactions and thereby, do not and
will not: (a) conflict with or result in a violation or breach of, or default under, any provision of the articles, notice of
articles, certificate of incorporation, by-laws or other organizational documents of Parent or Merger Sub; (b) conflict with or
result in a violation or breach of any provision of any Law or Governmental Order applicable to Parent or Merger Sub; or (c) require
the consent, notice or other action by any Person under any Contract to which Parent or Merger Sub is a party. No consent, approval,
Permit, Governmental Order, declaration or filing with, or notice to, any Governmental Authority is required by or with respect
to Parent or Merger Sub in connection with the execution and delivery of this Agreement and the other Transaction Documents and
the consummation of the Contemplated Transactions other than (i) the documents and consents required pursuant to Policy 6 of the
CSE, (ii) the applicable requirements, if any, of the Securities Act, (iii) the filing and recordation of appropriate merger documents
as required by the DGCL and (iv) the requirements of the HSR Act. Parent has provided to the Company true and complete copies
of the Organizational Document of Parent and Merger Sub as in effect as of the Effective Date. Neither Parent nor Merger Sub is
in default or in violation of any of its Organizational Documents.

 

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9.
Section 5.02(a) of the Agreement is hereby amended by deleting the existing Section 5.02(a) in its entirety and replacing it with
the following:

 

(a)
unless otherwise agreed to by the Parent, conduct the business of the Company in the Ordinary Course of Business and will use
commercially reasonable best efforts to maintain and preserve the assets of the Company, preserve intact the current business
organization of the Company, and user commercially reasonable efforts to maintain the relations and goodwill with customers, creditors,
employees, agents, and others having business relationships with the Company; provided that (i) Parent acknowledges that the Company
shall be permitted to pay cash compensation to the persons and entities, and in amounts equal to the amounts set forth in, the
Personnel Agreements through the Closing Date without violating this provision, (ii) no later than the First Amendment Effective
Date, the Company will enter into a lease with the Canyon Site Landlord on material terms and conditions no less favorable to
the Company than as set forth on Exhibit B (the “Canyon Site Lease”) and shall satisfy its obligations
thereunder, (iii) the Company shall commence construction on the site occupied by the Canyon Subsidiaries with a portion of the
proceeds of the CapEx Note, as defined below, and shall commence manufacturing and related construction with the remaining portion
of the proceeds of the CapEx Note and (iv) the Company shall otherwise be permitted to take actions expressly contemplated by
the terms and conditions of this Agreement, in the case of each of (i) through (iv), above, without violating this Section 5.02(a)
or any other provision to the contrary set forth in this Agreement; provided, further, that except with the prior written consent
of Parent (which consent shall not be unreasonably withheld or delayed or conditioned), and except as otherwise expressly permitted
or required under this Agreement, as amended, the Company shall not, nor shall it permit any of its Subsidiaries to: (A) amend,
modify or terminate any Material Contract; (B) enter into any Contract that, if in effect on the date hereof, would have been
a Material Contract; (C) waive any term of or any material default under, or release, settle or compromise any material claim
against the Company or any of its Subsidiaries or liability or obligation owing to the Company or any of its Subsidiaries, under
any Material Contract; (D) make or agree to make any capital expenditure, or incur any obligations or liabilities in connection
therewith, in excess of $1,000,000 in the aggregate;

 

10.
Section 5.02(e) of the Agreement is hereby amended by deleting the existing Section 5.02(e) in its entirety and replacing it with
the following:

 

(e)
cooperate with Parent with respect to all filings, permits or consents that Parent is required by Requirements of Law or other
Persons to make or obtain in connection with the Contemplated Transactions. In furtherance and not in limitation of the foregoing,
the Company agrees to make as promptly as practicable, to the extent it has not already done so, (i) an appropriate filing of
a Notification and Report Form pursuant to the HSR Act with respect to the Contemplated Transactions and (ii) to supply as promptly
as practicable any additional information and documentary material that may be requested or required by Requirements of Law and
to use its best efforts to cause the expiration, lapse or termination of the applicable waiting and other time periods (and any
extensions thereof) under the HSR Act and the receipt of Required Approvals under such other laws as soon as practicable; and

 

    	-4-

    	 

    

 

11.
Section 5.03(c) of the Agreement is hereby amended by deleting the existing Section 5.03(c) in its entirety and replacing it with
the following:

 

(c)
loans to the Company:

 

(i)
pursuant to one or more secured promissory note(s) in the aggregate principal amount of the total amount loaned pursuant to this
provision and with a maturity date of the first anniversary of the date of issuance of such note, which note shall bear simple
annual interest at a rate of 4.0% (the “Liquidity Note”), the proceeds of which shall be used to meet
the working capital needs of the Company, and the funding of which loan shall be as follows if and to the extent the Closing has
not occurred prior to such dates: (A) US$15,853,881.12, of which $853,881.12 has been previously advanced by Parent or will be
paid directly to one or more vendors by Parent and the balance of which will be advanced no later than three business days after
the date of this Amendment, (B) US$7,500,000 on July 1, 2019, and (C) thereafter such amounts as the Company and Parent shall
mutually agree, which shall be sufficient to meet reasonable operating expenses and growth targets of the Company; and

 

(ii)
not less than US$17,000,000 pursuant to a secured promissory note in the principal amount of US17,000,000 with a maturity date
which is thirty-six (36) months after the date of issuance of such note, which note shall bear simple annual interest at a rate
of 4.0% (the “CapEx Note”), the proceeds of which shall be used as follows: (A) US$11,000,000 shall
be used to fund manufacturing related construction (including, among other things, architect and engineering fees and expenses;
permit fees; utilities expenses; furniture, fixtures and equipment; and other costs reasonably associated with such construction)
at the premises located at 68625 Perez Road, Cathedral City, CA 92234 (the “Ireland Site”) and (B) US$6,000,000
for construction of leasehold improvements and related costs and expenses (including, among other things, architect and engineering
fees and expenses; permit fees; utilities expenses; furniture, fixtures and equipment; and other costs reasonably associated with
such construction) at the premises located at 67575 E. Palm Canyon Drive, Cathedral City, CA 92234 (the “Mor Furniture
Site”). Funding under the CapEx Note is contingent upon (A) the absence of a Company Party Default, (B) the Company
and each Company Subsidiary being in material compliance with each of the terms and conditions of the Liquidity Note and the CapEx
Note, (C) the Company or a Company Subsidiary entering into a lease for the Ireland Site and the Mor Furniture Site (with the
terms of the Mor Furniture Site lease substantially as set forth on Exhibit D attached to this Amendment and such lease being
entered into between the landowner and the Company), (D) prior to disbursement of funds under the CapEx Note, the Company providing
invoices, lien releases, evidence of payment of loan proceeds in accordance with previous loan advances or such other documents
as reasonably requested by Parent to verify proper use of funds under the CapEx Note and (E) the Company and the Company Subsidiaries
executing a promissory note, Security Agreement (as hereinafter defined) and financing statements reflecting the terms provided
for herein and such other terms and conditions reasonably required by Parent. The term “Security Agreement” means
a security agreement that provides for the following collateral: all tangible and intangible assets of the Company and each Company
Subsidiary, all Permits held by the Company and each Company Subsidiary, accounts receivables, trademarks and a pledge of 100%
of the ownership interests of the Company Subsidiaries owned by Parent. In addition, Security Agreement shall provide that an
event of default under the Promissory Note or any other Indebtedness of the Company or any of the Company’s Subsidiaries
owed or owing to Parent or any of its Affiliates (the “Existing Company Debt”) shall be deemed an event
of default under the Security Agreement.

 

    	-5-

    	 

    

 

provided
further that each of the Liquidity Note and the CapEx Note shall be: (A) secured by all assets of the Company and each Company
Subsidiary that can be secured by the filing of a UCC-1 financing statement listing the Company and each Company Subsidiary as
co-debtors and Parent of one of its Affiliates as creditor; (B) due and payable in full to Parent or its Affiliate within sixty
(60) days of any default under such note by the Company or any Company Subsidiary, including a Company Party Default or any change
of control of the Company; (C) upon any default under such note by the Company, including a Company Party Default, and if permitted
under applicable Law, convertible individually or in the aggregate (in each case in whole or in part) into common stock of the
Company at the option of Parent or Company on or prior to the maturity date thereof at a pre-conversion valuation of the Company
equal to US$250.0 million; and (C) in the event the Closing shall not have occurred, and if permitted under applicable Law, convertible
individually or in the aggregate (in each case in whole or in part) into common stock of the Company at the sole option of Parent
or the Company on or prior to the maturity date thereof at a pre-conversion valuation of the Company equal to US$250.0 million.
In the event of a conversion of the Liquidity Note or the CapEx Note, all Existing Company Debt shall be converted in accordance
with their terms and conditions prior to or at the same time as the Liquidity Note or the CapEx Note are converted.

 

12.
Section 5.03 of the Agreement is hereby further amended by adding the following new Section 5.03(e):

 

(e)
Parent agrees to grant options to purchase no less than 850,000 of the Parent’s Subordinate Voting Shares (the “Options”)
to Persons that were employees of the Company immediately prior to the Closing (622,500 of which shall be issued to employees
employed by the Company as of the Effective Date and up to 227,500 of which shall be issued to employees that the Company anticipates
hiring prior to the Closing). Parent shall grant such Options no later than 30 days following the Closing Date. The Options shall
vest as follows: 25% of the Options shall vest on each anniversary of the Vesting Commencement Date (as hereinafter defined),
such that all Option will be vested by the fourth anniversary of such date. The term “Vesting Commencement Date” shall
mean either (i) the date that is one (1) calendar year prior to the date of issuance of the Options for employees employed by
the Company as of such date or (ii) for employees of the Company that were not yet employed by the Company as of the date that
is one (1) calendar year prior to the date of issuance of the Options, the actual date of hire by the Company. In no event shall
the adjustment of the vesting schedule with respect to such Options have any impact on the actual date of issuance of such Option
or the applicable exercise or strike price related to such Options. With respect to employees hired or retained by the Company
after the date of the First Amendment Effective Date and prior to the Closing, the Company shall consult with Parent prior to
making a commitment with respect to an option package for such employees to ensure that the option commitment is in alignment
with Parent’s option program (and option packages then being offered by Parent to similarly situated employees of Parent)
as then in effect. All Options shall be issued pursuant to a Stock Option Agreement as adopted by Parent pursuant to and in accordance
with the terms of its stock incentive plan.

 

    	-6-

    	 

    

 

13.
Section 5.08 of the Agreement is hereby amended by deleting the existing Section 5.08 in its entirety and replacing it with the
following:

 

Section
5.08 Personnel Agreements. Effective as of the Closing, the Company or an affiliate of the Company shall enter into a master
services agreement with an affiliate of James Kunevicius and employment agreements with each of Edlin Kim, Mark Malatesta, Ryan
Rezaie and Jason Rezaie in the form of such agreement attached hereto as Exhibits E, F, G, H and I with compensation to commence
on the Closing Date (the “Personnel Agreements”). All obligations of the Company under the Personnel
Agreements shall be guaranteed by the Parent from and after the Closing, including without limitation all obligations with respect
to responsibilities/titles, salaries/fees, bonus amounts, benefits and other perquisites and all obligations to issue restricted
shares or restricted stock units of the Parent (without any strike price or exercise price in connection therewith) to the extent
contemplated therein and in the quantities and with the vesting schedules set forth in the Personnel Agreements.

 

14.
Section 5.09 of the Agreement is hereby amended by deleting the existing Sections 5.09(b) and 5.09(c) in their entirety.

 

15.
Article V of the Agreement is hereby amended by adding the following new Section 5.10:

 

Section
5.10 Parent’s Affirmative Covenants. Between the date of this Agreement and the Closing Date, the Parent shall make
as promptly as practicable, to the extent it has not already done so, (i) an appropriate filing of a Notification and Report Form
pursuant to the HSR Act with respect to the Contemplated Transactions and (ii) to supply as promptly as practicable any additional
information and documentary material that may be requested required by Requirements of Law and to use its best efforts to cause
the expiration or termination of the applicable waiting and other time periods (and any extensions thereof) under the HSR Act
and the receipt of Required Approvals under such other laws as soon as practicable.

 

16.
Section 6.01(a) of the Agreement is hereby amended by deleting the existing Section 6.01(a) and replacing it with the following:

 

(a)
All of the representations and warranties of the Company and the Company Stockholders contained in this Agreement shall be true
and correct in all material respects, other than Section 3.02 (Capitalization), which shall be true and correct in its entirety
in all respects (with the same effect as though such representations and warranties had been made on and as of the Closing Date,
subject to Section 9.14 below), except for such representations and warranties which are made as of a specified date, which shall
be true and correct in all respects or in all material respects, as applicable, as of such date.

 

    	-7-

    	 

    

 

17.
Section 6.01(g) of the Agreement is hereby amended by deleting the existing Section 6.01(g) in its entirety and replacing it with
the following:

 

(g)
The Parent shall have obtained all third-party approvals from all Governmental Authorities (including the expiration or termination
of any applicable waiting and other time periods (and any extensions thereof) under the HSR Act) deemed necessary by the Parent
in its commercially reasonable judgment in order to consummate the Contemplated Transactions including, but not limited to approval
from the CSE.

 

18.
Section 6.01 of the Agreement is hereby amended adding the following new Section 6.01(i):

 

(i)
First Western Holdings, LLC (“First Western”) shall have agreed to assign to Parent or an Affiliate
of Parent designated by Parent (the “New Tenant”), effective from and after the Closing and conditioned
solely on the occurrence of the Closing, all of First Western’s rights (and the New Tenant shall have assumed all of First
Western’s obligations) under the Lease Agreement between Terry William Ireland, Trustee of the T.W. Ireland Revocable Trust
dated April 28, 1992 (the “Ireland Trust”) and First Western, dated March 6, 2018 (the “Ireland
Lease”) and all subleases related to the Ireland Lease and (2) all of First Western’s rights as tenant under
the master leases dated in certain cases as of August 5, 2016 and in other cases as of April 25, 2017, for the premises located
at 68956 Perez Road Suites A, B, C, D, E, F, G and H-L, [68625 Perez Road, 68615A Perez Road and 68615B Perez Road, in Cathedral
City, California (the “Vista Leases”) and all subleases related to the Vista Leases, and First Western
shall have paid to the New Tenant all amounts previously paid as security deposits, tenant improvement allowances, other amounts
paid in excess of the amounts due by First Western to the landlord under the Vista Leases or prepaid rents (to the extent such
prepayment relates to a period that extends beyond the Closing Date) by third party subtenants to First Western, and, if required
by the Ireland Lease or the Vista Lease, the lessor(s) under the Ireland Lease and the Vista Lease, as applicable, shall have
consented to the assignment to (and assumption by) the New Tenant as contemplated in this subsection; provided that in connection
with such assignment and assumption, (i) the Parent and the New Tenant shall use commercially reasonable efforts to cause the
lessors under the Ireland Lease and the Vista Lease to have released First Western and its Affiliates, owners, managers and members
from all liability arising from and after the Closing Date under the Ireland Lease and the Vista Lease (whether as lessee, a guarantor
or otherwise) and (ii) Parent shall have agreed to indemnify, defend and hold harmless First Western and its Affiliates, owners,
managers and members from and against all liability arising from and after the Closing Date under the Ireland Lease and the Vista
Lease (whether as lessee, guarantor or otherwise). The Company shall cause First Western (A) to cooperate with the New Tenant
in the New Tenant’s efforts to obtain and to secure such consent as may be required to effect a valid transfer of the Ireland
Lease and the Vista Lease, (B) to cooperate with the New Tenant in any reasonable interim arrangement to secure for the New Tenant
the practical benefits of the Ireland Lease and the Vista Lease pending the receipt of the necessary consent or approval, and
(C) to make or complete such transfer or transfers as soon as reasonably possible.

 

    	-8-

    	 

    

 

19.
Section 6.02 of the Agreement is hereby amended by adding the following new Section 6.02(e):

 

(e)
The Company and the Company Stockholders shall have obtained all third-party approvals from all Governmental Authorities (including
the expiration or termination of any applicable waiting and other time periods (and any extensions thereof) under the HSR Act)
deemed necessary by the Company Stockholders in their commercially reasonable judgment in order to consummate the Contemplated
Transactions.

 

20.
Section 7.03 of the Agreement is hereby amended by deleting the existing Section 7.03(e) in its entirety.

 

21.
Article VII of the Agreement is hereby amended by adding the following new Section 7.06:

 

Section
7.06 Breakup Fee; Mutual No Shop.

 

(a)
Notwithstanding anything to the contrary set forth in this Agreement: in the event this Agreement has been terminated by the Company
pursuant to Section 7.03(d) due to (i) Parent’s failure to perform its obligations pursuant to Section 5.03(c) or Section
5.10, (ii) Parent’s breach of the terms and conditions of Section 7.06(c) if such breach is not cured within five business
days of written notice from the Company of such breach, provided that, prior to termination by the Company, the Parties have obtained
approval from the Department of Justice under the HSR Act to consummate such transactions (which approval may be an express approval,
early termination or expiration of the applicable waiting period following substantial compliance with any second request, or
the occurrence of any events or the satisfaction of any conditions which permit the Parties to consummate the transactions contemplated
by this Agreement without violating the HSR Act or any injunction or order of any court of competent jurisdiction) or (iii) Parent’s
failure to consummate the transactions contemplated by this Agreement in a commercially reasonable period of time after the Parties
have obtained approval from the Department of Justice under the HSR Act to consummate such transactions (which approval may be
an express approval, early termination or expiration of the applicable waiting period following substantial compliance with any
second request, or the occurrence of any events or the satisfaction of any conditions which permit the Parties to consummate the
transactions contemplated by this Agreement without violating the HSR Act or any injunction or order of any court of competent
jurisdiction), Parent shall pay to Company a cash breakup fee of US$50.0 million (the “Breakup Fee”);
provided that the Parent shall have no obligation to pay the Breakup Fee in the event any Governmental Authority obtains an injunction
from a court of competent jurisdiction enjoining the Closing in connection with any review under the HSR Act or the Parties agree
to terminate this Agreement in settlement of any claim by any Governmental Authority arising under any review under the HSR Act;
and (b) in the event that the Breakup Fee becomes payable, then payment to the Company of the Breakup Fee shall be the Company’s
sole and exclusive remedy as liquidated damages for any and all losses or damages of any nature against Parent and Merger Sub
and each of the Parent Parties in respect of this Agreement, any agreement executed in connection herewith, and the transactions
contemplated hereby and thereby, including for any loss or damage suffered as a result of the termination of this Agreement, the
failure of the Merger to be consummated or for a breach or failure to perform hereunder (whether intentionally, unintentionally,
or otherwise) or otherwise, and upon payment of such Breakup Fee no Parent Party shall have any further liability or obligation
relating to or arising out of this Agreement or the transactions contemplated hereby and thereby. Parent acknowledges and agrees
that the Company shall have the right and option, but not the obligation, in its sole discretion to pay with a portion of the
Breakup Fee by offsetting certain indebtedness of the Company owed to Parent (or to accept, in lieu of a portion of the Breakup
Fee, cancellation of indebtedness of the Company owed to Parent), which indebtedness shall be paid and payment applied as follows:
(i) first to the indebtedness referenced in the second parenthetical of the first paragraph of Section 5.03(a), (ii) second to
the Promissory Note and (iii) third, in the Company’s sole discretion among the outstanding Liquidity Note and the CapEx
Note.

 

    	-9-

    	 

    

 

(b)
From the date of this Agreement until the earlier of the Closing or the termination of this Agreement, the Company and the Company
Shareholders shall not, and shall not authorize or permit any of its Affiliates or Representatives to, directly or indirectly,
initiate, solicit, entertain, negotiate, accept or discuss any Company Acquisition Proposal from any Person (other than Parent
and its Affiliates) to acquire all or any material portion of the assets, properties, equity interests or equity interest equivalents
of the Company, whether by merger, purchase of equity, purchase of assets, tender offer or otherwise or provide any non-public
information to any third party in connection with a Company Acquisition Proposal or enter into any agreement, arrangement or understanding
requiring Company to abandon, terminate or fail to consummate the transactions contemplated hereby. For purposes hereof, “Company
Acquisition Proposal” means any inquiry, proposal or offer from any Person (other than Parent or any of its Affiliates)
to acquire all or any significant part of the assets, properties, equity interests or equity interest equivalents of the Company
or the Company Subsidiaries, whether by merger, purchase of equity, purchase of assets, tender offer or otherwise.

 

(c)
From the date of this Agreement until the earlier of the Closing or the termination of this Agreement, Parent shall not, and shall
not authorize or permit any of its Affiliates or Representatives to, directly or indirectly, initiate, solicit, entertain, negotiate,
accept or discuss any Competing Acquisition Proposal from any Person (other than the Company and its Affiliates) to acquire all
or any material portion of the assets, properties, equity interests or equity interest equivalents of any business that is a direct
competitor of the Company (including without limitation any cannabis consumer packaged goods companies, any cannabis distribution
companies and any cannabis manufacturing companies, in each case with material operations in California), whether by merger, purchase
of equity, purchase of assets, tender offer or otherwise or provide any non-public information to any third party in connection
with a Competing Acquisition Proposal. For purposes hereof, “Competing Acquisition Proposal” means any
inquiry, proposal or offer by or from any Person (other than Company or any of its Affiliates) to acquire all or any significant
part of the assets, properties, equity interests or equity interest equivalents of any business that is a direct competitor of
the Company (including without limitation any cannabis consumer packaged goods companies, any cannabis distribution companies
and any cannabis manufacturing companies, in each case with material operations in California), whether by merger, purchase of
equity, purchase of assets, tender offer or otherwise; provided that Competing Acquisition Proposal shall not include any transactions
that have been publicly announced by Parent.

 

    	-10-

    	 

    

 

22.
Section 9.01 of the Agreement is hereby amended by deleting the existing Section 9.01 in its entirety and replacing it with the
following:

 

Section
9.01 Expenses. Except as otherwise expressly provided herein, all costs and expenses, including, without limitation, fees
and disbursements of counsel, financial advisors and accountants, incurred in connection with this Agreement and the Contemplated
Transactions shall be paid by the Party incurring such costs and expenses, whether or not the Closing shall have occurred and
the filing fees for the premerger notification and report forms under the HSR Act shall be paid by Parent. Notwithstanding the
foregoing, Parent agrees that the Company may use a portion of the proceeds of the Liquidity Note to costs and expenses of the
Company (including without limitation attorneys’ fees and expenses and the fees and expenses of any retained experts and/or
consultants) reasonably incurred in connection with any requests for information submitted by Governmental Authorities under the
HSR Act and in connection with any litigation commenced by or against any Governmental Authorities relating to the transactions
contemplated by this Agreement under the HSR Act or under the Sherman Antitrust Act of 1890, as amended, the Clayton Antitrust
Act of 1914, as amended, or any rules and regulations promulgated thereunder. The amount of any amounts advanced may be added
to the Liquidity Note and shall be advanced by Parent when and as requested by counsel to the Company relating to HSR matters.

 

23.
Section 9.02 is hereby amended by deleting the address and contact information for counsel to the Company and replacing it with
the following:

 

Greenspoon
Marder LLP

1875 Century Park East, Suite 1900

Los Angeles, California 90067

Attn: Sander C. Zagzebski

E-mail: sander.zagzebski@gmlaw.com

 

24.
Article IX is hereby amended by adding the following new Section 9.14:

 

Section
9.14 Updated Disclosure Schedules. From time to time prior to the Closing, Company shall have the right (but not the obligation)
to supplement or amend the Disclosure Schedules with respect to any matter arising after the Effective Date, which, if existing,
occurring or known as of the Effective Date, would have been required to be set forth or described in the Disclosure Schedules
(each a “Schedule Supplement”). Any disclosure in any such Schedule Supplement shall not be deemed to
have cured any inaccuracy in or breach of any representation or warranty contained in this Agreement, including for purposes of
the indemnification or termination rights contained in this Agreement or of determining whether or not the conditions set forth
in Section 6.02(a) have been satisfied. Parent shall have the right to terminate this Agreement if a Schedule Supplement discloses
information that will have a Material Adverse Effect; provided, however, that if Parent does not elect to terminate this Agreement
within ten (10) Business Days of its receipt of such Schedule Supplement and/or elects to proceed with the Closing after receipt
of such Schedule Supplement, Parent shall be deemed to have irrevocably waived any right to terminate this Agreement with respect
to such matter and, further, shall have irrevocably waived its right to indemnification under Section 8.02 with respect to such
matter unless and to the extent Parent has within three (3) Business Days of its receipt of such Schedule Supplement (and in any
event prior to the Closing) provided written notice to the Company of the specific disclosures set forth on the applicable Schedule
Supplement with respect to which the Parent reasonably believes would result in an indemnifiable Losses and with respect to which
the Parent declines to waive its right to indemnification under Section 8.02 (the “Contested Disclosures”),
in which case (i) Company and Parent shall meet prior to the Closing to discuss such Contested Disclosures, determine in good
faith whether and to what extent the Contested Disclosures have or will result in indemnifiable Losses and the dollar value of
such Losses, (ii) if after meeting in accordance with clause (i), Company and Parent are unable to agree as to whether the Contested
Disclosures have or will result in indemnifiable Losses and the dollar value of such Losses, the Company and Parent will appoint
a mutually agreeable independent accounting firm (the “Accounting Firm”) (which Accounting Firm shall
be a national or regional accounting firm with experience in the cannabis industry that has no relationship with either Company
or Parent and the expenses of which shall be divided equally between Company and Parent) which shall act as an arbitrator of whether
the Contested Disclosures have or will result in Losses and the amount of such Losses, which Accounting Firm shall meet within
fifteen (15) calendar days of such referral to review materials and receive input from the Company and Parent as to the Contested
Disclosures, and which Accounting Firm shall use best efforts to determine within ten (10) calendar days following such meeting
to make a determination of whether the Contested Disclosures will result in Losses and, if so, the amount of such Losses (which
Accounting Firm’s review shall be limited solely to the disputed items relating to the Contested Disclosures and Losses,
if any, and which Accounting Firm’s determination shall not be outside the range defined by the respective amounts of Losses
presented by Company, on the one hand, and Parent, on the other hand, and which Accounting Firm’s determination shall be
final and binding upon, and non-appealable by, the Parties and their respective successors and assigns for all purposes of this
Agreement, and not subject to collateral attack for any reason absent manifest error, fraud or a demonstrable conflict of interest)
and (iii) after meeting in accordance with clause (i) and, if applicable, seeking a decision from an Accounting Firm in accordance
with clause (ii), the Parties shall consummate the Closing; provided that the Company Stockholders shall be obligated to indemnify
the Parent Indemnitees in an amount of fifty percent (50%) of the Losses (subject to the limitations set forth in Section 8.06),
if any, attributable to the Contested Disclosures.

 

    	-11-

    	 

    

 

25.
The Amended and Restated Disclosure Schedules of the Company, dated as of the First Amendment Effective Date, shall amend and
restate the Disclosure Schedules of the Company from and after the First Amendment Effective Date.

 

26.
The Agreement is hereby amended by deleting the originally attached Exhibit B in its entirety and replacing it with Exhibit B
attached to this Amendment. The Agreement is hereby further amended by including the several attachments marked Exhibits E, F,
G, H and I to this Amendment as exhibits to the Agreement.

 

27.
This Amendment shall be deemed part of, but shall take precedence over and supersede any provisions to the contrary contained
in the Agreement. All initial capitalized terms used in this Amendment shall have the same meaning as set forth in the Agreement
unless otherwise provided. Except as specifically modified hereby, all of the provisions of the Agreement which are not in conflict
with the terms of this Amendment shall remain in full force and effect.

 

28.
This Amendment is the first amendment to the Agreement and supersedes any other prior amendments, modifications or understandings,
written or oral, that purport to amend, modify or supplement in any way the express terms and conditions of the Agreement prior
to the date of this Amendment.

 

[Intentionally
Blank—Signature Page Follows]

 

    	-12-

    	 

    

 

IN
WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first above written.

 

	 	HARVEST
    HEALTH & RECREATION, INC.
	 	 	 
	 	By:	/s/
    Jason Vedadi
	 	Name:	Jason
    Vedadi
	 	Title:	Chairman
	 	 	 
	 	HARVEST
    CALIFORNIA ACQUISITION CORP.
	 	 	 
	 	By:	/s/
    Jason Vedadi
	 	Name:	Jason
    Vedadi
	 	Title:	Chairman
	 	 	 
	 	FALCON
    INTERNATIONAL CORP. 
	 	 	 
	 	By:	/s/
    James Kunevicius
	 	Name:	James
    Kunevicius
	 	Title:	Chief
    Executive Officer
	 	 	 
	 	COMPANY
    STOCKHOLDERS:
	 	 	 
	 	Kane
    Concepts, LLC
	 	 	                          
	 	By:	/s/
    James Kunevicius
	 	Name:	James
    Kunevicius
	 	 	 
	 	MK
    Point, LLC
	 	 	 
	 	By:	/s/
    Edlin Kim
	 	Name:	Edlin
    Kim
	 	 	 
	 	Rhino
    Group, LLC
	 	 	 
	 	By:	/s/
    Ryan Rezaie
	 	Name: 	Ryan
    Rezaie

 

    	-13-

    	 

    

 

	 	Grey
    Ghost Services, LLC
	 	 	 
	 	By:	/s/
    Mark Malatesta 
	 	Name: 	Mark
    Malatesta
	 	 	 
	 	BAM668,
    LLC
	 	 	 
	 	By:	/s/
    Michael Kelly 
	 	Name:	Michael
    Kelly
	 	 	 
	 	Cannoisseur
    Capital, LLC
	 	 	 
	 	By:	/s/
    Edward Wong 
	 	Name:	Edward
    Wong
	 	 	 
	 	Swoish
    Family Trust
	 	 	 
	 	By:	/s/
    David Swoish 
	 	Name:	David
    Swoish, Trustee
	 	 	 
	 	Betterworld
    Ventures, LLC
	 	 	 
	 	By:
    	/s/
    Paul Garrett 
	 	Name:
    	Paul
    Garrett
	 	 	 
	 	/s/
    Albert Kim
	 	Albert
    Kim, an individual
	 	 	 
	 	/s/
    Johnny Nasori
	 	Johnny
    Nasori, an individual
	 	 	 
	 	/s/
    Noah Novello
	 	Noah
    Novello, an individual
	 	 	 
	 	/s/
    Brian Brown
	 	Brian
    Brown, an individual
	 	 	 
	 	/s/
    Danielle Brown
	 	Danielle
    Brown, an individual
	 	 	 
	 	/s/
    David Mitchell
	 	David
    Mitchell, an individual

 

    	-14-

    	 

    

 

ATTACHMENT—EXHIBIT
D

 

67575
E. Palm Canyon Drive, Cathedral City, CA 92234 (Mor Furniture Building – A1 thru G1 Canyon, LLC)

 

-
5 year term with 5 x 5 year options (10% rate increase with each term extension).

 

-
Phase 1 (25,271 sq. ft) starting Sep 1, 2018 ($1.20/sq ft monthly rent + estimated $0.23/sq. ft CAM)

 

-
Phase 2 (~33,000 sq. ft) starting Jan 1, 2019 ($1.10/sq ft monthly rent + estimated $0.23/sq. ft CAM)

 

-
Phase 3 (~41,700 sq. ft) starting March 1, 2019 ($1.10/sq ft monthly rent + estimated $0.23/sq. ft CAM)

 

-
All rent prior to March 1, 2019 shall be deferred and spread evenly across the next 36 months of the lease term starting with
the March 1 payments.

 

-
All rent from March 1, 2019 through June 1, 2019 plus one month security deposit will be due at lease signing, which must be completed
before May 31, 2019.

 

    	-15-

    	 

    

 

ATTACHMENT—EXHIBIT
E

 

FORM
OF MASTER SERVICES AGREEMENT

 

BY
AND BETWEEN AN AFFILIATE OF PARENT

 

AND
J. VICIOUS, INC.

 

    	-16-

    	 

    

 

ATTACHMENT—EXHIBIT
F

 

FORM
OF EMPLOYMENT AGREEMENT

 

BY
AND BETWEEN AN AFFILIATE OF PARENT

 

AND
EDLIN KIM

 

    	-17-

    	 

    

 

ATTACHMENT—EXHIBIT
G

 

FORM
OF EMPLOYMENT AGREEMENT

 

BY
AND BETWEEN AND AFFILIATE OF PARENT

 

AND
MARK MALATESTA

 

    	-18-

    	 

    

 

ATTACHMENT—EXHIBIT
H

 

FORM
OF EMPLOYMENT AGREEMENT

 

BY
AND BETWEEN AN AFFILIATE OF PARENT

 

AND
RYAN REZAIE

 

    	-19-

    	 

    

 

ATTACHMENT—EXHIBIT
I

 

FORM
OF EMPLOYMENT AGREEMENT

 

BY
AND BETWEEN AN AFFILIATE OF PARENT

 

AND
JASON REZAIE

 

    	-20-Exhibit 10. 16 

 

EXECUTION COPY

 

CERTAIN
CONFIDENTIAL INFORMATION (MARKED BY BRACKETS AS “[***]”) HAS BEEN

 EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (I)
NOT MATERIAL AND (II) WOULD BE

 COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED.

 

SECURED
PROMISSORY NOTE

 

	$40,353,881.12	June
    7, 2019

 

FOR
VALUE RECEIVED, each of Falcon International, Corp., a Delaware corporation (“Falcon International”) and
each of its subsidiaries who are signatories to this Note (individually, a “Borrower” and collectively, the
“Co-Borrowers”), hereby, jointly and severally, promises to pay to the order of Harvest Enterprises, Inc.,
a Delaware corporation (the “Holder”), the principal sum of up to $40,353,881.12 (the “Principal Amount”),
of which $853,881.12 has been previously advanced by Holder or will be paid directly to the vendor by Holder and the balance of
which shall equal the aggregate of all advances as set forth in Section 1, together with interest thereon beginning to accrue
on the date of the applicable advance of the Principal Amount pursuant to Section 1 (this “Note”). Interest
will accrue on each applicable advance constituting a portion of the Principal Amount at a simple rate of interest of four percent
(4%) per annum from and after the date such funds are advanced to one or more of the Co-Borrowers. Unless (a) earlier accelerated
by the Holder upon the occurrence of an Event of Default (as defined below) in accordance with Section 4 below, or (b)
a Corporate Transaction (as defined below) or sooner in accordance with Section 5 below, the principal of this Note and
all accrued unpaid interest will be due and payable by the Co-Borrowers thirty-six (36) months from the date hereof (the “Maturity
Date”). Upon the occurrence and during the continuance of an Event of Default, interest shall accrue on the outstanding
principal at the base rate of interest set forth above plus 10% per annum (a total of 14%) (“Default Rate Interest”).

 

Capitalized
terms not otherwise defined in this Note will have the meanings set forth in the Agreement and Plan of Merger and Reorganization
entered into among Harvest Health & Recreation, Inc., Harvest California Acquisition Corp., the Borrower and its shareholders
dated February 14, 2019 and amended on June 7, 2019 (the “Merger Agreement”).

 

1.       Advances.

 

1.1       Liquidity
Advances. Not less than $23,353,881.12, the proceeds of which shall be used to meet the working capital needs of the Co-Borrowers,
and the funding of which loan shall be as follows if and to the extent the Closing has not occurred prior to such dates: (A) $853,881.12
has been previously advanced by Holder or will be paid directly to the vendor by Holder, (B) US$15,000,000 within three business
days of the date hereof, (C) US$7,500,000 on July 1, 2019, and (D) thereafter such amounts as the Co-Borrowers and Holder shall
mutually agree, which shall be sufficient to meet reasonable operating expenses and growth targets of the Co-Borrowers; and

 

    	 

     

    

 

1.2       CapEx
Advances. Not less than $17,000,000, the proceeds of which shall be used as follows:

 

(a)       $11,000,000
shall be used to fund manufacturing related construction (including, among other things, architect and engineering fees and expenses;
permit fees; utilities expenses; furniture, fixtures and equipment; and other costs reasonably associated with such construction)
at the premises located at 68625 Perez Road, Cathedral City, CA 92234 (the “Ireland Site”); and

 

(b)       $6,000,000
for construction of leasehold improvements and related costs and expenses (including, among other things, architect and engineering
fees and expenses; permit fees; utilities expenses; furniture, fixtures and equipment; and other costs reasonably associated with
such construction) at the premises located at 67575 E. Palm Canyon Drive, Cathedral City, CA 92234 (the “Mor Furniture
Site”).

 

1.3       Conditions
of Advances. The Holder’s obligation to make advances to the Co-Borrowers under this Note is contingent upon (A) the
absence of a Company Party Default, (B) the Company and each Company Subsidiary being in material compliance with each of the
terms and conditions of this Note, (C) the Company or a Company Subsidiary entering into a lease for the Ireland Site and the
Mor Furniture Site as provided for in the Merger Agreement, (D) prior to disbursement of funds pursuant to Section 1.2 of this
Note, the Co-Borrowers providing invoices, lien releases, or other evidence of payment of loan proceeds in accordance with previous
loan advances and such other documents as reasonably requested by Holder and (E) the Co-Borrowers executing this Note, the Security
Agreement and the filing of financing statements reflecting the terms provided for herein.

 

2.       Payment.
Principal and accrued interest thereon is due and payable upon the Maturity Date; or if earlier, following the acceleration by
the Holder of payments of principal, interest, and any other payment under this Note upon the occurrence of an Event of Default
(as defined below) in accordance with Section 4 below or upon the occurrence of a Corporate Transaction as described in
Section 5 below.

 

2.1       All
payments will be made in lawful money of the United States of America at the principal office of the Holder, or at such other
place as the Holder may from time to time designate in writing to the Co-Borrowers. Payment will be credited first to accrued
interest due and payable, with any remainder applied to principal.

 

2.2       Prepayment
of principal, together with accrued unpaid interest, may be made at any time without the written consent of the Holder and without
any prepayment penalty.

 

3.       Security
Interests. This Note is secured by that certain Security Agreement between the Co-Borrowers and Holder dated as of the date
hereof.

 

    	2

     

    

 

4.       Events
of Default. The following events shall constitute an Event of Default (an “Event of Default”) under this
Note if not cured by the Co-Borrowers within the applicable time period set forth below after their occurrence:

 

4.1       Failure
of the Co-Borrowers to make payments of principal or accrued interest under this Note when due and such failure is not cured within
five (5) business days of written notice of such failure from the Holder to the Co-Borrowers;

 

4.2       Breach
by the Co-Borrowers of any of their covenants under this Note (other than those contemplated by Section 4.1) and such breach
has not been cured within sixty (60) days of written notice of its occurrence;

 

4.3       Breach
of any of the Co-Borrowers’ representations or warranties set forth herein or any Company Party Default as defined in the
Merger Agreement, and such breach, if curable, has not been cured within sixty (60) days of written notice by the Holder to the
Co-Borrowers thereof;

 

4.4       Any
of the Co-Borrowers, pursuant to or within the meaning of Title 11, U.S. Code, or any similar Federal, foreign or state law for
the relief of debtors (collectively, “Bankruptcy Laws”), (a) commences a voluntary case, (b) consents to the
entry of an order for relief against it in an involuntary case, (c) consents to the appointment of a receiver, trustee, assignee,
liquidator or similar official (a “Custodian”), (d) makes a general assignment for the benefit of its creditors
or (e) admits in writing that it is generally unable to pay its debts as they become due;

 

4.5       A
court of competent jurisdiction enters an order or decree under any Bankruptcy Law that (a) is for relief against the Co-Borrowers
in an involuntary case, (b) appoints a Custodian of the Co-Borrowers or (c) orders the liquidation of the Co-Borrowers;

 

4.6       The
occurrence of a Company Party Default as provided for in the Merger Agreement.

 

4.7       
The occurrence of an “event of default” not timely cured or waived and triggering a right of acceleration under any
other instrument or note evidencing indebtedness of the Co-Borrowers to the Holder (“event of default” as defined
under such instruments or notes); and

 

4.8       Upon
the occurrence of such an Event of Default under this Note (after giving effect to applicable cure periods), the Holder shall
have the right to demand full payment of the outstanding principal and interest payable under this Note, in addition to any other
right or remedy available to a creditor at law or equity. In connection with such acceleration described herein, the Holder need
not provide, and each of the Co-Borrowers hereby waives, any presentment, demand, protest or other notice of any kind, and the
Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and
all other remedies available to it under applicable law. The remedies provided in this Note shall be cumulative and in addition
to all other remedies available under this Note and the Security Agreement at law or in equity (including a decree of specific
performance and/or other injunctive relief), and nothing herein shall limit the Holder’s right to pursue actual and consequential
damages for any failure by the Co-Borrowers to comply with the terms of this Note.

 

    	3

     

    

 

5.       Trigger
Events. This Note will be paid in full or converted as provided for in Section 6.1 without notice or demand, upon the occurrence
of an Event of Default (after giving effect to applicable cure periods) or a Corporate Transaction.

 

6.       Conversion
Rights; Prepayment.

 

6.1       In
the event the Closing (as defined in the Merger Agreement) does not occur, Falcon International or Holder shall have the right
to convert all or any part of the outstanding and unpaid principal amount of this Note, accrued and unpaid interest and such other
amounts as may due to the Holder under this Note (the “Indebtedness”) into that number of shares of Falcon
International’s Common Stock determined by dividing the amount to be converted by the value of the Common Stock on a fully
diluted basis as of the time of conversion based on a deemed pre-money enterprise value of Falcon International on a consolidated
basis of $250,000,000 (the “Conversion Shares”).

 

6.2       The
Borrower may prepay this Note at any time after 30 days prior written notice in full in cash (“Optional Redemption”)
by paying to the Holder the sum of (a) all of the Principal Amount then outstanding, and (b) accrued but unpaid interest through
the date of payment.

 

7.       Definitions.
For the purposes of this Note, the following terms shall have the following definitions:

 

7.1       “Common
Stock” means the Common Stock, par value US $0.0001 per share of Falcon International.

 

7.2       “Corporate
Transaction” means:

 

(a)       the
consolidation, merger or other business combination of any of the Co-Borrowers with or into another entity (other than (i) pursuant
to a migratory merger effected solely for the purpose of changing the jurisdiction of incorporation of the Co-Borrowers or (ii)
a consolidation, merger or other business combination in which holders of the Co-Borrowers’ voting power immediately prior
to the transaction continue after the transaction to hold, directly or indirectly, the voting power of the surviving entity or
entities necessary to elect a majority of the members of the board of directors or managers of the Co-Borrowers (the “Board
of Directors” or the “Board”) (or their equivalent if other than a corporation) of such entity or
entities); or

 

(b)       the
sale or transfer of more than fifty percent (50%) of the Co-Borrowers’ assets (based on the fair market value or negotiated
value as determined in good faith by the Board) other than inventory in the ordinary course of business in one or a related series
of transactions; or

 

(c)       the
closing of a purchase, tender or exchange offer made to the holders of more than fifty percent (50%) of the outstanding shares
of capital stock or ownership interests in which more than fifty percent (50%) of the outstanding shares of capital stock were
tendered and accepted, resulting in the right of the Co-Borrowers’ shareholders or members acquiring such shares to elect
or appoint more than 50% of the members of the Board of Directors.

 

    	4

     

    

 

For
the avoidance of doubt, a transaction will not constitute a “Corporate Transaction” if its sole purpose is to change
the state of the Co-Borrowers’ incorporation or to create a holding company that will be owned in substantially the same
proportions by the persons who held the Co-Borrowers’ securities immediately prior to such transaction.

 

7.3       
“Security Agreement” means the Security Agreement entered into between the Co-Borrowers and the Holder dated
as of the date hereof.

 

8.       Representations
and Warranties of the Co-Borrowers. Each of the Co-Borrowers hereby represents and warrants to the Holder that the following
representations are true and complete as of the date of this Note, except as otherwise indicated.

 

8.1       Authorization;
Enforceability. Each of the Co-Borrowers has all requisite power and authority to enter into this Note, to carry out and perform
their obligations under the terms of this Note. This Note has been duly authorized (including by the Co-Borrowers’ shareholders
or members to the extent required), validly executed and delivered on behalf of Co-Borrowers and is a valid and binding obligation
of the Co-Borrowers, enforceable in accordance with its terms, except to the extent that enforceability thereof may be limited
by bankruptcy, insolvency, moratorium or similar laws affecting the enforcement of creditors’ rights generally and except
that the availability of equitable remedies such as specific performance or injunctive relief are subject to the discretion of
the court before which any proceeding may be brought.

 

8.2       No
Conflicts. The execution, delivery and performance of this Note by the Co-Borrowers and the consummation by the Co-Borrowers
of the transactions contemplated hereby (excluding, for the avoidance of doubt, any transactions contemplated by the Merger Agreement)
do not and will not (a) conflict with or violate any provision of the Co-Borrowers’ organizational documents, or (b) conflict
with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of,
any agreement, credit facility, debt or other instrument (evidencing a Co-Borrowers debt or otherwise) or other understanding
to which the Co-Borrowers is a party or by which any property or asset of the Co-Borrowers is bound or affected, or (c) result
in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental
authority to which the Co-Borrowers is subject (including federal and state securities laws and regulations), or by which any
property or asset of the Co-Borrowers is bound or affected.

 

8.3       Bankruptcy
or Insolvency. No bankruptcy or similar insolvency proceeding under state or federal law has been filed, or is currently being
contemplated, with respect to the Co-Borrowers.

 

    	5

     

    

 

8.4       
No Existing First Lien on Assets. The security interest to be granted to Holder pursuant to the Security Agreement will
be a senior fist position security interest pursuant to the Security Agreement to secure the Co-Borrowers’ obligations to
pay the Note.

 

9.       Negative
Covenants. During the period of time that any portion of this Note remains outstanding, unless the Holder shall have otherwise
given prior written consent, the Co-Borrowers shall not, directly or indirectly:

 

9.1       amend
its charter documents, including, without limitation, its Amended Articles and Amended Bylaws, in any manner that materially and
adversely affects any rights of the Holder;

 

9.2       repay,
repurchase or offer to repay, repurchase or otherwise acquire more than a de minimis number of shares of its Common Stock or common
stock equivalents;

 

9.3       pay
cash dividends or distributions on any equity securities of Falcon International or any of the Co-Borrowers;

 

9.4       enter
into any new transaction with any affiliate of the Co-Borrowers which would create any obligation of the Co-Borrowers that extends
beyond the Closing (as defined in the Merger Agreement) or extend the term of any agreement with any affiliate of the Co-Borrowers
beyond the Closing;

 

9.5       issue
any equity securities of the Co-Borrowers other than pursuant to agreements in existence as of the date here;

 

9.6       use
the proceeds of this Note for any purpose other than for the purposes set forth in Section 1 or for the benefit of any person
or entity that is not a Co-Borrower; or

 

9.7       enter
into any agreement with respect to any of the foregoing.

 

10.       Miscellaneous.

 

10.1       Successors
and Assigns. Except as otherwise provided herein, the terms and conditions of this Note will inure to the benefit of, and
be binding upon, the respective successors and assigns of the parties; provided, however, that the Co-Borrowers may not assign
its obligations under this Note without the written consent of the Holder. This Note is for the sole benefit of the parties hereto
and their respective successors and permitted assigns, and nothing herein, express or implied, is intended to or will confer upon
any other person or entity any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this
Note.

 

10.2       Governing
Law. This Note will be governed by and construed in accordance with the internal laws of the State of Delaware without giving
effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction). Venue
for resolution of any disputes with respect to the payment of this Note shall be in Maricopa County, Arizona.

 

    	6

     

    

 

10.3       Counterparts.
This Note may be executed in counterparts, each of which will be deemed an original, but all of which together will be deemed
to be one and the same agreement. Counterparts may be delivered via facsimile, electronic mail (including PDF or any electronic
signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method, and
any counterpart so delivered will be deemed to have been duly and validly delivered and be valid and effective for all purposes.

 

10.4       Titles
and Subtitles. The titles and subtitles used in this Note are included for convenience only and are not to be considered in
construing or interpreting this Note.

 

10.5       Notices.
All notices and other communications given or made pursuant hereto will be in writing and will be deemed effectively given: (a)
upon personal delivery to the party to be notified; (b) when sent by email or confirmed facsimile; (c) five (5) days after having
been sent by registered or certified mail, return receipt requested, postage prepaid; or (d) one (1) day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications
will be sent to the respective parties at the addresses set forth in the Merger Agreement (or to such email address, facsimile
number or other address as subsequently modified by written notice given in accordance with this Section 10.5).

 

10.6       Expenses.
Each party will pay all costs and expenses that it incurs with respect to the negotiation, execution, delivery and performance
of this Note.

 

10.7       Attorneys’
Fees. If any action at law or in equity is necessary to enforce or interpret the terms of this Note, the prevailing party
will be entitled to seek reimbursement for all reasonable and documented legal fees, court costs and expenses incurred by the
prevailing party in connection with the enforcement or interpretation of this Note with respect to the particular claim such party
had prevailed (including reasonable and documented legal fees in connection with any litigation, including any appeal therefrom).

 

10.8       Entire
Agreement; Amendments and Waivers. This Note constitutes the full and entire understanding and agreement between the parties
with regard to the subject hereof. Any term of this Note may be amended and the observance of any term may be waived (either generally
or in a particular instance and either retroactively or prospectively) with the written consent of the Co-Borrowers and the Holder.
Any waiver or amendment effected in accordance with this Section 10.8 will be binding upon each future holder of this Note
and the Co-Borrowers.

 

10.9       Severability.
If one or more provisions of this Note are held to be unenforceable under applicable law, such provisions will be excluded from
this Note and the balance of this Note will be interpreted as if such provisions were so excluded and this Note will be enforceable
in accordance with its terms.

 

10.10       Transfer,
Successors and Assigns. The terms and conditions of this Note shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. The Holder may assign, pledge, or otherwise transfer this Note without the prior written
consent of the Co-Borrowers. Neither this Note nor any of the rights, interests or obligations hereunder may be assigned, by operation
of law or otherwise, in whole or in part, by the Co-Borrowers without the prior written consent of Holder except in connection
with an assignment in whole to a successor corporation to the Co-Borrowers, provided that (a) such successor company acquires
all or substantially all of the Co-Borrowers’ property and assets and (b) none of the Holder’s rights hereunder are
impaired.

 

    	7

     

    

 

10.11       Further
Assurances. From time to time, the parties will execute and deliver such additional documents and will provide such additional
information as may reasonably be required to carry out the terms of this Note and any agreements executed in connection herewith.

 

10.12       Limitation
on Interest. In no event will any interest charged, collected or reserved under this Note exceed the maximum rate then permitted
by applicable law, and if any payment made by the Co-Borrowers under this Note exceeds such maximum rate, then such excess sum
will be credited by the Holder as a payment of principal.

 

[signature
pages follow]

 

    	8

     

    

 

IN
WITNESS WHEREOF, this Note has been duly executed by the Co-Borrowers as of the day and year first above written.

 

	Falcon
    international, corp.	 
	 	 	 
	By:	/s/
    James Kunevicius	 
	Name:	James
    Kunevicius	 
	Title:	Chief
    Executive Officer	 

 

Address:
360 E. 1st Street, Unit 579

Tustin,
CA 92780

Attn:
James Kunevicius

Email:
[***]

 

Agreed
to and accepted:

 

	HARVEST
    ENTERPRISES, INC.	 
	 	 	 
	By:	/s/
    Jason Vedadi	 
	Name:	Jason
    Vedadi	 
	Title:	Executive
    Chairman	 

 

Address:
1155 W. Rio Salado Parkway, Suite 201

Tempe,
AZ 85281

Email
Address: [***]

Attn.:
Lazarus Rothstein, Assistant General Counsel

 

    	 

     

    

 

SUBSIDIARY
SIGNATURE PAGE TO SECURED PROMISSORY NOTE

 

	Falcon
    Brands, Inc.	 	Industrial
    Court L11, LLC
	 	 	 	 	 
	By:	/s/
    James Kunevicius	 	By:	/s/
    James Kunevicius
	Name:	James
    Kunevicius	 	Name:	James
    Kunevicius
	Title:	Authorized
    Signatory	 	Title:	Authorized
    Signatory
	 	 	 	 	 
	Falcon
    California, Inc.	 	A1
    Canyon, LLC
	 	 	 	 	 
	By:	/s/
    James Kunevicius	 	By:	/s/
    James Kunevicius
	Name:	James
    Kunevicius	 	Name:	James
    Kunevicius
	Title:	Authorized
    Signatory	 	Title:	Authorized
    Signatory
	 	 	 	 	 
	Coastal
    Harvest II, LLC	 	B1
    Canyon, LLC
	 	 	 	 	 
	By:	/s/
    James Kunevicius	 	By:	/s/
    James Kunevicius
	Name:	James
    Kunevicius	 	Name:	James
    Kunevicius
	Title:	Authorized
    Signatory	 	Title:	Authorized
    Signatory
	 	 	 	 	 
	First
    Canyon Holdings, LLC	 	C1
    Canyon, LLC
	 	 	 	 	 
	By:	/s/
    James Kunevicius	 	By:	/s/
    James Kunevicius
	Name:	James
    Kunevicius	 	Name:	James
    Kunevicius
	Title:	Authorized
    Signatory	 	Title:	Authorized
    Signatory
	 	 	 	 	 
	G1
    Perez, LLC	 	D1
    Canyon, LLC
	 	 	 	 	 
	By:	/s/
    James Kunevicius	 	By:	/s/
    James Kunevicius
	Name:	James
    Kunevicius	 	Name:	James
    Kunevicius
	Title:	Authorized
    Signatory	 	Title:	Authorized
    Signatory
	 	 	 	 	 
	V1
    Perez, LLC	 	E1
    Canyon, LLC
	 	 	 	 	 
	By:	/s/
    James Kunevicius	 	By:	/s/
    James Kunevicius
	Name:	James
    Kunevicius	 	Name:	James
    Kunevicius
	Title:	Authorized
    Signatory	 	Title:	Authorized
    Signatory

 

    	 

     

    

 

SUBSIDIARY
SIGNATURE PAGE TO SECURED PROMISSORY NOTE (CONTINUED)

 

	Industrial
    Court L5, LLC	 	F1
    Canyon, LLC
	 	 	 
	By:	/s/
    James Kunevicius	 	By:	/s/
    James Kunevicius
	Name:	James
    Kunevicius	 	Name:	James
    Kunevicius
	Title:	Authorized
    Signatory	 	Title:	Authorized
    Signatory
	 	 	 	 	 
	Industrial
    Court L6, LLC	 	 	 
	 	 	 	 
	By:	/s/
    James Kunevicius	 	 	 
	Name:	James
    Kunevicius	 	 	 
	Title:	Authorized
    Signatory

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00316-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00316-of-00352.parquet"}]]