Document:

MULTIPARTY
AGREEMENT

 

WHEREAS,
Stem Holdings, Inc., a Nevada corporation (“Stem”), was organized to enter into certain real estate and other
transactions in the State of Oregon;

 

WHEREAS,
the founding and majority shareholders of Stem are: (a) 1,833,333 shares—Oregon Acquisitions JV, LLC, a limited liability
company organized under the laws of Oregon (“ORAJV”), which is further owned 50% by Gated Oregon Holdings,
LLC, a limited liability company organized under the laws of Oregon (“Gated”) and 50% by Kind Care Holdings,
LLC, a limited liability company organized under the laws of Oregon (“Kind Care”); (b) 490,000 shares—Stem
Investor Holdings, LLC, a limited liability company organized under the laws of Delaware; and (c) 426,667 shares—Notrees
Acquisitions Corp., LLC, a limited liability company organized under the laws of Delaware.

 

WHEREAS,
Gated and Kind Care collectively are the controlling owners of ORAJV, Empire Holdings, LLC, a limited liability company organized
under the laws of Oregon (“Empire”), Skinner Holdings, LLC, a limited liability company organized under the
laws of Oregon (“Skinner”), OpCo Holdings, LLC, a limited liability company organized under the laws of Oregon
(“OpCo Holdings”), and Consolidated Ventures of Oregon, Inc., a corporation organized under the laws of Oregon
(“CVO”).

 

WHEREAS,
CVO is engaged in various aspects of the cannabis industry in the State of Oregon under the tradename “TJ’s Organic
Provisions” and “TJ’s Organic Gardens,” which aspects include the production and retail sale of marijuana.

 

WHEREAS,
CVO is the controlling owner of Kind Care, LLC (“JV Retail”), a limited liability company organized under the
laws of Oregon, JV Production 2 LLC (“JV Production 2”), a limited liability company organized under the laws
of Oregon and JV Production 3 LLC (“JV Production 3”), a limited liability company organized under the laws
of Oregon,. W

 

WHEREAS,
JV Retail is a marijuana retail company, and each of JV Production 2 and JV Production 3 is a marijuana production company.

 

WHEREAS,
Empire, Skinner, and Never Again Real Estate, LLC, a limited liability company organized under the laws of Oregon (“Never
Again”) currently own, lease or have under contract to purchase certain real estate interests in Oregon.

 

WHEREAS,
Stem desires to acquire from Gated, Kind Care, and Never Again (or their affiliates) certain real property interests detailed
on Exhibit A and to lease or sublease such interests to entities that are owned and controlled by OpCo Holdings (each, an “OpCo
Subsidiary”).

 

    	1

    

    

 

WHEREAS,
based on the achievement by Stem of certain funding milestones, Stem desires to acquire the following real property interests:

 

(i)       From
Empire, real property located at 1910 Empire Park Drive, Eugene, Oregon 97402 (the “Empire Facility”), which
is currently leased to JV Retail;

 

(ii)       From
Skinner, a land sale contract, pursuant to which Skinner has the right to buy and lease real property located at Skinner Lane,
Junction City, Oregon 97448 (the “Skinner Facility”), which is currently leased to JV Production; and

 

(iii)       From
Never Again, real property located at 451 Wallis Street, Eugene, Oregon (the “Never Again Facility”), which
is currently leased to JV Production 3.

 

WHEREAS,
Stem seeks to acquire an option to purchase the marijuana businesses that are owned directly or indirectly owned by Gated and
Kind Care and that are operated on properties owned or leased by Stem pursuant to this Agreement, all upon the terms and conditions
set forth herein.

 

NOW
THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows as of October 24, 2016:

 

	 	1.	Assignment
    of Real Property Purchase Agreements.

 

	 	a.	Gated,
    Kind Care and Never Again shall cause the assignment of the real property purchase agreements and lease set forth on Exhibit
    “A” to Stem, and Stem shall assume the obligations under such agreements as the purchaser or lessee; provided
    however, that if this Agreement terminates before Stem purchases or leases any particular real property subject to any
    such agreement, then Stem will assign the applicable real property purchase agreement or lease back to the original assignor,
    and the original assignor will assume Stem’s obligations under such agreements as the purchaser or lessee.
	 	 	 
	 	b.	If
    Stem purchases or leases any real property subject to any assigned agreement under Section 1(a), then contemporaneously with
    the purchase, Stem shall enter into a lease or sublease agreement with an OpCo Subsidiary for the real property, upon the
    terms and conditions set forth on Exhibit “A,” and upon such other reasonable and customary terms as the parties
    may agree.

 

	 	2.	Skinner
    Facility, Empire Facility and Never Again Facility.

 

	 	a.	Gated
    and Kind Care shall cause the transfer and sale to Stem of the Skinner Facility (free and clear of the land sale contract
    for the Skinner Facility) for $500,000 and the transfer and sale of the Empire Facility for $500,000, at such time and under
    the condition that Stem has invested an aggregate of at least $10,000,000 into the real properties purchased or leased by
    Stem under Section 1 or Section 3 (such real properties, the “New Stem Real Properties”) (such condition,
    “Milestone One”), provided that Milestone One has occurred on or before the termination of Stem’s
    right of first refusal in Section 3. The $10,000,000 in aggregate investments into the New Stem Real Properties can come from
    capital contributions to Stem, loans to Stem, and retained earnings generated by Stem. Such transactions shall close within
    ninety (90) days of achieving Milestone One. Notwithstanding anything in this Section 2 to the contrary, if Milestone One
    is not attained on or before the termination of Stem’s right of first refusal in Section 3, then Gated and Kind Care
    may, but are not obligated to, terminate their obligations under this Section 2(a).

 

    	2

    

    

 

	 	b.	If
    the transactions in Section 2(a) close, then contemporaneously with the closings, Stem shall enter into a lease agreement
    with JV Production 2 for the Skinner Facility and a lease agreement with JV Retail for the Empire Facility, upon the terms
    and conditions set forth on Exhibit “B,” and upon such other reasonable and customary terms as the parties may
    agree.
	 	 	 
	 	c.	Within
    thirty (30) days after Stem has attained Milestone Three (as defined in Section 4). Never Again shall cause the transfer and
    sale to Stem of the Never Again Facility (currently under construction) pursuant to the following terms: a cash payment from
    Stem of 110% of the costs incurred by Never Again to purchase and build out the Never Again Facility, plus an additional payment
    in Stem common shares in an amount equal to 20% of the costs incurred to purchase and build out the Never Again Facility,
    such shares to be valued at the then trailing 30 day average closing bid price of Stem’s common shares. Notwithstanding
    anything in this Section 2 to the contrary, if Milestone Two is not attained by the applicable specified date in Section 4,
    Never Again may, but is not obligated to, terminate its obligations under this Section 2(c).
	 	 	 
	 	d.	If
    the transaction in Section 2(c) closes, then contemporaneously with the closing, Stem shall enter into a lease agreement with
    JV Production 3 for the Never Again Facility, upon the terms and conditions set forth on Exhibit “B,” and upon
    such other reasonable and customary terms as the parties may agree.

 

	 	3.	Right
    of First Refusal on New Properties.

 

	 	a.	ORAJV,
    Gated and Kind Care hereby grant Stem a first option to acquire or lease (as the case may be) each new real property identified
    by them or their affiliates to be used for the operation of any business that requires a marijuana production license from
    the State of Oregon (a “Marijuana Production Business”) or any business that requires a marijuana retail
    license from the State of Oregon (a “Marijuana Retail Business”). Stem shall have a period of thirty (30)
    days to exercise such option from the date such written notice is given to Stem disclosing the details of the property and
    the proposed purchase (or lease) agreement terms, as well as the terms of the lease (or sublease) to an OpCo Subsidiary. If
    such option is exercised in writing by Stem, Stem shall have an additional thirty (30) days to enter into a written contract
    to purchase or lease such real property, and an additional sixty days (60) thereafter to close such purchase or lease. If
    Stem fails to exercise this option or to close the real property purchase or lease on a timely basis, ORAJV, CVO, Gated and
    Kind Care or their affiliates, may acquire or lease such real property, but only at a price that is not lower than 95% of
    the price in the proposed purchase or lease agreement and only on substantially similar terms and conditions. Subject to Section
    4, this right of first refusal shall continue in full force and effect until an Acquisition Event (defined below).
	 	 	 

    	3

    

    

 

	 	 	ORAJV,
    Gated and Kind Care will use all commercially reasonable means to identify at least three additional real properties in the
    period commencing on the date of this Agreement and terminating on November 30, 2017 (“Initial Period”)
    and at least four real properties in each succeeding twelve-month period commencing December 1, 2017 and terminating November
    30, 2019 (“Subsequent Periods”) for acquisition and lease (or lease and sublease) pursuant to the terms
    of Section 3(a). Properties identified in the Subsequent Periods will consist of or be suitable for (i) one Marijuana Retail
    Business, (ii) two indoor Marijuana Production Businesses and (iii) one outdoor Marijuana Production Business. Each such real
    property shall be leased (or subleased) to an OpCo Subsidiary on a triple net basis, for at least ten years, at a Fair Market
    Value Rental Rate (defined below), subject to the other provisions of this Section 3(b). Notwithstanding the Fair Market Value
    Rental Rate calculation, no property will be leased or re-leased for a monthly rate of less than $3.00 per square foot for
    retail businesses, $4.00 per square foot for indoor Marijuana Production Businesses, $1.00 per square foot (usable footage)
    for outdoor Marijuana Production Businesses with light assisted greenhouses, and $.25 per square foot (licensed arable land)
    for open air outdoor Marijuana Production Businesses or for outdoor Marijuana Production Businesses with greenhouses that
    are not light assisted.
	 	 	 
	 	b.	Rent
    will begin to accrue no later than three (3) months after acquisition of any marijuana retail property and will be paid beginning
    seven (7) months from acquisition. Rent will begin to accrue on the date that plant growing commences and will be paid beginning
    on the date of first harvest for all Marijuana Production Businesses.
	 	 	 
	 	c.	For
    purposes of this Agreement, “Fair Market Value Rental Rate” means the then-fair market value rent as agreed
    to by the landlord and tenant after taking into account the factors in this Section 3(c). The initial base rent will be based
    on (i) the purchase price of the real property, (ii) the necessary and desirable real property improvements, (iii) the necessary
    and desirable tenant improvements, (iv) the amount of deferred rents, and (v) the then-prevailing interest rates, see Exhibit
    C for an example calculation. For each factor, the parties will take into account the various risks associated with the real
    property and the intended tenant, including location, creditworthiness of the tenant, security and guarantees, and use of
    premises given the then-existing state and federal law. The base rent will be subject to an annual rent escalator based on
    inflation or on some other metric based on market trends at the time. Additionally, each year, the tenant may request a review
    of the then-current market, business, and legal conditions, together with a re-evaluation of the various risks associated
    with the real property. Upon such request, the landlord and tenant will meet to discuss whether any change in base rent would
    be justified.

 

    	4

    

    

 

	 	4.	Conditions
    to Continuation of Right of First Refusal. As a condition to the continuation of Stem’s right of first refusal in
    Section 3, Stem shall have invested an aggregate of at least $8,000,000 into New Stem Real Properties by January 30, 2019
    (“Milestone Two”) and an aggregate investment into New Stem Real Properties of at least $13,000,000 by
    January 30, 2020 (“Milestone Three”). The aggregate investments into the New Stem Real Properties can come
    from capital contributions to Stem, loans to Stem, and retained earnings generated by Stem. If either Milestone Two or Milestone
    Three is not met by the applicable specified dates, ORAJV, Gated and Kind Care may, but are not obligated to, terminate Stem’s
    right of first refusal in Section 3. Notwithstanding the foregoing, each of Milestone Two and Milestone Three will be excused
    and Stem’s right of first refusal will remain in full force and effect for so long as rental income from all New Stem
    Real Properties does not equal or exceed an annualized $1,200,000 during any calendar quarter commencing on or after December
    1, 2017 (the “First Quarter Achievement Threshold”). If the First Quarter Achievement Threshold is satisfied,
    then Stem’s right of first refusal under Section 3 may be terminated by ORAJV, Gated, or Kind Care on or after the 12-month
    period following the last day of the calendar quarter in which the First Quarter Achievement Threshold was satisfied, unless
    during such 12-month period Stem invests at least an additional $5,000,000 in the New Stem Real Properties. If Stem invests
    at least an additional $5,000,000 in the New Stem Real Properties during such 12-month period, then Stem’s right of
    refusal under Section 3 will remain in full force and effect for so long as rental income from all New Stem Real Properties
    does not equal or exceed an annualized $3,200,000 during any calendar quarter commencing on or after March 1, 2019 (the “Second
    Quarter Achievement Threshold”). If the Second Quarter Achievement Threshold is satisfied, then Stem’s right
    of first refusal under Section 3 may be terminated by ORAJV, Gated, or Kind Care at any time thereafter, unless Stem has invested
    an aggregate of at least $8,000,000 in the New Stem Real Properties before the last day of the calendar quarter in which the
    Second Quarter Achievement Threshold was satisfied. If Stem has invested an aggregate of at least $8,000,000 in the New Stem
    Real Properties before the last day of the calendar quarter in which the Second Quarter Achievement Threshold was satisfied,
    then Stem’s right of refusal under Section 3 will remain in full force and effect for so long as rental income from
    all New Stem Real Properties does not equal or exceed an annualized $5,000,000 during any calendar quarter commencing on or
    after August 1, 2019 (the “Third Quarter Achievement Threshold”). If the Third Quarter Achievement Threshold
    is satisfied, then Stem’s right of first refusal under Section 3 may be terminated by ORAJV, Gated, or Kind Care at
    any time thereafter, unless Stem invested an aggregate of at least $13,000,000 in the New Stem Real Properties before the
    last day of the calendar quarter in which the Third Quarter Achievement Threshold was satisfied.
	 	 	 

    	5

    

    

 

	 	5.	Obligation
    by OpCo Subsidiaries to Purchase Stem Preferred Stock. After Stem has invested a total of at least $13,000,000 into the
    New Stem Real Properties and until the occurrence of an Acquisition Event (defined below), ORAJV, Gated, and Kind Care agree
    to cause each of the OpCo Subsidiaries to utilize up to 50% of the net operating income of such OpCo Subsidiaries (after provision
    is made for the payment of federal and state income taxes on such income (assuming each OpCo Subsidiary is taxed as a C corporation))
    to acquire (or have their designees acquire) specifically designated preferred stock offered by Stem (“Stem Preferred
    Stock”). Such Stem Preferred Stock will be redeemable twenty years from issuance, will accrue an annual dividend
    of three percent (3%), will be convertible into Stem common shares at the higher of: (a) $10 per share (adjusted appropriately
    upon any share exchange, share reclassification, share combination, share dividend, share split, or similar event); or (b)
    the average closing price of Stem common shares for the twenty (20) trading days prior to the date of conversion. The Stem
    Preferred Stock shall have such other and further preferences, rights, privileges and limitations as ORAJV and Stem may mutually
    agree. Upon the occurrence of an Acquisition Event, the Stem Preferred Stock will be converted into Stem common stock.
	 	 	 
	 	6.	Acquisition
    of Target Marijuana Businesses. As long as Stem has fully satisfied all of its obligations pursuant to this Agreement,
    Stem shall have the obligation to acquire, and ORAJV, Gated, and Kind Care shall have the obligation to sell (or cause to
    be sold), 100% of each marijuana business owned by an entity that leases (or subleases) from Stem a New Stem Real Property
    or a real property purchased by Stem under Section 2 (each such entity, a “Target Marijuana Business”),
    either through mergers, asset sales, or similar transactions, within a reasonable time after Stem receives a legal opinion,
    in form and substance and from legal counsel reasonably satisfactory to ORAJV, that the operation of the Target Marijuana
    Businesses in the State of Oregon by Stem will not violate any federal or state laws solely as a result of the Target Marijuana
    Businesses producing or selling marijuana (the “Acquisition Event”). As consideration for the acquisition
    of the Target Marijuana Businesses, Stem will issue to the owners of the Target Marijuana Businesses (or their designees)
    (collectively, the “Target Owners”) such number of shares of common stock of Stem which, when added to
    the number of shares of common stock of Stem that ORAJV owned as of September 1, 2016, plus the number of common shares of
    Stem that are issued to the holders of the Stem Preferred Shares pursuant to Section 5, equals 75% of the total issued and
    outstanding shares of common stock of Stem immediately following the acquisition of the Target Marijuana Businesses. Notwithstanding
    the foregoing, if and when Stem satisfies Milestone Three, then any additional issuances of common shares by Stem for real
    property acquisitions or for additional equity raises will (for purposes of determining the percentage of shares that the
    Target Owners will receive pursuant to this Section 6) dilute the Target Owners pari-passu with the other shareholders
    of Stem.[1] The parties shall use their reasonable best efforts to consummate such acquisitions in conformity with
    all applicable laws and regulations and in a timely manner. If Stem fails to satisfy Milestone Two within 180 days of January
    30, 2019, or if Stem fails to satisfy Milestone Three within 180 days of January 30, 2020, ORAJV, Gated, and Kind Care may,
    but are not obligated to, terminate their obligations under this Section 6.

 

    	6

    

    

 

	 	7.	Financial
    Statements. ORAJV, Gated, and Kind Care will use commercially reasonable efforts to cause each OpCo Subsidiary to maintain
    books, records and financial statements in an auditable form using U.S. generally accepted accounting principles, consistently
    applied.
	 	 	 
	 	8.	Termination.
    This Agreement will terminate upon the earlier to occur of the following: (a) upon the written agreement of the parties;
    (b) upon notice by ORAJV or Never Again to Stem, if Stem materially breaches this Agreement and fails to cure the breach within
    thirty (30) days after ORAJV or Never Again notifies Stem of the breach; (c) upon notice by Stem to ORAJV and Never Again,
    if ORAJV, Gated, Kind Care, or Never Again materially breaches this Agreement and fails to cure the breach within thirty (30)
    days after Stem notifies ORAJV and Never Again of the breach; and (d) upon notice by ORAJV or Never Again to Stem, if: (i)
    Stem fails to enter into and close a transaction with Patch International Inc. (“Patch”) on or before December
    31, 2016 pursuant to which transaction Stem acquires at least $3,000,000 in new consideration for no more than 25% of the
    post-closing issued and outstanding common shares of Stem; and (ii) Stem also fails to complete a capital raise with any other
    third party(ies) on or before January 1, 2017 pursuant to which such third party(ies) contribute at least $3,000,000 in capital
    to Stem in consideration for no more than 25% of the post-closing issued and outstanding shares of Stem. The termination of
    this Agreement, regardless of how it occurs, will not relieve a party of obligations that have accrued before the termination.

 

 

1
Example 1: Assume the following: (a) the Target Owners have 2.75M shares of Stem as of September 1, 2016; (b) Stem has contributed
$8M in Year 2; (c) the Acquisition Event occurs in Year 3; and (d) Stem has 6M shares outstanding as of the Acquisition Event.
In that case, Stem will issue an additional 7M shares to the Target Owners. (2.75M + 7M) / (6M + 7M) = 75%.

 

Example
2: Assume the following: (a) the Target Owners have 2.75M shares of Stem as of September 1, 2016; (b) Stem has contributed $13M
in Year 2; (c) Stem has 8M shares outstanding in Year 2; (d) in Year 3, the Target Owners purchase preferred shares that are convertible
into 1M common shares of Stem; (e) in Year 3, Stem issues an additional 2M shares to purchase properties; and (f) the Acquisition
Event occurs in Year 4. In that case, Stem will issue an additional 12M shares to the Target Owners (2.75M + 1M + 12M) / (8M +
1M + 2M + 12M) = 68.48%. Note that the Target Owners are deemed to be diluted by the Year 3 issuance of the additional 2M shares,
and so the calculation as if those issuances had never occurred would be: (2.75M + 1M + 12M) / (8M + 1M + 12M) = 75%.

 

Example
3: Assume the following: (a) the Target Owners have 2.75M shares of Stem as of September 1, 2016; (b) Stem has contributed $13M
in Year 2; (c) Stem has 8M shares outstanding in Year 2; (d) in Year 3, the Target Owners purchase preferred shares that are convertible
into 1.5M common shares of Stem; (e) in Year 3, Stem issues an additional 1M shares to purchase properties; and (f) the Acquisition
Event occurs in Year 4. In that case, Stem will issue an additional 11.5M shares to the Target Owners (2.75M + 1.5M + 11.5M) /
(8M + 1.5M + 1M + 11.5M) = 71.59%. Note that the Target Owners are deemed to be diluted by the Year 3 issuance of the additional
1.5M shares, and so the calculation as if those issuances had never occurred would be: (2.75M + 1.5M + 11.5M) / (8M + 1.5M + 11.5M)
= 75%.

 

    	7

    

    

 

	 	9.	General
    Provisions.

 

	 	a.	Amendments.
    The parties may amend this Agreement only by a written agreement that identifies itself as an amendment to this Agreement
    and that is signed by the parties.
	 	 	 
	 	b.	Waivers.
    The parties may waive any provision of this Agreement only by a writing executed by the party or parties against whom the
    waiver is sought to be enforced. No failure or delay in exercising any right or remedy or in requiring the satisfaction of
    any condition under this Agreement, and no act, omission, or course of dealing between the parties, operates as a waiver or
    estoppel of any right, remedy, or condition. A waiver made in writing on one occasion is effective only in that instance and
    only for the purpose that the waiver is given and is not to be construed as a waiver on any future occasion or against any
    other person or entity.
	 	 	 
	 	c.	Severability.
    If any provision of this Agreement is determined to be invalid, illegal, or unenforceable, then the remaining provisions of
    this Agreement remain in full force and effect, if the essential terms and conditions of this Agreement for each party remain
    valid, binding, and enforceable.
	 	 	 
	 	d.	Entire
    Agreement. This Agreement constitutes the final and entire agreement between the parties and is the complete and exclusive
    expression of the parties’ agreement on the matters contained in this Agreement. All prior and contemporaneous negotiations,
    understandings, agreements, representations, and warranties, both written and oral, between the parties on the matters contained
    in this Agreement, including but not limited to that certain Agreement dated August 4, 2016 among the parties, are expressly
    merged into and superseded by this Agreement. The provisions of this Agreement may not be explained, supplemented, or qualified
    through evidence of trade usage or a prior course of dealings. There are no conditions precedent to the effectiveness of this
    Agreement, other than those expressly stated in this Agreement or the Memorandum.
	 	 	 
	 	e.	Assignment
    and Delegation. No party may assign any of its rights or delegate any of its performance under or relating to this Agreement
    without the prior written consent of the other party. Any purported assignment of rights or delegation of performance in violation
    of this Section 9(e) is void.
	 	 	 
	 	f.	Successors
    and Assigns. This Agreement binds and benefits the parties and their respective successors and permitted assigns.

 

    	8

    

    

 

	 	g.	Governing
    Law. The laws of the State of Oregon (without giving effect to its conflict of laws principles) govern all matters arising
    out of or relating to this Agreement and the transactions contemplated by this Agreement, including the validity, interpretation,
    construction, performance, and enforcement of this Agreement.
	 	 	 
	 	h.	Arbitration.
    Any disputes arising out of or relating to this Agreement or the transactions contemplated by this Agreement shall be brought
    before a three-member arbitration panel under the auspices of the American Arbitration Association. The hearing shall be held
    in Portland, Oregon.
	 	 	 
	 	i.	WAIVER
    OF JURY TRIAL. EACH PARTY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES ITS RIGHT TO A TRIAL BY JURY TO THE EXTENT
    PERMITTED BY APPLICABLE LAW IN ANY ACTION OR OTHER LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE TRANSACTIONS
    CONTEMPLATED BY THIS AGREEMENT. THIS WAIVER APPLIES TO ANY ACTION OR OTHER LEGAL PROCEEDING, WHETHER SOUNDING IN CONTRACT,
    TORT, OR OTHERWISE. EACH PARTY ACKNOWLEDGES THAT IT HAS RECEIVED THE ADVICE OF COMPETENT COUNSEL.
	 	 	 
	 	j.	Cumulative
    Remedies. The rights and remedies set forth in this Agreement are not intended to be exhaustive and the exercise by any
    party of any right or remedy under this Agreement, including specific performance, does not preclude the exercise of any other
    right or remedy. All of the rights and remedies of each party are cumulative and are in addition to any other right or remedy
    set forth in this Agreement or in any other agreement between the parties, or that may now or subsequently exist at law or
    in equity or by statute or otherwise.
	 	 	 
	 	k.	Transaction
    Expenses. Each party shall pay its own fees and expenses (including the fees and expenses of its attorneys, accountants,
    and other representatives) incurred in connection with this Agreement and the transactions contemplated herein.
	 	 	 
	 	l.	Gender.
    Wherever from the context it appears appropriate, any reference in this Agreement to the neuter gender includes the masculine,
    feminine, and neuter gender
	 	 	 
	 	m.	Captions.
    The descriptive headings of the sections and subsections of this Agreement are for convenience only, do not constitute a part
    of this Agreement, and do not affect the construction or interpretation of this Agreement.
	 	 	 
	 	n.	Counterparts.
    The parties may execute this Agreement in multiple counterparts, each of which is deemed an original, and all of which, collectively,
    constitute only one agreement. The signatures of all of the parties need not appear on the same counterpart, and delivery
    of an executed counterpart signature page by facsimile, email, or other means of electronic transmission is as effective as
    executing and delivering this Agreement in the presence of the other party. In proving this Agreement, a party must produce
    or account for only the executed counterpart of the party to be charged.

 

{Signatures
on following page}

 

    	9

    

    

 

	 	WITNESS
    the due execution hereof the day and year set forth below.
	 	 	 
	 	STEM
    HOLDINGS, INC.
	 	 	 
	 	By:	 
	 	Name:	              
	 	Title:	 
	 	 	 
	 	OREGON
    ACQUISITIONS JV LLC
	 	 	 
	 	By:	 
	 	Name:	 
	 	Title:	 
	 	 	 
	 	GATED
    OREGON HOLDINGS LLC
	 	 	 
	 	By:	 
	 	Name:	 
	 	Title:	 
	 	 	 
	 	KIND
    CARE HOLDINGS LLC
	 	 	 
	 	By:	 
	 	Name:	 
	 	Title:	 
	 	 	 
	 	NEVER
    AGAIN REAL ESTATE, LLC
	 	 	 
	 	By:
    	 
	 	Name:
    	 
	 	Title:
    	 

 

    	10

    

    

 

EXHIBIT
“A”

 

Three
Party Real Property Purchase or Lease Agreements to be assigned:

 

	 	1.	Harlequin
    Building retail store at 1027 Willamette Street, Eugene, Oregon
	 	 	 
	 	2.	Outdoor
    grow property to be identified by the parties
	 	 	 
	 	3.	Lease
    of indoor grow facility at 800 N. 42nd Street, Springfield, Oregon

 

Leases
to be entered

 

	 	 	Term	 	Rent†	 	Commence
	1.
    Harlequin Building	 	 	 	Fair
    Market Value Rental Rate	 	Commencing
    30 days after acquisitions rent accrues with payments beginning upon the opening of the dispensary
	 	 	 	 	 	 	 
	2.
    Outdoor grow*	 	 	 	Fair
    Market Value Rental Rate	 	TBD
	 	 	 	 	 	 	 
	3.
    Indoor grow facility at 800 N. 42nd Street, Springfield, Oregon*	 	 	 	Fair
    Market Value Rental Rate	 	TBD

 

*
NOTE: In lieu of an assignment to Stem by Gated, Kind Care, or Never Again, the parties may agree that Stem will directly enter
into a real property purchase agreement or lease with the seller/owner of the property.

  

 

†
All leases are triple net.

 

    	11

    

    

 

EXHIBIT
“B”

Leases

 

	 	 	Term	 	Rent‡	 	Commence
	Skinner
    Facility	 	10
    years	 	Fair
    Market Value Rental Rate	 	[upon
    acquisition]
	 	 	 	 	 	 	 
	Empire
    Facility	 	10
    years	 	Fair
    Market Value Rental Rate	 	[upon
    acquisition]
	 	 	 	 	 	 	 
	Never
                                         Again Facility

        (451
        Wallis Street,

        Eugene,
        Oregon)
	 	10
    years	 	Fair
    Market Value Rental Rate	 	[upon
    acquisition]

    

 

‡ All
leases are triple net.

 

    	12

    

    

 

Exhibit
C

 

 

    	13Exhibit 10.01

 

December 2, 2016

 

Dynasil Corporation of America

44 Hunt Street

Watertown, MA 02472

Attn: Robert Bowdring, Chief Financial Officer

 

Re:       Second Amendment of Loan
Agreement

 

Gentlemen:

 

Reference is made to that
certain Loan and Security Agreement dated May 1, 2014, as amended by a certain Line of Credit Modification dated September 29,
2015, as further amended from time to time (the “Loan Agreement”) by and between Middlesex Savings Bank (the “Lender”)
and Dynasil Corporation of America (the “Borrower”). The Loan Agreement is hereby amended, effective immediately,
as follows:

 

1.       Defined
terms used herein and not otherwise defined shall have the meanings ascribed to them in the Loan Agreement.

 

2.       Sections
3.4 and 4.9 of the Loan Agreement are hereby deleted in their entirety and the following new Sections 3.4 and 4.9 substituted therefor,
as follows:

 

          “3.4      Loans
and Investments. Make any loan or advance (other than in the ordinary course of business and other than inter-company loans
made to a Guarantor) or declare any dividends or make any distributions to any individual or entity or make any investment in
or with any individual or entity, except that (i) Borrower may pay dividends, provided that no Event of Default exists at the
time of the proposed dividend and that after giving effect to such dividends, Borrower is in compliance with the financial covenants
set forth in Section 4.9 and 4.9(a) of this Agreement, and (ii) Borrower may distribute up to $600,000.00 to Dynasil Biomedical
Corp. (‘Biomedical’) in the fiscal quarter ending December 31, 2016 and up to an additional $600,000.00 to
Biomedical prior to the end of the fiscal quarter ending September 30, 2018, such distributions to be utilized by Biomedical solely
for the purpose of investing in Xcede Technologies (a joint venture between Biomedical and the Mayo Clinic), provided that no
Event of Default exists at the time of the proposed distribution or after giving effect thereto and Borrower remains in compliance
with the financial covenants contained in this Agreement.”

 

     

     

    

 

          “4.9      Debt
Service Coverage. At the close of each fiscal quarter of Borrower, maintain a Debt Service Coverage ratio of at least 1.2
to 1.0 for the prior 12 month period. ‘Debt Service Coverage’ as used herein shall be determined for the relevant
period, and shall mean (i) EBITDA excluding non-cash and/or non-recurring expenditures or gains as permitted and the operating
income or loss of the Xcede Technologies joint venture before inter-company overhead allocation from Borrower to Biomedical and
Xcede Technologies, minus unfinanced capital expenditures, minus dividends and distributions (exclusive of the $600,000.00 distribution
from the Borrower to Biomedical as of the end of the fiscal quarter ending December 31, 2016, but including any and all subsequent
distributions from the Borrower to Biomedical), minus cash taxes paid for ongoing operations, divided by (ii) scheduled interest
and principal payments made on all debt.”

 

Except as specifically
amended hereby, the Loan Agreement remains in full force and effect and the Borrower hereby reaffirms all representations and warranties
contained therein, as of the date hereof.

 

Please acknowledge your
acceptance of the foregoing by signing this letter in the space provided and returning it to the undersigned, whereupon it shall
take effect as an instrument under seal.

 

	 	Very truly yours,	 
	 	 	 
	 	MIDDLESEX SAVINGS BANK	 
	 	 	 	 
	 	By:	/s/ Tony Zhang	 
	 	 	Tony Zhang, Senior Vice President	 

 

ACCEPTED AND AGREED TO:

 

DYNASIL CORPORATION OF AMERICA

(Borrower)

 

	By:	 /s/ Robert Bowdring	 
	 	Robert Bowdring, Chief Financial Officer	 

 

ACKNOWLEDGED BY GUARANTORS:

 

OPTOMETRICS CORPORATION

 

	By:	 /s/ Robert Bowdring	 

 

    	 	2	 

     

    

 

RADIATION MONITORING DEVICES, INC.

 

	By:	 /s/ Robert Bowdring	 

 

RMD INSTRUMENTS CORP.

 

	By:	 /s/ Robert Bowdring	 

 

EVAPORATED METAL FILMS CORP.

 

	By:	
        /s/ Robert Bowdring 
	 

 

DYNASIL BIOMEDICAL CORP.

 

	By:	
        /s/ Robert Bowdring 
	 

 

    	 	3

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