Document:

Exhibit 10.5

 

  

 

ASSET PURCHASE AGREEMENT

 

 

by and between

 

 

ARIZONA
DP CONSULTING LLC,

 

the
Individual Member of ARIZONA DP CONSULTING LLC,

 

AZ DP HOLDINGS, LLC

and

ITEM
9 LABS CORP. 

Dated:
NOVEMBER 26, 2018

 

    	 

    	 

    

TABLE
OF CONTENTS

Page

	Article I. DEFINITIONS	1
	Article II. PURCHASE AND SALE	5
	Article III. CLOSING	8
	Article IV. REPRESENTATIONS AND WARRANTIES OF SELLER	10
	Article V. REPRESENTATIONS AND WARRANTIES OF BUYER	16
	Article VI. COVENANTS	20
	Article VII. INDEMNIFICATION	23
	Article VIII. MISCELLANEOUS	27

 

    	 

    	 

    

ASSET PURCHASE AGREEMENT

This Asset Purchase
Agreement (this "Agreement") is entered into on November 26, 2018, by and between Arizona DP Consulting LLC, an
Arizona limited liability company ("Seller"), Sara Gullickson, an individual and the sole member of the Seller
("Owner"), Item 9 Labs Corp., a Delaware corporation (“INLB”), and AZ DP Holdings, LLC, a Nevada
limited liability company and wholly-owned subsidiary of INLB (“Buyer”). Seller, Buyer, INLB and Owner may collectively
be referred to herein as the "Parties" or individually as "Party".

RECITALS

WHEREAS,
this Agreement contemplates, among other things, a transaction in which, subject to the terms and conditions of this Agreement,
Buyer will purchase the Seller's Purchased Assets (as defined below), free and clear of any Encumbrances except for Permitted Encumbrances,
in return for the Purchase Price (as defined below) (the “Transaction”);

WHEREAS,
the Seller specializes in helping entrepreneurs obtain cannabis licenses and building cannabis businesses;

WHEREAS,
the Seller's Owner deems it advisable and in the best interests of the Seller that the Parties consummate the Transaction, upon
the terms and subject to the conditions provided for herein;

NOW, THEREFORE,
in consideration of the premises and the mutual promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, and intending to be legally bound, the Parties agree as follows.

Article
I.

DEFINITIONS

The following terms
have the meanings specified or referred to in this Article I:

"Affiliate"
of a Person means any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, such Person. The term "control" (including the terms "controlled by" and "under
common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

"Agreement"
means this Asset Purchase Agreement.

"Assigned
Contracts" has the meaning set forth in Section 2.01(b).

"Assumed Liabilities"
has the meaning set forth in Section 2.03.

"Benefit Plan"
has the meaning set forth in Section 4.15(a).

"Bill of Sale"
has the meaning set forth in Section 3.02(a)(i).

"Books and
Records" has the meaning set forth in Section 2.01(f).

"Business"
means the cannabis licensing and consulting business as conducted by the Seller as of the Closing Date.

"Business
Day" means any day except Saturday, Sunday or any other day on which commercial banks located in the State of Arizona
are authorized or required by Law to be closed for business.

"Buyer"
means AZ DP Holdings, LLC, a Nevada limited liability company and wholly owned subsidiary of INLB.

“Cash Payment”
has the meaning set forth in Section 2.05(a).

"Closing"
has the meaning set forth in Section 3.01.

"Closing Date"
has the meaning set forth in Section 3.01

    	 	1	 

     

    

"Code"
means the Internal Revenue Code of 1986, as amended.

“Common Stock”
means the common stock, par value $0.0001 per share, of INLB.

"Contracts"
means all legally binding written contracts, including, but not limited to leases, mortgages, licenses, instruments, notes, commitments,
undertakings, indentures and other agreements.

"Direct Claim"
has the meaning set forth in Section 7.06(c).

"Disclosure
Schedules" means the Disclosure Schedules delivered by the Parties concurrently with the execution and delivery of this
Agreement.

"Dollars or
$" means the lawful currency of the United States.

"Employees"
means those Persons employed by Seller immediately prior to the Closing.

"Encumbrance"
means any lien, pledge, mortgage, deed of trust, security interest, charge, claim, easement, encroachment or other similar encumbrance.

"ERISA"
means the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder.

“Exchange
Act” has the meaning set forth in Section 5.08(a).

"Excluded
Assets" has the meaning set forth in Section 2.02.

"Governmental
Authority" means any federal, state, local or foreign government or political subdivision thereof, or any agency or instrumentality
of such government or political subdivision, or any self-regulated organization or other non-governmental regulatory authority
or quasi-governmental authority (to the extent that the rules, regulations or orders of such organization or authority have the
force of Law), or any arbitrator, court or tribunal of competent jurisdiction.

"Governmental
Order" means any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any
Governmental Authority.

"Indemnified
Party" has the meaning set forth in Section 7.05.

"Indemnifying
Party" has the meaning set forth in Section 7.05.

“INLB”
means Item 9 Labs Corp., a Delaware corporation.

“INLB Shares”
has the meaning set forth in Section 2.05(b).

"Intellectual
Property" means any and all of the following in any jurisdiction throughout the world: (i) trademarks, service marks,
trade dress, trade names, brands, slogans, logos, internet domain names, and corporate names, all translations, adaptations, derivations,
and combinations of the foregoing, and all applications, registrations, and renewals in connection therewith, together with all
of the goodwill associated with the foregoing, (ii) copyrights and works of authorship (whether or not copyrightable), and moral
rights, and all applications, registrations, and renewals, (iii) computer software (including source code and object code, data,
databases and documentation thereof), (iv) trade secrets and other confidential or proprietary information, know-how, processes,
formulations, methods and techniques, research and development information, industry analyses, drawings, specifications, designs,
plans, proposals, industrial models, technical data, financial and accounting data, business and marketing plans and customer and
supplier lists and related information; (v) patents (including all reissues, divisionals, provisionals, continuations and continuations-in-part,
re-examinations, renewals, substitutions and extensions thereof), patent applications, and other patent rights and any other Governmental
Authority-issued indicia of invention ownership (including inventor's certificates, petty patents and patent utility models); (vi)
copies and tangible embodiments of any of the foregoing, in whatever form or medium; and (vii) all other intellectual property
and industrial property rights and assets, and all rights, interests and protections that are associated with, similar to, or required
for the exercise of, any of the foregoing.

    	 	2	 

     

    

"Intellectual
Property Agreements" means all licenses, sublicenses and other agreements by or through which other Persons grant Seller
or Seller grants any other Persons any exclusive or non-exclusive rights or interests in or to any Intellectual Property that is
used in connection with the Business.

"Intellectual
Property Assets" means all Intellectual Property that is owned by Seller and used in connection with the Business, including
the Intellectual Property Registrations set forth on Section 4.11(a) of the Disclosure Schedules.

"Intellectual
Property Registrations" means all Intellectual Property Assets that are subject to any issuance, registration, application
or other filing by, to or with any Governmental Authority or authorized private registrar in any jurisdiction, including any product
or facility registered or required to be registered with the FDA, registered trademarks, domain names, and copyrights, issued and
reissued patents and pending applications for any of the foregoing.

"Knowledge
of Seller" means the actual knowledge of Sara Gullickson upon reasonable inquiry.

"Law"
means any statute, law, ordinance, regulation, rule, code, order, constitution, treaty, common law, judgment, decree, other requirement
or rule of law of any Governmental Authority.

"Losses"
means actual out-of-pocket losses, damages, liabilities, costs or expenses, including reasonable attorneys' fees and fees of experts.

"Material
Adverse Effect" means any event, occurrence, fact, condition or change that is materially adverse to (a) the Business,
results of operations, financial condition or assets of the Seller, taken as a whole, or (b) the ability of Seller to consummate
the transactions contemplated hereby; 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) general economic or
political conditions; (ii) conditions generally affecting the industries in which the Business operates; (iii) any action required
or permitted by this Agreement or any action taken (or omitted to be taken) with the written consent of or at the written request
of Buyer; (iv) any changes in applicable Laws or accounting rules; (v) the announcement, pendency or completion of the transactions
contemplated by this Agreement, including losses or threatened losses of employees, customers, suppliers, distributors or others
having relationships with the Seller and the Business; or any matter of which Buyer is aware on the date hereof.

"Material
Contracts" has the meaning set forth in Section 4.07(a).

"Ordinary Course of Business"
means the usual and customary operation of the Seller consistent with past custom and practice.

"Owner" means Sara
Gullickson, as sole member of the Seller.

"Permits"
means all permits, licenses, franchises, approvals, authorizations and consents required to be obtained from Governmental Authorities.

"Permitted
Encumbrances" means (a) trade accounts payable, provided that such payables are current within the payment terms offered
by the vendor and incurred in the Ordinary Course of Business and (b) other imperfections of title or Encumbrances, if any, that
have not had, and would not have, a Material Adverse Effect.

"Person"
means an individual, corporation, partnership, joint venture, limited liability company, Governmental Authority, unincorporated
organization, trust, association or other entity.

    	 	3	 

     

    

"Purchase
Price" has the meaning set forth in Section 2.05.

"Purchased
Assets" has the meaning set forth in Section 2.01.

"Representative"
means, with respect to any Person, any and all directors, officers, employees, consultants, financial advisors, counsel, accountants
and other agents of such Person.

"Retained
Liabilities" has the meaning set forth in Section 2.04.

"Seller"
means Arizona DP Consulting LLC, an Arizona limited liability company.

"Taxes"
means all federal, state, local, foreign and other income, gross receipts, sales, use, production, ad valorem, transfer, franchise,
registration, profits, license, lease, service, service use, withholding, payroll, employment, unemployment, estimated, excise,
severance, environmental, stamp, occupation, premium, property (real or personal), real property gains, windfall profits, customs,
duties or other taxes, fees, assessments or charges of any kind whatsoever, together with any interest, additions or penalties
with respect thereto and any interest in respect of such additions or penalties.

"Tax Return"
means any return, declaration, report, claim for refund, information return or statement or other document required to be filed
with respect to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

"Third Party
Claim" has the meaning set forth in Section 7.06(a).

"Transaction
Documents" means this Agreement, the Bill of Sale, Non-Competition Agreement, Lease Agreement, Employment Agreement, and
all other agreements, instruments and documents required to be delivered at the Closing.

"Transferred
Employees" has the meaning set forth in Section 6.01.

    	 	4	 

     

    

Article
II.

PURCHASE AND SALE

2.01
Purchase and Sale of Assets. Subject to the terms and conditions set forth herein, at the Closing, Seller
shall sell, assign, transfer, convey and deliver to Buyer, and Buyer shall purchase from Seller, free and clear of all Encumbrances,
except for Permitted Encumbrances, all of Seller's right, title and interest in, to and under the following assets, properties
and rights of Seller, to the extent that such assets, properties and rights exist as of the Closing Date and relate to the Business
(collectively, the "Purchased Assets") including:

(a)
all computers and electronics, equipment and office supplies.

(b)
all Contracts set forth on Section 2.01(b) of the Disclosure Schedules and the Intellectual Property Agreements set
forth on Section 4.11(a) of the Disclosure Schedules (collectively, the "Assigned Contracts");

(c)
all Intellectual Property Assets;

(d)
all Permits, but only to the extent transferrable;

(e)
all of Seller's rights under warranties, indemnities and all similar rights against third parties to the extent related
to any Purchased Assets;

(f)
originals, or where not available, copies, of all books and records, including books of account, ledgers and general,
financial and accounting records, customer lists, customer purchasing histories, price lists, discount schedules, distribution
lists, supplier lists, vendor lists, customer complaints and inquiry files, research and development files, records and data (including
all correspondence with any Governmental Authority), sales material and records, strategic plans, internal financial statements
and marketing and promotional surveys, material and research, that relate to the Business or the Purchased Assets, other than books
and records set forth in Section 2.02(d) ("Books and Records");

(g)
all goodwill associated with any of the Purchased Assets; and

(h)
all of the Seller's websites, including the Seller's retail website, domain names, phone and fax numbers, and e-mail
addresses listed on Section 2.01(h) of the Disclosure Schedules.

2.02
Excluded Assets. Other than the Purchased Assets subject to Section 2.01, Buyer expressly understands
and agrees that it is not purchasing or acquiring, and Seller is not selling or assigning, any other assets or properties of Seller,
and all such other assets and properties shall be excluded from the Purchased Assets (the "Excluded Assets").
Excluded Assets include the following assets and properties of the Seller:

(a)
all accounts and accounts receivable, bank accounts, bank deposits, cash and cash equivalents, and securities of
Seller at Closing;

(b)
all real estate owned by the Seller including the related furniture and fixtures;

(c)
the personal property of Seller specifically set forth on Section 2.02(c) of the Disclosure Schedules;

(d)
the corporate seals, organizational documents, minute books, Tax Returns, books of account or other records having
to do with the corporate organization of Seller, all employee-related or employee benefit-related files or records, other than
personnel files of Transferred Employees, and any other books and records which Seller is prohibited from disclosing or transferring
to Buyer under applicable Law and is required by applicable Law to retain;

    	 	5	 

     

    

(e)
all insurance policies of Seller and all rights to applicable claims and proceeds thereunder;

(f)
all Benefit Plans and trusts or other assets attributable thereto;

(g)
all Tax assets (including duty and Tax refunds and prepayments) of Seller;

(h)
all customer deposits, prepaid expenses, credits, advance payments, security, charges, sums and fees;

(i)  
all assets, properties and rights used by Seller in its businesses other than the Business;

(j)  
the rights which accrue or will accrue to Seller under the Transaction Documents; and

(k)
expected returns or refunds of payment to the Seller that will be paid directly to Seller at Closing by such party,
or if such expected returns or refunds are received by Buyer, shall be forwarded outright to Seller within five business (5) days
after such funds have been received and cleared.

2.03
Assumed Liabilities. Subject to the terms and conditions set forth herein, Buyer shall assume and agree
to pay, perform and discharge when due any and all liabilities and obligations of the Seller when due resulting from the operation
of the Purchased Assets after the Closing Date (collectively, “Assumed Liabilities”). Assumed Liabilities shall
include, but are not limited to:

(a)
all liabilities and obligations arising under or relating to the Assigned Contracts;

(b)
all liabilities and obligations for (i) Taxes relating to the Business, the Purchased Assets or the Assumed Liabilities
for any taxable period commencing after the Closing Date. For the sake of clarity, Seller shall be responsible for all Taxes relating
to the Business and the Purchased Assets prior to, and including the Closing Date, and Buyer shall be responsible for Taxes resulting
from the operation of the Business after the Closing Date;

(c)
all liabilities and obligations arising under or relating to the employment of the Transferred Employees after the
Closing Date; and

(d)
all liabilities and obligations of Seller set forth on Section 2.03(d) of the Disclosure Schedules, which are expressly
agreed to be assumed by Buyer; and

(e)
all other liabilities and obligations arising out of or relating to Buyer's ownership or operation of the Business
and the Purchased Assets after the Closing Date.

2.04
Retained Liabilities. The Parties agree that, except for the Assumed Liabilities, Seller shall retain
any and all liabilities or obligations of the Seller resulting from the operation of the Business prior to or as of the Closing
Date ("Retained Liabilities"). Retained Liabilities shall include, but are not limited to:

(a)
any liabilities or obligations relating to or arising out of the Excluded Assets, and any liabilities or obligations
relating to or arising from the operation of the Seller and Business prior to the Closing Date;

(b)
any liabilities or obligations for (i) Taxes relating to the Seller or the Seller’s transaction of the Business,
the Purchased Assets or the Assumed Liabilities for any taxable period ending on or prior to the Closing Date and (ii) any other
Taxes of Seller for any taxable period prior to the Closing Date, including, but not limited to, payroll, income, sales and other
taxes;

    	 	6	 

     

    

(c)
any liabilities or obligations of Seller relating to or arising out of (i) the employment, or termination of employment,
of any Employee prior to the Closing, or (ii) workers' compensation claims of any Employee which relate to events occurring prior
to the Closing Date;

(d)
any liabilities or obligations of Seller arising or incurred in connection with the negotiation, preparation, investigation
and performance of this Agreement, the other Transaction Documents and the transactions contemplated hereby and thereby, including,
without limitation, fees and expenses of legal counsel, accountants, consultants, business brokers, advisers and others;

2.05
Purchase Price.
The aggregate purchase price payable by Buyer to Seller for the Purchased Assets to be acquired pursuant to the terms of this
Agreement shall be Nine Million Dollars ($9,000,000.00) (the "Purchase Price"), plus the assumption of the Assumed
Liabilities. The Purchase Price shall be comprised of the following consideration: 

(a)
One Million Five Hundred Thousand Dollars ($1,500,000.00) (the
“Cash Payment”), payable by Buyer to Seller, on the Closing Date via wire transfer of immediately available
funds to an account designated in writing by Seller to Buyer prior to the Closing; and

(b)
Three Million (3,000,000) newly issued restricted shares of Common
Stock, par value $0.0001 of INLB, having an aggregate cost basis of Seven Million Five Hundred Thousand Dollars ($7,500,000.00)
or $2.50 per share, based upon the current market price of INLB Common Stock (the “INLB Shares”). The INLB
Shares shall be issued to Seller or its Owner on a tax free exchange basis on the Closing Date. 

2.06
Allocation of Purchase Price.
The Parties and their respective Affiliates shall report and file all Tax Returns (including,
but not limited to Internal Revenue Service Form 8594) consistent with the allocation
set forth on Section 2.06 of the Disclosure Schedules. The Parties agree that this allocation
was arrived at by arm's length negotiation between them and that no Party will take a position on any income tax return, before
any Governmental Authority, that is inconsistent with such allocation without the prior written consent of the other Parties.
The Parties further agree that, to the extent required, each of them will properly prepare and timely file Form 8594 in accordance
with Section 2.06 of the Disclosure Schedules and Section 1060 of the Code.

    	 	7	 

     

    

Article
III.

CLOSING

3.01
Closing. The closing of the purchase and sale of the Purchased Assets (the "Closing")
is taking place simultaneously with the execution of this Agreement by transmittal of fully executed Transaction Documents by
electronic means. All transactions contemplated herein to occur on and as of the Closing Date shall be deemed to have occurred
simultaneously and to be effective as of the close of Seller’s business on the date of this Agreement (the "Closing
Date").

3.02
Closing Deliverables.

(a)
At the Closing, Seller or its Owner (as applicable) shall deliver
to Buyer or INLB (as applicable) the following:

(i)
  a bill of sale and
assignment and assumption agreement in the form of Exhibit A hereto (the "Bill of Sale") and duly executed
by Seller, transferring the Purchased Assets to Buyer;

(ii)
a non-competition agreement duly executed by Seller and Owner
with respect to Buyer and the Business with a three (3) year term from the Closing Date in the form of Exhibit B hereto
(the "Non-Competition Agreement");

(iii)
  the Employment Agreement
duly executed by Owner, as described in Section 6.01, and in the form attached hereto as Exhibit C;

(iv)
   the Lease Agreement,
duly executed by Seller, as described in Section 6.03, and in the form attached hereto as Exhibit D;

(v)
a certificate of the Secretary or an Assistant Secretary (or equivalent
officer) of Seller certifying (1) that attached thereto are true and complete copies of all resolutions adopted by the governing
body of Seller authorizing the execution, delivery and performance of this Agreement and the other Transaction Documents and the
consummation of the transactions contemplated hereby and thereby, and that all such resolutions are in full force and effect
and are all the resolutions adopted in connection with the transactions contemplated hereby and thereby; and (2) the names and
signatures of the officers of Seller authorized to sign this Agreement, the Transaction Documents and the other documents to be
delivered hereunder and thereunder; and

(vi)
such other customary instruments of transfer, assumption, filings or documents, in form and substance reasonably
satisfactory to Buyer, as may be required to give effect to this Agreement.

(b)
At the Closing, Buyer or INLB (as applicable) shall deliver (or cause to be delivered) to Seller or its Owner (as
applicable) the following:

(i)  
the Cash Payment, as described in Section 2.05(a);

(ii)
 a stock certificate evidencing the INLB Shares issued to Seller or its Owner, as described in Section 2.05(b);

(iii)  
the Bill of Sale duly executed by Buyer;

(iv)
the Non-Competition Agreement duly executed by Buyer;

(v)
the Employment Agreement duly executed by INLB;

(vi)
the Lease Agreement duly executed by Buyer;

    	 	8	 

     

    

(vii)
a certificate of the Secretary or an Assistant Secretary (or equivalent officer) of Buyer certifying (1) that attached
thereto are (a) true and complete copies of all resolutions adopted by the governing body of Buyer authorizing the execution, delivery
and performance of this Agreement and the other Transaction Documents and the consummation of the transactions contemplated hereby
and thereby, and that all such resolutions are in full force and effect and are all the resolutions adopted in connection with
the transactions contemplated hereby and thereby, and (b) a certificate of good standing for Buyer, as certified by the Nevada
Secretary of State; and (2) the names and signatures of the officers of Buyer authorized to sign this Agreement, the Transaction
Documents and the other documents to be delivered hereunder and thereunder;

(viii)     
a certificate of the Secretary or an Assistant Secretary (or equivalent officer) INLB certifying (1) that attached
thereto are (a) a true and complete copy of INLB’s certificate of incorporation, together with all amendments to date, as
certified by the Delaware Secretary of State, and that such certificate of incorporation, together with all amendments, is in full
force and effect on the date hereof, (b) a true and complete copy of INLB’s bylaws, as amended to date, and that such bylaws
have not been rescinded, amended or otherwise modified and are in full force and effect on the date hereof, (c) true and complete
copies of all resolutions adopted by the governing body of INLB authorizing the execution, delivery and performance of this Agreement
and the other Transaction Documents and the consummation of the transactions contemplated hereby and thereby, and that all such
resolutions are in full force and effect and are all the resolutions adopted in connection with the transactions contemplated hereby
and thereby, and (d) a certificate of good standing for INLB, as certified by the Delaware Secretary of State; and (2) the names
and signatures of the officers of INLB authorized to sign this Agreement, the Transaction Documents and the other documents to
be delivered hereunder and thereunder; and

(ix)
such other customary instruments of transfer, assumption, filings or documents, in form and substance reasonably
satisfactory to Seller, as may be required to give effect to this Agreement.

    	 	9	 

     

    

Article
IV.

REPRESENTATIONS AND WARRANTIES OF SELLER

Except as set forth
in the Disclosure Schedules, Seller represents and warrants to Buyer that, to the Knowledge of Seller, the statements contained
in this Article IV are true and correct as of the date hereof:

4.01
Organization and Qualification of Seller. Seller is a limited liability company duly organized, validly
existing and in good standing under the Laws of the State of Arizona, and has all necessary corporate power and authority to carry
on the Business as currently conducted. Seller is not licensed or qualified to do business in any other jurisdiction. Seller is
duly licensed or qualified to do business and is in good standing in each jurisdiction in which the ownership of the Purchased
Assets or the operation of the Business as currently conducted makes such licensing or qualification necessary, except where the
failure to be so licensed, qualified or in good standing would not have a Material Adverse Effect.

 

4.02
Authority of Seller. Seller has all necessary limited liability company power and authority to enter into
this Agreement and the other Transaction Documents to which Seller is a party, to carry out its obligations hereunder and thereunder
and to consummate the transactions contemplated hereby and thereby. The execution and delivery by Seller of this Agreement and
any other Transaction Document to which Seller is a party, the performance by Seller of its obligations hereunder and thereunder
and the consummation by Seller of the transactions contemplated hereby and thereby have been duly authorized by all requisite limited
liability company action on the part of Seller. This Agreement has been duly executed and delivered by Seller, and (assuming due
authorization, execution and delivery by Buyer) this Agreement constitutes a legal, valid and binding obligation of Seller, enforceable
against Seller in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar Laws affecting creditors' rights generally and by general principles of equity (regardless of whether enforcement
is sought in a proceeding at law or in equity). When each other Transaction Document to which Seller is or will be a party has
been duly executed and delivered by Seller (assuming due authorization, execution and delivery by each other party thereto), such
Transaction Document will constitute a legal and binding obligation of Seller enforceable against it in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting creditors'
rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in
equity).

    	 	10	 

     

    

4.03
No Conflicts; Consents. The execution, delivery and performance by Seller of this Agreement and the other
Transaction Documents to which it is a party, and the consummation of the transactions contemplated hereby and thereby, do not
and will not: (a) result in a violation or breach of any provision of the articles of organization or operating agreement of Seller;
(b) result in a violation or breach of any provision of any Law or Governmental Order applicable to Seller, the Business or the
Purchased Assets; or (c) except as set forth in Section 4.03 of the Disclosure Schedules, require the consent, notice or other
action by any Person under, conflict with, result in a violation or breach of, constitute a default under or result in the acceleration
of any Material Contract, except in the cases of clauses (b) and (c), where the violation, breach, conflict, default, acceleration
or failure to give notice would not have a Material Adverse Effect. Except as set forth in Section 4.03 of the Disclosure Schedules,
no consent, approval, Permit, Governmental Order, declaration or filing with, or notice to, any Governmental Authority is required
by or with respect to Seller in connection with the execution and delivery of this Agreement or any of the other Transaction Documents
and the consummation of the transactions contemplated hereby and thereby except for such filings and such consents, approvals,
Permits, Governmental Orders, declarations, filings or notices which, in the aggregate, would not have a Material Adverse Effect.

4.04
Financial Statements. The copies of the financial statements of Seller that have been provided to Buyer
prior to the date hereof (the “Financial Statements”) fairly present in all material respects the financial
condition of the Business as of the respective dates they were prepared and the results of the operations of the Business for the
periods indicated.

4.05
Undisclosed Liabilities. Seller has no liabilities with respect to the Business except (a) those which
are adequately reflected in the Financial Statements, and (b) those which have been incurred in the Ordinary Course of Business
and which are not, individually or in the aggregate, material in amount since the date of the last Financial Statement.

4.06
Absence of Certain Changes, Events and Conditions. Except as expressly contemplated by this Agreement,
or as set forth on Section 4.06 of the Disclosure Schedules, since January 1, 2018, through the Closing Date, Seller has transacted
Business in the Ordinary Course of Business in all material respects and there has not been, with respect to the Business, any:

 

(a)
event, occurrence or development that has had a Material Adverse Effect;

(b)
revocation or other loss of any Permit or Intellectual Property Registration issued by a Governmental Authority;

(c)
imposition of any Encumbrance upon any of the Purchased Assets, except for Permitted Encumbrances;

(d)
increase in the compensation of any Transferred Employees, other than as provided for in any written agreements or
in the Ordinary Course of Business;

(e)
any loan to (or forgiveness of any loan to), or entry into any other transaction with, any current or former managers,
officers or employees of the Seller;

    	 	11	 

     

    

(f)
adoption of any plan of merger, consolidation, reorganization, liquidation or dissolution or filing of a petition
in bankruptcy under any provisions of federal or state bankruptcy Law or consent to the filing of any bankruptcy petition against
it under any similar Law;

(g)
purchase or other acquisition of any property or asset that constitutes a Purchased Asset in an aggregate amount
exceeding $25,000; or

(h)
any agreement to do any of the foregoing, or any action or omission that would result in any of the foregoing.

4.07
Material Contracts.

(a)
Section 4.07(a) of the Disclosure Schedules lists each of the following Contracts (x) by which any of the Purchased
Assets are bound or affected or (y) to which Seller is a party or by which Seller is bound in connection with the Purchased Assets
(together with all Intellectual Property Agreements listed in Section 4.11(a) of the Disclosure Schedules, collectively, the "Material
Contracts"):

(i)  
all Contracts with vendors, suppliers, distributors, sales brokers, consultants, service providers, employees and
independent contractors involving aggregate consideration in excess of $25,000;

(ii)
all Contracts involving aggregate consideration in excess of $35,000;

(iii)  
all Contracts that relate to the sale of any of the Purchased Assets, other than in the Ordinary Course of Business,
for consideration in excess of $25,000;

(iv)
all Contracts that relate to the acquisition of any business, a material amount of stock or assets of any other Person
or any real property (whether by merger, sale of stock, sale of assets or otherwise);

(v)
all Contracts between or among the Seller on the one hand and any Affiliate of Seller on the other hand;

(vi)
all collective bargaining agreements or Contracts with any labor organization, union or association.

(b)
Seller is not in breach of, or default under, any Material Contract, except for such breaches or defaults that would
not have a Material Adverse Effect.

4.08
Title to Purchased Assets. Seller has good and valid title to, or a valid leasehold interest in, all the
Purchased Assets, free and clear of Encumbrances except for Permitted Encumbrances.

4.09
Sufficiency of Assets. Except as set forth in Section 4.09 of the Disclosure Schedules, the Purchased
Assets are sufficient for the continued conduct of the Business after the Closing in substantially the same manner as conducted
prior to the Closing and constitute all of the rights, property and assets necessary to conduct the Business as currently conducted.

    	 	12	 

     

    

4.10
Real Property.

(a)
Seller does not lease any material real property used in connection with the Business. As set forth in Section 6.03
of this Agreement, the parties shall enter into a lease agreement for the commercial office space located at 1709 E. Bethany Home
Road, Phoenix, Arizona owned by Seller (the “Real Property”).

(b)
Seller has not received any written notice of existing, pending or threatened (i) condemnation proceedings affecting
the Real Property, or (ii) zoning, fire or building code violations or other proceedings, or similar matters which would reasonably
be expected to materially and adversely affect the ability to utilize the Real Property as currently operated. Neither the whole
nor any material portion of any Real Property has been damaged or destroyed by fire or other casualty.

4.11
Intellectual Property.

(a)
Section 4.11(a) of the Disclosure Schedules lists (i) all Intellectual Property Assets, (ii) all Intellectual Property
Registrations, and (iii) all Intellectual Property Agreements. Seller owns or has the right to use all Intellectual Property Assets
and the Intellectual Property licensed to Seller under the Intellectual Property Agreements, including, but not limited to, formulations
for all products and all processes and know-how related to the development of products and processes as conducted by the Seller.

(b)
Except as set forth in Section 4.11(b) of the Disclosures Schedules: (i) the transaction of the Business as currently
conducted does not infringe, misappropriate, dilute or otherwise violate the Intellectual Property of any Person; and (ii) to Seller’s
Knowledge, no Person is infringing, misappropriating or otherwise violating any Intellectual Property Assets.

4.12
Legal Proceedings; Governmental Orders.

(a)
Except as set forth in Section 4.12(a) of the Disclosure Schedules, there have not been within the last three (3)
calendar years and there are currently no actions, suits, claims, investigations or other legal proceedings pending or, to the
Knowledge of Seller, threatened against or by Seller relating to or affecting the Seller, the Business, the Purchased Assets or
the Assumed Liabilities.

(b)
Except as set forth in Section 4.12(b) of the Disclosure Schedules, there are no outstanding Governmental Orders
and no unsatisfied judgments, penalties or awards against or affecting the Seller or the Purchased Assets which would have a Material
Adverse Effect.

4.13
Compliance With Laws; Permits.

(a)
Except as set forth in Section 4.13(a) of the Disclosure Schedules, Seller is in compliance with all Laws applicable
to the conduct of the Business as currently conducted or the ownership and use of the Purchased Assets, except where the failure
to be in compliance would not have a Material Adverse Effect.

(b)
Section 4.13(b) of the Disclosure Schedules contains a complete and accurate list of all Permits required for Seller
to conduct the Business as currently conducted or for the ownership and use of the Purchased Assets, except where the failure to
obtain such Permits would not have a Material Adverse Effect.

    	 	13	 

     

    

4.14
Environmental. Except as would not have a Material Adverse Effect, Seller is currently in compliance with
all Laws relating to the environment or worker safety with respect to the Business or the Purchased Assets, and Seller has not
received any written notice, report, or information regarding any liabilities (whether accrued, absolute, contingent, unliquidated,
or otherwise) or any corrective, investigatory, or remedial obligations arising under such Laws which relate to Seller currently
or previously as used by Seller in the operation of the Business.

4.15
Employee Benefit Matters.

(a)
Except as set forth in Section 4.15(a) of the Disclosure Schedules there are no material benefit, retirement, employment,
consulting, compensation, incentive, bonus, membership interest/stock option, appreciation right, phantom equity, change in control,
severance, vacation, paid time off, welfare and fringe-benefit agreement, plan, policy and program in effect and covering one or
more Employees, former employees of the Seller, current or former directors of the Seller or the beneficiaries or dependents of
any such Persons, and is maintained, sponsored, contributed to, or required to be contributed to by Seller, or under which Seller
has any material liability for premiums or benefits (as listed on Section 4.15(a) of the Disclosure Schedules, each, a "Benefit
Plan").

(b)
No Benefit Plan: (i) is subject to the minimum funding standards of Section 302 of ERISA or Section 412 of the Code;
or (ii) is a "multi-employer plan" (as defined in Section 3(37) of ERISA).

(c)
No Benefit Plan provides benefits or coverage in the nature of health, life or disability insurance following retirement
or other termination of employment (other than death benefits when termination occurs upon death).

(d)
No Benefit Plan exists that could: (i) result in the payment to any Employee, director or consultant of the Seller
of any money or other property; or (ii) accelerate the vesting of or provide any additional rights or benefits (including funding
of compensation or benefits through a trust or otherwise) to any Employee, director or consultant of the Seller, in each case,
as a result of the execution of this Agreement. Neither the execution of this Agreement nor the consummation of the transactions
contemplated hereby will result in "excess parachute payments" within the meaning of Section 280G(b) of the Code.

4.16
Employment Matters.

(a)
Seller is not a party to or bound by any collective bargaining or other agreement with a union or labor organization
representing any of the Employees. There has not been, nor, to the Knowledge of Seller, has there been any threat of, any strike,
slowdown, work stoppage, lockout, concerted refusal to work overtime or other similar labor activity or dispute affecting Seller
or any of the Employees.

(b)
Seller is in compliance with all applicable Laws pertaining to employment and employment practices to the extent
they relate to the Transferred Employees, except to the extent non-compliance would not result in a Material Adverse Effect.

    	 	14	 

     

    

4.17
Taxes.

(a)
Except as set forth in Section 4.17(a) of the Disclosure Schedules or as would not have a Material Adverse Effect,
Seller has filed (taking into account any valid extensions) all Tax Returns with respect to the Seller and Business required to
be filed by Seller and has paid all Taxes shown thereon as owing. Seller is not currently the beneficiary of any extension of time
within which to file any Tax Return other than extensions of time to file Tax Returns obtained in the Ordinary Course of Business.
To Seller’s Knowledge, no issue relating to Taxes has been raised by a taxing authority during any pending audit or examination,
and no issue relating to Taxes was raised by a taxing authority in any completed audit or examination, that reasonably can be expected
to recur in a later taxable period.

(b)
Seller is not a "foreign person" as that term is used in Treasury Regulations Section 1.1445-2.

(c)
The representations and warranties set forth in this Section 4.17 are Seller's sole and exclusive representations
and warranties regarding Tax matters.

4.18
Brokers. No broker, finder or investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement or any other Transaction Document based upon arrangements
made by or on behalf of Seller.

4.19
No Other Representations and Warranties. Except for the representations and warranties contained in this
Article IV (including the related portions of the Disclosure Schedules), neither Seller nor any other Person has made or makes
any other express or implied representation or warranty, either written or oral, on behalf of Seller, including any representation
or warranty as to the accuracy or completeness of any information regarding the Seller, Business, and the Purchased Assets furnished
or made available to Buyer and its Representatives, or as to the future revenue, profitability or success of the Business, or any
representation or warranty arising from statute or otherwise under applicable Laws.

 

4.20
Full Disclosure. No representation or warranty by Seller in this Agreement, and no statement contained
in the Disclosure Schedules to this Agreement, contains any untrue statement of a material fact, or omits to state a material fact
necessary to make the statements contained therein, in light of the circumstances in which they are made, not misleading.

    	 	15	 

     

    

Article
V.

REPRESENTATIONS AND WARRANTIES OF BUYER

Except as set forth
in the Disclosure Schedules, Buyer represents and warrants to Seller and its Owner that the statements contained in this Article
V are true and correct as of the date hereof:

5.01
Organization of Buyer. Buyer is a limited liability company duly organized, validly existing and in good
standing under the Laws of the State of Nevada and has all necessary corporate power and authority to carry on its business as
currently conducted.

5.02
Authority of Buyer. Buyer has all necessary limited liability company power and authority to enter into
this Agreement and the other Transaction Documents to which Buyer is a party, to carry out its obligations hereunder and thereunder
and to consummate the transactions contemplated hereby and thereby. The execution and delivery by Buyer of this Agreement and any
other Transaction Document to which Buyer is a party, the performance by Buyer of its obligations hereunder and thereunder and
the consummation by Buyer of the transactions contemplated hereby and thereby have been duly authorized by all requisite limited
liability company action on the part of Buyer. This Agreement has been duly executed and delivered by Buyer, and (assuming due
authorization, execution and delivery by Seller and its Owner) this Agreement constitutes a legal, valid and binding obligation
of Buyer enforceable against Buyer in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency,
moratorium or similar Laws affecting creditors' rights generally and by general principles of equity (regardless of whether enforcement
is sought in a proceeding at law or in equity). When each other Transaction Document to which Buyer is or will be a party has been
duly executed and delivered by Buyer (assuming due authorization, execution and delivery by each other party thereto), such Transaction
Document will constitute a legal and binding obligation of Buyer enforceable against it in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting creditors' rights
generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity).

5.03
No Conflicts; Consents. The execution, delivery and performance by Buyer of this Agreement and the other
Transaction Documents to which it is a party, and the consummation of the transactions contemplated hereby and thereby, do not
and will not: (a) result in a violation or breach of any provision of the articles of organization or operating agreement of Buyer;
(b) result in a violation or breach of any provision of any Law or Governmental Order applicable to Buyer; or (c) except as set
forth in Section 5.03 of the Disclosure Schedules, require the consent, notice or other action by any Person under, conflict with,
result in a violation or breach of, constitute a default under or result in the acceleration of any agreement to which Buyer is
a party, except in the cases of clauses (b) and (c), where the violation, breach, conflict, default, acceleration or failure to
give notice would not have a material adverse effect on Buyer's ability to consummate the transactions contemplated hereby. No
consent, approval, Permit, Governmental Order, declaration or filing with, or notice to, any Governmental Authority is required
by or with respect to Buyer in connection with the execution and delivery of this Agreement and the other Transaction Documents
and the consummation of the transactions contemplated hereby and thereby, except as set forth in Section 5.03 of the Disclosure
Schedules and such consents, approvals, Permits, Governmental Orders, declarations, filings or notices which would not have a material
adverse effect on Buyer's ability to consummate the transactions contemplated hereby and thereby.

    	 	16	 

     

    

5.04
Brokers. No broker, finder or investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement or any other Transaction Document based upon arrangements
made by or on behalf of Buyer.

5.05
Sufficiency of Funds. Buyer has sufficient cash on hand or other sources of immediately available funds
to enable it to make the Cash Payment and consummate the transactions contemplated by this Agreement.

5.06
Solvency. Immediately after giving effect to the transactions contemplated hereby, Buyer shall be solvent
and shall: (a) be able to pay its debts as they become due; and (b) have adequate capital to carry on its business.

 

5.07
Legal Proceedings. To Buyer's knowledge, there are no actions, suits, claims, investigations or other
legal proceedings pending or threatened against or by Buyer or any Affiliate of Buyer that challenge or seek to prevent, enjoin
or otherwise delay the transactions contemplated by this Agreement.

Except as set forth
in the Disclosure Schedules, INLB represents and warrants to Seller and its Owner that the statements contained in this Article
V are true and correct as of the date hereof:

5.08
Disclosure Reports.

(a)
INLB is not, and its common stock is not, currently registered under the Securities Exchange Act of 1934 (the “Exchange
Act”). INLB is currently listed for trading of its common stock on the OTC Markets Pink sheets and files quarterly, annual
and interim reports in compliance with Rule 15c2-11 (a)(5) promulgated under the Exchange Act and the requirements of OTC Markets
(the “OTC Reports”). The INLB OTC Reports (i) at the time filed, (or, if amended or superseded by a filing prior
to the date of this Agreement, then on the date of such filing) complied in all material respects with the applicable requirements
of the securities laws and other applicable laws and (ii) did not, at the time they were filed (or, if amended or superseded by
a filing prior to the date of this Agreement, then on the date of such amended or superseded filing) contain any untrue statement
of a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.
Each offering or sale of securities by INLB (i) was either registered under the Exchange Act or made pursuant to a valid exemption
from registration, (ii) complied in all material respects with the applicable requirements of the securities laws and other applicable
laws, except for immaterial late “Blue Sky” filings, including disclosure and broker/dealer registration requirements,
and (iii) was made pursuant to offering documents, which did not, at the time of the offering (or, in the case of registration
statements, at the effective date thereof) contain any untrue statement of a material fact or omit to state a material fact required
to be stated in the offering documents or necessary to make the statements in such documents, in light of the circumstances under
which they were made, not misleading.

    	 	17	 

     

    

(b)
All of the financial statements of INLB included in its Annual Report for year ended September 30, 2017 filed with
OTC Markets in 2018, and each of its Quarterly Report filings filed with OTC Markets in 2018, including any related notes thereto,
have been prepared in accordance with GAAP in all material respects, subject in the case of unaudited financial statements to normal
year-end adjustments and the absence of notes, and present fairly in all material respects the consolidated financial position,
results of operations and cash flows of INLB and its subsidiaries as of the dates and for the periods indicated therein.

5.09
Capitalization. The authorized capital stock of INLB consists of 2,000,000,000 shares of Common Stock,
all with a par value of $0.0001 per shares. As of the Closing Date, there are 59,699,196 shares of Common Stock issued and outstanding
(which includes all 5,000,000 shares committed to be issued to Viridis Group I9 Capital LLC). All of the outstanding Common Stock
has been duly authorized, validly issued, fully paid and is nonassessable, and was not subject to or issued in violation of any
purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under any provision
of applicable Law, the organizational documents of INLB, any Contract to which INLB is or was a party or otherwise bound, any Law
or Governmental Order or any federal or state securities or “Blue Sky” Laws. The issuance and sale of the INLB Shares
pursuant to this Agreement will not obligate INLB to issue shares of Common Stock or other securities to any Person (other than
Seller and its Owner) and will not result in a right of any holder of INLB’s securities to adjust the exercise, conversion,
exchange or reset price under any of such securities. There are no stockholders agreements, voting agreements or other similar
agreements with respect to the INLB’s capital stock to which INLB is a party or, to the knowledge of INLB, between or among
any of the INLB’s stockholders.

5.10
Insurance. INLB and its subsidiaries are insured by insurers of recognized financial responsibility against
such losses and risks and in such amounts as are prudent and customary in the businesses in which INLB and its subsidiaries are
engaged, however, INLB does not currently have directors and officers insurance coverage. INLB has no reason to believe that it
will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business without a significant increase in cost.

5.11
Issuance of INLB Shares; Compliance Matters. The INLB Shares issuable pursuant to this Agreement are duly
authorized and, when issued, sold and delivered in accordance with the terms and for the consideration set forth in this Agreement,
will be validly issued, fully paid and nonassessable, free and clear of all Encumbrances imposed by INLB other than restrictions
on transfer provided by applicable Law. No registration under the Exchange Act is required for the offer and sale of the INLB Shares
to Seller or its Owner (as applicable) as contemplated by this Agreement. INLB has not, in the twelve (12) months preceding the
date hereof, received notice from any trading market on which INLB’s Common Stock is or has been listed or quoted to the
effect that INLB is not in compliance with the listing or maintenance requirements of such trading market, with the exception of
the quarterly reports for periods ending March 31, 2018 and June 30, 2018, which have been filed with OTC Markets but were filed
past the due date. INLB is in compliance with all such listing and maintenance requirements and the consummation of the transactions
contemplated by this Agreement do not violate the marketplace rules of any such trading market.

    	 	18	 

     

    

5.12
Price. INLB has not, and to its knowledge, no Person has, taken, directly or indirectly, any action primarily
designed to cause or to result in the stabilization or destabilization of the price of any security of INLB to facilitate the sale
or resale of any of the Common Stock.

5.13
Organization of INLB. INLB is a corporation duly organized, validly existing and in good standing under
the Laws of the State of Delaware and has all necessary corporate power and authority to carry on its business as currently conducted.

5.14
Authority of INLB. INLB has all necessary corporate power and authority to enter into this Agreement and
the other Transaction Documents to which INLB is a party, to carry out its obligations hereunder and thereunder and to consummate
the transactions contemplated hereby and thereby. The execution and delivery by INLB of this Agreement and any other Transaction
Document to which INLB is a party, the performance by INLB of its obligations hereunder and thereunder and the consummation by
INLB of the transactions contemplated hereby and thereby have been duly authorized by all requisite limited liability company action
on the part of INLB. This Agreement has been duly executed and delivered by INLB, and (assuming due authorization, execution and
delivery by Seller) this Agreement constitutes a legal, valid and binding obligation of INLB enforceable against INLB in accordance
with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium or similar Laws affecting creditors'
rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in
equity). When each other Transaction Document to which INLB is or will be a party has been duly executed and delivered by INLB
(assuming due authorization, execution and delivery by each other party thereto), such Transaction Document will constitute a legal
and binding obligation of INLB enforceable against it in accordance with its terms, except as such enforceability may be limited
by bankruptcy, insolvency, moratorium or similar Laws affecting creditors' rights generally and by general principles of equity
(regardless of whether enforcement is sought in a proceeding at law or in equity).

5.15
No Conflicts; Consents. The execution, delivery and performance by INLB of this Agreement and the other
Transaction Documents to which it is a party, and the consummation of the transactions contemplated hereby and thereby, do not
and will not: (a) result in a violation or breach of any provision of the certificate of incorporation or bylaws of INLB; (b) result
in a violation or breach of any provision of any Law or Governmental Order applicable to INLB; or (c) except as set forth in Section
5.15 of the Disclosure Schedules, require the consent, notice or other action by any Person under, conflict with, result in a violation
or breach of, constitute a default under or result in the acceleration of any agreement to which INLB is a party, except in the
cases of clauses (b) and (c), where the violation, breach, conflict, default, acceleration or failure to give notice would not
have a material adverse effect on INLB's ability to consummate the transactions contemplated hereby. No consent, approval, Permit,
Governmental Order, declaration or filing with, or notice to, any Governmental Authority is required by or with respect to INLB
in connection with the execution and delivery of this Agreement and the other Transaction Documents and the consummation of the
transactions contemplated hereby and thereby, except as set forth in Section 5.15 of the Disclosure Schedules and such consents,
approvals, Permits, Governmental Orders, declarations, filings or notices which would not have a material adverse effect on INLB’s
ability to consummate the transactions contemplated hereby and thereby.

5.16
Full Disclosure. No representation or warranty by Buyer or INLB in this Agreement and no statement contained
in the Disclosure Schedules to this Agreement contains any untrue statement of a material fact, or omits to state a material fact
necessary to make the statements contained therein, in light of the circumstances in which they are made, not misleading.

    	 	19	 

     

    

Article
VI.

COVENANTS

6.01

Transfer
of Employees. Simultaneously with the Closing, Seller is terminating the employment of all employees, and will pay all liabilities,
relating to the employment of and termination of such employees, if any. At the Closing, Buyer shall offer employment to all of
Seller’s former employees (the “Transferred Employees”) set forth on Section 6.01 of the Disclosure Schedules.
Seller shall use its best efforts to assist in the post-closing employment of the Transferred Employees. No portion of the assets
of any Benefit Plan, fund, program or arrangement, written or unwritten, heretofore sponsored or maintained by Seller (and no amount
attributable to any such Benefit Plan, fund, program or arrangement) shall be transferred to Buyer, and Buyer shall not be required
to continue any such Benefit Plan, fund, program or arrangement after the Closing.

(a)
Transferred Employees. At the Closing, Buyer is offering employment to the Transferred Employees at substantially
the same pay as received by such Transferred Employees prior to Closing and with rights to participate in all employee benefit
and incentive packages offered by Buyer to its employees from time to time.

(b)
Employment Agreement. At the Closing, INLB is entering into an employment agreement with Owner, pursuant to
which Owner shall serve in the capacity of Chief Executive Officer of INLB (the “Employment Agreement”) and
shall receive a base salary of $200,000 and a bonus of up to $200,000 per year upon completion of certain performance measurements.
The form of Employment Agreement is attached hereto as Exhibit C. Any and all prior consulting agreements entered into prior
to Closing between Buyer and Owner shall be terminated effective as of Closing.

6.02
Board and Governance of INLB. In accordance with the
written consent of the Board of Directors of INLB (“INLB Board”)
and/or a majority vote of the INLB shareholders, INLB agrees that Owner shall be appointed to serve as a director on the INLB Board
effective as of the Closing. 

6.03
Lease Agreement. At the Closing, Seller, as owner of that certain commercial office space
located at 1709 E. Bethany Home Road, Phoenix, Arizona 85016, is entering into a lease with Buyer for a minimum term of six (6)
months at an initial gross monthly rent of $3,200, inclusive of all furniture and fixtures, in the form attached hereto as Exhibit
D (the “Lease Agreement”). The Lease Agreement shall be renewable at the
option of Buyer on substantially the same terms for additional time periods as agreed upon by the Buyer and Seller.

6.04
Confidentiality. The Parties to this Agreement acknowledge, covenant and agree
that each Party and such Party’s Representatives and Affiliates will keep all information relating to the Seller, the Business
and the transactions described in this Agreement confidential, and no Party, its Representatives or Affiliates will disclose or
allow to be disclosed any confidential information, directly or indirectly, to any third party without the prior written approval
of all Parties, except where the information is already generally available to the public through no act of a Party or where a
Party is required by any applicable law to disclose confidential information (and then prior notice of such disclosure shall be
given to the other Parties). 

    	 	20	 

     

    

6.05
Books and Records.

(a)
In order to facilitate the resolution of any claims made against or incurred by Seller prior to the Closing, or for
any other reasonable purpose, for a period of three (3) years after the Closing, Buyer shall:

(i)  
retain the Books and Records (including personnel files) relating to periods after to the Closing in a manner reasonably
consistent with the prior practices of Seller; and

(ii)
upon reasonable notice, afford the Seller's Representatives reasonable access (including the right to make, at Seller's
expense, photocopies), during normal business hours, to such Books and Records.

(b)
In order to facilitate the resolution of any claims made by or against or incurred by Buyer after the Closing, or
for any other reasonable purpose, for a period of three (3) years after the Closing, Seller shall:

(i)  
retain the books and records (including personnel files) of Seller which relate to the Business and its operations
for periods prior to the Closing; and

(ii)
upon reasonable notice, afford the Buyer's Representatives reasonable access (including the right to make, at Buyer's
expense, photocopies), during normal business hours, to such books and records.

(c)
Neither Buyer nor Seller shall be obligated to provide the other party with access to any books or records (including
personnel files) pursuant to this Section where such access would violate any Law.

6.06
Public Announcements. Unless otherwise required by applicable Law, no Party shall make any public announcements
in respect of this Agreement or the transactions contemplated hereby or otherwise communicate with any news media without the prior
written consent of the other Parties (which consent shall not be unreasonably withheld or delayed), and the Parties shall cooperate
as to the timing and contents of any such announcement.

6.07
Bulk Sales Laws. The Parties hereby waive compliance
with the provisions of any bulk sales, bulk transfer or similar Laws of any jurisdiction that may otherwise be applicable with
respect to the sale of any or all of the Purchased Assets to Buyer.

 

6.08
Receivables. From and after the Closing, if Buyer
or its Affiliate receives or collects any funds relating to any Excluded Assets, Buyer or its Affiliate shall remit any such funds
to Seller within ten (10) Business Days after its receipt thereof. 

 

    	 	21	 

     

    

6.09
Transfer Taxes. All transfer, sales, use, registration, value added and other such Taxes and fees (including
any penalties and interest) incurred in connection with this Agreement and the other Transaction Documents (including unsecured
personal property tax to county tax collectors) that are attributable to Seller under state or federal tax Law shall be borne and
paid by Seller. Seller shall, at its own expense, file any Tax Return or other document with respect to such Taxes or fees (and
Buyer shall cooperate with respect thereto as necessary).

 

6.10
Further Assurances. Following the Closing, each of the Parties hereto shall, and shall cause their respective
Affiliates to, execute and deliver such additional documents, instruments, conveyances and assurances and take such further actions
as may be reasonably required to carry out the provisions hereof and give effect to the transactions contemplated by this Agreement
and the other Transaction Documents.

 

6.11
Matters Relating to the INLB Shares.

(a)
The INLB Shares to be issued to Seller or its Owner pursuant to this Agreement shall not have been registered and
shall be characterized as “restricted securities” under applicable federal and state securities laws, and under such
laws such shares may be resold without registration under the Exchange Act and state securities laws, only in certain limited circumstances.
Each certificate evidencing the INLB Shares to be issued to Seller or its Owner under this Agreement shall bear an appropriate
restrictive legend with respect thereto.

(b)
INLB hereby agrees to remove the restrictive legend(s) set forth on the certificate representing the INLB Shares
and issue a certificate without such restrictive legend(s) to the holder of the applicable certificate upon which it is stamped
at such time as (i) such INLB Shares are registered for resale under the Exchange Act, (ii) such INLB Shares are sold or transferred
pursuant to Rule 144, and (iii) such INLB Shares are eligible for sale under Rule 144, with the requirement for INLB to be in compliance
with the current public information required under Rule 144 as to such securities. Following the earlier of subsections (i), (ii),
or (iii) of this Section 6.11(b), INLB shall instruct its transfer agent to remove the restrictive legend(s) from the INLB Shares
and shall cause its counsel to issue any legend removal opinion required by the transfer agent, and take any and all such additional
steps as may be required to remove any and all then existing restrictive legend(s) from the INLB Shares, at INLB’s expense.
In connection with a sale of the INLB Shares in reliance on Rule 144, Seller or its Owner (as applicable) or their broker shall
also deliver to INLB a customary broker representation letter, which shall include, as may be appropriate, a certification that
such holder is, or is not, an affiliate of INLB (as defined in Rule 144) and a certification as to the length of time the applicable
INLB Shares have been held.

    	 	22	 

     

    

(c)
INLB shall file on a timely basis (or obtain extensions in respect thereof and file within the applicable grace period)
all reports required to be filed by it under the Exchange Act (including the reports under Sections 13 and 15(d) of the Exchange
Act referred to in subparagraph (c)(1) of Rule 144), and comply with all applicable securities laws. If INLB is not required to
file reports pursuant to the Exchange Act, upon the request of Seller or its Owner, INLB shall make publicly available the information
specified in subparagraph (c)(2) of SEC Rule 144 for a period not to exceed three (3) years from the date INLB is no longer required
to file reports pursuant to the Exchange Act. INLB shall take such further action (including, without limitation, the filing of
current Form 10 information and the reports under Sections 13 and 15(d) of the Exchange Act referred to in subparagraph (c)(1)
of Rule 144 ) as may be reasonably required from time to time and as may be within the reasonable control of INLB, to enable Seller
or its Owner (as applicable) to transfer the INLB Shares without registration under the Exchange Act, pursuant to the exemptions
provided by SEC Rule 144 or any similar rule or regulation hereafter adopted by the SEC; such action will be taken as soon as practicable,
and in any event so that such transfers by Seller or its Owner (as applicable) may commence no later than two (2) years following
the Closing Date. Upon the request of Seller or its Owner (as applicable), INLB will deliver to such party a written statement
as to whether it has complied with such requirements and, if not, the specifics thereof. In connection with the sale, transfer
or disposition of any of the INLB Shares under SEC Rule 144, provided that Seller or its Owner (as applicable) or their broker
shall have delivered to INLB a customary representation letter, INLB agrees promptly to cause its transfer agent to remove the
restrictive legend(s) on certificates or book entries representing the INLB Shares sold, transferred or distributed to the transferees
and to instruct INLB’s counsel to promptly issue a legal opinion, at INLB’s expense, confirming to the transfer agent
the right to have such legend(s) removed, and take any and all such additional steps as may be required to remove any and all then
existing restrictive legend(s) from the INLB Shares, at INLB’s expense. In connection with any sale, transfer or other disposition
by Seller or its Owner (as applicable) pursuant to SEC Rule 144, INLB shall cooperate with such holder to facilitate the timely
preparation and delivery of certificates representing such INLB Shares to be sold and not bearing any Exchange Act legend(s), and
enable certificates for such INLB Shares to be for such number of shares and registered in such names as Seller or its Owner (as
applicable) may reasonably request.

Article
VII.

INDEMNIFICATION

 

7.01
Survival. Subject to the limitations and other provisions of this Agreement, the representations and warranties
contained herein shall survive the Closing and shall remain in full force and effect until the date that is eighteen (18) months
from the Closing Date; except the representations and warranties set forth in Sections 4.01 (Organization and Qualification of
Seller), 4.02 (Authority of Seller), 4.08 (Title to Purchased Assets), 4.14 (Environmental), 4.15 (Employee Benefits), 4.18 (Brokers),
5.01 (Organization and Authority of Buyer), 5.02 (Authority of Buyer), 5.04 (Brokers), 5.08 (Disclosure Reports), 5.09 (Capitalization),
5.10 (Insurance), 5.11 (Issuance of INLB Shares), 5.13 (Organization and Authority of INLB) and 5.14 (Authority of INLB) which
shall survive until sixty (60) days following the expiration of the applicable statute of limitations. All covenants and agreements
of the Parties contained in this Agreement shall survive the Closing indefinitely or for the period explicitly specified therein.
The expiration of any representation, warranty or covenant shall not affect any claim made in accordance with this Agreement prior
to the date of such expiration.

    	 	23	 

     

    

7.02
Indemnification By Seller. Subject to the other terms and conditions of this Article VII, Seller shall
indemnify Buyer against, and shall hold Buyer harmless from and defend against, any and all Losses incurred or sustained by, or
imposed upon, Buyer based upon, arising out of, with respect to or by reason of:

(a)
any inaccuracy in or breach of any of the representations or warranties of Seller contained in this Agreement;

(b)
any breach or non-fulfillment of any covenant, agreement or obligation to be performed by Seller pursuant to this
Agreement; or

(c)
any Excluded Asset or any Retained Liability.

7.03
Indemnification By Buyer. Subject to the other terms and conditions of this Article VII, Buyer shall indemnify
Seller and its Owner against, and shall hold Seller and its Owner harmless from and against, any and all Losses incurred or sustained
by, or imposed upon, Seller and its Owner based upon, arising out of, with respect to or by reason of:

(a)
any inaccuracy in or breach of any of the representations or warranties of Buyer contained in this Agreement;

(b)
any breach or non-fulfillment of any covenant, agreement or obligation to be performed by Buyer pursuant to this
Agreement; or

(c)
any Assumed Liability.

7.04
Indemnification By INLB. Subject to the other terms and conditions of this Article VII, INLB shall indemnify
Seller and its Owner against, and shall hold Seller and its Owner harmless from and defend against, any and all Losses incurred
or sustained by, or imposed upon, Seller and its Owner based upon, arising out of, with respect to or by reason of:

(a)
any inaccuracy in or breach of any of the representations or warranties of INLB contained in this Agreement; or

(b)
any breach or non-fulfillment of any covenant, agreement or obligation to be performed by INLB pursuant to this Agreement.

7.05
Certain Limitations. The party making a claim under this Article VII is referred to as the "Indemnified
Party", and the party against whom such claims are asserted under this Article VII is referred to as the "Indemnifying
Party". The indemnification provided for in Section 7.02 and Section 7.03 shall be subject to the following limitations:

(a)
The Indemnifying Party shall not be liable to the Indemnified Party for indemnification under Section 7.02(a) or
Section 7.03(a) as the case may be, until the aggregate amount of all Losses in respect of indemnification under Section 7.02(a)
or Section 7.03(a) exceed Fifty Thousand Dollars ($50,000) (the "Deductible"), in which event the Indemnifying
Party shall only be required to pay or be liable for Losses in excess of the Deductible.

    	 	24	 

     

    

(b)
The aggregate amount of all Losses for which an Indemnifying Party shall be liable pursuant to Section 7.02(a) or
Section 7.03(a) as the case may be, shall not exceed the Cash Payment.

(c)
Payments by an Indemnifying Party pursuant to Section 7.02 or Section 7.03 in respect of any Loss shall be limited
to the amount of any liability or damage that remains after deducting therefrom any insurance proceeds received by the Indemnified
Party in respect of any such claim. The Indemnified Party shall use its commercially reasonable efforts to recover under insurance
policies for any Losses prior to seeking indemnification under this Agreement.

(d)
In no event shall any Indemnifying Party be liable to any Indemnified Party for any punitive damages relating to
the breach or alleged breach of this Agreement.

(e)
Each Indemnified Party shall take, and cause its Affiliates to take, all reasonable steps to mitigate any Loss upon
becoming aware of any event or circumstance that would be reasonably expected to, or does, give rise thereto, including incurring
costs only to the minimum extent necessary to remedy the breach that gives rise to such Loss.

7.06
Indemnification Procedures. 

(a)
Third Party Claims. If any Indemnified Party receives notice of the assertion or commencement of any action,
suit, claim or other legal proceeding made or brought by any Person who is not a party to this Agreement or an Affiliate of a party
to this Agreement or a Representative of the foregoing (a "Third Party Claim") against such Indemnified Party
with respect to which the Indemnifying Party is obligated to provide indemnification under this Agreement, the Indemnified Party
shall give the Indemnifying Party prompt written notice thereof. The failure to give such prompt written notice shall not, however,
relieve the Indemnifying Party of its indemnification obligations, except and only to the extent that the Indemnifying Party forfeits
rights or defenses by reason of such failure. Such notice by the Indemnified Party shall describe the Third Party Claim in reasonable
detail, shall include copies of all material written evidence thereof and shall indicate the estimated amount, if reasonably practicable,
of the Loss that has been or may be sustained by the Indemnified Party. The Indemnifying Party shall have the right to participate
in, or by giving written notice to the Indemnified Party, to assume the defense of any Third Party Claim at the Indemnifying Party's
expense and by the Indemnifying Party's own counsel, and the Indemnified Party shall cooperate in good faith in such defense. In
the event that the Indemnifying Party assumes the defense of any Third Party Claim, subject to Section 7.05(b), it shall have the
right to take such action as it deems necessary to avoid, dispute, defend, appeal or make counterclaims pertaining to any such
Third Party Claim in the name and on behalf of the Indemnified Party. The Indemnified Party shall have the right, at its own cost
and expense, to participate in the defense of any Third Party Claim with counsel selected by it subject to the Indemnifying Party's
right to control the defense thereof. If the Indemnifying Party elects not to compromise or defend such Third Party Claim or fails
to promptly notify the Indemnified Party in writing of its election to defend as provided in this Agreement, the Indemnified Party
may, subject to Section 7.05(b), pay, compromise, or defend such Third Party Claim and seek indemnification for any and all Losses
based upon, arising from or relating to such Third Party Claim. The Parties shall cooperate with each other in all reasonable respects
in connection with the defense of any Third Party Claim, including making available (subject to the provisions of Section 6.04
(Confidentiality)) records relating to such Third Party Claim and furnishing, without expense (other than reimbursement of actual
out-of-pocket expenses) to the defending party, management employees of the non-defending party as may be reasonably necessary
for the preparation of the defense of such Third Party Claim.

    	 	25	 

     

    

(b)
Settlement of Third Party Claims. Notwithstanding any other provision of this Agreement, the Indemnifying
Party shall not enter into settlement of any Third Party Claim without the prior written consent of the Indemnified Party (which
consent shall not be unreasonably withheld or delayed), except as provided in this Section 7.05(b). If a firm offer is made to
settle a Third Party Claim without leading to liability or the creation of a financial or other obligation on the part of the Indemnified
Party and provides, in customary form, for the unconditional release of each Indemnified Party from all liabilities and obligations
in connection with such Third Party Claim and the Indemnifying Party desires to accept and agree to such offer, the Indemnifying
Party shall give written notice to that effect to the Indemnified Party. If the Indemnified Party fails to consent to such firm
offer within ten (10) days after its receipt of such notice, the Indemnified Party may continue to contest or defend such Third
Party Claim and in such event, the maximum liability of the Indemnifying Party as to such Third Party Claim shall not exceed the
amount of such settlement offer. If the Indemnified Party fails to consent to such firm offer and also fails to assume defense
of such Third Party Claim, the Indemnifying Party may settle the Third Party Claim upon the terms set forth in such firm offer
to settle such Third Party Claim. If the Indemnified Party has assumed the defense pursuant to Section 7.05(a), it shall not agree
to any settlement without the written consent of the Indemnifying Party (which consent shall not be unreasonably withheld or delayed).

(c)
Direct Claims. Any claim by an Indemnified Party on account of a Loss which does not result from a Third Party
Claim (a "Direct Claim") shall be asserted by the Indemnified Party giving the Indemnifying Party prompt written
notice thereof. The failure to give such prompt written notice shall not, however, relieve the Indemnifying Party of its indemnification
obligations, except and only to the extent that the Indemnifying Party forfeits rights or defenses by reason of such failure. Such
notice by the Indemnified Party shall describe the Direct Claim in reasonable detail, shall include copies of all material written
evidence thereof and shall indicate the estimated amount, if reasonably practicable, of the Loss that has been or may be sustained
by the Indemnified Party. The Indemnifying Party shall have thirty (30) days after its receipt of such notice to respond in writing
to such Direct Claim. During such thirty-day (30) period, the Indemnified Party shall allow the Indemnifying Party and its professional
advisors to investigate the matter or circumstance alleged to give rise to the Direct Claim, and whether and to what extent any
amount is payable in respect of the Direct Claim. The Indemnified Party shall assist the Indemnifying Party's investigation by
giving such information and assistance (including access to the Indemnified Party's premises and personnel and the right to examine
and copy any accounts, documents or records) as the Indemnifying Party or any of its professional advisors may reasonably request.
If the Indemnifying Party does not so respond within such thirty-day (30) period, the Indemnifying Party shall be deemed to have
rejected such claim, in which case the Indemnified Party shall be free to pursue such remedies as may be available to the Indemnified
Party on the terms and subject to the provisions of this Agreement.

7.07
Tax Treatment of Indemnification Payments. All indemnification payments made under this Agreement shall
be treated by the parties as an adjustment to the Purchase Price for Tax purposes, unless otherwise required by Law.

7.08
Exclusive Remedies. The Parties acknowledge and agree that their sole and exclusive remedy with respect
to claims for money damages, other than claims arising from intentional misrepresentation or fraud on the part of a Party hereto
in connection with the transactions contemplated by this Agreement, for any breach of any representation, warranty, covenant,
agreement or obligation set forth herein or otherwise relating to the subject matter of this Agreement, shall be pursuant to the
indemnification provisions set forth in this Article VII. Nothing in this Section 7.08 shall limit any Person's right to seek
and obtain any equitable relief to which any Person shall be entitled, or to seek any remedy on account of any intentional misrepresentation
or fraud by any Party hereto.

    	 	26	 

     

    

Article
VIII.

MISCELLANEOUS

8.01
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 transactions
contemplated hereby shall be paid by the Party incurring such costs and expenses, whether or not the Closing shall have occurred.

8.02
Notices. All notices, requests, consents, claims, demands, waivers and other communications hereunder
shall be in writing and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt); (b)
when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by
facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient,
and on the next Business Day if sent after normal business hours of the recipient or (d) on the third (3rd) day after
the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to
the respective Parties at the following addresses (or at such other address for a Party as shall be specified in a notice given
in accordance with this Section 8.02):

	
        If to Seller or Owner:

         

         

         
	
        Arizona DP Consulting LLC

        Attn: Sara Gullickson

        1709 E. Bethany Home Road

        Phoenix, Arizona 85016

        O: 312-600-5665

        C: 612-965-4980 

        E-mail: sgullickson@dispensarypermits.com

         

	
        with a copy to:

         
	
        Dickinson Wright

        Attn: Scott Crow

        150 E. Gay Street, Suite 2400

        Columbus, OH 43215

        Tel: 614-744-2585

        E-Mail: SCrow@dickinson-wright.com

	 	
         

         

	
        If to Buyer or INLB:

         
	
        Item 9 Labs Corp.

        Attn: Bryce Skalla

        16211 N Scottsdale Rd Ste A6A-466

        Scottsdale, AZ 85254

        Tel: 833-867-6337

        E-mail: bryce@item9labs.com

         

	
        with a copy to:

         
	
        Horwitz + Armstrong, A Professional Law Corp.

        Attn: Jessica Lockett

        14 Orchard, Suite 200

        Lake Forest, CA 92630

        Tel: 949-540-6540

        Facsimile: 949-540-6578

        E-mail: jlockett@horwitzarmstrong.com

         

8.03
Interpretation. For purposes of this Agreement, (a) the words "include," "includes" and
"including" shall be deemed to be followed by the words "without limitation"; and (b) the words "herein,"
"hereof," "hereby," "hereto" and "hereunder" refer to this Agreement as a whole. Unless
the context otherwise requires, references herein: (x) to Articles, Sections, Disclosure Schedules and Exhibits mean the Articles
and Sections of, and Disclosure Schedules and Exhibits attached to, this Agreement; (y) to an agreement, instrument or other document
means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted
by the provisions thereof and (z) to a statute means such statute as amended from time to time and includes any successor legislation
thereto and any regulations promulgated thereunder. This Agreement shall be construed without regard to any presumption or rule
requiring construction or interpretation against the party drafting an instrument or causing any instrument to be drafted. The
Disclosure Schedules and Exhibits referred to herein shall be construed with, and as an integral part of, this Agreement to the
same extent as if they were set forth verbatim herein.

    	 	27	 

     

    

8.04
Headings. The headings in this Agreement are for reference only and shall not affect the interpretation
of this Agreement.

8.05
Severability. If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction,
such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or
render unenforceable such term or provision in any other jurisdiction. Upon such determination that any term or other provision
is invalid, illegal or unenforceable, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated
hereby be consummated as originally contemplated to the greatest extent possible.

8.06
Entire Agreement. This Agreement and the other Transaction Documents constitute the sole and entire agreement
of the Parties to this Agreement with respect to the subject matter contained herein and therein, and supersede all prior and contemporaneous
representations, warranties, understandings and agreements, both written and oral, with respect to such subject matter. In the
event of any inconsistency between the statements in the body of this Agreement and those in the other Transaction Documents, the
Exhibits and Disclosure Schedules (other than an exception expressly set forth as such in the Disclosure Schedules), the statements
in the body of this Agreement will control.

8.07
Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the Parties
hereto and their respective successors and permitted assigns. Neither party may assign its rights or obligations hereunder without
the prior written consent of the other Party, which consent shall not be unreasonably withheld or delayed. No assignment shall
relieve the assigning party of any of its obligations hereunder.

8.08
No Third Party Beneficiaries. This Agreement 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 shall 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 Agreement.

8.09
Amendment and Modification; Waiver. This Agreement may only be amended, modified or supplemented by an
agreement in writing signed by each Party hereto. No waiver by any Party of any of the provisions hereof shall be effective unless
explicitly set forth in writing and signed by the Party so waiving. No waiver by any Party shall operate or be construed as a waiver
in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different
character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any right, remedy,
power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege.

    	 	28	 

     

    

8.10
Governing Law; Arbitration; Submission to Jurisdiction; Waiver of Jury Trial.

(a) This Agreement shall
be governed by and construed in accordance with the laws of the State of Delaware without giving effect to any choice or conflict
of law provision or rule, or any other jurisdiction.

(b)
Any dispute, controversy or claim arising out of or relating to this Agreement or the breach thereof, shall be settled by binding
arbitration in accordance with the commercial arbitration rules then in effect of the American Arbitration Association, and judgment
upon the award rendered may be entered in any court having jurisdiction thereof. The arbitration proceedings shall be conducted
in Maricopa County, Arizona. The parties to the arbitration shall select an arbitrator from a list provided by the American Arbitration
Association that is mutually satisfactory to them. If the parties to the arbitration are unable to agree on an arbitrator, one
party shall choose an arbitrator from a list provided by the American Arbitration Association and the other party shall choose
an arbitrator from such list. The two arbitrators so selected shall then select a third arbitrator mutually satisfactory to them
from the list provided by the American Arbitration Association. The single arbitrator so selected shall hear the dispute and decide
it. The award of the arbitrator shall be binding and final on all parties to the arbitration. Any and all legal, accounting and
other costs and expenses incurred by the prevailing party shall be borne by the nonprevailing party. Notwithstanding the foregoing,
any party may seek equitable relief by court action before or after instituting arbitration, including, without limitation, seeking
and obtaining temporary restraining orders, injunctions or other provisional or ancillary remedies, and the initiation and/or maintenance
of any such action shall not constitute a waiver of the right to arbitrate any controversy or claim.

(c)
The Parties agree that any legal suit, action or proceeding arising out of or based upon this Agreement or the other Transaction
Documents shall be instituted in the Federal or State courts of the State of Arizona.

(d)
EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS
IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER TRANSACTION
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A)
NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE
FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY
MAKES THIS WAIVER VOLUNTARILY, AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.10(d).

8.11
Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original,
but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile,
e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed
copy of this Agreement.

 

[Signature
Page Follows]

    	 	29	 

     

    

IN WITNESS WHEREOF, the
Parties hereto have caused this Asset Purchase Agreement to be executed as of the date first written above by their respective
signatories thereunto duly authorized.

 

 

SELLER:

 

ARIZONA DP CONSULTING LLC

 

 

By: __________________________

Name: Sara Gullickson

Title: Member

 

 

BUYER:

 

AZ DP HOLDINGS, LLC

 

 

By: __________________________

Name: Bryce Skalla

Title: Manager

 

 

INLB:

 

ITEM 9 LABS CORP.

 

 

By: __________________________

Name: Bryce Skalla

Title: Chief Executive Officer

 

 

OWNER:

 

 

_____________________________

Sara Gullickson

 

 

 

[Signature
Page to Asset Purchase Agreement]

    	 	30	 

     

    

EXHIBIT A

BILL OF SALE

AND

ASSIGNMENT AND ASSUMPTION AGREEMENT

 

 

This Bill of Sale and Assignment
and Assumption Agreement (“Bill of Sale”) is made effective as of November __, 2018, by and between Arizona DP Consulting
LLC, an Arizona limited liability company ("Seller"), and AZ DP Holdings, LLC, a Nevada limited liability company ("Buyer").

 

WHEREAS, the Seller
and Buyer are parties to that certain Asset Purchase Agreement dated as of the date hereof (the “Agreement”), pursuant
to which the Seller will sell, convey, transfer and assign to Buyer all of Seller’s respective right, title and interest
in and to the Purchased Assets and Buyer shall assume and agree to pay, perform and discharge the Assumed Liabilities from Seller,
as set forth in the Agreement;

 

WHEREAS, unless
otherwise defined herein, capitalized terms used in this Bill of Sale shall have the meanings ascribed to them in the Agreement.

 

NOW, THEREFORE, BE IT
KNOWN THAT:

 

For good and valuable
consideration, the receipt and sufficiency of which are acknowledged:

		A.	Seller agrees as follows:

1.
Seller hereby sells, assigns, transfers and conveys to Buyer forever, all of Seller's right, title and interest in and to
the Purchased Assets.

2.
The Seller hereby covenants and agrees that it shall, without further consideration, at any time and from time to time after
the date hereof, execute and deliver to Buyer such further instruments of sale, conveyance, assignment and transfer, and take such
other action, all upon the reasonable request of Buyer, to (i) sell, convey, grant, assign, transfer and deliver all or any
portion of the Purchased Assets to Buyer, and (ii) assure and confirm to any other person or entity Buyer’s ownership
of the Purchased Assets pursuant to this Bill of Sale.

		B.	Buyer agrees as follows:

1.
Buyer hereby assumes and agrees to pay, perform and discharge when due the Assumed Liabilities.

2.
Buyer hereby covenants and agrees that it shall, without further consideration, at any time and from time to time after
the date hereof, execute and deliver to Seller such further instruments and documents and take such other action, all upon the
reasonable request of Seller, to (i) assume, pay, perform and discharge when due the Assumed Liabilities, and (ii) assure and confirm
to any other person or entity Buyer’s assumption of the Assumed Liabilities pursuant to this Bill of Sale.

		C.	This Bill of Sale and all of its terms shall inure to the benefit of Buyer, Seller and their respective
successors and assigns.

		D.	This Bill of Sale shall be governed by and construed in accordance with the laws of the State of
Delaware.

		E.	This Bill of Sale may be executed in one or more counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the same instrument.

 

 

[Signature Page to Follow]

    	 

    	 

    

IN WITNESS WHEREOF, the
Parties hereto have caused this Bill of Sale to be executed as of the date first written above by their respective signatories
thereunto duly authorized.

 

 

 

	SELLER	BUYER
	 	 
	ARIZONA DP CONSULTING LLC	AZ DP HOLDINGS, LLC
	 	 
	By: _____________________	By: __________________________
	Name: Sara Gullickson	Name: Bryce Skalla
	Title: Member	Title: Manager

 

 

 

    	 

    	 

    

EXHIBIT B

NON-COMPETITION AGREEMENT

 

 

 

 

 

 

 

  

    	 

    	 

    

 

NON-COMPETITION AGREEMENT

This NON-COMPETITION
AGREEMENT (this “Agreement”), dated as of November 26, 2018 (the “Effective
Date”), is entered into by and among Sara Gullickson (the “Non-Competing Party”), and AZ DP Holdings, LLC, a
Nevada limited liability company (the “Company”), which is a wholly owned subsidiary of Item 9 Labs Corp., a Delaware
corporation. The Company and the Non-Competing Party may sometimes be referred to in this Agreement as the “Parties,”
or individually as a “Party.”

 

RECITALS:

 

WHEREAS, the Non-Competing
Party is the sole owner of Arizona DP Consulting LLC, an Arizona limited liability company (“ADP”), which is selling
certain assets to the Company pursuant to that certain Asset Purchase Agreement, of even date herewith (the “Asset Purchase
Agreement”);

 

WHEREAS, the Non-Competing
Party has experience in the cannabis licensing and consulting business as conducted by ADP:

 

WHEREAS, the Non-Competing
Party has confidential information and know-how imperative to the operation of a business which may compete with the Business and
the Purchased Assets (as defined in the Asset Purchase Agreement) that the Company is acquiring pursuant to the Asset Purchase
Agreement;

 

WHEREAS, the Asset Purchase
Agreement requires the execution of this Agreement providing for the Non-Competing Party to no longer participate in any business
which competes with the Business on the terms set forth herein;

 

NOW, THEREFORE, in consideration
of the premises, and of the representations, warranties, covenants, and agreements contained herein, and other good and valuable
consideration the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound, the Parties agree
as follows:

 

		1.	Definitions. In this Agreement, the following terms (in addition
to any capitalized terms defined elsewhere in this Agreement) shall have the meanings specified or referred to in this Section
1 and shall be equally applicable to both the singular and plural forms: 

 

“Affiliate”
shall mean, with respect to any person or entity, (a) any other person or entity that controls, is controlled by, or is under common
control with such person or entity, (b) any officer, director, manager, shareholder or member of such person or entity, and (c)
any parent, sibling, descendant or spouse of such person or entity or of any of the persons or entities referred to in clauses
(a) and (b) or anyone sharing a home with such person or entity or any of the persons or entities referred to in clauses (a) and
(b). For purposes of this definition, the term “control” of a person or entity shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management or policies, whether through the ownership of voting
securities, by contract or otherwise.

 

“Business”
means the cannabis licensing and consulting business as conducted by ADP as of the closing of the Asset Purchase Agreement. The
term “Business” shall not include the operations of any businesses by the Non-Competing Party as described in Schedule
A or those that may otherwise be pre-approved by the Company.

 

“Competition,”
“compete” and any terms with correlative meaning shall mean to: directly or indirectly, own any interest in, manage,
control, participate in, invest in, consult with, render services for, operate or in any manner engage in any business that operates
in the Business in the Restricted Area.

 

“Restricted
Area” shall mean the geographic areas where the Business operated until the closing of the Asset Purchase Agreement, and
shall consist of: Arizona, Arkansas, California, Colorado, Delaware, Florida, Hawaii, Illinois, Maryland, Massachusetts, Michigan,
Missouri, Nevada, New Jersey, North Dakota, Ohio, Pennsylvania, Rhode Island and West Virginia.

 

		2.	Non-Compete Agreement. During the three (3) year period (the
“Restricted Period”) commencing on the Effective Date, neither the Non-Competing Party nor any controlled Affiliate
of the Non-Competing Party will, directly or indirectly, in any manner, anywhere in the Restricted Area (a) engage directly or
indirectly in the Business or any business that competes with the Business, (b) own any interest in, manage, control, participate
in (whether as an owner, operator, manager, consultant, officer, director, employee, investor, agent, representative or otherwise)
any business that competes with the Business, or (c) consult with or render services for any person or entity that is engaged in
the Business or in any activity that competes directly or indirectly with the Business; provided however, that ownership, for passive
investment purposes not intended to circumvent this Agreement, of less than 5% of the outstanding stock of any publicly traded
corporation, shall not be deemed to be engaging in the Business solely by reason of such ownership.

 

		3.	Acknowledgment. The Non-Competing Party hereby acknowledges
that the enforcement of the provisions of this Agreement may potentially interfere with her ability to pursue business opportunities,
including, without limitation, the expansion or development of a business similar to the Business or which shall produce or sell
any competing products with that of the Business. The Non-Competing Party recognizes and agrees that the enforcement of this Agreement
is necessary to the closing of the Asset Purchase Agreement. The Non-Competing Party hereby acknowledges that she has been advised
to consult with an attorney before executing this Agreement and that she has done so. 

 

		4.	Enforcement. Notwithstanding Section 10 of this Agreement
(Severability), if at the time of enforcement of Section 2 of this Agreement or any other time, a court, arbitrator, or mediator
holds that the restrictions in this Agreement are unreasonable or to any extent invalid or overbroad under circumstances then existing
or otherwise, the Parties agree that the covenants herein should be interpreted and enforced to the maximum extent that such court
or mediator deems reasonable, valid or enforceable. The Parties hereto agree that money damages would not be an adequate remedy
for any breach of this Agreement, and any breach of the terms of Section 2 would result in irreparable injury and damage to the
Company for which there would be no adequate remedy at law. Therefore, in the event of a breach or threatened breach of this Agreement,
the Company or, as applicable, its successors or assigns, in addition to other rights and remedies existing in their favor, shall
be entitled to specific performance and/or immediate injunctive or other equitable relief from a court of competent jurisdiction
in order to enforce, or prevent any violations of, the provisions hereof (without posting a bond or other security), without having
to prove damages, in addition to any other remedies to which the Company may be entitled at law or in equity. The terms of this
Section shall not prevent the Company from pursuing any other available remedies for any breach or threatened breach hereof, including
but not limited to the recovery of damages from the Non-Competing Party. 

 

		5.	Governing Law; Dispute Resolution. 

(a)
Governing Law. This Agreement shall be construed in accordance with, and governed in
all respects by, the internal laws of the State of Delaware without giving effect to principles of conflicts of laws.

 

(b)
Arbitration. Any dispute, controversy or claim arising out of or relating to this Agreement
or the breach thereof, shall be settled by binding arbitration in accordance with the commercial arbitration rules then in effect
of the American Arbitration Association, and judgment upon the award rendered may be entered in any court having jurisdiction thereof.
The arbitration proceedings shall be conducted in Maricopa County, Arizona. The parties to the arbitration shall select an arbitrator
from a list provided by the American Arbitration Association that is mutually satisfactory to them. If the parties to the arbitration
are unable to agree on an arbitrator, one party shall choose an arbitrator from a list provided by the American Arbitration Association
and the other party shall choose an arbitrator from such list. The two arbitrators so selected shall then select a third arbitrator
mutually satisfactory to them from the list provided by the American Arbitration Association. The single arbitrator so selected
shall hear the dispute and decide it. The award of the arbitrator shall be binding and final on all parties to the arbitration.
Any and all legal, accounting and other costs and expenses incurred by the prevailing party shall be borne by the nonprevailing
party. Notwithstanding the foregoing, any party may seek equitable relief by court action before or after instituting arbitration,
including, without limitation, seeking and obtaining temporary restraining orders, injunctions or other provisional or ancillary
remedies, and the initiation and/or maintenance of any such action shall not constitute a waiver of the right to arbitrate any
controversy or claim. Notwithstanding the foregoing, any party may seek equitable relief by court action before or after instituting
arbitration, including, without limitation, seeking and obtaining temporary restraining orders, injunctions or other provisional
or ancillary remedies, and the initiation and/or maintenance of any such action shall not constitute a waiver of the right to mediate
any controversy or claim. 

 

		6.	Waiver of Jury Trial. Each Party hereby irrevocably and unconditionally
waives any right it may have to a trial by jury.

 

		7.	Notices. Any notices required or permitted to be given hereunder
shall be given in writing and shall be delivered (a) in person, (b) by certified mail, postage prepaid, return receipt requested,
(c) by electronic mail, or (d) by a commercial overnight courier that guarantees next day delivery and provides a receipt, and
such notices shall be addressed as follows, or to such other address as either Party may from time to time specify in writing to
the other Party consistent with these notice provisions. All notices shall be effective on the date of delivery to the recipient.

 

	
        If to Company:

         

         

         
	
        Item 9 Labs Corp.

        Attn: Bryce Skalla

        16211 N Scottsdale Rd Ste A6A-466

        Scottsdale, AZ 85254

        Tel: 833-867-6337

        E-mail: bryce@item9labs.com

         

	
        with a copy to:

         
	
        Horwitz + Armstrong, A Professional Law Corporation

        Attn: Jessica M. Lockett

        14 Orchard, Suite 200

        Lake Forest, CA 92630

        E-mail: jlockett@horwitzarmstrong.com

         

	
        If to Non-Competing Party:

         
	
        Sara Gullickson

        1709 E. Bethany Home Road

        Phoenix, Arizona 85016

        O: 312-600-5665

        C: 612-965-4980 

        E-mail: sgullickson@dispensarypermits.com

         

	with a copy to	
        Dickinson Wright

        Attn: Scott Crow

        150 E. Gay Street, Suite 2400

        Columbus, OH 43215

        Tel: 614-744-2585

        E-Mail: SCrow@dickinsonwright.com

         

		8.	Authority. Each of the Parties represents and warrants that
she or it, as applicable, is competent to enter into this Agreement and has the full right, power and authority to enter into and
perform the obligations under this Agreement, without the need for the consent of any other person or entity (including a spouse,
if any, of such Party).

 

		9.	Successors and Assigns; Amendments. This Agreement shall be
binding upon and inure to the benefit of the Company and its successors and assigns. The Non-Competing Party may not assign any
of her rights or obligations under this Agreement without the prior written consent of the Company. This Agreement may be amended
only by written agreement executed by all Parties to this Agreement.

 

		10.	Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability or the other
provisions hereof. Further subject to Section 3 and 4 hereof, if any provision of this Agreement, or the application thereof, is
invalid or unenforceable, (a) a suitable and equitable provision shall be substitute therefore in order to carry out, so far as
may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision; and (b) the remainder of this
Agreement shall not be affected by such invalidity or unenforceability.

 

		11.	Waivers. No waiver by any Party of any covenant, term, condition,
or agreement contained herein shall be deemed or construed as a waiver of any other covenant, term, condition, or agreement, nor
shall a waiver of any breach hereof be deemed to constitute a waiver of any subsequent breach, whether of the same or of a different
provision in this Agreement. 

 

		12.	Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
This Agreement may be executed with electronic, facsimile, or e-mailed signatures. Such signatures shall be deemed valid for all
purposes as if they were signed by hand.

 

		13.	Headings. The captions and headings contained herein are solely
for convenience of reference and shall not affect in any way the meaning or interpretation of this Agreement.

 

		14.	Entire Agreement. This Agreement, together with the recitals
hereto, which are hereby incorporated in and an integral part of this Agreement, represents the entire agreement among the Parties
relating to the subject matter hereof, superseding any and all contemporaneous and prior written or oral agreements and understandings
with respect hereto (other than, for avoidance of doubt, the Asset Purchase Agreement). 

 

[Signature Page To Follow]

    	 

    	 

    

IN WITNESS WHEREOF,
the Parties have entered into this Non-Competition Agreement as of the date and year first written above.

 

 

NON-COMPETING PARTY 

 

 

______________________________

Sara Gullickson

 

 

 

COMPANY

 

AZ DP HOLDINGS LLC

 

 

________________________

By: Bryce Skalla as Manager

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 

    	 

    

 

SCHEDULE A

 

SCHEDULE OF NON-COMPETING BUSINESSES OPERATIONS

 

		·	Strive Wellness of Nevada, LLC

		·	Strive Management, LLC 

		·	North Dakota – WE- Mend d/b/a Strive Life Dispensary 

		·	West Hollywood – November 2018: Dispensary 10, LLC

		o	Sara Gullickson owns 33% ownership

		·	Nevada (Retail) – December 2019- Strive Wellness of Nevada,
LLC 

		o	Sara Gullickson, Larry Lemons & Donnie Burton control the license
if it is awarded.  Local partner collectively has 13% of the facility.

		·	Ohio – December 2018 Strive Wellness of Ohio, LLC 

		o	Sara Gullickson, Larry Lemons & Donnie Burton control the license
if it is awarded. 

		·	New Jersey – January 2019 Modern Remedies, LLC 

		o	Sara Gullickson has 2% ownership and facility will be Strive Model
if license is awarded. 

		·	Michigan, Benton Harbor – February 2019 The Harvest Foundation,
LLC

		o	Sara Gullickson, Larry Lemons & Donnie Burton control the license
if it is awarded.

 

 

    	 

    	 

    

EXHIBIT C

EMPLOYMENT AGREEMENT

 

 

 

 

 

 

 

 

    	 

    	 

    

EXECUTIVE EMPLOYMENT AGREEMENT

 

This Employment Agreement ("Agreement")
is effective on November 26, 2018 (the “Effective Date”) between Item 9 Labs Corp., a Delaware corporation ("Company")
and Sara Gullickson ("Executive"). The Company and Executive are sometimes referred to herein individually as
a “Party” and collectively as the “Parties.”

 

RECITALS:

 

WHEREAS, the Company,
by and through its wholly owned subsidiary AZ DP Holdings, LLC (“AZDP”), acquired the Purchased Assets of Arizona
DP Consulting LLC, an Arizona limited liability company (“ADP”), pursuant to that certain Asset Purchase Agreement
of even date herewith by and between the Company, AZDP, ADP, and Executive as sole owner of ADP, incorporated herein by reference
(the “Asset Purchase Agreement”).

 

WHEREAS, any terms
not herein defined shall have the same meaning as set forth in the Asset Purchase Agreement.

 

WHEREAS, the Company
is a publicly traded corporation engaged in the business of cultivating quality-driven cannabis flower and marijuana products in
Arizona and Nevada (the “Business”) and following the Closing of the Asset Purchase Agreement, the Company will
own and operate the Purchased Assets by and through AZDP.

 

WHEREAS, the Executive
is in the business of providing the kinds of services required in the Company’s Business and has extensive experience in
operating the business related to the Purchased Assets.

 

WHEREAS, the Company
desires that Executive be employed by the Company, and render services to the Company, and Executive is willing to be so employed
and to render such services to the Company, all upon the terms and subject to the conditions contained herein.

 

NOW, THEREFORE,
in consideration of the mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties agree as follows:

 

AGREEMENT:

 

1. EMPLOYMENT.  Subject
to and upon the terms and conditions contained in this Agreement, the Company hereby agrees to employ Executive and Executive agrees
to be employed by the Company, for the period set forth in paragraph 2 hereof, to render to the Company, its affiliates and/or
subsidiaries the services described in paragraph 3 hereof.

 

The Executive hereby acknowledges
and agrees that upon the Effective Date, any and all existing employment or consulting agreements entered into between Company
and Executive are hereby expressly terminated and replaced in entirety by this Agreement.

 

2. TERM.  Executive’s
employment under this Agreement shall commence as of the Effective Date hereof and shall continue for a period of three (3) years
unless earlier terminated by the Board of Directors (the “Board”) of the Company or by the Executive in accordance
with the terms of this Agreement (the “Employment Term”).

 

3. DUTIES.

 

(a)
Executive shall serve as the Chief Executive Officer of the Company, reporting directly to
the Board and shall be responsible for the management and running of the day-to-day operations of the Company, including, but not
limited to, those services set forth in Exhibit A, attached hereto and incorporated herein by reference (the “Services”).

 

(b)
Executive shall perform all duties and services incidental to the positions held by her. The
Board retains the right to change Executive's duties and reporting relationships as may be determined to be in the best interests
of the Company; provided, however, that any such change in Executive's duties shall be consistent with Executive's training, experience,
and qualifications.

 

(c)
Executive shall serve as a member of the Board of the Company during the Employment Term.

 

(d)
Executive agrees to abide by all bylaws and policies of the Company promulgated from time
to time by the Company and made available to Executive as well as all laws, statutes and regulations in all material respects.

 

4. BEST
EFFORTS.  Executive agrees to devote her full business time and attention, subject to absences for customary
vacations and for temporary illness, as well as her best efforts, energies and skill, to faithfully and industriously perform the
duties and responsibilities attributable to her position, to the reasonable satisfaction of the Company. In addition, Executive
will not engage in any other gainful occupation which requires Executive’s personal attention and/or creates a conflict of
interest with job responsibilities under this Agreement without the prior approval of the Board, with the exception that Executive
may personally trade in stock, bonds, securities, commodities or real estate investments for her own benefit. Company hereby grants
express permission to Executive to continue operating the existing business ventures as set forth in Exhibit B attached
hereto and incorporated herein by reference, so long as such obligations do not materially interfere with Executives performance
of the Services.

 

5. COMPENSATION.
The Company will pay Executive the following compensation for her services under this Agreement:

 

(a)
Base Salary. As compensation for her services and covenants hereunder, the Parties
mutually agree that the Company shall pay executive an annual salary of $200,000 USD per annum, payable in accordance with the
Company’s normal payroll methods (the “Base Salary”). The Base Salary will be reviewed from time to time
in accordance with the established procedures of the Company for adjusting salaries for similarly situated executives and may be
adjusted upwards in the sole discretion of the Company.

 

(b)
Performance Bonus. Executive is eligible to receive a discretionary annual bonus
in an amount up to 100% of Executives Base Salary, to be determined in the sole and absolute discretion of the Board, payable in
cash, based upon the Company’s operating results and gross sales, or such other performance benchmarks as determined by the
Board (“Performance Bonus”), with the criteria for eligibility to receive such Performance Bonus to be provided
to Executive at the beginning of each year of the Employment Term. 

 

(c)
Incentive Plan. Executive shall also be eligible to participate in the Company’s
annual incentive plan for executives (“Incentive Bonus”), if applicable. The criteria for determining the
amount of the Incentive Bonus, and the conditions that must be satisfied to entitle Executive to receive the Incentive Bonus for
any year during the Employment Term of this Agreement shall be determined by the Board or its compensation committee and provided
to Executive at the beginning of such year. 

 

6. EXPENSES.  

 

(a)
Reimbursement. Executive shall receive a Company credit card with a limit of
at least $10,000 per month in order to directly charge to the Company all business expenses incurred by her which are reasonable
and necessary for Executive to perform her duties under this Agreement in accordance with policies established from time to time
by the Company.  All charges and expenditures in excess of $500 shall be subject to pre-authorization by Company in accordance
with Company policy and procedures.

 

(b)
Travel. Where Executive is required to travel for Company, including but not
limited to events, conferences and meetings related to the Company, Company shall pay the costs of such travel which shall be pre-approved
by the Board prior to incurring any expense.

 

7. EXECUTIVE
BENEFITS.

 

(a)
Benefits. During the Employment Term, Executive shall be entitled to participate
in all group term insurance, disability insurance, health and medical insurance benefits, life insurance, retirement plans or programs
and any other employee benefits as are from time to time generally made available to executive employees of the Company pursuant
to the policies of the Company; provided that Executive shall be required to comply with the conditions attendant to coverage by
such employee benefit plans (collectively, “Benefit Plans”). The Board shall present any offerings for Benefit
Plans in writing to Executive when available. The Company may withhold from any benefits payable to Executive under any Benefit
Plans all federal, state, local and other taxes and amounts as shall be permitted or required to be withheld pursuant to any applicable
law, rule or regulation.

 

(b)
Vacation. Executive shall be entitled to four (4) weeks paid vacation per year
during the Employment Term. Vacation time shall be taken in accordance with the Company’s policies as may be established
from time to time by the Company for its executive staff.

 

(c)
Maternity Leave. To the extent that the Company does not have a maternity leave
policy in place for executive employees of the Company, Executive shall be entitled to eight (8) weeks of paid maternity leave
during the Employment Term. 

 

8. DEATH
AND DISABILITY.

 

(a)
Death. The Employment Term shall terminate on the date of Executive’s
death, in which event the Company shall, within 30 days of the date of death, pay to her estate, Executive’s Base Salary,
any unpaid Performance Bonus, Incentive Bonus or any other stock or bonus awards (including any bonus award for a plan
year that has ended prior to the time employment terminated where the award was scheduled to be paid after the date employment
terminated), reimbursable expenses and benefits owing to Executive through the date of Executive’s death together with any
benefits payable under any life insurance program in which Executive is a participant. 

 

(b) Disability.
The Employment Term shall terminate upon Executive’s Disability. For purposes of this
Agreement, “Disability” shall mean that Executive is unable to engage in any substantial gainful activity
by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be
expected to last for a continuous period of not less than 12 months.  For purposes of determining Executive’s
Disability, the Board may rely on a determination by the Social Security Administration that Executive is totally disabled or
a determination by the Company’s disability insurance carrier that Executive has satisfied the above definition of
Disability.  In case of such termination, Executive shall be entitled to receive the Executive’s Base Salary,
any unpaid Performance Bonus, Incentive Bonus or any other stock or bonus awards (including any bonus award for a plan year
that has ended prior to the time employment terminated where the award was scheduled to be paid after the date employment
terminated), reimbursable expenses and benefits owing to Executive through the date of termination within 30 days of the date
of the Company’s determination of Executive’s Disability, together with any benefits payable under any disability
insurance program in which Executive is a participant. Except as otherwise contemplated by this Agreement, Executive will not
be entitled to any other compensation upon termination of employment pursuant to this subparagraph 8(b).

 

9. TERMINATION
OF EMPLOYMENT.

 

(a)
Termination With Cause By Company. The Company may terminate this Agreement
at any time during the Employment Term for Cause upon written notice to Executive, upon which termination shall be effective immediately.
For purposes of this Agreement, “Cause” means any one or more of the following: 

 

		i.	the commission of fraud by the Executive against the Company; 

 

		ii.	a material breach by Executive of any provision of this Agreement,
including the continued failure of Executive to perform the Services set forth in Section 3(a) of this Agreement, which breach
is not cured within thirty (30) days after receipt of written notice from the Company to Executive specifying the breach or, if
notice and cure have previously taken place regarding the same or a substantially similar breach, if the breach recurs; 

 

		iii.	Executive’s theft of funds or material property of the Company;
or

 

		iv.	Executive’s conviction of a felony, plea of guilty or nolo
contendere to a felony charge or any criminal act involving moral turpitude.

 

(b)
Termination Without Cause By Company. The Company may terminate this Agreement
at any time during the Employment Term without Cause upon ninety (90) days written notice to Executive. 

 

(c)
Termination Without Good Reason by Executive. Executive may terminate this Agreement
at any time during the Employment Term without Good Reason by providing the Company thirty (30) days’ written notice. 

 

(d)
Termination With Good Reason By Executive. Executive may terminate this Agreement
at any time during the Employment Term with Good Reason upon written notice to Company, upon which termination shall be effective
immediately. For purposes of this Agreement “Good Reason” means any one or more of the following:

 

		i.	material breach by the Company of any provision of this Agreement,
including without limitation, the Company’s failure to pay Executive any Base Salary, Performance Bonus or vested Incentive
Bonus, which such breach is not cured within thirty (30) days after receipt of written notice from Executive to the Company specifying
the breach or, if notice and cure have previously taken place regarding the same or a substantially similar breach, if the breach
recurs;

 

		ii.	a requirement by the Company that Executive change her primary work
location to a location that is more than thirty–five (35) miles from her then-existing main work location without Executive’s
consent to such change;

 

		iii.	the creation and continuation of a hostile work environment which
continues without corrective action being taken by the Company for a period of more than fifteen (15) days following written notice
by Executive to the Company identifying the nature and cause of such hostile work environment; or

 

		iv.	the Company, without Executive’s consent (A) changes Executive’s
title or position to a lower title or position, (B) reduces Executive’s current salary and/or benefits, or (C) assigns duties
or responsibilities to Executive that are materially inconsistent with her position.

 

(e)
Compensation upon Termination. 

 

		i.	In the event that the Company terminates the Executive’s employment
hereunder for Cause or the Executive terminates employment hereunder without Good Reason, the Executive shall be entitled to receive
the Executive’s Base Salary, any unpaid Performance Bonus, Incentive Bonus or any other vested stock or bonus awards, reimbursable
expenses and benefits owing to Executive (collectively, the “Accrued Amounts”) through the last day on which
Executive is actively employed by the Company under the terms of this Agreement (“Date of Termination”). The
Accrued Amounts shall be paid when required under applicable law and in any event within thirty (30) business days after the Date
of Termination.

 

		ii.	In the event that the Company terminates the Executive’s employment
hereunder without Cause or the Executive terminates employment hereunder with Good Reason, Executive shall be entitled to all Accrued
Amounts, which shall be paid when required under applicable law and in any event within thirty (30) business days after the Date
of Termination. In addition, the Company shall pay severance to Executive consisting of Executive’s Base Salary, payable
in accordance with normal payroll practices of the Company, and benefits under Benefit Plans (including health care as applicable),
for a period of twelve (12) months from the Date of Termination (the "Severance Period"). Except as otherwise
contemplated by this Agreement, Executive will not be entitled to any other compensation upon termination of this Agreement.

 

		iii.	The salary, applicable bonuses and fringe benefits to be paid to
Executive under Section 9(f)(ii) above during the Severance Period are referred to herein as the "Termination Compensation."
Executive shall not be entitled to any Termination Compensation unless: (1) Executive complies with the surviving restrictive covenants
set forth in Section 10 of this Agreement and (2) Executive executes and delivers to Company, on the Date of Termination, a release
in form and substance reasonably acceptable to Company and Executive, by which Executive releases Company from any obligations
and liabilities of any type whatsoever under this Agreement, except for Company's obligations with respect to the Termination Compensation.
For the avoidance of doubt, the release shall not affect (a) Executive’s right to indemnification, if any, for actions taken
within the scope of Executive’s employment with the Company or (b) any rights of Executive under the Asset Purchase Agreement.
Notwithstanding anything herein, no Termination Compensation shall be paid or otherwise provided to Executive until the applicable
revocation period related to the release has fully expired, not later than sixty (60) days from the Date of Termination, and the
release becomes fully and finally enforceable. The parties hereto acknowledge that the Termination Compensation to be provided
is in consideration for Executive’s release. 

 

		iv.	If Executive terminates this Agreement without Good Reason by providing
appropriate notice, the Company, at its election, may (1) require Executive to continue to perform duties hereunder for the full
notice period, or (2) terminate Executive's employment at any time during such notice period, provided that any such termination
shall not be deemed to be a termination without Cause of Executive's employment by the Company. Unless otherwise provided by Section
9(f), all compensation and benefits paid by Company to Executive under this Agreement shall cease upon the Date of Termination.

 

10. DISCLOSURE
OF TRADE SECRETS AND OTHER PROPRIETARY INFORMATION.

 

(a) Executive
acknowledges that she is prohibited from disclosing any confidential information about the Company, including but not limited to
trade secrets, formulas, processes, methods, plans, and financial information, to any party who is not a director, officer or authorized
agent of the Company or its subsidiaries and affiliates.  The Company will provide Executive with valuable confidential
information belonging to the Company or its subsidiaries or its affiliates above and beyond any confidential information previously
received by Executive and will associate Executive with the goodwill of the Company or its subsidiaries or its affiliates above
and beyond any prior association of Executive with that goodwill.  In return, Executive promises never to disclose or
misuse such confidential information and never to misuse such goodwill. This Section 10(a) shall not apply to the extent that
such confidential information of the Company is generally available to and known by the public through no fault of Executive or
if Executive is compelled to disclose confidential information by judicial or administrative process or by other requirements of
law.

 

(b) Executive
will not, during the Employment Term, directly or indirectly, as an executive, employer, consultant, agent, principal, partner,
manager, stockholder, officer, director, or in any other individual or representative capacity, engage in or participate in any
other business for her own account or for or on behalf of another person, firm, or corporation that is competitive with, conflicts,
or interferes with the Company’s Business or Executive’s performance of duties under this Agreement, except those permitted
business obligations of Executive as set forth in Exhibit B hereto or those that may otherwise be pre-approved by the Company.
Notwithstanding the foregoing, Executive may own, directly or indirectly, solely as an investment, securities of any company traded
on any national securities exchange if Executive does not, directly or indirectly, own 5% or more of any class of securities of
such company.

 

(c) Executive
will not, during the Employment Term and for a period of one (1) year thereafter, directly or indirectly, work in Arizona as an
employee, employer, consultant, agent, principal, partner, manager, stockholder, officer, director, or in any other individual
or representative capacity for any person or entity who is competitive with the Business of the Company, except for those permitted
business obligations of Executive as set forth in Exhibit B hereto or those that may otherwise be pre-approved by the Company.
Notwithstanding the foregoing, Executive may own, directly or indirectly, solely as an investment, securities of any company traded
on any national securities exchange if Executive does not, directly or indirectly, own 5% or more of any class of securities of
such company. For the avoidance of doubt, Executive is also a party to that certain Non-Competition Agreement of even date herewith
in favor of AZDP on the terms set forth therein.

 

(d) Executive
will not, during the Employment Term and for a period of one (1) year thereafter, on her behalf or on behalf of any other business
enterprise, directly or indirectly, under any circumstance other than at the direction and for the benefit of the Company, (i)
solicit for employment or hire any person employed by the Company or any of its subsidiaries, or (ii) call on, solicit, or take
away any person or entity who was a customer of the Company or any of its subsidiaries or affiliates during Executive’s employment
with the Company, in either case for a business that is competitive with the Business of the Company.

 

(e) It
is expressly agreed by Executive that the nature and scope of each of the provisions set forth above are reasonable and necessary.
If, for any reason, any aspect of the above provisions as it applies to Executive is determined by a court of competent jurisdiction
to be unreasonable or unenforceable under applicable law, the provisions shall be modified to the extent required to make the provisions
enforceable.  Executive acknowledges and agrees that her services are of unique character and expressly grants to the
Company or any subsidiary or affiliate of the Company or any successor of any of them, the right to enforce the above provisions
through the use of all remedies available at law or in equity, including, but not limited to, injunctive relief.

 

11. COMPANY
PROPERTY.

 

(a) Any
patents, inventions, discoveries, applications, processes, models or financial statements designed, devised, planned, applied,
created, discovered or invented by Executive during the Employment Term, regardless of when reduced to writing or practice, which
pertain to any aspect of the Company’s or its subsidiaries’ or affiliates’ Business shall be the sole and absolute
property of the Company, and Executive shall promptly report the same to the Company and promptly execute any and all documents
that may from time to time be reasonably be requested by the Company to assure the Company the full and complete ownership thereof.

 

(b) All
records, files, lists, including computer generated lists, drawings, documents, equipment and similar items relating to the Company’s
Business which Executive shall prepare or receive from the Company shall remain the Company’s sole and exclusive property.
Upon termination of this Agreement, Executive shall promptly return to the Company all property of the Company in her possession.
Executive further represents that she will not copy or cause to be copied, print out or cause to be printed out any software, documents
or other materials originating with or belonging to the Company except as needed to perform the Services under this Agreement.
Executive additionally represents that, upon termination of her employment with the Company, she will not retain in her possession
any such software, documents or other materials.

 

12. EQUITABLE
RELIEF.  It is mutually understood and agreed that Executive’s services are special, unique, unusual, extraordinary
and of an intellectual character giving them a peculiar value, the loss of which cannot be reasonably or adequately compensated
in damages in an action at law. Accordingly, in the event of any breach of this Agreement by Executive, including, but not limited
to, the breach of any of the provisions of paragraphs 10 or 11 hereof, the Company shall be entitled to equitable relief by way
of injunction or otherwise in addition to any damages which the Company may be entitled to recover.

 

13. 
CONSENT TO JURISDICTION AND VENUE; ARBITRATION.   The Executive hereby consents and agrees that the State
of Arizona shall have personal jurisdiction and proper venue with respect to any dispute between the Executive and the Company.
In any dispute with the Company, the Executive will not raise, and hereby expressly waives, any objection or defense to any such
jurisdiction as an inconvenient forum. Executive and the Company agree that all disputes and claims of any nature that Executive
may have against the Company including all statutory, contractual, and common law claims (including all employment discrimination
claims), and all other disputes and claims of any nature that the Company may have against Executive, shall be settled by binding
arbitration in accordance with the commercial arbitration rules then in effect of the American Arbitration Association, as set
forth in the Asset Purchase Agreement, Section 8.10.

 

14. NOTICE.  Any
notice, request, demand or other communication permitted or required to be given under this Agreement shall be in writing and shall
be given in accordance with the notice provisions set forth in the Asset Purchase Agreement, Section 8.02.

 

15. INTERPRETATION;
HEADINGS.  The parties acknowledge and agree that the terms and provisions of this Agreement have been negotiated,
shall be construed fairly as to all parties hereto, and shall not be construed in favor of or against any party. The paragraph
headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this
Agreement.

 

16. SUCCESSORS
AND ASSIGNS; ASSIGNMENT; INTENDED BENEFICIARIES.  Neither this Agreement, nor any of Executive’s rights,
powers, duties or obligations hereunder, may be assigned by Executive. This Agreement shall be binding upon and inure to the benefit
of Executive and her heirs and legal representatives and the Company and its successors. Successors of the Company shall include,
without limitation, any corporation or corporations acquiring, directly or indirectly, all or substantially all of the assets of
the Company, whether by merger, consolidation, purchase, lease or otherwise, and such successor shall thereafter be deemed “the
Company” for the purpose hereof.

 

17. NO
WAIVER BY ACTION.  Any waiver or consent from the Company respecting any term or provision of this Agreement
or any other aspect of the Executive’s conduct or employment shall be effective only in the specific instance and for the
specific purpose for which given and shall not be deemed, regardless of frequency given, to be a further or continuing waiver or
consent. The failure or delay of the Company at any time or times to require performance of, or to exercise any of its powers,
rights or remedies with respect to, any term or provision of this Agreement or any other aspect of the Executive’s conduct
or employment in no manner (except as otherwise expressly provided herein) shall affect the Company’s right at a later time
to enforce any such term or provision.

 

18. COUNTERPARTS;
GOVERNING LAW; AMENDMENTS.  This Agreement may be executed in two counterpart copies, each of which may be executed
by one of the parties hereto, but all of which, when taken together, shall constitute a single agreement binding upon all of the
parties hereto. This Agreement and all other aspects of the Executive’s employment shall be governed by and construed in
accordance with the applicable laws pertaining in the State of Delaware (other than those that would defer to the substantive laws
of another jurisdiction). Each and every modification and amendment of this Agreement shall be in writing and signed by the parties
hereto, and any waiver of, or consent to any departure from, any term or provision of this Agreement shall be in writing and signed
by each affected party hereto.  

 

20. Severability.

If any provision
of this Agreement shall be held by a court or arbitrator to be invalid, unenforceable, or void, such provision shall be enforced
to the fullest extent permitted by law, and the remainder of this Agreement shall remain in full force and effect. In the event
that the time period or scope of any provision is declared by a court or arbitrator of competent jurisdiction to exceed the maximum
time period or scope that such court or arbitrator deems enforceable, then such court or arbitrator shall reduce the time period
or scope to the maximum time period or scope permitted by law.

21. ENTIRE
AGREEMENT.  The entire understanding and agreement between the Parties has been incorporated into this
Agreement, and this Agreement supersedes all other agreements and understandings between Executive and the Company with
respect to the relationship of Executive with the Company or its affiliates or subsidiaries.

 

22. EXECUTIVE
AcknowledgEment

EXECUTIVE ACKNOWLEDGES
THAT EXECUTIVE HAS HAD THE OPPORTUNITY TO CONSULT LEGAL COUNSEL CONCERNING THIS AGREEMENT, THAT EXECUTIVE HAS READ AND UNDERSTANDS
THE AGREEMENT, IS FULLY AWARE OF ITS LEGAL EFFECT, AND THAT EXECUTIVE HAS ENTERED INTO IT FREELY BASED ON EXECUTIVE’S OWN
JUDGMENT AND NOT ON ANY REPRESENTATIONS OR PROMISES OTHER THAN THOSE CONTAINED IN THIS AGREEMENT. 

 

 

 

[Signature page follows.]

    	 

    	 

    

 

 

IN
WITNESS WHEREOF, the Parties hereto have executed this Executive Employment Agreement as of the date set forth above.

 

  

	(“COMPANY”)	(“EXECUTIVE”)
	Item 9 Labs Corp.	 
	 	 
	 	 
	_________________________________	______________________________
	By:  Bryce Skalla	By: Sara Gullickson
	Its: Chief Executive Officer	 

 

 

    	 

    	 

    

 

EXHIBIT A

DESCRIPTION OF EMPLOYMENT SERVICES

 

 

As the Chief Executive Officer (“CEO”)
of Item 9 Labs Corp. (the “Company”), the CEO shall report to the board of directors (the “Board”)
and is responsible for leading the development and execution of the Company’s long term strategy with a view to creating
shareholder value. The CEO’s leadership role also entails being ultimately responsible for all day-to-day management decisions
and for implementing the Company’s long and short term plans. The CEO acts as a direct liaison between the Board and management
of the Company and communicates to the Board on behalf of management. Specifically, the duties of the CEO shall include:

 

Strategy & Planning

		·	Drafting / Execution of Short Term Execution of National Expansion
Plan

		o	Submission of Applications (Dispensary Permits.com Team to Execute)–
Markets TBD – See 09-20-18 - DP - Our Brands Page - v3- Page 9 for Markets with Opportunities in 2019.

		o	Selection of Distressed Cannabis Assets for INLB Acquisition, specifically,
Licensees: Cultivation, MM Product Lines & Dispensary – Markets TBD (Based on bullet above).

 

Financial Planning & Budgets

		·	Create Budget with Jeffrey Rassas for Expansion, Acquisition and
INLB Operations.

		·	Assist, as required, in raising additional capital at appropriate
valuations to enable the Company to meet sales, growth and market share objectives.

 

 

SEC and OTC Filings

		·	Assist in the preparation, review, and filing of all interim, quarterly,
and annual reports and other filings necessary for OTC and SEC compliance.

 

Investor Relations Management

		·	Manage and interface with investors for general relations outreach
and response, as necessary, and attend local and national conferences to promote the Company generally.

 

Management & Execution

		·	Ensure Vice President(s) of Southwest, Midwest, East Coast, and Southern
Regions for Expansion are executing National Expansion Strategy though Application, Acquisition, and Operations mentioned above.

		·	Ensure Cultivation, Processing, and Dispensary Department Heads Meet
Revenue Milestones & Expansion Milestones

		o	SOPS

		o	R&D

		o	Training

		o	Sales

 

Company Leadership/Vision

		·	Employee / Management Staffing Plan

		o	Build Organizational Chart & Ensure Chart Includes Examples Below:

 
Chief Financial Officer

 
Chief Operating Officer

 
Chief Compliance Officer

 
Medical Advisory Board

 
Director of Community

 
Dispensary / Retail Manager

 
Director of Security

 
Director of Technology

 
Director of Extraction

  Director
of Patient Services

 
Director of Cultivation

 
Human Resources

 
Banking Relations

 
Real Estate Advisor /Firm for Expansion

 
Architect/ Engineer(S)

 
Director of Marketing

 
Legal / Attorney

 
Insurance

 
Director of Staffing

		·	Roles, Responsibilities & Expectations 

		·	Selection, Hiring, Retainment and Termination Policies & Procedures

    	 

    	 

    

 

EXHIBIT B

Pre-existing
business obligations of Executive 

 

REDACTED FOR CONFIDENTIALITY

 

 

 

 

 

 

 

 

    	 

    	 

    

EXHIBIT D

LEASE AGREEMENT

 

 

 

 

 

 

 

    	 

    	 

    

Arizona Commercial
Lease Agreement

 

 

 

 

 

1. Basic Provisions
("Basic Provisions").

 

1.1Parties:
This Lease ("Lease"),
dated for reference purposes only, November
26, 2018, is made By and between ARIZONA
DP CONSULTING LLC . ("Lessor")
and ITEM 9 LABS CORP. ("Lessee"),
(collectively the "Parties,"
or individually a "Party").

 

1.2Premises:
That certain
real property,
including all improvements
therein or
to be provided
by Lessor under
the terms
of this
Lease, and
commonly known as  DP Office ,
located in the County of Maricopa
, State of Arizona , and generally
described
as (describe briefly the
nature of the
property and,
if applicable, the "Project",
if the property is located within a Project) A 1700 square foot commercial building
located at 1709 E. Bethany Home Road Phoenix, AZ 85016_("Premises").
(See also Paragraph
2)

 

1.3Term: 0years
and 6months ("Original
Term") commencing December
1, 2018 ("Commencement
Date") and ending
June 1, 2019("Expiration
Date").
(See also Paragraph
3)

 

1.4 Early Possession:
NA("Early
Possession Date")
(See also Paragraphs
3.2 and 3.3).

 

1.5 Base
Rent: $3,200 per month ("Base
Rent"), payable on
the 1st day of each month
commencing December 1, 2018

(See also Paragraph
4)

[ ] If this box is
checked, there are provisions in
this Lease for the Base
Rent to be adjusted.

 

1.6 Base Rent
and Other Monies Paid Upon Execution:

(check
applicable boxes)

 

[ ]Base Rent:
$ 3,200 per month gross, inclusive of all utilities

[ ]Security Deposit: $ 3,200("Security
Deposit"). (See
also Paragraph 5)

 

[ ]Association
Fees: $ 0for the period

 

[ ]Other: $ 0for

[ ]Total Due Upon Execution of this Lease: $
6,400.

 

1.7 Agreed Use: Item
9 offices (See also Paragraph
6)

 

1.8 Insuring Party: Lessor
is the "Insuring Party"
unless otherwise
stated herein.
(See also Paragraph
8)

 

1.9 Real Estate
Brokers: (See also Paragraph
15)

 

(a) Representation: The
following real estate
brokers (the "Brokers") and
brokerage relationships exist in this transaction:
(check applicable boxes)

 

[ ] n/a_represents
Lessor exclusively ("Lessor's
Broker(s)");

 

[ ] represents Lessee
exclusively ("Lessee's
Broker(s)"); or [ ] represents
both Lessor and Lessee ("Dual
Agency").

 

(b) Payment
to Brokers: Upon
execution and delivery of this
Lease by both Parties, Lessor shall pay to the Broker the fee agreed
to in their separate written agreement
(or if there is no such agreement,
the sum of __________ or __________% of the total Base Rent)
for the brokerage services
rendered
by the Brokers.

 

1.10 Guarantor.
The obligations of the Lessee under this
Lease are to be guaranteed
by n/a ("Guarantor(s)").
(See also Paragraph
37)

 

1.11 Attachments.
Attached hereto are the following,
all of which constitute a part of
this Lease:

 

[ ]an Addendum
consisting of Paragraphs
_________ through _________:

[ ] a plot
plan depicting
the Premises;

[ ] a current set of
the Rules and Regulations;
[ ]a Work Letter;

[ ]other (specify): _________________________________________

 

2. Premises.

 

2.1 Letting.
Lessor hereby
leases to Lessee,
and Lessee
hereby leases
from Lessor,
the Premises,
for the term,
at the rental,
and upon all of the
terms, covenants and conditions
set forth in this Lease. Unless
otherwise provided herein, any statement
of size set forth in this Lease,
or that may have been
used in
calculating Rent, is an approximation which
the Parties agree is reasonable
and any payments
based thereon
are not subject
to revision
whether
or not the
actual size is more or less. Note: Lessee is advised
to verify the actual size prior
to executing this Lease.

 

2.2 Condition.
Lessor shall deliver
the Premises
to Lessee broom
clean and free of
debris on the
Commencement
Date or the
Early Possession
Date, whichever
first occurs
("Start Date"),
and, so long
as the required
service contracts
described
in Paragraph 7.1(b)
below are obtained
by Lessee and
in effect within thirty
days following the Start Date, warrants
that the existing electrical, plumbing,
fire sprinkler, lighting, heating, ventilating
and air conditioning
systems ("HVAC"),
loading doors, sump pumps, if any, and
all other such elements
in the Premises,
other than
those constructed
by Lessee, shall
be in good operating
condition
on said date and
that the structural
elements
of the roof,
bearing walls and foundation
of any buildings
on the Premises
(the "Building") shall be free of material defects.
If a non-compliance
with said warranty
exists as
of the Start
Date, or if
one of such
systems or elements
should malfunction
or fail within the appropriate warranty
period, Lessor shall, as Lessor's sole
obligation with respect to such matter,
except as otherwise provided
in this Lease,
promptly after receipt
of written notice
from Lessee
setting forth
with specificity
the nature and
extent of such
non-compliance,
malfunction
or failure, rectify
same at Lessors
expense. The
warranty periods
shall be as follows:
(i) 6 months as to
the HVAC systems,
and (ii) 30 days as to the
remaining systems
and other elements
of the Building.
If Lessee
does not give
Lessor the
required notice
within the
appropriate warranty
period, correction
of any such
non-compliance,
malfunction or failure shall be the obligation
of Lessee
at Lessee's
sole cost and
expense.

 

2.3 Compliance.
Lessor warrants
that the improvements
on the Premises
comply with the
building
codes, applicable
laws, covenants
or restrictions
of record, regulations,
and ordinances
("Applicable Requirements")
that were in effect
at the time that each improvement,
or portion
thereof, was constructed.
Said warranty
does not apply to the use
to which Lessee will put the Premises, modifications which
may be required by the Americans with Disabilities
Act or any similar laws as a result of Lessee's use (see
Paragraph 50), or to any Alterations or
Utility Installations (as defined in Paragraph
7.3(a)) made
or to be made by Lessee.
NOTE: Lessee
is responsible
for determining
whether or
not the Applicable
Requirements,
and especially
the zoning,
are appropriate
for Lessee's
intended use,
and acknowledges
that past uses of
the Premises
may no longer be allowed.
If the Premises
do not comply
with said warranty,
Lessor shall,
except as otherwise
provided, promptly
after receipt of
written notice
from Lessee
setting
forth with
specificity
the nature
and extent of
such non-compliance,
rectify the same at Lessor's
expense.
If Lessee does
not give Lessor written notice of a non-compliance
with this warranty within
6 months following the Start Date, correction
of that non-compliance
shall be the obligation of Lessee at Lessee's
sole cost and expense.
If the Applicable
Requirements
are hereafter changed
so as to require during the term of this
Lease the construction of an addition
to or an alteration of the Premises and/or Building,
the remediation of any Hazardous
Substance,
or the reinforcement
or other physical modification of the Unit,
Premises and/or
Building
("Capital
Expenditure"),
Lessor
and Lessee
shall allocate the cost of such work
as follows:

 

(a) Subject
to Paragraph 2.3(c)
below, if such
Capital Expenditures are
required as a result
of the specific
and unique use
of the Premises
by Lessee as
compared with
uses by tenants
in general,
Lessee shall
be fully responsible
for the cost
thereof,
provided,
however that
if such Capital Expenditure
is required
during the last
2 years of this Lease
and the cost
thereof
exceeds
6 months' Base
Rent, Lessee
may instead
terminate
this Lease
unless Lessor
notifies Lessee,
in writing, within
10 days after
receipt
of Lessee's
termination
notice that
Lessor has elected
to pay the difference
between
the actual cost thereof
and an amount
equal to 6 months'
Base Rent. If
Lessee elects
termination,
Lessee shall
immediately cease
the use of
the Premises
which requires
such Capital Expenditure
and deliver to Lessor written notice specifying a termination
date at least 90 days thereafter.
Such termination date shall, however,
in no event be earlier than the
last day that Lessee could legally utilize
the Premises without commencing
such Capital Expenditure.

 

(b)
If such Capital Expenditure
is not the result of the specific
and unique
use of the Premises
by Lessee (such
as, governmentally
mandated seismic modifications),
then Lessor
and Lessee
shall allocate the obligation
to pay for such costs
pursuant to
the provisions
of Paragraph 7.1(d); provided,
however,
that if such Capital Expenditure is required
during the last 2 years of this Lease or
if Lessor reasonably determines
that it is not economically
feasible to pay its share thereof,
Lessor shall
have the option to terminate this Lease
upon 90 days prior written notice to Lessee
unless Lessee notifies Lessor,
in writing, within
10 days after receipt of Lessor's
termination notice that Lessee will pay
for such Capital Expenditure. If Lessor does
not elect to terminate, and fails to
tender its share of any such Capital
Expenditure,
Lessee
may advance such
funds and
deduct same,
with Interest,
from Rent until
Lessor's share
of such
costs have been fully paid.
If Lessee
is unable to
finance Lessor's
share, or if the
balance of the
Rent due and payable
for the remainder
of this Lease
is not sufficient to fully reimburse Lessee on an offset basis,
Lessee shall have the right to terminate
this Lease upon 30 days written
notice to Lessor.

 

(c)
Notwithstanding
the above,
the provisions
concerning
Capital Expenditures
are intended
to apply only to
non-voluntary,
unexpected,
and new Applicable Requirements.
If the Capital
Expenditures
are instead triggered
by Lessee
as a result of
an actual or proposed
change in use,
change in
intensity
of use, or modification
to the Premises then, and
in that event, Lessee
shall either: (i) immediately cease
such changed
use or intensity
of use and/or take such other steps
as may be necessary
to eliminate
the requirement
for such
Capital Expenditure, or (ii) complete
such Capital
Expenditure
at its own expense.
Lessee
shall not,
however, have
any right to terminate this Lease.

 

2.4 Acknowledgements.
Lessee
acknowledges
that: (a) it has been advised
by Lessor and/or
Brokers to satisfy
itself with respect
to the condition
of the Premises (including but not
limited to the electrical, HVAC and fire
sprinkler systems,
security, environmental aspects,
and compliance with Applicable
Requirements and the Americans with
Disabilities Act), and their suitability
for Lessee's intended use, (b) Lessee has
made such investigation
as it deems necessary
with reference to such matters and assumes
all responsibility therefor
as the same
relate to
its occupancy
of the Premises,
and (c) neither
Lessor, Lessor's
agents, nor
Brokers have made any oral or written
representations
or warranties with respect to said matters
other than as set forth in this
Lease. In
addition,
Lessor
acknowledges that: (i) Brokers
have made no representations, promises
or warranties concerning Lessee's ability
to honor the Lease or suitability to occupy the Premises,
and (ii) it is Lessor's sole
responsibility to investigate the financial capability and/or
suitability of all proposed tenants.

 

2.5 Lessee
as Prior Owner/Occupant.
The warranties made by Lessor
in Paragraph 2 shall be of no force
or effect if immediately prior to the
Start Date Lessee
was the owner
or occupant
of the Premises.
In such event,
Lessee shall
be responsible
for any necessary
corrective
work.

 

3. Term.

 

3.1 Term.
The Commencement
Date, Expiration
Date and Original Term
of this Lease
are as specified
in Paragraph 1.3.

 

3.2 Early
Possession.
If Lessee totally or partially occupies
the Premises prior to the Commencement
Date, the obligation
to pay Base Rent
shall be abated for the period of such
early possession.
All other terms of this Lease (including but not
limited to the obligations to pay Real Property Taxes and insurance
premiums and to maintain the Premises)
shall, however, be in
effect during such period. Any such early
possession shall not affect the Expiration
Date.

 

3.3 Delay
In Possession. Lessor
agrees to use its best
commercially
reasonable efforts to deliver possession
of the Premises
to Lessee
by the Commencement
Date. If, despite
said efforts, Lessor
is unable to deliver possession
by such date, Lessor
shall not be subject
to any liability therefor, nor shall such
failure affect the validity of this Lease.
Lessee shall not, however,
be obligated
to pay Rent or
perform its
other obligations
until Lessor delivers
possession
of the Premises
and any period
of rent abatement
that Lessee
would otherwise
have enjoyed
shall run from the
date of delivery
of possession
and continue
for a period
equal to what
Lessee would
otherwise
have enjoyed
under the
terms hereof,
but minus any days
of delay
caused by the
acts or
omissions
of Lessee.
If possession
is not delivered within 60 days after the
Commencement
Date, Lessee may, at its option, by notice
in writing within 10 days after the
end of such
60 day period, cancel this
Lease, in
which event the
Parties shall
be discharged
from all obligations
hereunder.
If such
written notice
is not received
by Lessor within said
10 day period, Lessee's
right to
cancel shall
terminate.
If possession
of the Premises
is not delivered
within 120
days after the
Commencement
Date, this
Lease shall
terminate unless
other agreements
are reached
between
Lessor and
Lessee, in writing.

 

3.4
Lessee Compliance. Lessor shall
not be required to deliver possession
of the Premises to Lessee until Lessee
complies with its obligation to provide
evidence
of insurance
(Paragraph 8.5).
Pending
delivery
of such
evidence, Lessee shall be required to perform all of its obligations
under this
Lease from
and after the Start Date, including the
payment of Rent, notwithstanding
Lessor's
election to
withhold possession
pending receipt
of such evidence
of insurance. Further,
if Lessee is required to perform any other conditions prior to or concurrent
with the Start Date, the Start Date shall occur
but Lessor may elect to withhold
possession
until such conditions
are satisfied.

 

4.
Rent.

 

4.1
Rent Defined. Al
monetary obligations
of Lessee
to Lessor under
the terms
of this Lease
(except for
the Security
Deposit)
are deemed to be rent
("Rent").

 

4.2
Payment. Lessee
shall cause payment
of Rent to
be received
by Lessor in lawful
money of
the United States on or
before the day on
which it
is due, without offset or deduction
(except as specifically
permitted in this Lease).
Rent for any period during the term hereof
which is for less than one full calendar
month shall be prorated
based upon
the actual number
of days of said month.
Payment of Rent
shall be made to Lessor at its
address stated
herein or
to such other
persons or place as Lessor
may from time to time designate in writing.
Acceptance of a payment which is less
than the amount then due shall not
be a waiver of Lessor's
rights to
the balance
of such Rent,
regardless
of Lessor's
endorsement
of any check
so stating. In
the event that
any check,
draft, or other instrument of payment given
by Lessee
to Lessor is dishonored
for any reason,
Lessee agrees
to pay to Lessor the
sum of $25 in addition
to any Late
Charge and Lessor,
at its option, may require all future payments
to be made by Lessee to be by cashier's
check. Payments will be applied first to accrued
late charges and attorneys fees,
second to accrued
interest,
then to Base Rent
and Operating
Expense Increase,
and any remaining
amount to
any other outstanding
charges
or costs.

 

 

5. Security
Deposit. Lessee
shall deposit
with Lessor upon
execution hereof
the Security
Deposit as security
for Lessee's
faithful performance
of its obligations under this Lease.
If Lessee fails to pay Rent,
or otherwise Defaults under
this Lease, Lessor may use, apply
or retain all or any portion of said
Security Deposit for the payment of any
amount due Lessor or to reimburse
or compensate Lessor
for any liability, expense, loss or damage which
Lessor may suffer
or incur by reason thereof.
If Lessor uses or applies all or any portion
of the Security Deposit, Lessee shall within 10 days after written request therefor
deposit monies with
Lessor
sufficient
to restore
said Security
Deposit to
the full
amount required by this Lease. If the Base Rent increases
during the term
of this
Lease, Lessee
shall, upon written request from Lessor,
deposit additional moneys with
Lessor so that the total amount of the
Security Deposit shall at all times bear
the same proportion
to the increased
Base Rent as
the initial
Security Deposit
bore to the
initial Base
Rent. Should
the Agreed
Use be amended to accommodate
a material change
in the business
of Lessee
or to accommodate
a sublessee
or assignee,
Lessor
shall have the
right to increase
the Security
Deposit to the extent necessary,
in Lessor's reasonable
judgment,
to account for any increased
wear and tear that the Premises may suffer
as a result thereof.
If a change in control
of Lessee occurs
during this
Lease and
following such
change the
financial
condition of
Lessee
is, in Lessor's
reasonable
judgment,
significantly
reduced,
Lessee shall
deposit
such additional monies with Lessor as
shall be sufficient to cause the Security
Deposit to be at a commercially reasonable
level based
on such
change in
financial condition.
Lessor shall not
be required to
keep the Security
Deposit separate
from its general
accounts. Within
14 days after the expiration or termination
of this Lease, if Lessor elects
to apply the Security Deposit only
to unpaid Rent, and otherwise
within 30 days
after the Premises have been
vacated pursuant
to Paragraph7.4(c)
below, Lessor
shall return
that portion
of the Security
Deposit
not used or
applied by
Lessor. No part of
the Security
Deposit
shall be considered
to be held
in trust, to bear interest
or to be prepayment
for any monies to
be paid
by Lessee under
this Lease.

 

6. Use.

 

6.1
Use. Lessee shall
use and occupy
the Premises
only for the
Agreed Use,
or any other legal use which is reasonably
comparable thereto,
and for no other purpose.
Lessee shall
not use or
permit the use
of the Premises
in a manner
that is unlawful, creates
damage, waste
or a nuisance,
or that disturbs occupants
of or causes
damage to
neighboring
premises or
properties. Lessor
shall not unreasonably
withhold or delay its consent
to any written request for
a modification of the Agreed
Use, so
long as the
same will not impair
the structural
integrity of
the improvements
on the Premises
or the mechanical
or electrical
systems
therein,
and/or is
not significantly
more burdensome
to the Premises.
If Lessor elects
to withhold
consent,
Lessor
shall within
7 days after
such request
give written
notification
of same, which
notice shall include
an explanation
of Lessor's
objections
to the change
in the Agreed
Use.

 

6.2 Hazardous
Substances.

 

(a) Reportable Uses Require Consent. The term "Hazardous Substance"
as used in this
Lease shall mean any product,
substance, or
waste whose presence, use,
manufacture,
disposal, transportation, or
release, either by itself or
in combination
with other
materials expected to
be on the Premises,
is either: (i) potentially
injurious to the public health,
safety or welfare, the environment or the
Premises,
(ii) regulated or
monitored by any governmental
authority, or (iii) a basis for potential
liability of Lessor to any governmental
agency or third party under any
applicable statute
or common law theory.
Hazardous Substances shall

include,
but not be limited
to, hydrocarbons,
petroleum,
gasoline, and/or
crude oil or
any products,
by-products
or fractions
thereof.
Lessee shall
not engage in any activity in or on the
Premises which constitutes a Reportable
Use of Hazardous Substances without the
express prior written consent
of Lessor and timely compliance (at Lessee's expense)
with all Applicable Requirements. "Reportable
Use" shall mean (i) the installation or use of any above or below
ground storage tank, (ii) the
generation,
possession,
storage, use, transportation, or disposal
of a Hazardous Substance that requires
a permit from, or with respect to which
a report, notice, registration
or business plan is required
to be filed with, any governmental
authority, and/or (iii) the presence at the
Premises of a Hazardous
Substance
with respect
to which any
Applicable
Requirements
requires that
a notice be given
to persons
entering or
occupying
the Premises
or neighboring
properties.
Notwithstanding
the foregoing,
Lessee may
use any ordinary
and customary
materials reasonably required
to be used in
the normal
course of
the Agreed Use,
ordinary office
supplies (copier toner,
liquid paper, glue,
etc.) and common
household
cleaning materials, so long
as such use is in compliance
with all Applicable Requirements,
is not a Reportable
Use, and does
not expose
the Premises
or neighboring
property
to any meaningful
risk of contamination
or damage or expose Lessor to any liability
therefor. In addition, Lessor may condition
its consent to any Reportable Use upon receiving such
additional assurances as Lessor reasonably
deems necessary
to protect itself,
the public, the
Premises
and/or the
environment against
damage, contamination,
injury and/or liability,
including, but not limited to, the installation (and removal
on or before Lease expiration or termination)
of protective modifications (such as concrete
encasements)
and/or increasing
the Security
Deposit.

 

(b) Duty
to Inform
Lessor. If Lessee
knows, or
has reasonable cause to
believe, that a Hazardous
Substance
has come to
be located
in, on, under
or about the
Premises, other
than as previously
consented
to by Lessor,
Lessee shall
immediately
give written notice of
such fact to Lessor,
and provide Lessor
with a copy of
any report,
notice, claim or
other documentation
which it has concerning
the presence
of such
Hazardous Substance.

 

(c) Lessee
Remediation.
Lessee
shall not
cause or permit any
Hazardous Substance
to be spilled or released in, on, under,
or about the Premises (including through
the plumbing
or sanitary sewer
system) and shall
promptly, at Lessee's expense, comply with all Applicable
Requirements
and take all investigatory
and/or remedial action reasonably recommended,
whether or not formally ordered
or required, for the cleanup
of any contamination of, and for
the maintenance,
security
and/or monitoring
of the Premises
or neighboring
properties, that
was caused or materially contributed
to by Lessee, or
pertaining to
or involving any
Hazardous Substance
brought onto
the Premises
during the term
of this Lease, by or for Lessee,
or any third party.

 

(d) Lessee
Indemnification.
Lessee shall
indemnify,
defend and hold
Lessor,
its agents,
employees,
lenders and
ground lessor,
if any, harmless
from and against
any and all loss of rents and/or damages,
liabilities, judgments, claims, expenses,
penalties, and attorneys' and consultants'
fees arising out of or involving any
Hazardous Substance
brought onto
the Premises
by or for Lessee,
or any third
party (provided,
however, that
Lessee shall have
no liability under this Lease with respect
to underground migration of any Hazardous Substance
under the
Premises from
adjacent properties
not caused or contributed
to by Lessee).
Lessee's obligations shall include, but not be limited to, the effects
of any contamination
or injury to person, property
or the environment
created or
suffered by Lessee,
and the cost
of investigation,
removal, remediation,
restoration and/or
abatement, and shall
survive the expiration
or termination of this Lease. No termination, cancellation or release agreement entered
into by Lessor
and Lessee
shall release
Lessee from
its obligations
under this
Lease with
respect
to Hazardous Substances,
unless specifically so agreed by Lessor in writing at the time of such agreement.

 

(e) Lessor
Indemnification. Lessor
and its successors
and assigns
shall indemnify,
defend, reimburse
and hold Lessee,
its employees
and lenders,
harmless from and against any
and all environmental damages,
including
the cost of remediation, which result from
Hazardous Substances
which existed on
the Premises prior to Lessee's occupancy
or which are caused
by the gross negligence
or willful misconduct of Lessor, its agents
or employees. Lessor's obligations,
as and when required by the Applicable
Requirements, shall include, but not be
limited to, the cost of investigation, removal, remediation,
restoration and/or abatement, and shall
survive the expiration or termination
of this Lease.

 

(f) Investigations
and Remediations. Lessor
shall retain the responsibility and pay for any investigations
or remediation measures required by governmental
entities having
jurisdiction
with respect
to the existence
of Hazardous
Substances
on the Premises
prior to Lessee's
occupancy,
unless
such remediation measure
is required as a result of Lessee's
use (including 'Alterations', as
defined in paragraph 7.3(a) below) of
the Premises,
in which event Lessee
shall be responsible
for such payment.
Lessee shall
cooperate fully
in any such activities
at the request
of Lessor, including
allowing Lessor
and Lessor's agents
to have reasonable
access to the
Premises at reasonable
times in order to carry out Lessor's
investigative and
remedial responsibilities.

 

(g) Lessor
Termination Option. If
a Hazardous Substance
Condition (see
Paragraph 9.1(e)) occurs
during the term of this
Lease, unless
Lessee is legally responsible therefor (in which
case Lessee shall make the
investigation and remediation thereof
required by the Applicable Requirements and this Lease shall
continue
in full force and effect, but
subject to
Lessor's rights under
Paragraph 6.2(d)
and Paragraph 13), Lessor may, at
Lessor's option, either (i)
investigate and remediate such Hazardous Substance Condition, if required, as
soon as reasonably
possible at Lessor's
expense, in which event
this Lease shall
continue in full force and
effect, or (ii) if the estimated cost
to remediate such condition
exceeds
12 times the then monthly
Base Rent or $100,000,
whichever is greater,
give written notice to Lessee, within
30 days after receipt by Lessor of knowledge of the occurrence of
such Hazardous Substance Condition,
of Lessor's desire to terminate this
Lease as of the date 60 days following the date of such notice. In the event
Lessor elects to give a termination
notice, Lessee may,
within 10 days thereafter,
give written notice to Lessor of Lessee's commitment to
pay the amount
by which the
cost of the remediation of
such Hazardous
Substance Condition
exceeds an amount
equal to 12 times the then
monthly Base Rent or
$100,000, whichever is greater. Lessee
shall provide Lessor with
said funds or satisfactory assurance thereof
within 30
days following such
commitment. In
such event, this Lease
shall continue in full force and
effect, and Lessor shall
proceed to
make such remediation
as soon as reasonably
possible after the required funds
are available. If
Lessee does not
give such notice
and provide the
required funds or
assurance thereof
within the time
provided, this Lease
shall terminate as
of the date specified in Lessor's
notice of termination.

 

6.3 Lessee's
Compliance with Applicable
Requirements. Except
as otherwise
provided in this
Lease, Lessee
shall, at Lessee's
sole expense,
fully, diligently and
in a timely manner,
materially comply with all Applicable
Requirements, the requirements of any applicable fire insurance
underwriter
or rating
bureau, and
the recommendations
of Lessor's
engineers and/or
consultants
which relate
in any manner
to the such
Requirements,
without regard
to whether such
Requirements
are now in effect or
become effective
after the Start
Date. Lessee shall, within 10 days after receipt of Lessor's
written request,
provide Lessor
with copies of
all permits and other
documents,
and other information
evidencing Lessee's
compliance
with any Applicable
Requirements
specified by Lessor,
and shall immediately upon receipt, notify
Lessor in writing (with copies of any documents
involved) of any threatened or actual claim, notice,
citation, warning,
complaint or
report pertaining to or involving
the failure of Lessee or the Premises to comply
with any Applicable Requirements.

 

6.4 Inspection;
Compliance. Lessor
and Lessor's
"Lender" (as defined
in Paragraph 30) and
consultants
shall have
the right to
enter into
Premises at
any time, in the case of an emergency,
and otherwise
at reasonable times
after reasonable notice,
for the purpose of inspecting
the condition
of the Premises
and for verifying
compliance by Lessee
with this Lease.
The cost of
any such inspections
shall be paid by Lessor,
unless a violation
of Applicable Requirements, or a Hazardous Substance
Condition
(see paragraph
9.1) is found to
exist or be imminent,
or the inspection
is requested
or ordered
by a governmental authority. In such
case, Lessee
shall upon request reimburse
Lessor for the cost of such inspection,
so long as such inspection
is reasonably related
to the violation
or contamination.
In addition,
Lessee
shall provide copies
of all relevant
material safety data sheets
(MSDS) to Lessor
within 10 days of the
receipt of
a written request
therefor.

 

7.
Maintenance; Repairs,
Utility Installations;
Trade Fixtures and Alterations.

 

7.1 Lessee's Obligations.

 

(a)
In General. Subject
to the provisions
of Paragraph
2.2 (Condition),
2.3 (Compliance),
6.3 (Lessee's Compliance
with Applicable Requirements), 7.2 (Lessor's
Obligations), 9 (Damage
or Destruction),
and 14 (Condemnation),
Lessee shall,
at Lessee's
sole expense,
keep the Premises,
Utility Installations (intended
for Lessee's
exclusive use,
no matter where
located),
and Alterations
in good order,
condition
and repair (whether
or not the
portion of
the Premises
requiring
repairs, or the
means of
repairing the
same, are
reasonably
or readily accessible to Lessee, and
whether or not the need for such
repairs occurs
as a result of
Lessee's use,
any prior use, the elements
or the age of such
portion of the Premises),
including,
but not limited to, all equipment
or facilities, such as plumbing,
HVAC equipment, electrical,
lighting facilities, boilers, pressure
vessels, fire protection system,
fixtures, walls (interior and
exterior), foundations, ceilings, roofs, roof
drainage systems,
floors, windows,
doors, plate glass,
skylights, landscaping,
driveways,
parking lots, fences,
retaining walls,
signs, sidewalks
and parkways located
in, on, or adjacent
to the Premises.
Lessee,
in keeping the Premises
in good order,
condition and
repair, shall
exercise and perform good maintenance
practices, specifically
including the
procurement
and maintenance
of the service
contracts
required by Paragraph
7.1(b) below.
Lessee's
obligations shall
include
restorations,
replacements
or renewals
when necessary
to keep the Premises
and all improvements
thereon
or a part thereof
in good order,
condition
and state of
repair. Lessee
shall, during
the term
of this Lease,
keep the exterior appearance
of the Building
in a first-class condition
(including, e.g.
graffiti removal)
consistent with the exterior appearance
of other similar facilities of comparable
age and size in the vicinity, including,
when necessary, the exterior repainting of the Building.

 

(b)
Service Contracts. Lessee shall,
at Lessee's sole
expense,
procure and maintain
contracts,
with copies
to Lessor, in customary
form and substance
for, and with contractors specializing and experienced in
the maintenance
of the following
equipment
and improvements,
if any,
if and when
installed on
the Premises: (i) HVAC
equipment,
(ii) boiler, and pressure vessels, (iii)
fire extinguishing systems,
including fire alarm and/or smoke detection, (iv)
landscaping and irrigation systems, (v) roof covering
and drains, (vi) clarifiers (vii) basic
utility feed to the perimeter of the
Building, and (viii) any other
equipment, if reasonably
required by
Lessor. However,
Lessor reserves
the right,
upon notice
to Lessee,
to procure
and maintain any or
all of such service
contracts, and
if Lessor
so elects, Lessee
shall reimburse
Lessor,
upon demand, for
the cost thereof.

 

(c)
Failure to Perform. If Lessee fails
to perform Lessee's obligations under
this Paragraph
7.1, Lessor may
enter upon the
Premises after 10
days' prior written notice to Lessee (except
in the case of an emergency,
in which case no notice shall be required),
perform such obligations
on Lessee's behalf,
and put the Premises
in good order,
condition and
repair, and
Lessee shall
promptly pay to Lessor
a sum equal to 115% of
the cost thereof.

 

(d)
Replacement.
Subject to Lessee's
indemnification
of Lessor
as set forth in Paragraph 8.7
below, and without relieving Lessee of
liability resulting from Lessee's failure to exercise
and perform good
maintenance practices,
if an item described
in Paragraph 7.1(b) cannot
be repaired other than
at a cost which is in excess
of 50% of the
cost of replacing
such item,
then such
item shall be replaced
by Lessor, and the
cost thereof
shall be prorated
between the Parties and
Lessee shall only be obligated
to pay, each
month during
the remainder
of the term
of this
Lease, on
the date on
which Base
Rent is due,
an amount
equal to the
product of
multiplying the cost of such
replacement by a fraction, the numerator
of which is one,
and the denominator
of which is 144 (ie. 1/144th
of the cost
per month).
Lessee shall pay interest on the unamortized balance
at a rate that is commercially reasonable in the
judgment of
Lessor's accountants.
Lessee may,
however, prepay its obligation
at anytime.

 

7.2
Lessor's Obligations.
Subject
to the provisions
of Paragraphs
2.2 (Condition),
2.3 (Compliance), 9 (Damage
or Destruction)
and 14 (Condemnation),
it is intended
by the Parties hereto
that Lessor
have no obligation,
in any manner
whatsoever,
to repair
and maintain
the Premises,
or the equipment
therein, all of which obligations are intended
to be that of the Lessee. It is the intention of the Parties that the terms
of this Lease govern
the respective
obligations of the Parties as to maintenance and repair of the Premises,
and they expressly
waive the benefit
of any statute
now or hereafter in
effect to the extent it is inconsistent
with the terms of this Lease.

 

7.3
Utility Installations;
Trade Fixtures; Alterations.

 

(a)
Definitions. The term 'Utility Installations' refers to all floor and window
coverings, air and/or vacuum
lines, power panels, electrical distribution,
security and
fire protection
systems, communication
cabling, lighting
fixtures, HVAC equipment,
plumbing,
and fencing
in or on the
Premises.
The term "Trade
Fixtures" shall
mean Lessee's
machinery and
equipment that
can be removed without
doing material
damage to the
Premises. The
term "Alterations"
shall mean any modification of the improvements,
other than Utility Installations
or Trade Fixtures, whether
by addition or deletion. 'Lessee
Owned Alterations and/or
Utility Installations' are defined as
Alterations and/or Utility Installations
made by Lessee that are not yet owned
by Lessor pursuant to Paragraph
7.4(a).

 

(b)
Consent. Lessee shall not make
any Alterations or Utility Installations
to the Premises without Lessor's prior written consent.
Lessee may, however, make non-structural
Utility Installations to the interior
of the Premises (excluding the roof) without
such consent but upon notice
to Lessor,
as long as they
are not visible
from the outside,
do not involve
puncturing,
relocating
or removing the roof or any existing walls, will not affect the
electrical, plumbing,
HVAC, and/or
life safety
systems, and
the cumulative
cost thereof
during this
Lease as extended
does not exceed
a sum equal to
3 month's Base
Rent in
the aggregate
or a sum equal
to one month's
Base Rent in any
one year. Notwithstanding
the foregoing,
Lessee shall
not make or
permit any roof penetrations
and/or install
anything on the roof without the prior
written approval of
Lessor. Lessor
may, as a precondition
to granting such
approval, require
Lessee
to utilize a contractor chosen and/or
approved by Lessor. Any
Alterations or Utility Installations that Lessee
shall desire to
make and which
require
the consent
of the Lessor
shall be
presented
to Lessor
in written form with detailed plans. Consent shall be deemed conditioned
upon Lessee's: (i) acquiring all applicable
governmental permits, (ii) furnishing
Lessor with copies of both the permits and the plans and specifications prior
to commencement
of the work, and (iii) compliance with
all conditions of said permits and other
Applicable Requirements
in a prompt and expeditious
manner. Any Alterations
or Utility Installations
shall be performed
in a workmanlike manner
with good and sufficient materials.
Lessee shall promptly
upon completion furnish Lessor with as-built
plans and specifications. For work
which costs
an amount in excess
of one month's
Base Rent, Lessor
may condition
its consent
upon Lessee
providing a lien
and completion
bond in an
amount equal
to 150% of the
estimated cost of such Alteration or Utility
Installation and/or upon Lessee's
posting an additional Security Deposit
with Lessor.

 

(c)
Liens; Bonds. Lessee
shall pay, when due, all claims
for labor or materials furnished
or alleged to
have been furnished
to or for
Lessee
at or for use
on the Premises,
which claims are or
may be secured
by any mechanic's
or materialmen's
lien against the Premises
or any interest
therein. Lessee
shall give Lessor
not less than 10 days notice prior to the commencement
of any work in, on or about the Premises, and
Lessor shall have the right
to post notices of non-
responsibility. If Lessee shall contest
the validity of any such lien, claim or demand,
then Lessee shall, at its sole expense
defend and protect
itself, Lessor
and the Premises
against the same and
shall pay and satisfy any such
adverse judgment
that may be rendered
thereon before
the enforcement
thereof. If
Lessor shall require,
Lessee shall
furnish a surety
bond in an amount
equal to 150% of
the amount of
such contested
lien, claim or demand,
indemnifying
Lessor against liability for the same.
If Lessor elects
to participate in any such
action, Lessee
shall pay Lessor's
attorneys' fees and
costs.

 

7.4
Ownership; Removal; Surrender;
and Restoration.

 

(a)
Ownership. Subject
to Lessor's
right to require
removal or elect
ownership
as hereinafter provided, all Alterations
and Utility Installations made by
Lessee shall be the
property of
Lessee, but
considered
a part of the Premises.
Lessor may,
at any time,
elect in writing to
be the owner of all or any specified part
of the Lessee Owned Alterations and Utility
Installations. Unless
otherwise instructed
per paragraph
7.4(b) hereof, all Lessee Owned
Alterations and Utility Installations
shall, at the expiration
or termination
of this Lease,
become the
property
of Lessor
and be surrendered
by Lessee
with the
Premises.

 

(b) Removal.
By delivery to Lessee of written
notice from Lessor not
earlier than 90 and not
later than 30 days prior to the
end of the term of this Lease, Lessor
may require that
any or all Lessee Owned Alterations
or Utility Installations be removed
by the expiration or termination of this Lease. Lessor
may require the removal
at any time of all or any part of any Lessee Owned
Alterations or Utility Installations made without
the required consent.

 

(c) Surrender;
Restoration.
Lessee shall
surrender
the Premises
by the Expiration
Date or any earlier termination date,
with all of the improvements, parts and
surfaces thereof
broom clean and
free of debris,
and in good operating
order, condition
and state of
repair, ordinary
wear and tear excepted.
'Ordinary wear and tear'
shall not include any
damage or deterioration
that would
have been
prevented
by good maintenance
practice. Notwithstanding
the foregoing,
if this Lease is for
12 months or
less, then Lessee
shall surrender
the Premises
in the same condition
as delivered to
Lessee on
the Start Date with NO allowance for
ordinary wear and
tear. Lessee
shall repair any
damage occasioned
by the installation, maintenance
or removal of Trade Fixtures,
Lessee owned
Alterations and/or
Utility Installations, furnishings,
and equipment
as well as the removal of any storage tank
installed by or for Lessee. Lessee shall completely
remove from the Premises
any and all
Hazardous Substances
brought onto
the Premises
by or for Lessee,
or any third
party (except
Hazardous Substances
which were deposited
via underground
migration
from areas outside
of the Premises,
or if applicable, the Project)
even if such removal
would require
Lessee to perform or pay for work that
exceeds statutory
requirements.
Trade Fixtures
shall remain the property
of Lessee and
shall be removed
by Lessee.
Any personal property
of Lessee
not removed
on or before the Expiration Date or any earlier termination date shall be deemed
to have been abandoned
by Lessee and
may be disposed
of or retained
by Lessor
as Lessor may desire. The failure by Lessee
to timely vacate the Premises pursuant to this Paragraph
7.4(c) without the express written
consent of Lessor
shall
constitute
a holdover under
the provisions
of Paragraph
26 below.

 

8. Insurance;
Indemnity.

 

8.1 Payment
For Insurance. Lessee shall pay for
all insurance
required under Paragraph 8 except
to the extent of the cost attributable
to liability insurance carried by Lessor
under Paragraph 8.2(b) in excess
of $2,000,000 per occurrence. Premiums
for policy periods commencing
prior to or extending
beyond the Lease term shall be prorated
to correspond to the Lease term. Payment
shall be made by Lessee
to Lessor within 10 days following
receipt of an invoice.

 

8.2 Liability
Insurance.

 

(a) Carried
by Lessee. Lessee shall
obtain and keep in force a Commercial
General Liability policy of insurance
protecting Lessee and Lessor as an additional
insured against claims
for bodily injury,
personal injury and
property damage
based upon or
arising out of
the ownership,
use, occupancy
or maintenance
of the Premises
and all areas appurtenant
thereto. Such
insurance shall
be on an occurrence
basis providing
single limit coverage
in an amount not less than
$1,000,000 per occurrence
with an annual aggregate
of not less than $2,000,000, an
'Additional Insured-Managers
or Lessors of Premises
Endorsement'
and contain
the 'Amendment
of the Pollution
Exclusion Endorsement'
for damage caused
by heat,
smoke or fumes
from a hostile
fire. The policy
shall not contain
any intra-insured
exclusions
as between
insured persons
or organizations,
but shall include coverage for liability
assumed under this Lease
as an 'insured
contract'
for the performance
of Lessee's indemnity obligations under
this Lease. The limits of said insurance shall not,
however,
limit the liability of Lessee nor relieve Lessee of any
obligation
hereunder.
All insurance
carried by Lessee
shall be primary to and not
contributory with any similar insurance
carried by Lessor,
whose insurance
shall be considered
excess insurance
only.

 

(b) Carried
by Lessor. Lessor shall maintain liability
insurance as described
in Paragraph 8.2(a), in addition
to, and not in lieu of,
the insurance
required to
be maintained
by Lessee.
Lessee shall
not be named
as an additional
insured therein.

 

8.3 Property
Insurance - Building,
Improvements and Rental
Value.

 

(a) Building
and Improvements. The Insuring Party
shall obtain and keep in force a policy or policies in the name of Lessor, with loss
payable to Lessor,
any ground-lessor,
and to any
Lender
insuring loss
or damage
to the Premises.
The amount of
such insurance
shall be equal
to the full replacement
cost of the Premises,
as the same shall exist from time to time,
or the amount required
by any Lender,
but in no event more than
the commercially reasonable
and available insurable value thereof.
If Lessor is the Insuring Party, however,
Lessee Owned
Alterations and Utility Installations,
Trade Fixtures,
and Lessee's
personal property
shall be insured
by Lessee
under Paragraph
8.4 rather than by
Lessor. If the coverage
is available and commercially
appropriate, such policy or policies shall insure against all risks of direct physical
loss or damage (except the
perils of
flood and/or
earthquake unless
required
by a Lender), including coverage for
debris removal
and the enforcement
of any Applicable
Requirements
requiring
the upgrading,
demolition, reconstruction
or replacement
of any portion
of the Premises
as the result of a covered loss. Said policy
or policies shall also contain an agreed
valuation provision in lieu of any coinsurance
clause, waiver of subrogation,
and inflation
guard protection
causing an
increase
in the annual
property insurance
coverage
amount by a factor
of not less
than the
adjusted
U.S. Department
of Labor
Consumer
Price Index for
All Urban Consumers
for the city
nearest to
where the Premises
are located.
If such
insurance coverage
has a deductible clause, the deductible
amount shall not exceed $1,000 per occurrence,
and Lessee shall be liable for such deductible
amount in the event of
an Insured Loss.

 

(b) Rental
Value. The Insuring Party
shall obtain and keep in
force a policy or policies in the
name of Lessor with loss payable to Lessor
and any Lender, insuring
the loss of
the full
Rent for one year
with an extended
period of indemnity
for an additional
180 days ('Rental
Value insurance'). Said
insurance shall contain an agreed
valuation provision in lieu of any coinsurance
clause, and the amount of coverage
shall be adjusted annually
to reflect the projected Rent otherwise
payable by Lessee,
for the next 12 month
period. Lessee
shall be liable for any deductible
amount in the
event of such
loss.

 

(c) Adjacent
Premises. If the
Premises are part
of a larger building,
or of a group
of buildings owned by Lessor which are adjacent
to the Premises, the Lessee shall pay for
any increase in the premiums for the property insurance
of such building
or buildings if said increase is caused
by Lessee's
acts, omissions,
use or occupancy
of the Premises.

 

8.4 Lessee's
Property; Business Interruption Insurance.

 

(a) Property
Damage. Lessee
shall obtain and maintain insurance coverage
on all of Lessee's personal
property, Trade
Fixtures, and Lessee
Owned Alterations and Utility Installations.
Such insurance shall be full replacement
cost coverage
with a deductible
of not to exceed $1,000
per occurrence.
The proceeds
from any such
insurance shall
be used by Lessee
for the replacement
of personal property,
Trade Fixtures
and Lessee
Owned Alterations and Utility Installations.
Lessee shall provide Lessor with written
evidence that such insurance
is in force.

 

(b) Business
Interruption. Lessee shall obtain
and maintain loss of income and extra
expense insurance
in amounts as will reimburse Lessee for
direct or indirect loss of earnings attributable
to all perils commonly insured
against by prudent
lessees in the
business
of Lessee
or attributable to prevention of access
to the Premises
as a result of such
perils.

 

(c) No
Representation of Adequate
Coverage. Lessor makes no representation
that the limits or forms of coverage of
insurance
specified herein
are adequate to cover Lessee's property,
business operations or obligations under this
Lease.

 

8.5 Insurance Policies. Insurance
required herein
shall be
by companies duly
licensed
or admitted to
transact business
in the state
where the Premises
are located, and maintaining during the policy
term a 'General Policyholders Rating'
of at least B+, V, as set forth in the most
current issue
of 'Best's
Insurance
Guide', or such
other rating
as may be required by a Lender.
Lessee shall
not do or permit
to be done anything which
invalidates
the required insurance policies. Lessee shall, prior to the Start Date, deliver
to Lessor certified copies
of policies of such insurance
or certificates evidencing
the existence and
amounts of the required insurance. No
such policy shall be cancelable
or subject to modification except
after 30 days prior written notice
to Lessor. Lessee
shall, at least 30 days prior to the expiration of such policies,
furnish Lessor with evidence
of renewals
or 'insurance
binders' evidencing
renewal thereof,
or Lessor may order such insurance and
charge the cost
thereof to
Lessee, which amount
shall be payable by Lessee
to Lessor upon
demand. Such
policies shall be for a term of at least
one year, or the length of the remaining term of this Lease, whichever
is less. If either Party shall fail to procure
and maintain the insurance
required
to be carried by it, the other
Party may, but shall not be required to,
procure and maintain the same.

 

8.6 Waiver
of Subrogation. Without
affecting any other rights
or remedies,
Lessee
and Lessor each
hereby release
and relieve the
other, and waive their entire
right to recover
damages against
the other, for
loss of or
damage to its
property arising out of or incident
to the perils required to be insured
against herein.
The effect of
such releases
and waivers
is not limited
by the amount of insurance
carried or required,
or by any deductibles
applicable
hereto. The
Parties agree to have
their respective
property damage
insurance
carriers waive any right
to subrogation
that such companies
may have against
Lessor or
Lessee, as
the case may be, so long as
the insurance is not invalidated
thereby.

 

8.7 Indemnity.
Except for Lessor's gross negligence or
willful misconduct,
Lessee shall indemnify,
protect, defend and hold harmless
the Premises,
Lessor and its agents,
Lessor's master
or ground lessor,
partners and
Lenders,
from and against any
and all claims, loss of rents
and/or damages,
liens, judgments,
penalties, attorneys'
and consultants'
fees, expenses
and/or liabilities
arising out of, involving, or in connection
with, the use and/or
occupancy
of the Premises
by Lessee.
If any action
or proceeding
is brought against
Lessor by reason
of any of the
foregoing
matters, Lessee
shall upon notice
defend the
same at Lessee's
expense by counsel
reasonably satisfactory
to Lessor
and Lessor shall
cooperate with
Lessee in such
defense.
Lessor
need not
have first paid
any such claim in order to be defended
or indemnified.

 

8.8 Exemption
of Lessor from Liability. Lessor
shall not be liable for
injury or damage to the person or goods, wares, merchandise
or other property of Lessee,
Lessee's
employees, contractors,
invitees, customers,
or any other person in or about the Premises, whether
such damage or injury is caused by or results from fire, steam, electricity, gas,
water or rain, or from
the breakage,
leakage, obstruction
or other defects
of pipes,
fire sprinklers, wires,
appliances,
plumbing, HVAC
or lighting fixtures,
or from any other
cause, whether the said
injury or damage results from conditions arising upon
the Premises
or upon other
portions
of the building
of which the
Premises are a part,
or from other
sources or
places. Lessor
shall not be liable for any damages
arising from any act or
neglect of any other tenant of Lessor
nor from the failure of Lessor to enforce the provisions of any other lease
in the Project. Notwithstanding
Lessor's negligence
or breach of
this Lease,
Lessor shall under
no circumstances
be liable for injury
to Lessee's
business
or for any
loss of income
or profit therefrom.

 

8.9 Failure
to Provide Insurance.
Lessee acknowledges
that any failure on
its part to obtain or maintain the insurance
required herein will expose Lessor to risks and potentially
cause Lessor to incur costs
not contemplated
by this Lease, the extent of which will
be extremely difficult to ascertain.
Accordingly,
for any month or portion thereof that Lessee does
not maintain the required
insurance
and/or does not
provide Lessor
with the required
binders or certificates
evidencing the
existence
of the required
insurance,
the Base
Rent shall
be automatically
increased,
without
any requirement
for notice to
Lessee, by an
amount equal to 10% of the
then existing Base Rent or $100, whichever
is greater. The parties agree that such increase in Base Rent represents
fair and reasonable
compensation for the additional
risk/ costs
that Lessor will incur by reason of Lessee's failure to maintain the
required insurance. Such increase in Base
Rent shall in no event constitute
a waiver of
Lessee's
Default or
Breach with
respect to the failure to maintain
such insurance,
prevent the exercise of any of the other rights and
remedies granted hereunder, nor relieve
Lessee of its obligation to maintain the insurance specified in this Lease.

 

9. Damage
or Destruction.

 

9.1 Definitions.

 

(a) "Premises
Partial Damage"
shall mean damage or destruction
to the improvements
on the Premises,
other than
Lessee Owned
Alterations
and Utility Installations, which
can reasonably
be repaired in 6 months or less from the date
of the damage or destruction. Lessor shall notify
Lessee in writing
within 30 days from
the date of the damage or
destruction as to whether
or not the damage is Partial
or Total.

 

(b) "Premises
Total Destruction"
shall mean damage or destruction
to the Premises, other than Lessee Owned
Alterations and Utility Installations
and Trade
Fixtures, which
cannot reasonably
be repaired
in 6 months
or less from
the date of
the damage
or destruction.
Lessor shall
notify Lessee in writing within
30 days from the date
of the damage or destruction
as to whether or not the damage
is Partial or Total.

 

c) "Insured
Loss" shall mean
damage or destruction
to improvements
on the Premises,
other than Lessee Owned Alterations and Utility Installations
and Trade Fixtures,
which was
caused by an event
required
to be covered
by the insurance
described
in Paragraph 8.3(a),
irrespective
of any deductible amounts or coverage
limits involved.

 

(d) "Replacement
Cost" shall mean
the cost to repair or rebuild the improvements owned
by Lessor at the time of the occurrence
to their condition existing immediately
prior thereto, including demolition,
debris removal and upgrading required by the operation
of Applicable Requirements,
and without
deduction
for depreciation.

 

(e) "Hazardous
Substance Condition"
shall mean the occurrence
or discovery of a condition involving the presence
of, or a contamination
by, a Hazardous Substance
as defined in Paragraph
6.2(a), in, on, or
under the
Premises which
requires repair,
remediation,
or restoration.

 

9.2 Partial
Damage - Insured Loss.
If a Premises
Partial Damage
that is an Insured
Loss occurs,
then Lessor
shall, at Lessor's
expense,
repair such
damage (but not Lessee's Trade Fixtures
or Lessee Owned Alterations and Utility
Installations) as soon as reasonably
possible and
this Lease
shall continue
in full force
and effect;
provided, however,
that Lessee
shall, at Lessor's
election,
make the repair of
any damage or
destruction
the total cost to repair of which is
$10,000 or less, and, in such event,
Lessor shall make any
applicable insurance
proceeds available to Lessee on a reasonable
basis for that purpose.
Notwithstanding the foregoing,
if the required
insurance was not in force
or the insurance
proceeds are
not sufficient to effect
such repair, the
Insuring
Party shall promptly contribute
the shortage in proceeds (except as to
the deductible
which is Lessee's
responsibility)
as and when
required
to complete
said repairs.
In the event,
however,
such shortage
was due
to the fact
that, by reason
of the unique
nature of the
improvements,
full replacement cost insurance
coverage was not commercially
reasonable and available,
Lessor shall have no obligation to pay for the shortage
in insurance proceeds or to fully restore
the unique
aspects
of the Premises
unless Lessee
provides
Lessor with
the funds to
cover same,
or adequate
assurance
thereof,
within 10 days following
receipt
of written
notice of such
shortage
and request
therefor.
If Lessor
receives
said funds or adequate
assurance
thereof
within said 10 day period,
the party responsible
for making the repairs shall complete
them as soon as reasonably possible
and this Lease
shall remain in full force and effect.
If such funds or assurance
are not received,
Lessor
may nevertheless
elect by written notice to
Lessee within
10 days thereafter
to: (i) make such restoration
and repair as is
commercially
reasonable with Lessor paying any shortage
in proceeds, in which
case this Lease shall remain in full force and effect,
or (ii) have this Lease terminate 30 days thereafter.
Lessee shall
not be entitled to reimbursement of any funds contributed
by Lessee to repair any such damage
or destruction. Premises Partial Damage
due to flood or earthquake shall be subject
to Paragraph 9.3, notwithstanding that
there may be some insurance coverage,
but the net proceeds of any such insurance
shall be made available for the repairs if made by either Party.

 

9.3 Partial
Damage - Uninsured Loss. If a Premises
Partial Damage that is not an Insured Loss occurs,
unless caused by a negligent or willful act of Lessee
(in which event Lessee
shall make the repairs
at Lessee's expense),
Lessor
may either: (i) repair such
damage as soon
as reasonably
possible at Lessor's
expense,
in which event this
Lease shall
continue
in full
force and effect, or (ii) terminate this Lease by giving written notice
to Lessee within 30 days after receipt
by Lessor of knowledge
of the occurrence of such
damage. Such
termination shall be effective 60 days
following the date of such notice.
In the event
Lessor elects
to terminate this Lease, Lessee shall
have the right within 10 days after receipt of the termination notice to give
written notice to
Lessor of Lessee's
commitment
to pay for the
repair of such
damage without
reimbursement
from Lessor.
Lessee shall
provide
Lessor
with said funds
or satisfactory
assurance
thereof
within 30 days after making
such commitment. In such event this Lease
shall continue in
full force and effect,
and Lessor shall proceed to make such
repairs as soon as reasonably
possible after
the required funds
are available. If Lessee
does not make
the required
commitment,
this Lease shall
terminate as of
the date specified
in the termination notice.

 

9.4 Total
Destruction. Notwithstanding
any other provision hereof, if a Premises Total Destruction
occurs, this Lease shall terminate 60 days following
such Destruction.
If the damage
or destruction was caused
by the gross
negligence
or willful misconduct
of Lessee, Lessor
shall have the right
to recover Lessor's damages
from Lessee,
except as provided in
Paragraph 8.6.

 

9.5 Damage
Near End of Term. If
at anytime
during the last
6 months of
this Lease
there is
damage for which
the cost to
repair exceeds
one month's
Base Rent, whether
or not an
Insured Loss,
Lessor may
terminate
this Lease effective
60 days following
the date
of occurrence
of such
damage by giving a written
termination notice to Lessee within
30 days after the date of occurrence
of such damage.
Notwithstanding
the foregoing,
if Lessee at that time
has an exercisable
option
to extend
this Lease
or to purchase
the Premises,
then Lessee
may preserve
this Lease by, (a)
exercising such
option
and (b) providing
Lessor with any
shortage
in insurance
proceeds
(or adequate
assurance thereof)
needed to
make the repairs
on or before
the earlier of (i) the
date which is 10 days after Lessee's
receipt of Lessor's written notice purporting
to terminate this Lease,
or (ii) the day prior to the date upon which
such option expires. If
Lessee duly
exercises such
option during
such period
and provides Lessor
with funds
(or adequate
assurance
thereof)
to cover any shortage
in insurance
proceeds,
Lessor shall,
at Lessor's
commercially reasonable expense,
repair such damage as soon as reasonably
possible and this Lease shall continue
in full force and effect.
If Lessee fails to
exercise such
option
and provide
such funds
or assurance
during such
period, then this
Lease shall terminate
on the date
specified
in the termination
notice and Lessee's
option
shall be extinguished.

 

9.6 Abatement
of Rent; Lessee's Remedies.

 

(a) Abatement.
In the event
of Premises Partial
Damage or Premises
Total Destruction
or a Hazardous Substance
Condition
for which Lessee
is not responsible
under this
Lease, the Rent
payable by Lessee
for the period
required for
the repair, remediation
or restoration
of such damage
shall be abated in proportion
to the degree
to which Lessee's
use of the Premises
is impaired,
but not to exceed
the proceeds
received from
the Rental
Value insurance.
All other obligations of Lessee
hereunder shall be performed
by Lessee, and Lessor shall have no liability
for any such damage, destruction,
remediation,
repair or restoration
except as provided
herein.

 

(b) Remedies.
If Lessor shall be obligated to repair or restore the Premises and
does not commence,
in a substantial
and meaningful way,
such repair
or restoration within 90 days after such obligation shall accrue,
Lessee may, at any time prior to the commencement
of such repair or restoration, give written
notice to Lessor and to any
Lenders of which Lessee
has actual notice, of Lessee's
election to terminate this Lease on a date
not less
than 60 days following
the giving of
such notice.
If Lessee
gives such notice
and such repair
or restoration
is not commenced
within 30 days thereafter,
this Lease shall terminate as of the date
specified in said
notice. If the repair or restoration
is commenced
within such 30 days, this Lease shall
continue in full force
and effect. 'Commence'
shall mean either the
unconditional
authorization
of the preparation
of the required
plans, or the
beginning of
the actual
work on the
Premises,
whichever first
occurs.

 

9.7 Termination;
Advance Payments. Upon
termination
of this Lease
pursuant to
Paragraph 6.2(g) or
Paragraph 9, an equitable
adjustment
shall be made concerning
advance Base
Rent and any
other advance
payments
made by Lessee to
Lessor. Lessor
shall, in addition,
return
to Lessee so
much of Lessee's
Security
Deposit as
has not been,
or is not
then required
to be, used
by Lessor.

 

9.8 Waive
Statutes. Lessor
and Lessee
agree that the
terms of this
Lease shall govern
the effect of
any damage to
or destruction
of the Premises
with respect to the termination of this Lease and
hereby waive the provisions of any present
or future statute
to the extent inconsistent
herewith.

 

10. Real
Property Taxes.

 

10.1 Definition.
As used herein, the
term "Real Property Taxes" shall include
any form of assessment;
real estate, general, special,
ordinary or extraordinary,
or rental levy or tax (other than inheritance,
personal income or estate taxes); improvement
bond; and/or license fee imposed upon
or levied against any legal or equitable
interest of Lessor in the Premises
or the Project, Lessor's
right to other income therefrom,
and/or
Lessor's
business
of leasing, by any
authority having the direct or indirect power
to tax and where the funds
are generated
with reference
to the Building
address
and where the
proceeds
so generated
are to be applied by the city, county or other local taxing authority
of a jurisdiction within which the Premises
are located. Real Property Taxes shall
also include any tax,
fee, levy, assessment
or charge, or
any increase therein:
(i) imposed by reason of
events occurring
during the
term of this
Lease, including but not limited to, a
change in the
ownership
of the Premises,
and (ii) levied or
assessed
on machinery
or equipment
provided
by Lessor to
Lessee
pursuant to this Lease.

 

10.2 Payment
of Taxes. Lessee shall have no obligation to pay any portion of Real Property Tax assessed on or related to the Premises

 

10.3 Joint
Assessment. If the Premises are not
separately assessed,
Lessee's liability shall be an equitable
proportion of the Real Property Taxes for all of the
land and improvements
included
within the tax
parcel assessed,
such proportion
to be conclusively
determined
by Lessor from
the respective
valuations assigned in the assessor's
work sheets or such other information as may
be reasonably available.

 

10.4 Personal
Property Taxes.
Lessee shall pay, prior
to delinquency,
all taxes assessed against
and levied
upon Lessee Owned Alterations, Utility Installations,
Trade Fixtures,
furnishings,
equipment
and all personal
property of
Lessee.
When possible,
Lessee shall
cause its Lessee
Owned Alterations and Utility Installations,
Trade Fixtures, furnishings,
equipment and
all other personal
property to
be assessed
and billed separately
from the real property
of Lessor. If any of Lessee's
said property
shall be assessed
with Lessor's
real property, Lessee
shall pay Lessor the taxes
attributable to Lessee's property within 10 days after
receipt of a written statement setting
forth the taxes applicable to Lessee's
property.

 

11. Utilities
and Services. Lessor
shall pay for all
water, gas,
heat, light,
power, telephone,
trash disposal
and other utilities
and services
supplied to
the Premises, together with any
taxes thereon.
There shall
be no abatement of rent and Lessor shall not be liable
in any respect whatsoever
for the inadequacy,
stoppage, interruption or discontinuance
of any utility or service
due to riot,
strike, labor
dispute,
breakdown,
accident,
repair or
other cause beyond
Lessor's reasonable control
or in cooperation with governmental
request or directions.

 

12. Assignment
and Subletting.

 

12.1 Lessor's
Consent Required.

 

(a) Lessee
shall not voluntarily or by operation of law assign, transfer,
mortgage
or encumber
(collectively, "assign
or assignment") or sublet
all or any part of Lessee's
interest in this Lease or in the Premises
without Lessor's prior written consent.

 

(b) Unless
Lessee is a corporation and its stock
is publicly traded on a national stock exchange,
a change in the control
of Lessee
shall constitute
an assignment
requiring consent.
The transfer,
on a cumulative
basis, of 25% or
more of the
voting control
of Lessee shall
constitute
a change in control
for this
purpose.

 

(c) The
involvement of
Lessee or
its assets in any
transaction, or series
of transactions
(by way of merger,
sale, acquisition,
financing, transfer,
leveraged buy-out
or otherwise),
whether or
not a formal assignment
or hypothecation
of this
Lease or Lessee's
assets
occurs,
which results or will result in a reduction
of the Net
Worth of Lessee
by an amount greater
than 25% of such
Net Worth as it was represented
at the time of the execution
of this
Lease or
at the time of
the most recent
assignment
to which Lessor
has consented,
or as it exists
immediately
prior to said transaction
or transactions
constituting such
reduction,
whichever was or
is greater, shall be considered
an assignment
of this Lease
to which Lessor
may withhold its
consent.
"Net Worth
of Lessee"
shall mean the
net worth
of Lessee
(excluding any
guarantors)
established
under generally
accepted accounting
principles.

 

(d) An
assignment or subletting without consent
shall, at Lessor's option, be a Default curable
after notice per Paragraph 13.1(c),
or a noncurable
Breach without the necessity of any notice
and grace period. If Lessor elects to
treat such unapproved assignment
or subletting as a noncurable
Breach, Lessor
may either: (i) terminate this Lease,
or (ii) upon 30 days written notice, increase the monthly
Base Rent to 110% of the Base Rent then in effect. Further,
in the event of
such Breach and
rental adjustment,
(i) the purchase
price of any option
to purchase
the Premises
held by Lessee
shall be subject to
similar adjustment to 110% of
the price previously
in effect, and
(ii) all fixed and non-fixed
rental adjustments
scheduled
during the remainder
of the Lease
term shall be increased
to 110% of the scheduled
adjusted
rent.

 

(e) Lessee's
remedy for
any breach
of Paragraph 12.1 by Lessor
shall be limited to
compensatory
damages and/or
injunctive
relief.

 

12.2 Terms
and Conditions Applicable to Assignment
and Subletting.

 

(a) Regardless
of Lessor's
consent,
no assignment or
subletting shall: (I)
be effective
without the
express written
assumption
by such
assignee or
sublessee
of the obligations of Lessee under this
Lease, (ii) release Lessee of any obligations hereunder,
or (iii) alter
the primary liability of Lessee
for the payment of Rent or for the performance
of any other obligations to be performed by Lessee.

 

(b) Lessor
may accept Rent or
performance
of Lessee's
obligations
from any person other than Lessee
pending approval or disapproval
of an assignment.
Neither a delay in the
approval or disapproval
of such assignment
nor the acceptance
of Rent or
performance
shall constitute a waiver
or estoppel of Lessor's
right to exercise
its remedies
for Lessee's
Default or Breach.

 

(c) Lessor's
consent to any assignment
or subletting shall not constitute
a consent to any subsequent
assignment or subletting.

 

(d) In
the event of
any Default or
Breach by Lessee,
Lessor may proceed
directly against
Lessee,
any Guarantors or
anyone else
responsible
for the performance
of Lessee's
obligations
under this Lease,
including any assignee
or sublessee,
without first exhausting
Lessor's remedies
against any other person or
entity responsible therefor to Lessor, or any security held by Lessor.

 

(e) Each
request for consent to an assignment or
subletting shall
be in writing, accompanied
by information relevant to Lessor's
determination as to the financial and operational
responsibility
and appropriateness
of the proposed
assignee or
sublessee,
including
but not limited to the
intended
use and/or
required
modification of the Premises, if any, together
with a fee of $500 as consideration for Lessor's
considering
and processing said request.
Lessee agrees
to provide
Lessor with such other or additional information
and/or documentation
as may be reasonably
requested. (See
also Paragraph 36)

 

(f) Any
assignee of,
or sublessee
under, this
Lease shall,
by reason of
accepting such
assignment
or entering
into such
sublease,
be deemed
to have assumed
and agreed to
conform and
comply with each
and every term,
covenant,
condition
and obligation
herein to be observed
or performed by Lessee
during the term of said
assignment
or sublease,
other than
such obligations
as are contrary
to or inconsistent
with provisions
of an assignment
or sublease
to which
Lessor has specifically
consented to in writing.

 

(g) Lessor's
consent to
any assignment
or subletting
shall not transfer
to the assignee
or sublessee
any Option
granted to
the original
Lessee
by this Lease
unless such transfer
is specifically consented
to by Lessor
in writing.
(See Paragraph
39.2)

 

12.3 Additional
Terms and Conditions Applicable to Subletting.
The following
terms and conditions
shall apply to any subletting
by Lessee of
all or any part of the Premises and shall
be deemed included in all subleases
under this Lease whether
or not expressly incorporated
therein:

 

(a) Lessee
hereby assigns
and transfers
to Lessor all of Lessee's
interest in
all Rent payable on any sublease,
and Lessor may
collect such Rent
and apply same toward
Lessee's obligations
under this Lease; provided, however,
that until a Breach shall occur in the performance
of Lessee's
obligations,
Lessee may
collect said Rent.
In the event
that the amount
collected by Lessor
exceeds Lessee's
obligations
any such excess
shall be refunded
to Lessee. Lessor shall not, by reason
of the foregoing
or any assignment
of such sublease,
nor by reason
of the collection
of Rent, be deemed
liable to the sublessee
for any failure of Lessee
to perform and
comply with any of
Lessee's obligations
to such sublessee.
Lessee hereby
irrevocably
authorizes and
directs any
such sublessee,
upon receipt
of a written notice from
Lessor stating
that a Breach exists in the performance
of Lessee's obligations under this Lease,
to pay to Lessor all Rent due and to become
due under the
sublease. Sublessee
shall rely upon any
such notice
from Lessor
and shall pay all Rents to
Lessor without
any obligation
or right to
inquire
as to whether
such Breach
exists, notwithstanding
any claim from Lessee
to the contrary.

 

(b) In
the event of
a Breach by Lessee,
Lessor
may, at its option,
require sublessee
to attorn to
Lessor, in which
event Lessor
shall undertake
the obligations
of the sublessor
under such
sublease
from the
time of the
exercise of
said option
to the expiration
of such
sublease;
provided, however,
Lessor shall
not be liable for any prepaid
rents or security deposit
paid by such sublessee
to such sublessor
or for any prior Defaults or Breaches
of such sublessor.

 

(c) Any
matter requiring the
consent of
the sublessor
under a sublease
shall also require
the consent
of Lessor.

 

(d) No
sublessee
shall further assign
or sublet all or
any part of the
Premises without
Lessor's
prior written
consent.

 

(e)
Lessor shall
deliver a copy of any notice of Default
or Breach by Lessee to
the sublessee,
who shall have
the right to
cure the Default
of Lessee
within the
grace period,
if any, specified
in such
notice. The
sublessee
shall have a right of reimbursement
and offset
from and against
Lessee for any
such Defaults
cured by
the sublessee.

 

13. Default; Breach; Remedies.

 

13.1 Default; Breach.
A "Default" is defined
as a failure by the Lessee to comply with or perform
any of the
terms, covenants,
conditions or
Rules and Regulations under
this Lease. A "Breach" is defined
as the occurrence of one or more of the
following Defaults, and the
failure of Lessee
to cure such
Default within
any applicable grace
period:

 

(a) The
abandonment
of the Premises;
or the vacating
of the Premises
without providing a commercially
reasonable level
of security, or where
the coverage
of the property
insurance
described in
Paragraph 8.3 is jeopardized
as a result thereof,
or without
providing reasonable
assurances to minimize potential vandalism.

 

(b) The failure of Lessee to make
any payment of Rent or any Security
Deposit required to
be made by Lessee hereunder,
whether to Lessor
or to a third party, when due, to provide reasonable
evidence of insurance or surety bond,
or to fulfill any obligation under this
Lease which endangers
or threatens
life or property,
where such
failure continues
for a period
of 3 business
days following written
notice to
Lessee.

 

(c) The failure by Lessee to provide
(i) reasonable written evidence of compliance
with Applicable Requirements, (ii) the service contracts, (iii) the rescission of
an unauthorized assignment or subletting,
(iv) an Estoppel Certificate,
(v) a requested subordination, (vi) evidence
concerning
any guaranty
and/or Guarantor, (vii) any document
requested under Paragraph 42, (viii) material safety data
sheets (MSDS),
or (ix) any other documentation
or information which Lessor may reasonably require of Lessee
under the
terms of this Lease,
where any such failure
continues for a period of 10 days
following written notice
to Lessee.

 

(d) A Default
by Lessee as to the terms,
covenants,
conditions or provisions of this
Lease, or of the rules
adopted under
Paragraph
40 hereof, other than
those described in
subparagraphs 13.1(a), (b) or
(c), above, where
such Default continues
for a period of 30 days after written
notice; provided,
however, that if the
nature of
Lessee's Default is such that more than 30
days are reasonably required for its
cure, then it
shall not be deemed to
be a Breach if
Lessee commences such
cure within said 30
day period and thereafter
diligently
prosecutes
such cure to
completion. 

 

(e) The
occurrence
of any of
the following
events: (i) the making
of any general
arrangement
or assignment
for the benefit
of creditors;
(ii) becoming a "debtor"
as defined
in 11 U.S.C.
§101 or
any successor
statute thereto
(unless,
in the case of
a petition filed
against Lessee,
the same is
dismissed
within 60
days); (iii) the appointment of a trustee or receiver
to take possession of substantially
all of Lessee's assets located at the
Premises or
of Lessee's
interest
in this
Lease, where
possession is not
restored to
Lessee within
30 days; or (iv) the attachment,
execution
or other judicial seizure
of substantially all of Lessee's assets
located at the
Premises or
of Lessee's
interest in this
Lease, where
such seizure
is not discharged
within 30 days;
provided, however,
in the event that any
provision of this subparagraph (e) is contrary
to any applicable law, such provision shall
be of no force or effect, and
not affect the validity of the remaining
provisions.

 

(f) The
discovery that
any financial statement
of Lessee
or of any Guarantor
given to Lessor was materially false.

 

(g)
If the performance
of Lessee's
obligations
under this
Lease is guaranteed:
(i) the death of a Guarantor, (ii) the
termination of a Guarantor's liability
with respect to this Lease other than
in accordance with
the terms of such guaranty,
(iii) a Guarantor's becoming
insolvent or the subject of a bankruptcy
filing, (iv) a Guarantor's refusal
to honor the guaranty,
or (v) a Guarantor's breach
of its guaranty obligation on an anticipatory
basis, and Lessee's
failure, within
60 days following
written notice of
any such
event, to
provide written alternative
assurance
or security,
which, when coupled
with the then
existing resources
of Lessee, equals
or exceeds
the combined
financial resources
of Lessee
and the Guarantors
that existed at the
time of execution
of this Lease.

 

13.2 Remedies. If
Lessee fails to perform any of its
affirmative duties or obligations, within 10 days after written notice
(or in case of an emergency,
without notice), Lessor may, at its option, perform such duty or obligation on Lessee's
behalf, including
but not limited to the obtaining
of reasonably required bonds, insurance
policies, or governmental licenses,
permits or approvals. Lessee shall
pay to Lessor an amount
equal to 115% of the costs
and expenses
incurred by Lessor in such
performance upon
receipt of an invoice
therefor. In the event of a Breach,
Lessor may, with or without
further notice or
demand, and
without limiting Lessor in the
exercise of any right or remedy which
Lessor may have
by reason of such
Breach:

 

(a) Terminate
Lessee's
right to possession
of the Premises
by any lawful
means, in which
case this
Lease shall terminate
and Lessee shall
immediately surrender
possession
to Lessor. In
such event Lessor
shall be entitled
to recover
from Lessee:
(i) the unpaid Rent
which had been
earned at
the time of
termination; (ii) the
worth at the
time of award
of the amount
by which the unpaid
rent which would
have been earned
after termination
until the
time of award
exceeds the
amount
of such rental
loss that
the Lessee
proves could have
been reasonably avoided; (iii) the worth
at the time of award of
the amount
by which the
unpaid rent for
the balance
of the term
after the
time of
award exceeds
the amount of
such rental
loss that the
Lessee
proves could be
reasonably avoided;
and (iv) any other amount
necessary
to compensate
Lessor for
all the detriment proximately caused
by the Lessee's failure to perform its
obligations
under this
Lease
or which in the ordinary course of things would be likely to result
therefrom, including but not limited to
the cost of recovering possession
of the Premises,
expenses of reletting, including necessary
renovation and alteration of the Premises,
reasonable attorneys' fees,
and that portion of any leasing
commission paid by Lessor in
connection
with this
Lease applicable
to the unexpired
term of this Lease. The worth
at the time of award of the amount
referred to in provision (iii) of the immediately preceding
sentence
shall be computed
by discounting such
amount at the discount
rate of the
Federal Reserve
Bank of the
District within
which the
Premises are located
at the time of
award plus one percent.
Efforts by Lessor
to mitigate
damages caused
by Lessee's
Breach of
this Lease shall not waive Lessor's
right to recover damages under Paragraph 12.
If termination of this Lease
is obtained
through the
provisional remedy
of unlawful
detainer, Lessor
shall have
the right to recover
in such proceeding
any unpaid Rent
and damages as
are recoverable
therein, or
Lessor
may reserve the
right to recover all or any
part thereof in a separate
suit. If
a notice and grace period
required under
Paragraph 13.1 was not
previously given,
a notice to pay rent or
quit, or to perform or quit given to Lessee
under the unlawful
detainer statute
shall also constitute
the notice
required
by Paragraph 13.1.
In such case,
the applicable
grace period
required by
Paragraph 13.1 and the
unlawful detainer
statute
shall run concurrently,
and the failure of
Lessee to
cure the Default
within the greater
of the two such grace
periods shall constitute both an unlawful
detainer and a Breach of this
Lease entitling Lessor to the remedies provided for in this Lease
and/or by said statute.

 

(b) Continue
the Lease and
Lessee's
right to possession
and recover the
Rent as it becomes
due, in which
event Lessee
may sublet
or assign,
subject only to reasonable
limitations. Acts of maintenance, efforts to relet, and/or the appointment
of a receiver to protect the Lessor's
interests,
shall not constitute
a termination of the Lessee's right to possession.

 

(c) Pursue
any other remedy
now or hereafter
available under the
laws or judicial
decisions of
the state
wherein the
Premises are
located. The
expiration
or termination of this Lease and/or the
termination of Lessee's right to possession
shall not relieve Lessee from
liability under any indemnity provisions
of this Lease as to matters occurring
or accruing
during the term
hereof or by reason
of Lessee's occupancy of the Premises.

 

13.3 Inducement
Recapture. Any agreement
for free or abated rent
or other charges, or for the giving or
paying by Lessor to or for
Lessee of any cash or other
bonus, inducement
or consideration
for Lessee's
entering into
this Lease,
all of which concessions
are hereinafter
referred
to as "Inducement Provisions,"
shall be deemed
conditioned upon Lessee's full
and faithful performance of
all of the
terms, covenants
and conditions
of this
Lease.
Upon Breach
of this Lease by Lessee, any such Inducement
Provision shall automatically be deemed
deleted from
this Lease
and of no further
force or
effect, and
any rent, other
charge, bonus,
inducement
or consideration
theretofore
abated, given
or paid by Lessor
under such
an inducement
Provision
shall be immediately
due and payable
by Lessee
to Lessor,
notwithstanding
any subsequent
cure of said
Breach by Lessee.
The acceptance
by Lessor of
rent or the
cure of the Breach which initiated the operation
of this paragraph
shall not be deemed
a waiver by Lessor of the provisions of
this paragraph unless specifically so stated
in writing
by Lessor at
the time of such
acceptance.

 

13.4 Late Charges.
Lessee hereby
acknowledges that
late payment by Lessee of Rent
will cause Lessor to
incur costs
not contemplated
by this Lease,
the exact amount of which will be extremely difficult to ascertain. Such
costs include, but are
not limited to,
processing and accounting charges,
and late charges which
may be imposed upon
Lessor by any Lender.
Accordingly, if any
Rent shall not be
received by Lessor
within 5 days after such amount
shall be due, then,
without any requirement for
notice to Lessee, Lessee
shall immediately
pay to Lessor
a one-time late charge equal to 10% of
each such overdue amount or $100, whichever is
greater. The Parties hereby agree that
such late charge represents a fair and
reasonable estimate of the costs
Lessor will incur by reason of such
late payment. Acceptance of
such late charge
by Lessor shall in
no event constitute a waiver of Lessee's
Default or Breach with respect to
such overdue
amount, nor
prevent the exercise of
any of the other
rights and remedies granted hereunder. In the event that
a late charge is payable hereunder, whether or
not collected, for 3
consecutive installments of
Base Rent, then
notwithstanding
any provision of this Lease to the
contrary,
Base Rent shall, at Lessor's option, become
due and payable quarterly
in advance.

 

13.5 Interest. Any
monetary payment due Lessor
hereunder, other than late charges,
not received by Lessor,
when due as to scheduled
payments (such as Base Rent)
or within 30 days following the date on which it was due
for non-scheduled payment, shall
bear interest from the date
when due, as to scheduled
payments, or the
31st day after it was due as to
non-scheduled payments. The
interest ("Interest")
charged shall
be computed
at the rate of
10% per annum but shall not exceed the maximum
rate allowed by law. Interest is
payable in addition to the potential
late charge provided
for in Paragraph
13.4.

 

13.6 Breach by
Lessor.

 

(a) Notice
of Breach. Lessor shall not be
deemed in breach
of this Lease unless Lessor fails within
a reasonable time to perform
an obligation required to
be performed by
Lessor. For purposes of this
Paragraph,
a reasonable time
shall in no event be less than 30
days after receipt
by Lessor, and
any Lender whose
name and address
shall have been furnished Lessee in writing for such
purpose, of written
notice specifying wherein such obligation
of Lessor has not been
performed; provided, however, that if
the nature of Lessor's obligation
is such that more than 30 days
are reasonably required for its
performance, then Lessor shall
not be in breach if performance is commenced
within such 30 day period and thereafter diligently pursued to completion.

 

(b) Performance
by Lessee on Behalf of Lessor.
In the event
that neither Lessor
nor Lender
cures said breach
within 30
days after
receipt
of said notice,
or if having
commenced
said cure
they do not diligently
pursue it
to completion,
then Lessee
may elect to cure
said breach
at Lessee's
expense and
offset from Rent
the actual and
reasonable
cost to perform such cure,
provided however,
that such offset
shall not exceed an amount
equal to the greater of one month's
Base Rent or the
Security Deposit,
reserving Lessee's
right to seek
reimbursement
from Lessor.
Lessee
shall document the
cost of said
cure and supply
said documentation
to Lessor.

 

14. Condemnation.
If the Premises
or any portion
thereof
are taken
under the power
of eminent
domain or
sold under
the threat
of the exercise
of said power
(collectively "Condemnation"),
this Lease shall terminate as to the part
taken as of the date the condemning authority
takes title or possession,
whichever first
occurs. If more
than 10% of the
Building, or
more than
25% of that portion of the Premises not occupied
by any building, is taken by Condemnation,
Lessee
may, at Lessee's
option,
to be exercised
in writing within 10 days after
Lessor shall have given
Lessee written
notice of such
taking (or
in the absence
of such notice,
within 10 days after the condemning
authority shall have taken possession)
terminate this Lease as of the date the condemning
authority
takes such possession.
If Lessee does not terminate
this Lease in accordance with the foregoing,
this Lease shall remain in full force and effect
as to the
portion of the
Premises remaining,
except that
the Base Rent
shall be
reduced
in proportion
to the
reduction in utility of the Premises caused
by such Condemnation.
Condemnation
awards
and/or payments
shall be the property
of Lessor,
whether such
award shall be made as compensation
for diminution
in value of the leasehold,
the value of
the part taken,
or for severance
damages; provided,
however, that Lessee
shall be entitled to any compensation
for Lessee's
relocation expenses,
loss of business
goodwill and/or
Trade Fixtures, without
regard to whether or not this Lease is
terminated pursuant
to the provisions of this Paragraph. All Alterations
and Utility Installations made to
the Premises
by Lessee,
for purposes
of Condemnation
only, shall be considered
the property
of the Lessee
and Lessee
shall be entitled
to any and all compensation which is payable
therefor. In the event that this Lease
is not terminated
by reason of the Condemnation,
Lessor shall repair any
damage to the Premises
caused by
such Condemnation.

 

15. Brokerage
Fees.

 

15.1 Additional
Commission. In
addition to
the payments
owed pursuant
to Paragraph
1.9 above,
and unless
Lessor
and the Brokers
otherwise agree
in writing, Lessor
agrees that:
(a) if Lessee exercises
any Option, (b)
if Lessee acquires
any rights to
the Premises
or other premises
owned by Lessor
and located within
the same Project,
if any,
within which
the Premises
is located,
(c) if Lessee remains
in possession
of the Premises,
with the consent
of Lessor,
after the expiration of this Lease, or
(d) if Base Rent is increased, whether
by agreement
or operation
of an escalation
clause herein,
then, Lessor shall pay Brokers a fee in
accordance with
the schedule of the Brokers
in effect at the time of the execution of this Lease.

 

15.2 Assumption
of Obligations.
Any buyer or
transferee
of Lessor's
interest in
this Lease shall be
deemed to
have assumed
Lessor's obligation
hereunder.
Brokers shall be third
party beneficiaries
of the provisions
of Paragraphs
1.9, 15, 22 and 31. If Lessor
fails to pay to Brokers any amounts due
as and for brokerage
fees pertaining
to this Lease when
due, then
such amounts
shall accrue Interest.
In addition,
if Lessor fails to pay any amounts
to Lessee's Broker when
due, Lessee's
Broker may send written
notice to
Lessor and Lessee
of such failure
and if Lessor fails to
pay such amounts within 10 days after said
notice, Lessee
shall pay said
monies to
its Broker
and offset
such amounts
against Rent.
In addition,
Lessee's
Broker shall
be deemed
to be a third party
beneficiary of any commission
agreement entered
into by and/or
between Lessor
and Lessor's
Broker for
the limited purpose
of collecting
any brokerage
fee owed.

 

15.3
Representations and Indemnities
of Broker Relationships.
Lessee and
Lessor each represent
and warrant
to the other
that it
has had no dealings with any person,
firm, broker or
finder (other than the Brokers,
if any) in connection
with this Lease, and that no one
other than said
named Brokers
is entitled to any commission
or finder's fee
in connection herewith. Lessee
and Lessor
do each hereby
agree to indemnify,
protect, defend
and hold the
other harmless from and against liability
for compensation or charges
which may be claimed by any such
unnamed broker, finder or other
similar party by reason of any
dealings or actions of the indemnifying
Party, including any costs, expenses,
attorneys' fees
reasonably incurred
with respect
thereto.

 

16. Estoppel
Certificates.

 

(a) Each
Party (as "Responding Party")
shall within 10 days after written notice from the other Party (the "Requesting
Party") execute, acknowledge
and deliver to the Requesting Party a
statement in writing in form similar
to the then most current "Estoppel Certificate"
form published
by the American
Industrial
Real Estate
Association,
plus such
additional
information,
confirmation and/or
statements as may
be reasonably requested
by the Requesting
Party.

 

(b) If
the Responding
Party shall fail
to execute or
deliver the Estoppel
Certificate within
such 10 day period,
the Requesting
Party may execute an
Estoppel Certificate
stating
that: (i) the
Lease is
in full force and effect
without
modification
except as may be represented
by the Requesting
Party, (ii) there
are no uncured
defaults in
the Requesting
Party's performance, and
(iii) if Lessor is the Requesting Party, not
more than one month's rent has been
paid in advance.
Prospective
purchasers
and encumbrancers
may rely upon the
Requesting
Party's Estoppel
Certificate, and the
Responding Party
shall be estopped
from denying
the truth
of the facts
contained
in said Certificate.

 

(c)
If Lessor
desires to
finance,
refinance,
or sell the Premises,
or any part thereof,
Lessee and all Guarantors shall deliver
to any potential lender or purchaser
designated
by Lessor
such financial
statements as
may be reasonably
required by such
lender or
purchaser,
including
but not limited to Lessee's
financial statements
for the past 3 years.
All such financial statements
shall be received
by Lessor and
such lender
or purchaser
in confidence
and shall
be used
only for
the purposes
herein set
forth.

 

17. Definition
of Lessor. The
term "Lessor"
as used herein shall mean
the owner or owners at the time in question
of the fee title to the Premises, or, if
this is a sublease, of
the Lessee's
interest in the prior
lease. In the
event of a transfer
of Lessor's
title or
interest in the
Premises or this Lease, Lessor shall deliver
to the transferee
or assignee
(in cash or by credit)
any unused
Security Deposit
held by Lessor. Except
as provided in Paragraph
15, upon such transfer
or assignment
and delivery of
the Security
Deposit, as aforesaid, the prior Lessor shall be relieved
of all liability with respect to
the obligations
and/or covenants
under this
Lease thereafter
to be performed
by the Lessor.
Subject to the foregoing, the obligations
and/or covenants in this Lease to be performed
by the Lessor
shall be binding only upon
the Lessor as hereinabove
defined.

 

18. Severability.
The invalidity of any provision of this
Lease, as determined by a court
of competent jurisdiction, shall in no way
affect the validity of any other provision hereof.

 

19. Days. Unless otherwise
specifically indicated to the contrary,
the word
'days' as used in this
Lease shall mean
and refer to calendar days.

 

20. Limitation
on Liability. The obligations
of Lessor under this Lease shall no constitute personal obligations of Lessor or its partners,
members, directors,
officers or shareholders, and Lessee
shall look to the Premises, and to no other
assets of Lessor, for the satisfaction of any liability of Lessor
with respect to this Lease,
and shall no
seek recourse
against Lessor's
partners, members,
directors, officers
or shareholders,
or any of their
personal
assets for
such satisfaction.

 

21. Time of Essence. Time
is of the essence with respect to the performance
of all obligations to be performed or observed by the
Parties under this Lease.

 

22. No
Prior or Other Agreements; Broker
Disclaimer. This Lease contains
all agreements between the Parties with respect
to any matter mentioned herein,
and no other prior or
contemporaneous
agreement
or understanding
shall be effective.
Lessor
and Lessee
each represents
and warrants
to the Brokers that it has made, and is
relying solely upon, its own investigation
as to the nature, quality, character and financial
responsibility of the other Party to this Lease and as to the use, nature, quality and character of the Premises.
Brokers have no responsibility
with respect thereto
or with respect to any default or breach
hereof
by either Party. The liability (including court costs and attorneys' fees),
of any Broker with respect to negotiation, execution, delivery
or performance
by either Lessor
or Lessee
under this
Lease or
any amendment
or modification
hereto shall
be limited to an amount
up to the
fee received
by such Broker
pursuant to
this Lease; provided, however,
that the foregoing limitation on each Broker's
liability shall not be applicable to any gross negligence
or willful misconduct
of such Broker.

 

23. Notices.

 

23.1 Notice
Requirements.
All notices required
or permitted by this
Lease or applicable law shall be in writing and may be delivered in person (by hand
or by courier)
or may be sent by regular,
certified or
registered
mail or U.S. Postal
Service Express
Mail, with postage
prepaid,
or by facsimile transmission,
and shall be deemed
sufficiently
given if served in a manner specified
in this Paragraph
23. The addresses
noted adjacent
to a Party's signature
on this Lease shall be that Party's
address for delivery or mailing of notices.
Either Party may by written notice
to the other specify a different address
for notice,
except that upon
Lessee's taking
possession
of the Premises,
the Premises
shall constitute
Lessee's address
for notice. A copy
of all notices
to Lessor shall
be concurrently
transmitted to
such party or
parties at such
addresses
as Lessor may from
time to time
hereafter designate
in writing.

 

23.2 Date
of Notice. Any notice sent
by registered or
certified mail, return receipt
requested,
shall be deemed given on the
date of delivery shown on
the receipt card, or if no delivery date is shown, the postmark
thereon. If
sent by regular mail the notice shall
be deemed given 48 hours after the
same is addressed
as required herein
and mailed with postage
prepaid. Notices
delivered by United
States Express
Mail or overnight
courier that guarantee
next day delivery shall be deemed
given 24 hours after
delivery of the
same to the Postal Service or
courier. Notices transmitted by
facsimile transmission
or similar means shall be
deemed delivered
upon telephone
confirmation of receipt (confirmation
report from fax machine is sufficient),
provided a copy
is also delivered via delivery
or mail. If notice is received on
a Saturday, Sunday or legal holiday,
it shall be deemed received on the
next business day.

 

24. Waivers. No waiver
by Lessor of the Default or Breach of any
term, covenant
or condition hereof by
Lessee,
shall be deemed a waiver of any other
term, covenant
or condition
hereof,
or of any subsequent
Default or Breach
by Lessee of
the same or
of any other
term, covenant
or condition hereof.
Lessor's consent
to, or approval of, any act shall not be deemed
to render unnecessary
the obtaining
of Lessor's
consent to,
or approval
of, any subsequent
or similar act
by Lessee, or be construed
as the basis of an estoppel to enforce
the provision or provisions
of this Lease requiring
such consent.
The acceptance
of Rent by Lessor
shall not be a waiver of
any Default or
Breach by Lessee.
Any payment
by Lessee may be accepted
by Lessor on
account of moneys
or damages
due Lessor,
notwithstanding
any qualifying
statements
or conditions
made by Lessee
in connection
therewith,
which such
statements
and/or conditions
shall be
of no force or
effect whatsoever
unless specifically agreed
to in writing
by Lessor at or
before the time
of deposit
of such payment.

 

25. Disclosures Regarding
The Nature of a Real Estate
Agency Relationship.

 

(a)
When entering into a discussion
with a real estate agent regarding a real estate transaction,
a Lessor or Lessee should
from the outset understand
what type of agency relationship or representation
it has with the agent
or agents
in the transaction.
Lessor
and Lessee
acknowledge
being advised
by the Brokers
in this transaction, as follows:

 

(i) Lessor's
Agent. A Lessor's agent
under a listing agreement
with the Lessor
acts as the agent for the Lessor only. A Lessor's
agent or subagent has
the following affirmative obligations: To the Lessor: A fiduciary
duty of
utmost care,
integrity,
honesty,
and loyalty
in dealings with the Lessor.
To the Lessee
and the Lessor:
a. Diligent exercise
of reasonable
skills and care
in performance
of the agent's
duties. b. A duty
of honest
and fair
dealing and good
faith. c.
A duty to
disclose all facts
known to
the agent materially affecting
the value or desirability of the property
that are not known to, or within the diligent
attention and observation of,
the Parties. An agent is not
obligated to reveal to
either Party any confidential
information obtained from
the other Party which
does not involve
the affirmative duties
set forth above.

 

(ii) Lessee's
Agent.
An agent can agree to act as agent for the Lessee
only. In these situations, the agent is not the Lessor's
agent, even if by agreement
the agent may receive
compensation
for services
rendered,
either in full or in part from the
Lessor. An agent
acting only for a Lessee
has the following affirmative obligations.
To the Lessee:
A fiduciary duty of
utmost care,
integrity,
honesty, and
loyalty in dealings
with the Lessee.
To the Lessee
and the Lessor:
a. Diligent exercise of reasonable skills
and care in performance
of the agent's
duties. b.
A duty of honest
and fair dealing and good faith. c. A duty
to disclose all facts known
to the agent materially affecting the value or desirability
of the property that are not known to, or
within the diligent attention and observation
of, the Parties. An agent is not obligated to reveal to either Party any confidential
information obtained from the other Party
which does not
involve the affirmative
duties set forth
above.

 

(iii)
Agent Representing
Both Lessor
and Lessee. A real estate agent,
either acting directly or through one or more associate
licenses, can
legally be the agent of both the Lessor
and the Lessee in a transaction,
but only with the knowledge and consent
of both the Lessor
and the Lessee.
In a dual agency situation,
the agent has the following
affirmative obligations to both the Lessor
and the Lessee:
a. A fiduciary duty of
utmost care, integrity,

honesty
and loyalty in the
dealings with either Lessor or the
Lessee. b. Other duties to the
Lessor and the
Lessee as stated
above in subparagraphs
(i) or (ii). In representing both Lessor and
Lessee, the agent may not without the
express permission of the respective
Party, disclose
to the other Party that the Lessor
will accept rent in an amount less than that
indicated in the listing or that the Lessee is willing to pay a higher rent than that offered. The above
duties of the agent in a real estate transaction do not relieve
a Lessor or Lessee from the responsibility to
protect their own
interests.
Lessor and
Lessee should carefully read all
agreements to assure that they adequately
express their
understanding of the transaction.
A real estate agent is a person
qualified to advise about real estate. If
legal or tax advice
is desired, consult
a competent professional.

 

(b) Brokers have
no responsibility with respect to any default
or breach hereof by either Party. The liability (including
court costs
and attorneys' fees),
of any Broker with respect to any breach
of duty, error or omission relating to
this Lease
shall not
exceed the fee
received
by such Broker
pursuant to
this Lease; provided, however, that the
foregoing limitation on each Broker's
liability shall not be applicable to any gross negligence
or willful misconduct
of such Broker.

 

(c) Lessor
and Lessee
agree to identify to Brokers as
'Confidential'
any communication or information given Brokers
that is considered
by such Party
to be confidential.

 

26. No
Right To Holdover. Lessee
has no right to retain
possession
of the Premises
or any part thereof
beyond the expiration or termination of this Lease.
In the event that
Lessee holds
over, then the
Base Rent shall be
increased to
150% of the Base
Rent applicable immediately
preceding
the expiration or termination.
Nothing contained
herein shall
be construed
as consent
by Lessor to
any holding
over by Lessee.

 

27. Cumulative
Remedies.
No remedy or election hereunder
shall be deemed exclusive
but shall, wherever possible,
be cumulative with all other remedies
at law or in equity.

 

28. Covenants
and Conditions;
Construction
of Agreement. All
provisions
of this
Lease to
be observed
or performed
by Lessee are
both covenants
and conditions.
In construing
this Lease,
all headings
and titles are for
the convenience
of the Parties
only and shall not
be considered
a part of this Lease.
Whenever
required by the
context,
the singular
shall include the plural and
vice versa. This
Lease shall not
be construed as
if prepared by one
of the Parties, but rather according to its fair
meaning as a whole,
as if both Parties had prepared
it.

 

29. Binding Effect; Choice
of Law. This Lease shall
be binding upon the
Parties, their personal
representatives,
successors
and assigns
and be governed
by the laws of the State in which the
Premises are located. Any litigation between
the Parties hereto
concerning this Lease
shall be initiated in the
county in which
the Premises
are located.

 

30. Subordination;
Attornment;
Non-Disturbance.

 

30.1 Subordination.
This Lease and
any Option granted
hereby shall
be subject and subordinate
to any ground lease,
mortgage, deed
of trust,
or other
hypothecation or security device (collectively,
"Security Device"), now
or hereafter placed upon the Premises, to any and all advances
made on the
security thereof,
and to all renewals, modifications, and extensions thereof.
Lessee agrees
that the holders of any such Security
Devices (in this Lease
together referred
to as "Lender")
shall have no liability or obligation to perform any of the obligations of Lessor
under this Lease. Any Lender may elect
to have this Lease and/or any Option granted hereby
superior to the
lien of its Security Device by giving written
notice thereof
to Lessee, whereupon this Lease and
such Options
shall be deemed
prior to such Security Device, notwithstanding
the relative dates of the documentation
or recordation thereof.

 

30.2
Attornment. In
the event that
Lessor transfers
title to
the Premises,
or the Premises
are acquired by another
upon the foreclosure
or termination
of a Security Device
to which this
Lease is subordinated
(i) Lessee shall,
subject to
the non-disturbance
provisions of
Paragraph 30.3, attorn
to such new
owner, and upon request, enter into a
new lease, containing
all of the terms and provisions of this
Lease, with such new owner for the remainder
of the term hereof, or, at
the election
of such new
owner, this
Lease shall automatically
become a new Lease
between
Lessee and
such new
owner,
upon all of the terms and conditions
hereof, for the remainder of the term hereof,
and (ii) Lessor shall thereafter be relieved
of any further obligations
hereunder
and such new owner
shall assume all of Lessor's
obligations hereunder, except
that such new owner shall not: (a) be
liable for any act or omission of any prior lessor
or with respect to events occurring prior to
acquisition
of ownership;
(b) be subject
to any offsets
or defenses
which Lessee
might have against
any prior lessor,
(c) be bound
by prepayment
of more than one month's rent, or (d) be
liable for the return of any security deposit paid to any prior
lessor.

 

30.3 Non-Disturbance.
With respect to Security Devices entered into by Lessor
after the execution
of this Lease, Lessee's
subordination of this Lease
shall be subject to receiving a commercially
reasonable non-disturbance
agreement (a "Non-Disturbance
Agreement") from
the Lender
which Non-Disturbance
Agreement provides
that Lessee's
possession
of the Premises,
and this Lease,
including any
options
to extend
the term
hereof,
will not
be disturbed
so long as Lessee is not
in Breach hereof and attorns to the record owner of the Premises.
Further, within 60 days after the execution
of this Lease, Lessor shall use its commercially
reasonable efforts to obtain a Non-Disturbance
Agreement from
the holder
of any pre-existing
Security Device
which is secured
by the Premises.
In the event
that Lessor
is unable to provide
the Non-Disturbance
Agreement
within said 60 days, then
Lessee may, at Lessee's
option,
directly contact Lender
and attempt to
negotiate
for the execution
and delivery of
a Non-Disturbance
Agreement.

 

30.4
Self-Executing. The agreements
contained
in this Paragraph
30 shall be effective
without the
execution
of any further documents;
provided, however,
that, upon
written request
from Lessor
or a Lender
in connection
with a sale,
financing or
refinancing
of the Premises,
Lessee
and Lessor
shall execute
such further writings as may be reasonably
required to separately document any subordination,
attornment and/or Non-Disturbance
Agreement provided
for herein.

 

31. Attorneys'
Fees. If any Party or Broker brings
an action or proceeding
involving the Premises
whether founded
in tort, contract
or equity, or
to declare rights hereunder,
the Prevailing Party (as hereafter defined)
in any such
proceeding,
action, or
appeal thereon,
shall be
entitled
to reasonable
attorneys' fees.
Such fees
may be awarded
in the same suit
or recovered
in a separate
suit, whether
or not such
action or
proceeding is pursued
to decision
or judgment.
The term,
"Prevailing Party" shall include,
without limitation, a Party or Broker who substantially
obtains or defeats
the relief
sought,
as the case may be,
whether by compromise,
settlement, judgment, or the abandonment
by the other Party or Broker of its claim or defense.
The attorneys' fees
award
shall not
be computed
in accordance
with any court fee schedule,
but shall be such as to fully reimburse all attorneys'
fees reasonably incurred. In addition,
Lessor shall be entitled to attorneys' fees,
costs and expenses
incurred in the preparation
and service
of notices of Default and consultations
in connection
therewith,
whether
or not a legal
action is subsequently commenced in connection
with such Default
or resulting Breach ($200 is a reasonable
minimum per occurrence
for such services
and consultation).

 

32. Lessor's
Access; Showing Premises;
Repairs. Lessor
and Lessor's
agents
shall have
the right to enter
the Premises
at anytime,
in the case
of an emergency,
and otherwise
at reasonable times
after reasonable prior notice for the purpose
of showing
the same
to prospective
purchasers,
lenders,
or tenants,
and making such
alterations, repairs, improvements
or additions
to the Premises as
Lessor may deem
necessary
or desirable and
the erecting,
using and
maintaining
of utilities, services,
pipes and conduits
through the
Premises and/or other premises as
long as there is no material
adverse effect to
Lessee's use
of the Premises. All such
activities shall be without abatement of
rent or liability to Lessee.

 

33. Auctions.
Lessee shall
not conduct,
nor permit
to be conducted,
any auction
upon the Premises
without
Lessor's
prior written
consent.
Lessor shall
not be obligated to exercise
any standard of reasonableness
in determining whether
to permit an auction.

 

34. Signs. Lessor
may place on
the Premises
ordinary 'For
Sale' signs at any time and ordinary
'For Lease'
signs during the
last 6 months of the term hereof.
Except for
ordinary 'for sublease'
signs, Lessee
shall not place any sign upon
the Premises
without Lessor's
prior written consent.
All signs must comply with
all Applicable Requirements.

 

35. Termination;
Merger. Unless specifically stated
otherwise in writing
by Lessor, the voluntary or other surrender
of this Lease by Lessee, the mutual termination
or cancellation hereof, or a termination
hereof by Lessor for Breach by Lessee, shall automatically
terminate any sublease
or lesser estate
in the
Premises; provided,
however, that
Lessor may elect
to continue
any one or all existing subtenancies.
Lessor's failure within 10 days following any such event
to elect to the contrary by written notice
to the holder of any such lesser
interest, shall constitute Lessor's
election to have such event constitute
the termination of such interest.

 

36. Consents.
Except as otherwise provided
herein, wherever in this Lease the consent
of a Party is required to an act by or for the other Party,
such consent
shall not be unreasonably
withheld or delayed. Lessor's actual
reasonable costs
and expenses (including but not
limited to architects',
attorneys',
engineers'
and other consultants'
fees) incurred
in the consideration
of, or response
to, a request by Lessee
for any Lessor
consent,
including but not limited to consents
to an assignment,
a subletting or
the presence
or use of
a Hazardous Substance,
shall be paid
by Lessee upon
receipt of
an invoice
and supporting
documentation
therefor. Lessor's
consent to any act,
assignment or subletting shall not constitute an acknowledgment
that no Default or Breach
by Lessee
of this Lease
exists, nor shall such
consent be deemed
a waiver of any then
existing Default
or Breach, except
as may be otherwise
specifically stated
in writing by Lessor at the time of such
consent. The failure to specify herein
any particular condition
to Lessor's
consent shall
not preclude
the imposition
by Lessor
at the time
of consent
of such further
or other conditions as
are then reasonable
with reference
to the particular matter for which
consent is being
given. In the
event that either
Party disagrees
with any determination
made by the other hereunder
and reasonably requests
the reasons
for such determination,
the determining
party shall furnish its reasons
in writing and in
reasonable detail within 10 business days
following such request.

 

37. Guarantor.

 

37.1 Execution.
The Guarantors, if
any, shall each execute a guaranty
in the form most recently
published
by the American
Industrial Real
Estate Association,
and each such
Guarantor
shall have the same
obligations as Lessee
under this
Lease.

 

37.2 Default. It shall constitute a Default of the Lessee
if any Guarantor fails or refuses, upon
request to provide: (a) evidence
of the execution
of the guaranty,
including
the authority
of the party
signing on
Guarantor's
behalf to obligate Guarantor, and
in the case of
a corporate
Guarantor, a certified copy of
a resolution
of its board
of directors
authorizing
the making of
such guaranty,
(b) current
financial statements,
(c) an Estoppel
Certificate, or (d) written confirmation
that the guaranty is still in effect.

 

38. Quiet Possession.
Subject to payment by Lessee
of the Rent and
performance of
all of the covenants,
conditions
and provisions
on Lessee's
part to be
observed
and performed
under this
Lease, Lessee
shall have quiet possession
and quiet enjoyment
of the Premises during the term hereof.

 

39. Options. If Lessee
is granted an
Option, as defined
below, then the following provisions shall apply:

 

39.1 Definition.
"Option" shall mean:
(a) the right to extend the term of or renew
this Lease
or to extend
or renew
any lease
that Lessee
has on other
property of Lessor; (b) the right of first refusal or first offer to
lease either the Premises
or other property
of Lessor; (c) the right to purchase
or the right of first refusal to purchase the Premises
or other property of Lessor.

 

39.2 Options
Personal To Original
Lessee. Any Option granted to Lessee in this Lease is personal
to the original Lessee, and cannot
be assigned or exercised
by anyone other than said original Lessee
and only while the original Lessee
is in full possession of
the Premises and, if requested
by Lessor, with
Lessee
certifying that
Lessee
has no intention
of thereafter
assigning or
subletting. 

 

39.3 Multiple
Options. In the
event that
Lessee has any
multiple
Options to
extend or
renew this
Lease, a later
Option cannot
be exercised unless
the prior Options have
been validly exercised.

 

39.4 Effect
of Default on Options.

 

(a) Lessee
shall have no right to exercise an Option: (i) during the period commencing
with the giving of any notice of Default and continuing
until said Default is cured,
(ii) during the
period of time any Rent
is unpaid
(without
regard to whether
notice thereof
is given Lessee),
(iii) during the time Lessee is in Breach
of this
Lease, or
(iv) in the
event that
Lessee has been
given 3 or more notices of separate
Default, whether or not
the Defaults
are cured, during
the 12 month
period immediately
preceding
the exercise
of the Option.

 

(b) The
period of time within which an Option may
be exercised shall not be extended or
enlarged by reason of Lessee's inability
to exercise an
Option
because of the provisions of Paragraph
39.4(a).

 

(c) An Option
shall terminate
and be of no further
force or
effect, notwithstanding
Lessee's
due and timely
exercise of the
Option,
if, after such exercise
and prior to the commencement of the
extended term or completion of the
purchase,
(i) Lessee fails to pay Rent for a period
of 30 days after such Rent becomes
due (without
any necessity of
Lessor to
give notice thereof),
or (ii) if Lessee commits
a Breach of this Lease.

 

40. Multiple Buildings.
If the Premises are a part of a group of buildings controlled
by Lessor, Lessee
agrees
that it
will abide by
and conform to
all reasonable
rules and regulations which
Lessor may make from time to
time for the management, safety, and care of said
properties, including
the care and
cleanliness of
the grounds
and including
the parking, loading
and unloading
of vehicles,
and to cause
its employees, suppliers,
shippers, customers,
contractors
and invitees to
so abide and
conform. Lessee
also agrees to
pay its fair share
of common
expenses incurred
in connection
with such rules
and regulations.

 

41. Security Measures.
Lessee hereby
acknowledges
that the Rent payable to Lessor hereunder
does not include the cost of guard
service or other security
measures, and
that Lessor shall have
no obligation whatsoever to provide same.
Lessee assumes all responsibility
for the protection
of the Premises,
Lessee,
its agents and invitees and their property
from the acts of third parties.

 

42. Reservations. Lessor
reserves to itself the right, from time
to time, to grant, without the consent
or joinder of Lessee,
such easements, rights and
dedications that Lessor
deems necessary,
and to cause the
recordation of
parcel maps and
restrictions,
so long as such easements,
rights, dedications,
maps and
restrictions do not unreasonably
interfere with the
use of the Premises
by Lessee.
Lessee agrees
to sign any documents
reasonably requested
by Lessor to
effectuate any
such easement
rights, dedication,
map or restrictions.

 

43. Performance Under
Protest. If at any time a dispute shall arise
as to any amount or sum of money to be
paid by one Party to the other under the provisions hereof, the Party against
whom the obligation to pay the money is asserted shall have the right to make payment
'under protest'
and such payment
shall not be regarded as a voluntary payment
and there shall survive the right
on the part of said Party to institute suit for recovery
of such
sum. If it
shall be adjudged
that there was no legal obligation on
the part of said Party to pay such sum or any part thereof,
said Party shall be entitled to recover
such sum or
so much thereof
as it was not legally required to pay.

 

44. Authority;
Multiple Parties;
Execution.

 

(a) If either
Party hereto is a corporation, trust, limited liability
company, partnership, or similar entity, each individual executing this Lease on behalf
of such entity
represents
and warrants
that he
or she is
duly authorized
to execute
and deliver this
Lease on
its behalf.
Each party
shall, within 30 days after request, deliver
to the other
party satisfactory evidence
of such authority.

 

(b) If
this Lease is executed
by more than one
person or
entity as 'Lessee',
each such person
or entity
shall be jointly and severally
liable hereunder. It is agreed that
any one of the
named Lessees
shall be empowered
to execute any
amendment to
this Lease, or
other document
ancillary thereto and bind all of the named
Lessees,
and Lessor
may rely on the
same as if all
of the named
Lessees had executed
such document.

 

(c)
This Lease may be executed
by the Parties in counterparts, each of which shall be deemed an original and all
of which together shall constitute one
and the same instrument.

 

45. Conflict. Any
conflict between the printed provisions of this Lease and typewritten or
handwritten provisions
shall be controlled
by the typewritten
or handwritten provisions.

 

46. Offer. Preparation
of this Lease by either Party or their agent
and submission
of same to
the other Party
shall not be deemed
an offer
to lease to
the other Party. This Lease is not
intended to be binding until executed
and delivered by all Parties hereto.

 

47.
Amendments. This Lease
may be modified only in writing, signed
by the Parties in interest at the time of the modification. As long as they
do not materially change Lessee's obligations
hereunder, Lessee agrees to make such
reasonable non-monetary
modifications to this Lease as may be
reasonably required
by a Lender in
connection
with the obtaining
of normal
financing or refinancing
of the Premises.

 

48. Waiver of Jury Trial.
THE PARTIES
HEREBY
WAIVE THEIR
RESPECTIVE
RIGHTS
TO TRIAL BY JURY IN ANY
ACTION OR PROCEEDING
INVOLVING THE PROPERTY
OR ARISING
OUT OF THIS AGREEMENT.

 

49. Mediation
and Arbitration of Disputes.
The Parties agree to mediate all disputes
between the Parties and/orBrokers
arising out of this Lease.

 

50. Americans with
Disabilities Act. Since
compliance with the
Americans with Disabilities
Act (ADA) is dependent
upon Lessee's
specific use of the Premises,
Lessor makes no warranty
or representation as to whether or not
the Premises comply with ADA or any
similar legislation. In the event that
Lessee's use
of the Premises
requires modifications
or additions
to the Premises
in order
to be in ADA compliance,
Lessee agrees
to make any such
necessary
modifications and/or additions
at Lessee's
expense.

 

 

    	 

    	 

    

LESSOR AND LESSEE
HAVE CAREFULLY READ AND REVIEWED
THIS LEASE AND EACH TERM AND
PROVISION
CONTAINED HEREIN,
AND BY THE EXECUTION
OF THIS LEASE SHOW THEIR INFORMED AND
VOLUNTARY
CONSENT THERETO.
THE PARTIES HEREBY
AGREE THAT, AT THE TIME THIS LEASE IS EXECUTED,
THE TERMS OF THIS LEASE ARE
COMMERCIALLY REASONABLE
AND EFFECTUATE
THE INTENT
AND PURPOSE OF LESSOR AND
LESSEE WITH RESPECT TO THE PREMISES.

 

ATTENTION:
NO REPRESENTATION
OR RECOMMENDATION
IS MADE BY BY ANY BROKER
AS TO THE LEGAL SUFFICIENCY,
LEGAL EFFECT, OR TAX
CONSEQUENCES
OF THIS LEASE OR THE TRANSACTION
TO WHICH
IT RELATES. THE
PARTIES
ARE URGED
TO:

1. SEEK ADVICE OF COUNSEL
AS TO THE LEGAL AND
TAX CONSEQUENCES
OF THIS LEASE.

2. RETAIN
APPROPRIATE
CONSULTANTS TO REVIEW
AND INVESTIGATE
THE CONDITION OF THE PREMISES.
SAID INVESTIGATION SHOULD
INCLUDE BUT NOT BE LIMITED TO: THE
POSSIBLE PRESENCE
OF HAZARDOUS
SUBSTANCES,
THE ZONING
OF THE PREMISES,
THE STRUCTURAL
INTEGRITY, THE CONDITION OF
THE ROOF AND OPERATING
SYSTEMS, AND THE
SUITABILITY OF THE PREMISES
FOR LESSEE'S INTENDED
USE.

 

WARNING'
IF THE PREMISES
IS LOCATED IN A STATE OTHER THAN
CALIFORNIA,
CERTAIN PROVISIONS
OF THE LEASE MAY NEED
TO BE REVISED TO COMPLY WITH
THE LAWS OF THE
STATE IN WHICH
THE PREMISES
IS LOCATED.

 

The parties
hereto have executed
this Lease at the
place and on
the dates specified
above their
respective
signatures.

 

	Executed at: ___________________________	Executed at: ___________________________
	on: ___________________________________	on: ___________________________________
	 	 
	For LESSOR	By LESSEE:
	 	 
	Lessor: ARIZONA DP CONSULTING LLC	Lessee: ITEM 9 LABS CORP.
	By: ___________________________________	By: ___________________________________
	Name Printed: SARA GULLICKSON	Name Printed: BRYCE SKALLA
	Title: MEMBER	Title: CHIEF EXECUTIVE OFFICER
	Telephone: ______________________________	By: ____________________________________
	Facsimile: _______________________________	Name Printed: ___________________________
	Email address: ___________________________	Title: __________________________________
	Address: ________________________________	Telephone: _____________________________
		Facsimile: ______________________________
	 	Email address: __________________________
	 	Address: _______________________________Exhibit 10.6

 

LOAN
AND Revenue PARTICIPATION AGREEMENT

 

This
Loan and Revenue Participation Purchase Agreement (the "Agreement") is made as of September___,
2018 (the "Effective Date") by and among Item 9 Labs Corp.,
a Delaware corporation (the "Item 9 Labs"), BSSD Group, LLC, an Arizona limited liability company (“Arizona
Subsidiary”), Item 9 Properties, LLC, a Nevada limited liability company (“Nevada Subsidiary”),
and Viridis Group I9 Capital, LLC, an Arizona limited lability company (hereinafter the "Purchaser"). Item
9 Labs, the Arizona subsidiary, and the Nevada subsidiary are defined herein collectively as the “Company”.

 

Recital

 

WHEREAS, The
Company
and Purchaser are
executing
and delivering
this Agreement
in reliance
upon the exemption
from securities
registration
afforded
by the rules
and regulations
as promulgated
by the United States
Securities
and Exchange
Commission (the “SEC”)
under the
Securities
Act of 1933, as amended
(the “1933 Act”);

 

WHEREAS,
Item 9 Labs owns 100% of the membership interests in each of the Arizona subsidiary and the Nevada subsidiary;

 

WHEREAS,
To provide the Company with additional resources to conduct its business and specifically to expand and construct additional improvements
(“AZ Expansion”) on and to certain real property as described in the AZ Deed of Trust (as defined below)
(the “AZ Facility”) located in Coolidge, Arizona, Purchaser desires to lend the amount of $1,200,000
for the AZ Expansion, subject to the conditions specified herein;

 

WHEREAS,
To provide the Company with additional resources to conduct its business and specifically to reimbursement costs of acquisition,
and to expand and construct additional improvements (“NV Expansion”) on and to certain real property
as described in the NV Deed of Trust (as defined below) (the “NV Facility”) located in Pahrump, Nevada,
Purchaser desires to lend the amount of $1,500,000 for the NV Expansion, subject to the conditions specified herein;

 

WHEREAS,
parcel consideration of funding loans for the AZ expansion and the NV expansion, the Company desires to provide Purchaser with
a revenue participation, subject to the conditions specified herein.

 

Now, Therefore,
in consideration of the foregoing, and the representations, warranties, covenants and conditions set forth below, the Company
and Purchaser, intending to be legally bound, hereby agree as follows:

 

		1.	Amount and Terms of the Loans

1.1
The AZ Expansion Loan. Subject to the terms of this Agreement, the Purchaser agrees to lend to the Arizona Subsidiary
at the AZ Loan Closing (as hereinafter defined), the sum of $1,200,000 for the AZ Expansion (the “AZ Loan”)
and specifically the construction of a 10,000 square foot facility (the “AZ Facility”) located on the
AZ Property. The AZ Loan will be evidenced by the following: (i) a promissory note by the Arizona Subsidiary in an amount up to
$1,200,000, in the form attached hereto as Exhibit A (the “AZ Note”); (ii) a personal guaranty
by Item 9 Labs of the AZ Note in the form attached hereto as Exhibit D (the “AZ Guaranty”);
and (iii) a first priority Deed of Trust, Security Agreement, Assignment of Rents and Fixture Filing (“AZ Deed of Trust”)
secured by the AZ Facility, in the form attached hereto as Exhibit C. At or prior to the AZ Loan Closing, Purchaser may
file a UCC-1 financing statement as the Collateral, and Purchaser agrees that upon repayment of the principal and interest on the
AZ Loan, the UCC-1 financing statement shall be terminated. Purchaser and the Company agree that there is no obligation of the
Company to obtain a mortgagee’s policy of title insurance.

 

1.2
The NV Expansion Loan. Subject to the terms of this Agreement, the Purchaser agrees to lend to the Nevada Subsidiary
at the NV Loan Closing (as hereinafter defined), the sum of $1,500,000 for the NV Expansion (the “NV Loan”)
and specifically for reimbursement costs of acquisition, and to expand and construct additional improvements (the “NV
Facility”) located on the NV Property. The NV Loan will be evidenced by the following: (i) a promissory note by the
Nevada Subsidiary in the amount $1,500,000, in the form attached hereto as Exhibit D (the “NV Note”);
(ii) personal guaranty by Item 9 Labs of the NV Note in the form attached hereto as Exhibit E (the “NV
Guaranty”); and (iii) a first priority Deed of Trust, Assignment of Rents and Fixture Filing (“NV Deed
of Trust”) secured by the NV Facility, in the form attached hereto as Exhibit F. At or prior to the NV Loan
Closing, Purchaser may file a UCC-1 financing statement as the Collateral, and Purchaser agrees that upon repayment of the principal
and interest on the NV Loan, the UCC-1 financing statement shall be terminated. Purchaser and the Company agree that there is no
obligation of the Company to obtain a mortgagee’s policy of title insurance.

 

1.3
Revenue Participation. As additional consideration for the AZ Loan and the NV Loan, the Company grants to Purchaser
the right to participate in the Gross Revenues generated from the operations of the AZ Facility and the NV Facility. For avoidance
of doubt, the calculation of Gross Revenues will not be aggregated for both the Arizona Operations and the Nevada Operations, but
will be calculated separately, and the applicable percentage of Gross Revenues will be applied separately, as set forth below.
In addition to the defined terms above, the following terms will have the meanings set forth below:

 

“Arizona
Operations” means the commencement of operations at the AZ Facility.

 

“Change
in Control” means the occurrence of any of the following events: (i) a change in the ownership of the Company which
occurs on the date that any one person, or more than one person acting as a group (“Person”), acquires
ownership of the stock of the Company that, together with the stock held by such Person, constitutes more than fifty one percent
(51%) of the total voting power of the stock of the Company; provided, however, that for purposes of this definition, the
acquisition of additional stock by any one Person, who is considered to own more than twenty percent (20%) of the total voting
power of the stock of the Company will not be considered a Change of Control; or (ii) a change in the ownership of all or substantially
all of the Company’s assets which occurs on the date that any Person or entity acquires (or has acquired during the period
ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross
fair market value equal to or more than fifty one percent (51%) of the total gross fair market value of all of the assets
of the Company immediately prior to such acquisition or acquisitions. For purposes of this subsection, gross fair market value
means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities
associated with such assets.

 

“Deferment
Period” means, as the case may require: (i) the period commencing on the AZ Loan Closing date and ending on the date
which is 90 days after the Arizona Subsidiary commences revenue generation from Arizona Operations; and (ii) the period commencing
on the NV Loan Closing date and ending on the date which is 90 days after the Nevada Subsidiary commences revenue generation from
Nevada Operations.

 

“Distribution(s)”
means the distribution of Gross Revenues to Purchaser.

 

“Gross
Revenue” means all revenues of the Company from the Arizona Operations of the Company, including, but not limited
to, (i) investment income, (ii) rental income, (iii) income from the operations of the Company, (iv) net proceeds
of business interruption insurance, if any, (v) income from fees and charges (whether such fees and charges are paid by or
on behalf of patients or by any other party) and (vii) without duplication, all other accounts receivable, revenues, profits
and receipts derived by or on behalf of the Company from any source relating to the Arizona Operations.

 

“Nevada
Operations” means the commencement of operations at the NV Facility.

 

“Nevada
Subsidiary’s Interest” shall mean only the amount in which the Company has an interest in the NV Facility.
Purchaser is expressly aware that the Company shall only be entitled to 51% of the aggregate NV Facility operations, and that the
percentage interest in which Purchaser is entitled is not from the whole operation, rather only of the 51% to which Company has
an interest.

 

“Revenue
Participation Payments” means the payments described in Section 1.3(a) as to the Arizona Operations, and Section
1.3(b) below as to the Nevada Operations.

 

(a) Arizona
Facility Revenue Participation. Commencing on the first calendar quarter following the Deferment Period for the Arizona Operations,
and continuing on the fifteenth day after the close of each calendar quarter thereafter, unless earlier terminated pursuant to
the terms of this Agreement, the Company and the Arizona Subsidiary shall make Distributions of Revenue Participation Payments
generated from Gross Revenues during the immediately preceding calendar quarter pursuant to the following schedule:

 

1)
5% of Gross Revenues generated by the Arizona Operations until the AZ Note is repaid; such payments are estimated to be
between $250,000 to $350,000 annually once the Arizona Operations are fully operational, however, actual results may vary and a
lower annual revenue amount shall not constitute a default or breach; then,

 

2)
2% of Gross Revenues generated by the Arizona Operations until Lender has been paid amounts under the AZ Note and this Section
1.3(a) equal to 200% of the principal amount of the AZ Note; such payments are estimated to be $100,000 to $140,000 annually, however,
actual results may vary and a lower annual revenue amount shall not constitute a default or breach; then,

 

3)
1% of Gross Revenues generated by the Arizona Operations in perpetuity or until a Change in Control triggering a Mandatory
Buyout, notwithstanding the repayment of the AZ Note.

 

4)
No distributions of Revenue Participation Payments shall be made during the Deferment Period.

 

5)
Upon payment of Revenue Participation Payments equal to 200%
of the principal amount of the AZ Note, the payments under Section 1.3(a)(1) and (2) shall terminate, and if not previously done,
the Purchaser shall release its UCC-1, its security interest against the Collateral, and the AZ Deed of Trust.

 

(b) Nevada
Facility Revenue Participation. Commencing on the first calendar quarter following the Deferment Period for the Nevada Operations,
and continuing on the fifteenth day after the close of each calendar quarter thereafter, unless earlier terminated pursuant to
the terms of this Agreement, the Company and the Nevada Subsidiary shall make Distributions of Revenue Participation Payments generated
from the Nevada Subsidiary’s Interest in the Nevada Gross Revenues during the immediately preceding calendar quarter pursuant
to the following schedule:

 

1) 5%
of Gross Revenues generated from the Nevada Subsidiary’s Interest in Nevada Operations until the NV Note is repaid; such
payments are estimated to be between $250,000 to $350,000 annually once the Nevada Operations are fully operational, however, actual
results may vary and a lower annual revenue amount shall not constitute a default or breach; then,

 

2) 2%
of Gross Revenues generated from the Nevada Subsidiary’s Interest in the Nevada Operations until Lender has been paid amounts
under the NV Note and this Section 1.3(a) equal to 200% of the principal amount of the NV Note; such payments are estimated to
be $100,000 to $140,000 annually, however, actual results may vary and a lower annual revenue amount shall not constitute a default
or breach; then,

 

3) 1%
of Gross Revenues generated from the Nevada Subsidiary’s Interest in Nevada Operations in perpetuity or until a Change in
Control triggering a Mandatory Buyout, notwithstanding the repayment of the NV Note.

 

4) No
distributions of Revenue Participation Payments shall be made during the Deferment Period.

 

5) Upon
payment of Revenue Participation Payments equal to 200% of the principal amount of
the NV Note, the payments under Section 1.3(b)(1) and (2) shall terminate, and if not previously done, the Purchaser shall release
its UCC-1, its security interest against the Collateral, and the NV Deed of Trust.

 

(c)
Mandatory Buyout. Upon the occurrence of a Change in Control the Purchaser shall be entitled to receive: (i) the balance of
200% of the principal amount of the AZ Note, which balance
will be calculated after crediting to the Company any and all Revenue Participation Payments paid to the Purchaser through the
date of the Change in Control; (ii) the balance of 200% of the principal amount of the NV
Note, which balance will be calculated after crediting to the Company any and all Revenue Participation Payments paid to the Purchaser
through the date of the Change in Control and (iii) 1% of the aggregate sales price or consideration received pursuant to such
Change in Control, and thereafter all obligations of the Company and its subsidiaries to the Purchaser shall be deemed to be satisfied
in full.

 

		2.	Closing and Delivery; Loan Advances

2.1
Initial Closing. The initial closing (the "Initial Closing") of the sale and purchase of the
Notes shall be held on the Effective Date, or at such other time as the Company and the Purchaser may mutually agree (such date
is hereinafter referred to as the "Initial Closing Date").

 

2.2
Deliveries.

 

1) At
the AZ Loan Closing (i) Purchaser shall deliver to the Arizona Subsidiary a check or wire transfer funds in the amount of an initial
advance of the AZ Loan in the amount of $____________ (the “Initial Advance”), with further advances
as provided in the AZ Note; (ii) the Arizona Subsidiary shall issue and deliver to the Purchaser the AZ Note, the AZ Security
Agreement, and the AZ Deed of Trust; (iii) Item 9 Labs shall delver the AZ Guaranty; and (iv) the Company and the Arizona Subsidiary
will deliver such other documents and certificates, corporation resolutions, and the like (the “Company Closing Documents”),
as may be necessary or desired by Purchaser to consummate the AZ Loan as contemplated hereby.

 

2) At
the NV Loan Closing (i) Purchaser shall deliver to the Nevada Subsidiary a check or wire transfer funds in the amount of $1,500,000;
(ii) the Nevada Subsidiary shall issue and deliver to the Purchaser the NV Note, the NV Security Agreement, and the NV Deed
of Trust; (iii) Item 9 Labs shall deliver the NV Guaranty; and (iv) the Company and the Nevada Subsidiary will deliver such other
documents and certificates, corporation resolutions, and the like (the “Company Closing Documents”),
as may be necessary or desired by Purchaser to consummate the NV Loan as contemplated hereby.

 

		3.	Representations and Warranties of the Company

 

The Company hereby represents
and warrants to Purchaser as of the AZ Loan Closing and the NV Loan Closing as follows:

 

3.1
Organization and Qualification. The Company
is a corporation,
and the Arizona Subsidiary and the Nevada Subsidiary are each limited liability companies, duly
organized,
validly existing
and in good standing
under the laws of the jurisdiction
in which formed or incorporated,
with full power and
authority
(corporate
and other) to own, lease,
use and operate its properties
and to carry
on its business as and
where now owned, leased,
used, operated
and conducted.
Item 9 Labs is duly qualified as
a foreign corporation,
and the Arizona Subsidiary and the Nevada Subsidiary are each qualified, to do business
and is in good standing
in every
jurisdiction in which
its ownership or use of property
or the nature of the business
conducted
by it makes
such qualification
necessary
except
where the failure
to be so qualified
or in good standing would not have
a Material
Adverse Effect.
“Material
Adverse Effect”
means
any material
adverse
effect on
the business, operations, assets,
financial
condition or prospects
of the Company
and its subsidiaries, taken as
a whole, or on the
transactions
contemplated
hereby
or by the agreements
or instruments to be entered
into in connection herewith.

 

3.2
Authorization; Enforcement. (i) The Company
and its subsidiaries each have all requisite corporate
power and authority
to enter into and
perform this Agreement,
the Notes, and the Closing documents, and
to consummate the transactions
contemplated
hereby (collectively with this Agreement,
the "Loan Documents") and thereby
and to issue the securities, in
accordance
with the terms hereof
and thereof,
(ii) the execution
and delivery
of this Agreement,
the Notes, and the Closing documents, and
the consummation by
it of the transactions
contemplated
hereby
and thereby
have been
duly authorized
by the Company’s
and its subsidiaries Board of Directors
and no further
consent
or authorization
of the Company
and its subsidiaries, its Board
of Directors,
or its shareholders
is required, (iii)
this Agreement has
been duly
executed
and delivered
by the Company
and its subsidiaries by its authorized
representative,
and such authorized
representative
is the true and
official
representative
with authority
to sign this Agreement
and the other documents
executed
in connection
herewith
and bind the Company
and its subsidiaries accordingly,
and (iv) this Agreement
constitutes, and
upon execution
and delivery
by the Company
and its subsidiaries of the Notes and Closing documents, each
of such instruments
will constitute,
a legal,
valid and binding obligation
of the Company
and its subsidiaries, as applicable, enforceable
against
the Company
and its subsidiaries in accordance
with its terms.

 

3.3
Governmental Consents. All consents, approvals, orders, or authorizations of, or registrations, qualifications, designations,
declarations, or filings with, any governmental authority, required on the part of the Company and its subsidiaries in connection
with the valid execution and delivery of this Agreement, the offer, sale or issuance of the Notes issuable or the consummation
of any other transaction contemplated hereby shall have been obtained and will be effective at such time as required by such governmental
authority.

 

3.4
Compliance with Laws. To its knowledge, the Company and its subsidiaries are not in violation of any applicable statute,
rule, regulation, order or restriction of any domestic or foreign government or any instrumentality or agency thereof in respect
of the conduct of its business or the ownership of its properties, which violation would materially and adversely affect the business,
assets, liabilities, financial condition or operations of the Company and its subsidiaries.

 

3.5
Compliance with Other Instruments. The Company and its subsidiaries are not in violation or default of any term of its
articles of organization or operating agreement, or of any provision of any mortgage, indenture or contract to which it is a party
and by which it is bound or of any judgment, decree, order or writ, other than such violations that would not individually or in
the aggregate have a material adverse effect on the Company and its subsidiaries. The execution, delivery and performance of the
Loan Documents, and the consummation of the transactions contemplated by the Loan Documents will not result in any such violation
or be in conflict with, or constitute, with or without the passage of time and giving of notice, either a default under any such
provision, instrument, judgment, decree, order or writ or an event that results in the creation of any lien, charge or encumbrance
upon any assets of the Company and its subsidiaries or the suspension, revocation, impairment, forfeiture, or nonrenewal of any
material permit, license, authorization or approval applicable to the Company and its subsidiaries, their respective business or
operations or any of its assets or properties.

 

3.6
Offering. Assuming the accuracy of the representations and warranties of the Purchasers contained in Section 4
hereof, the offer, issue and sale of the Notes (collectively, the "Securities") are and will be exempt
from the registration and prospectus delivery requirements of the Securities Act of 1933, as amended (the "Securities
Act"), and have been registered or qualified (or are exempt from registration and qualification) under the registration,
permit or qualification requirements of all applicable state securities laws.

 

3.7
Use of Proceeds. The Company and its subsidiaries shall use the proceeds of sale and issuance of the Notes solely for
the costs of constructing the AZ Expansion and the NV Expansion, and equipping each project in accordance with the construction
contracts for each project, and any other costs in the project budgets approved in writing by Purchaser; (B) other costs and expenses
incurred or to be incurred in connection with such construction as Purchaser in its sole discretion shall approve; and (C) costs
and expenses the operations of the Company business as Purchaser in its sole discretion shall approve, and not for any personal,
family or household purpose.

 

		4.	Representations and Warranties of the Purchasers

Purchaser hereby
represents and warrants to the Company as follows:

 

4.1
Purchase for Own Account. The Purchaser represents that it is acquiring the Securities solely for its own account and
beneficial interest for investment and not for sale or with a view to distribution of the Notes or any part thereof, has no present
intention of selling (in connection with a distribution or otherwise), granting any participation in, or otherwise distributing
the same, and does not presently have reason to anticipate a change in such intention.

 

4.2
Accredited
Investor
Status.
The Purchaser is an “accredited
investor”
as that term
is defined in Rule
501(a) of Regulation
D (an “Accredited
Investor”)
because such Purchaser meets at least one (1) of the categories of "accredited investors" set forth on Exhibit G
attached hereto. Any assignee of Purchaser under Section 1.1 will also be an Accredited Investor.

 

4.3
Ability to Bear Economic Risk. The Purchaser acknowledges that investment in the Securities involves a high degree of
risk, and represents that it is able, without materially impairing its financial condition, to hold the Securities for an indefinite
period of time and to suffer a complete loss of its investment.

 

4.4
Restricted Securities. The Purchaser understands that the Notes have not been, and will not be, registered under the
Securities Act, or any state securities laws, by reason of a specific exemption from the registration provisions of the Securities
Act which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of such Purchaser’s
representations as expressed herein. The Purchaser understands that the Notes are “restricted securities” under applicable
U.S. federal and state securities laws and that, pursuant to these laws, and except as provided in Section 1.1, such Purchaser
must hold the Notes indefinitely (or until maturity) unless they are registered with the Securities and Exchange Commission and
qualified by state authorities, or an exemption from such registration and qualification requirements is available. Such Purchaser
acknowledges that the Company is under no obligation to effect any such registration with respect to the Notes. Such Purchaser
further acknowledges that if an exemption from registration or qualification is available, it may be conditioned on various requirements
including the time and manner of sale, the holding period for the Securities, and on requirements relating to the Company which
are outside of the Purchaser’s control, and which the Company is under no obligation and may not be able to satisfy.

 

4.5
Further Limitations on Disposition. Without in any way limiting the representations set forth above, Purchaser further
agrees not to make any disposition of all or any portion of the Note unless and until:

 

(a)
There is then in effect a Registration Statement under the Securities Act covering such proposed disposition and such
disposition is made in accordance with such Registration Statement;

 

(b)
The Purchaser shall have notified the Company of the proposed disposition and shall have furnished the Company with
a detailed statement of the circumstances surrounding the proposed disposition, and if reasonably requested by the Company, Purchaser
shall have furnished the Company with an opinion of counsel, reasonably satisfactory to the Company, that such disposition will
not require registration under the Securities Act or any applicable state securities laws, provided that no such opinion shall
be required for dispositions in compliance with Rule 144, except in unusual circumstances; or

 

(c)
Notwithstanding the provisions of paragraphs (a) and (b) above, no such registration statement or opinion of counsel
shall be necessary for a transfer by Purchaser to a partner (or retired partner) or member (or retired member) of Purchaser in
accordance with partnership or limited liability company interests, or transfers by gift, will or intestate succession to any spouse
or lineal descendants or ancestors, if all transferees agree in writing to be subject to the terms hereof to the same extent as
if they were the Purchaser hereunder.

 

4.6
No General Solicitation. Neither Purchaser, nor any of its officers, directors, managers, employees, agents, members,
stockholders or partners, has either directly or indirectly, including through a broker or finder, (a) engaged in any general solicitation
in connection with the offer and sale of the Notes, (b) published any advertisement in connection with the offer and sale of the
Notes, (c) been presented with or solicited by any publicly issued or circulated newspaper, mail, radio, television or other form
of general advertising or solicitation in connection with the offer, sale or purchase of Notes, or (d) attended any public meeting
or seminar concerning an investment in the Notes.

 

4.7
Exculpation by Purchaser. The Purchaser acknowledges that it is not relying upon any person other than the Company and
its officers and managers, in making its investment or decision to invest in the Company and its subsidiaries. Purchaser agrees
that neither Purchaser nor the respective controlling persons, officers, directors, managers, partners, agents, or employees of
Purchaser shall be liable to any assignee under Section 1.1 for any action heretofore or hereafter taken or omitted to be taken
by any of them in connection with the purchase of the Notes.

 

4.8
Residence. If such Purchaser is an individual, such Purchaser resides in the state or province identified in the address
of such Purchaser set forth on such Purchaser’s signature page to this Agreement; if such Purchaser is a partnership, corporation,
limited liability company or other entity, then the principal place of business of such Purchaser is located at the address of
such Purchaser set forth on such Purchaser’s signature page to this Agreement.

 

4.9
Authorization;
Enforcement.
This Agreement
has been duly
and validly
authorized.
This Agreement
has been
duly executed
and delivered
on behalf of the Purchaser,
and this Agreement
constitutes a valid
and binding agreement
of the Purchaser enforceable
in accordance
with its terms.

 

4.10
"Bad Actor" Status. Purchaser hereby represents and warrants that neither it nor any of its
Rule 506(d) Related Parties is subject to any Disqualification Event. For purposes of this Agreement, "Rule 506(d) Related
Party" shall mean a person or entity covered by the "Bad Actor" disqualification provision of Rule 506(d) of
the Securities Act.

 

4.11
Legends. Such Purchaser understands that the Notes may bear any one or more of the restrictive legends, including any
legend required by federal securities laws or the securities laws of any state to the extent such laws are applicable to the securities
so legended.

 

		5.	Further Agreements; Covenants

5.1
Further Assurances. Purchaser agrees and covenants that at any time and from time to time it will promptly execute and
deliver to the Company such further instruments and documents and take such further action as the Company may reasonably require
in order to carry out the full intent and purpose of this Agreement and to comply with state or federal securities laws or other
regulatory approvals.

 

5.2
Best Efforts.The
parties
shall use their
best efforts
to satisfy
timely each
of the conditions described
in this Agreement.

 

5.3
Corporate
Existence.
So long as the Purchaser
beneficially
owns any
Note, the Company
shall maintain
its corporate
existence
and shall not sell
all or substantially
all of the Company’s
assets,
except
in the event of a merger
or consolidation or sale
of all or substantially
all of the Company’s
assets, where
the surviving or successor
entity in such
transaction (i)
assumes the Company’s
obligations
hereunder and
under the agreements
and instruments
entered into in connection
herewith and
(ii) is a publicly
traded
corporation
whose Common Stock
is listed for
trading on the Pink
Sheets, OTCQX,
OTCQB,
Nasdaq,
Nasdaq
SmallCap,
NYSE or AMEX.

 

5.4
Failure to Comply
with the 1934 Act. So long
as the Purchaser beneficially
owns each Note, if applicable, the Company
shall comply
with the reporting
requirements
of the Securities Exchange Act of 1934, as amended (the “1934 Act”);
and the Company
shall continue to be
subject to the reporting
requirements
of the 1934 Act.

 

5.5
Trading Activities.
Neither
the Purchaser nor its affiliates
has an open
short position in the common stock
of the Company
and the Purchaser agrees
that it shall
not, and that it will cause
its affiliates
not to, engage
in any short
sales of or hedging
transactions
with respect
to the common stock of the Company.

 

5.6
Conditions to the Company’s
Obligation to Sell.
The obligation of the Company
hereunder
to issue and sell the Notes
to the Purchaser at the Closing
is subject to the satisfaction,
at or before
the Closing Date
of each
of the following conditions
thereto, provided
that these conditions
are for
the Company’s
sole benefit and
may be waived
by the Company
at any
time in its sole discretion:

 

a.The
Purchaser shall have
executed
this Agreement and
delivered the same
to the Company.

 

b.
The Purchaser shall
have agreed to deliver
the Loan Amount in accordance
with the terms of this Agreement, and a copy of each Note to the Company.

 

c.
The representations
and warranties
of the Purchaser shall be true
and correct
in all material
respects
as of the date
when made
and as of the Closing
Date as though
made at that
time (except
for representations
and warranties
that speak
as of a specific
date),
and the Purchaser shall
have performed,
satisfied
and complied
in all material
respects with the covenants,
agreements
and conditions required
by this Agreement
to be performed,
satisfied
or complied with by
the Purchaser at or prior
to the Closing Date.

 

d. No litigation,
statute, rule,
regulation,
executive
order, decree,
ruling or injunction
shall have been
enacted,
entered,
promulgated
or endorsed
by or in any
court or governmental
authority
of competent
jurisdiction or any
self-regulatory
organization
having authority
over the matters
contemplated
hereby
which prohibits
the consummation of any
of the transactions
contemplated
by this Agreement.

 

5.7 Conditions
to Purchaser’s Obligation
to Purchase.
The obligation
of the Purchaser hereunder
to purchase
the Notes at a Closing is subject
to the satisfaction,
at or before
the Closing Date of each
of the following conditions,
provided that
these conditions are
for the Purchaser’s
sole benefit
and may be
waived by
the Purchaser at
any time in its sole discretion:

 

a. The
Company
and its subsidiaries, as applicable, shall have
executed
this Agreement,
the Notes, and the Closing documents, and delivered
the same (including the original Notes)
to the Purchaser.

 

b. The
representations
and warranties
of the Company
and its subsidiaries shall be true and
correct
in all material
respects
as of the date
when made and
as of the Closing
Date as though
made at such
time (except
for representations
and warranties
that speak
as of a specific
date) and
the Company
and its subsidiaries shall have
performed,
satisfied
and complied
in all material
respects
with the covenants,
agreements
and conditions required
by this Agreement
to be performed,
satisfied
or complied with by
the Company
at or prior to the
Closing Date.

 

c. No litigation,
statute, rule,
regulation,
executive
order, decree,
ruling or injunction
shall have been
enacted,
entered,
promulgated
or endorsed
by or in any
court or governmental
authority
of competent
jurisdiction or any
self-regulatory
organization
having authority
over the matters
contemplated
hereby
which prohibits
the consummation of any
of the transactions
contemplated
by this Agreement.

 

d. No event
shall have occurred
which could reasonably
be expected
to have a Material
Adverse Effect
on the Company
including but not limited
to a change in the reporting
status of the Company
or the failure
of the Company
to be timely in its reporting
obligations.

 

		6.	Miscellaneous

6.1
Binding Agreement. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the
respective successors and assigns of the parties. Nothing in this Agreement, expressed or implied, is intended to confer upon any
third party any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.

 

6.2
Governing Law. This Agreement and all actions arising out of or in connection with this Agreement shall be governed
by and construed in accordance with the laws of the State of Arizona, without regard to the conflicts of law provisions of the
State of Arizona, or of any other state.

 

6.3
Counterparts. This Agreement may be executed in two or more counterparts, which may be delivered by electronic transmission
(including delivery facsimile copies of signatures via email in PDF or similar readily accessible format), each of which shall
be deemed an original, but all of which together shall constitute one and the same instrument. The parties may execute this Agreement
electronically.

 

6.4
Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be
considered in construing or interpreting this Agreement.

 

6.5
Severability.
In the event
that any
provision of this Agreement
is invalid or unenforceable
under any
applicable statute
or rule of law,
then such
provision shall be deemed
inoperative to the
extent
that it may conflict
therewith and shall
be deemed
modified to conform
to such statute or rule
of law. Any provision
hereof which may
prove invalid
or unenforceable
under any
law shall not affect
the validity
or enforceability
of any other
provision hereof.

 

6.6
Notices. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon
personal delivery to the party to be notified, (b) when sent by confirmed electronic mail or facsimile if sent during normal
business hours of the recipient, if not, then on the next business day, (c) five days after having been sent by registered
or certified mail, return receipt requested, postage prepaid, or (d) one day after deposit with a nationally recognized overnight
courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the Company at
the address on the signature page below, and to each Purchaser at the address set forth on the signature page below or at such
other addresses as the Company or such Purchaser may designate by 10 days advance written notice to the other parties hereto.

 

6.7
Modification; Waiver. Any modification or waiver of any provision of this Agreement or consent to departure therefrom
shall be effective only upon the written consent of the Company and the Purchaser. Any provision of the Notes may be amended or
waived by the written consent of the Company and the Purchaser, or requisite holder.

 

6.8 Expenses.
Each Purchaser shall bear its respective expenses and legal fees incurred with respect to this Agreement and the transactions
contemplated herein.

 

6.9
Delays or Omissions. It is agreed that no delay or omission to exercise any right, power or remedy accruing to each
Purchaser, upon any breach or default of the Company under the Loan Documents shall impair any such right, power or remedy, nor
shall it be construed to be a waiver of any such breach or default, or any acquiescence therein, or of or in any similar breach
or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring. It is further agreed that any waiver, permit, consent or approval of any kind or character
by any Purchaser of any breach or default under this Agreement, or any waiver by any Purchaser of any provisions or conditions
of this Agreement must be in writing and shall be effective only to the extent specifically set forth in writing and that all remedies,
either under this Agreement, or by law or otherwise afforded to any Purchaser, shall be cumulative and not alternative.

 

6.10
Publicity.
The Company
shall have the right
to review a reasonable
period
of time before issuance
of any
press releases,
SEC, OTC
Markets or FINRA
filings, or any
other public statements
with respect to the transactions
contemplated
hereby;
provided, however,
that the Company
shall be entitled,
without the prior approval
of the Purchaser, to make any
press release,
SEC, OTC
Markets (or other
applicable
trading market)
or FINRA
filings
with respect
to such transactions
as is required
by applicable
law and regulations
(although the
Purchaser shall be consulted
by the Company
in connection
with any such
press release
prior to its release
and shall be provided
with a copy thereof
and be given
an opportunity
to comment thereon).

 

6.11
No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties
to express their mutual intent, and no rules of strict construction will be applied against any party.

 

6.12
Survival.
The representations
and warranties
of the Company
and the agreements
and covenants
set forth
in this Agreement shall
survive the closing
hereunder
notwithstanding any
due diligence
investigation
conducted
by or on behalf
of the Purchaser.

 

6.13
Entire Agreement. This Agreement and the Exhibits hereto and the Loan Documents constitute the full and entire understanding
and agreement between the parties with regard to the subjects hereof and no party shall be liable or bound to any other party in
any manner by any representations, warranties, covenants and agreements except as specifically set forth herein.

 

(signature pages
follow)

    	 

    	 

    

In
Witness Whereof, the parties have executed this Loan and Revenue Participation Agreement as of the date first written
above.

 

Company:

 

ITEM
9 LABS CORP.

 

 

By: _______________________________

 

Name: ____________________________

 

Title: ______________________________

 

 

Address:

 

_______________________________

 

_______________________________

 

_______________________________

 

Email:
__________________________

    	 

    	 

    

  

In
Witness Whereof, the parties have executed this Loan and Revenue Participation Agreement as of the date first written
above.

 

ARIZONA
SUBSIDIARY:

 

BSSD
GROUP, LLC

 

 

By: _______________________________

 

Name: ____________________________

 

Title: ______________________________

 

 

Address:

 

_______________________________

 

_______________________________

 

_______________________________

 

Email: __________________________ 

    	 

    	 

    

In
Witness Whereof, the parties have executed this Loan and Revenue Participation Agreement as of the date first written
above.

 

NEVADA
SUBSIDIARY:

 

ITEM
9 PROPERTIES, LLC.

 

 

By: _______________________________

 

Name: ____________________________

 

Title: ______________________________

 

 

Address:

 

_______________________________

 

_______________________________

 

_______________________________

 

Email:
__________________________

    	 

    	 

    

In
Witness Whereof, the parties have executed this Loan and Revenue Participation Agreement as of the date first written
above.

 

PURCHASER: 

 

VIRIDIS GROUP I9 CAPITAL, LLC

 

By: _______________________________

 

Name: ____________________________

 

Title: ______________________________

 

 

Address:

 

_______________________________

 

_______________________________

 

_______________________________

 

Email:
__________________________

 

 

PURCHASER:
(NV NOTE)

 

By: _______________________________

 

Name: ____________________________

 

Title: ______________________________

 

 

Address:

 

_______________________________

 

_______________________________

 

_______________________________

 

Email:
__________________________

 

    	 

    	 

    

Exhibit
A

 

Promissory
Note 

ARIZONA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 

    	 

    

 

PROMISSORY NOTE

 

	Total Principal Amount:	Up to $1,200,000
	Issue Date:	September 11, 2018
	Location of Execution:	Scottsdale, Arizona
	Borrower:	BSSD Group, LLC
	Borrower’s Address:	2033 N. Overfield Road
	 	Casa Grande, AZ 85194
	Lender:	Viridis Group I9 Capital, LLC
	Lender’s Address:	2727 N. 3rd Street, Suite 301
	 	Phoenix AZ 85004

 

THIS PROMISSORY
NOTE (the "Note") is made and entered to be effective as of the 11th day of September, 2018, by
and between BSSD Group, LLC, an Arizona limited liability company (the "Borrower")
and Viridis Group I9 Capital LLC, an Arizona limited liability company (the "Lender").
For value received, and in consideration of the mutual promises and covenants hereinafter set forth, Borrower and Lender agree
as follows:

 

1.  Promise
to Pay. Borrower promises to pay to Lender or order, in lawful money of the United States of America, the principal amount
up to One Million Two Hundred Thousand Dollars and no/100 Dollars ($1,200,000), or so much as may be advanced to Borrower by Lender
together with interest on the unpaid outstanding principal balance.

 

2. Maturity
Date. As used herein, the "Maturity Date" shall be September 11, 2023.

 

3.  Interest
Rate. Prior to the Maturity Date, interest on the principal balance outstanding shall accrue at a rate per annum of
2.9% interest, compounded annually.

 

4.  Payment
of Principal and Interest. This Note is due and payable in monthly payments of interest only, with all principal and any accured
and unpaid interest is due and payable in full on the Maturity Date, whether such maturity occurs by acceleration or otherwise.
All Distributions, as defined in and made under the Loan and Revenue Participation Agreement of even date herewith, shall first
be applied to accrued and unpaid interest then principal. All payments called for hereunder shall be paid in lawful money of the
United States of America in federal or other immediately collected funds, which, at the time of payment is legal tender for the
payment of public and private debts. All written communications and payments will be mailed or delivered to Lender at the address
above.

 

5.  Prepayment.
Borrower may pay, without penalty, at any time and from time to time, all or a portion of the amount owed earlier than it is due.

 

6. Loan
Advances. Lender’s obligation to make the Initial Advance (as defined in the Loan and Revenue Participation Agreement)
and each subsequent advance of the loan proceeds under this Note shall be subject to the fulfillment to Lender's satisfaction of
all of the conditions set forth in this Section 6. Lender shall have received and accepted a complete set of written Plans and
Specifications setting forth all improvements for the AZ Expansion (as defined in the Loan and Revenue Participation Agreement),
and Borrower shall have furnished to Lender copies of all permits and requisite approvals of any governmental body necessary for
the construction and use of the AZ Expansion. Borrower shall have furnished in form and substance satisfactory to Lender an executed
copy of the Architect's Contract and an executed copy of the Construction Contract.

 

a.  Application
for Advances. Each application shall be stated on a standard AIA payment request form or other form approved by Lender, executed
by Borrower and the Architect, and supported by such evidence as Lender shall reasonably require. Borrower shall apply only for
disbursement with respect to work actually done by the General Contractor and for materials and equipment actually incorporated
into the Project. Each application for an Advance shall be deemed a certification of Borrower that as of the date of such application,
all representations and warranties contained in the Agreement are true and correct, and that Borrower is in compliance with all
of the provisions of this Agreement. Lender will fund each such application for payment within five (5) business days.

 

b. Cessation
of Advances. Lender shall have no obligation to make loan advances or to disburse Loan proceeds if: (A) Borrower is in default
under the terms of this Note or any other agreement of the Borrower and Lender; (B) Borrower becomes insolvent, files a petition
in bankruptcy or similar proceedings, or is adjudged a bankrupt; or (C) there occurs a material adverse change in Borrower's financial
condition or in the value of any collateral securing this Note.

 

c. Limitation
of Responsibility. The making of any advance by Lender shall not constitute or be interpreted as either (A) an approval or
acceptance by Lender of the work done through the date of the advance, or (B) a representation or indemnity by Lender to any party
against any deficiency or defect in the work or against any breach of any contract. Inspections and approvals of the Plans and
Specifications, the improvements, the workmanship and materials used in the improvements, and the exercise of any other right of
inspection, approval, or inquiry granted to Lender in this Agreement are acknowledged to be solely for the protection of Lender's
interests, and under no circumstances shall they be construed to impose any responsibility or liability of any nature whatsoever
on Lender to any party. Neither Borrower nor any contractor, subcontractor, materialman, laborer, or any other person shall rely,
or have any right to rely, upon Lender's determination of the appropriateness of any advance. No disbursement or approval by Lender
shall constitute a representation by Lender as to the nature of AZ Expansion, its construction, or its intended use for Borrower
or for any other person, nor shall it constitute an indemnity by Lender to Borrower or to any other person against any deficiency
or defects in AZ Expansion or against any breach of any contract.

 

7. Interest
After Default. At Lender's option and without prior notice, upon the occurrence of an Event of Default under this Note or any
Related Documents, Lender may increase the interest rate applicable to the Note to twelve (12%) percent per annum, compounded annually
(the "Default Rate"). Lender shall give written notice to Borrower of Lender's imposition of the Default Rate.
If the Note is not paid on the Maturity Date, Lender may impose the Default Rate from the Maturity Date to the date paid in full
without notice. Lender's imposition of the Default Rate shall not constitute an election of remedies or otherwise limit Lender's
rights concerning other remedies available to Lender as a result of the occurrence of an event of default. In the event of a conflict
between the provisions of this paragraph and any other provision of this Note or any Related Document, the provisions of this paragraph
shall control.

 

8.  Security.
This Promissory Note is secured by a Security Agreement and Deed of Trust of even date herewith.

 

9.  Default.
Each of the following shall constitute an event of default ("Event of Default”) under this Note:

 

a.  Payment
Default. Borrower fails to make any payment when due under this Note.

 

b.  Other
Defaults. Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in
this Note or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between
Lender and Borrower, after Lender has given Borrower written notice specifying the default and Borrower has failed to cure the
default within fifteen (15) calendar days thereafter.

 

c.  Default
in Favor of Third Parties. Borrower defaults under any loan, extension of credit, security agreement, purchase or sales
agreement, or any other agreement, in favor of any other creditor or person that may, in Lender’s commercially reasonable
judgment, materially affect any of Borrower's property or Borrower's ability to repay this Note or perform Borrower's obligations
under this Note or any of the documents related to or executed in connection with this Note (the “Related Documents”).

 

d.  False
Statements. Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower's behalf, under
this Note or any Related Documents is false or misleading in any material respect, either now or at the time made or furnished
or becomes false or misleading at any time thereafter.

 

e.  Dissolution
or Insolvency. The dissolution of Borrower, any member withdraws from Borrower, or any other termination of any Borrower's
existence as a going business, the insolvency of any Borrower, the appointment of a receiver for any part of any Borrower's property,
any assignment for the benefit of creditors, or the commencement of any proceeding under any bankruptcy or insolvency laws by or
against Borrower not dismissed within sixty (60) days.

 

f.  Creditor
or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of any Borrower or by any governmental agency. However, this Event of Default
shall not apply if there is a good faith dispute by such Borrower as to the validity or reasonableness of the claim which is the
basis of the creditor or forfeiture proceeding and if such Borrower gives Lender written notice of the creditor or forfeiture proceeding
and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender,
in its commercially reasonable discretion, as being an adequate reserve or bond for the dispute.

 

10.  Lender's
Rights. Upon an Event of Default, Lender may declare the entire unpaid principal balance on this Note and all accrued unpaid
interest immediately due, and then Borrower will pay that amount.

 

11.  Attorney's
Fees; Expenses. Lender may hire or pay someone else to help collect this Note if Borrower does not pay. Borrower will pay Lender
the reasonable costs of such collection. This includes, subject to any limits under applicable law, Lender's attorneys' fees and
Lender's legal expenses, whether or not there is a lawsuit, including without limitation attorneys' fees and legal expenses for
bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), and appeals. If not prohibited
by applicable law, Borrower also will pay any court costs, in addition to all other sums provided by law.

 

12.  Application
of Payments. Unless otherwise agreed, all sums received from Borrower may be applied to interest, fees, principal, or any other
amounts due to Lender in any order at Lender's sole discretion.

 

13.  Further
Assurances. The parties hereto agree to do all things deemed reasonably necessary by Lender in order to fully document the
loan evidenced by this Note and any Related Documents. The undersigned agree to assist in the cure of any defects in the execution,
delivery or substance of the Note and Related Documents to the extent consistent with the understanding of the parties.

 

14.  Successors
in Interest. The terms of this Note shall be binding upon Borrower, and upon Borrower's successors and assigns, and shall inure
to the benefit of Lender and its successors and assigns.

 

15.  General
Provisions. Lender may delay or forgo enforcing any of its rights or remedies under this Note without waving those rights.
Borrower and any other person who signs or endorses this Note, to the extent allowed by law, waive presentment, demand for payment,
and notice of dishonor. Upon any change in the terms of this Note, and unless otherwise expressly stated in writing, no party who
signs this Note, whether as maker, accommodation maker or endorser, shall be released from liability. All such parties agree that
Lender may renew or extend (repeatedly and for any length of time) this loan or release any party; and take any other action deemed
necessary by Lender without the consent of or notice to anyone.

 

16.  Borrower's
Representations and Warranties. Borrower represents and warrants to Lender that Borrower has been duly organized under the
laws of the State of Arizona and has the requisite power and authority to enter into and perform this Note, the Related Documents,
and instruments required to be executed and delivered by Borrower pursuant hereto. This Note has been duly executed and delivered
by Borrower, and is a valid and binding obligation of Borrower enforceable in accordance with its terms. This Note, the Related
Documents, and instruments required to be executed and delivered by Borrower pursuant hereto have each been duly authorized by
all limited liability company action on the part of Borrower and such execution, delivery and performance does not and will not
conflict with or result in a violation of Borrower’s certificate of formation or other organizational documents of Borrower
or any judgment, order or decree of any court or arbiter to which Borrower is a party, or any agreement to which Borrower is bound
or subject.

 

17.  Waiver
of Right to Jury Trial. Borrower hereby knowingly, voluntarily and intentionally waives any right it may have to a trial by
jury in respect of any litigation arising out of, under or in connection with this Note, the Related Documents, or the transactions
contemplated herein. Borrower hereby certifies that no representative or agent of the Lender or the Lender's counsel has represented,
expressly or otherwise, that the Lender would not, in the event of such litigation, seek to enforce this waiver of right to jury
trial provision. Borrower acknowledges that the Lender has been induced to make the loan evidenced by this Note by, among other
things, the provisions of this section.

 

18.  Governing
Law. This Note is and shall be deemed entered into in the State of Arizona and shall be governed by and construed in accordance
with the laws of the State of Arizona and no defense given or allowed by the laws of any state or country shall be interposed in
any action or proceeding hereof unless such defense is also given or allowed by the laws of the State of Arizona. In the event
that any word, phrase, clause, sentence, or other provision hereof shall violate any applicable statute, ordinance or rule of law
in any jurisdiction in which it is used, such provisions shall be ineffective to the extent of such violation without invalidating
any other provision hereof.

 

19.  Jurisdiction
and Venue. With respect to any claim arising out of this Note or any other agreement to or for the benefit of Lender, Borrower
(a) irrevocably submits, for itself and its property, to the exclusive jurisdiction and venue of the courts of Maricopa County,
Arizona, and any appellate courts therefrom, and (b) irrevocably waives any objection which it may have at any time to venue of
any suit, action or proceeding arising out of or relating to this Note or any Related Document brought in any such court, (c) irrevocably
waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum and
(d) further irrevocably waives the right to object with respect to such claim, suit, action or proceeding brought in any such court
that such court does not have jurisdiction over it. Borrower irrevocably and unconditionally consents to the service of process
in any such suit, action or proceeding in the aforesaid court by the mailing of copies of such process by certified mail to Borrower’s
address above.

 

PRIOR TO SIGNING THIS NOTE, BORROWER READ
AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE. BORROWER AGREES TO THE TERMS OF THE NOTE. 

 

BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED
COPY OF THIS PROMISSORY NOTE. 

 

IN WITNESS WHEREOF, the Borrower has
caused this Note to be duly executed as of the date set forth above written.

 

BSSD GROUP, LLC, An Arizona limited liability
company

 

By:      ITEM 9 LABS CORP.

A Delaware corporation

Its Manager

 

By: _______________________________

Bryce Skalla,
President 

    	 	 	 

     

    

Exhibit
B

 

Guaranty

ARIZONA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 

    	 

    

 

GUARANTY AGREEMENT

 

THIS GUARANTY AGREEMENT
is dated and effective September 11, 2018, and is made by Item 9 Labs Corp., a Delaware corporation (“Guarantor”)
to and for the benefit of Viridis Group I9 Capital, LLC, an Arizona limited liability company (“Lender”).

 

Recitals

 

A.
For sufficient value, BSSD Group LLC, an Arizona limited liability company (“Borrower”) executed a Promissory
Note dated September 11, 2018 (the “Note”) in the principal amount of up to $1,200,000 for the benefit Lender
as Note Holder.

 

B.
In order to induce Lender to convey its assets to Borrower, Guarantor agrees to personally guarantee the obligations of
Borrower under the Note as provided herein.

 

C.
Guarantor is the owner of 100% of the membership interests in the Borrower, and acknowledges that it is receiving an indirect
benefit from the funding of the Note by the Lender.

 

Agreement

 

IN CONSIDERATION of the
foregoing and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Guarantor agrees
as follows:

 

1.
Guarantee.

 

		(a)	Guarantor, severally and unconditionally, guarantees to Lender the full and prompt payment of the
principal and any interest at the rate specified under the Note, in lawful money of the United States, upon demand when due, whether
at maturity or by acceleration or otherwise, including but not limited to, all of Borrower’s present and future obligations
under the Note, and all modifications, amendments, restatements, extensions and renewals thereof, whether for principal, interest
or otherwise.

 

		(b)	In addition, Guarantor agrees to pay Lender any and all expenses, including, without limitation,
attorneys’ fees, court costs and related legal expenses incurred by Lender in connection with the enforcement of this Guaranty.

 

		(c)	All of the obligations, indebtedness and liabilities of Guarantor set forth in this Section 1
are referred to herein as the “Obligations.”

 

2.
Obligations Absolute. The Obligations of the Guarantor hereunder are primary, absolute and unconditional and are
intended as a continuing guaranty of payment and performance by Guarantor. Guarantor acknowledges having been provided with a copy
of the Note and having consulted with counsel concerning Guarantor’s Obligations hereunder.

 

3.
No Impairment of Liability. Guarantor agrees that Guarantor’s liability hereunder will not be released, reduced,
impaired or affected by any one or more of the following events: (a) Lender’s obtaining additional collateral from Borrower
or any other person to secure payment or performance of the Note; (b) the assumption of liability by any other person (whether
as guarantor or otherwise) for payment or performance under the Note; (c) the release, surrender, exchange, loss, termination,
waiver or other discharge of any collateral securing payment or performance under the Note; (d) the subordination, relinquishment
or discharge of the Lender’s rights relating to the Note or any collateral described therein; (e) the foreclosure upon
any collateral given to secure any liability of Borrower by judicial or non-judicial sale (though it is acknowledged that no collateral
was pledged in connection with the origination of the Note or this Guaranty); (f) the loss or impairment of any right of subrogation
of the Guarantor; (g)  (h) the insolvency, bankruptcy, reorganization, discharge, waiver or other exoneration of the
Borrower or any other person now or hereafter liable for payment or performance of the Obligations; (i) the renewal, consolidation,
extension, modification, rearrangement or amendment from time to time of the Note, including, without limitation, the extension
of the maturity date of the Note; (j) the failure, delay, waiver or refusal by Lender to exercise any right or remedy held
by Lender under the Note; (k) Lender’s application of any monies available to Lender in payment or reduction of any
of the Obligations in such manner and such amounts and at such times and in such order of priority as Lender may see fit to the
payment or reduction of such portions of the Obligations as Lender may elect; (l) the sale, encumbrance, transfer or other
modification of the ownership of the Borrower or the Borrower’s assets, or the change in the financial condition or management
of the Borrower; (m) the invalidity, unenforceability or insufficiency of any provision of the Note or any collateral securing
payment or performance thereunder; or (n) the failure of the Guarantor to receive notice of any one or more of the foregoing
actions or events.

 

4.
Waivers by Guarantor. Guarantor hereby expressly waives (a) diligence, presentment, protest, notice of dishonor,
demand for payment, notice of nonpayment or nonperformance; (b) notice of the acceptance of this Guaranty; (c) notice
of the existence or creation of all or any part of the Obligations of Borrower; (d) notice of termination as to future liability
given by any other guarantor; (e) notice of demand, advertisement or notice of time or place of sale of any Collateral securing
any of the Borrower’s Obligations; (f) all presentments, demands for performance, notices of nonperformance, protests
and all other notices whatsoever; (g) any right to require Lender to proceed against Borrower or any security held in relation
to the Borrower’s Obligations or to pursue any other right or remedy in Lender’s power; (h) any right to contest
the enforcement of this Guaranty by virtue of any statute of limitations or other law varying the terms of this Guaranty; (i) any
other defense available to Guarantors at law or in equity; or (j) and the right to interpose counterclaims or setoffs of any
kind or description in any litigation arising under this Guaranty.

 

5.
Amendments. No provision or term of this Guaranty may be amended, modified, revoked, supplemented, waived or otherwise
changed except by a written instrument duly executed by Guarantor and Lender and designated as an amendment, supplement or waiver

 

6.
Transfer of Assets. Guarantor will not voluntarily or involuntarily transfer title to any of his or her material
assets without fair consideration or take any other action or suffer the same to be done, which would have a materially adverse
effect on Guarantor’s ability to fulfill his Obligations to Lender hereunder.

 

7.
Notices. Any notice given to any party in connection with this Guaranty shall be in writing, shall be (i) hand
delivered, (ii) sent by registered or certified mail, return receipt requested, postage prepaid, or (iii) sent by Federal
Express or other nationally recognized overnight courier service, and if hand delivered shall be deemed received when delivered,
if mailed shall be deemed received one day after having been deposited in the United States mail, postage prepaid, and if sent
by Federal Express or other nationally recognized overnight courier service shall be deemed received one business day after having
been deposited with Federal Express or other nationally recognized overnight courier service if designated for next-day delivery,
addressed as follows:

 

If to Lender to:

Viridis Group I9 Capital, LLC

2727 N. 3rd Street, Suite 301

Phoenix AZ 85004

 

If to Guarantor to:

Item 9 Labs Corp.

2033 N. Overfield Road

Casa Grande, AZ 85194

 

Either party may change its address for notices
by giving the other party notice thereof.

 

8.
Counterparts. This Guaranty may be executed in two or more counterparts, each of which shall be deemed an original
and all of which together shall constitute one instrument.

 

9.
Captions and Pronouns. The captions and headings of the various sections of this Guaranty are for convenience only,
and are not to be construed as confining or limiting in any way the scope or intent of the provisions hereof.

 

10.
Binding Effect. This Agreement will be binding on the Guarantor and his successors and permitted assigns, and will
inure to the benefit of the Lender and all successors and permitted assigns of the Lender. Guarantor consents to the assignment
of all or any portion of the rights of the Lender hereunder in connection with any assignment of the rights of the Lender under
the Note without notice to the Guarantor.

 

11.
Rights Cumulative. Each right, power and remedy of Lender under this Guaranty and the Note is cumulative and in addition
to every other right, power or remedy, existing or implied, given now or hereafter existing, at law or in equity, and each and
every right, power and remedy set forth herein or otherwise so existing may be exercised from time to time as often and in such
order as may be deemed expedient by Lender, and the exercise or the beginning of the exercise of one right, power or remedy shall
not be a waiver of the right to exercise at the same time or thereafter any other right, power or remedy; and no delay or omission
of Lender in the exercise of any right, power or remedy accruing hereunder or arising otherwise shall impair any such right, power
or remedy, or be construed to be a waiver of any default or acquiescence therein.

 

12.
Waiver. Lender shall not be deemed to have waived any provision of this Guaranty or the Note unless such waiver is
in writing and is signed by Lender.

 

13.
Choice of Law. This Agreement has been negotiated, executed and delivered in Scottsdale Arizona, and is intended
to be construed in accordance with the laws of the State of Arizona.

 

14.
Time of the Essence. Time is of the essence hereof with respect to the dates, terms and conditions of this Guaranty.

 

IN WITNESS WHEREOF, the
Parties have duly executed this Personal Guaranty the date first above written.

 

ITEM 9 LABS CORP.

A Delaware corporation

 

By: ________________________

Bryce Skalla, President

 

    	 

    	 

    

Exhibit
C

 

DEED
OF TRUST AND SECURITY AGREEMENT

ARIZONA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 

    	 

    

 

	
        RECORDING REQUESTED BY:

        Viridis Group I9 Capital, LLC

        AND WHEN RECORDED MAIL TO:

        2727 N. 3rd Street, Suite 301

        Phoenix AZ 85004

        Attn: Andrew Bowden, Manager
	 
	 

                                                                                 

                                                                                 

                                                                                ESCROW NO.:   

SPACE ABOVE THIS LINE FOR RECORDER’S
USE

CONSTRUCTION DEED OF TRUST, SECURITY
AGREEMENT, 

AND ASSIGNMENT OF RENTS AND FIXTURE FILING

[Arizona]

 

	Date: 	September 11, 2018
	 	 
	Trustor: 	BSSD GROUP, LLC, an Arizona limited liability company 
	whose address is:	2033 N. Overfield Rd
	 	Casa Grande, AZ 85194
	 	 
	Beneficiary:	Viridis Group I9 Capital, LLC, an Arizona limited liability company
	whose address is:	2727 N. 3rd Street, Suite 301
	 	Phoenix AZ 85004
	 	Attn: Andrew Bowden, Manager   
	 	 
	Trustee:	Chicago Title Agency, Inc.
	 	6710 N. Scottsdale Rd., Suite 100
	 	Scottsdale, AZ 85253

 

This Deed of Trust, Security Agreement,
Assignment of Rents and Fixture Filing (“Deed of Trust”) is made on the above date between the Trustor, Trustee, and
Beneficiary above named.

 

WITNESSETH: That Trustor irrevocably
grants and conveys to Trustee in Trust, with Power of Sale, all of the following described property, both real and personal (collectively,
the “Property”):

 

A.
The certain tract or parcel of land being legally described on Exhibit A hereto (the “Land”);

 

B.
All buildings, structures and improvements of every nature whatsoever now or hereafter constructed and/or situated on the
Land, and all fixtures, machinery, appliances, equipment, furniture and personal property of every kind and nature whatsoever now
or hereafter owned or leased by Trustor and located in, on or attached to, and used or intended to be used in connection with the
Land, buildings, structures or other improvements, or in connection with any construction being conducted or which may be conducted
on the Land, and owned by Trustor, and all extensions, additions, improvements, betterments, renewals, substitutions and replacements
to any of the foregoing (collectively, the “Improvements”);

 

C.
All easements, rights-of-way, gores or strips of land, streets, ways, alleys, passages, sewer rights, water courses, water
rights and powers, and all appurtenances whatsoever, in any way belonging, relating or appertaining to any of the Land, or which
hereinafter shall in any way belong, relate or be appurtenant thereto, whether now owned or hereafter acquired by Trustor;

 

D.
All of the estate, right, title and interest of Trustor of, in and to (i) all judgments, insurance proceeds, awards of damages
and settlements hereafter made resulting from condemnation proceedings or the taking of the Property or any part thereof under
the power of eminent domain, or for any damage (whether caused by such taking or otherwise) to the Property or any part thereof,
or to any rights appurtenant thereto, and all proceeds of any sales or other dispositions of the Property or any part thereof,
and Beneficiary is hereby authorized to collect and receive the awards and proceeds and to give proper receipts and acquittances
therefor, and (if it so elects) to apply the same toward the payment of the indebtedness and other amounts secured hereby, notwithstanding
the fact that the amount owing may not then be due and payable; (ii) all contracts rights, general intangibles, actions and rights
in action, including without limitation all rights to insurance proceeds and unearned premiums arising from or relating to the
Property; and (iii) all proceeds, products, replacements, additions, substitutions, renewals and accessions of and to the Property;

 

E.
All rents, issues, profits, other income and other benefits that are now due or hereafter may become due by reason of the
lending, leasing, or bailment of all or a portion of the Property or use or occupancy thereof to which Trustor may now or hereafter
be entitled to and have received (collectively, the “Property Income”), to be applied against the indebtedness and
other sums secured hereby;

 

F.
Subject to the rights of the Trustor hereunder, all right, title and interest of Trustor in and to any and all leases now
or hereafter which grant a possessory interest in, or the right to use or occupy, all of part of the Property, together with all
security therefor and all amounts payable thereunder, and all books and records which account for payments made under the leases
and all security therefor (collectively, the “Leases”); and

 

G.
All right, title and interest of Trustor in and to the following, whether now owned or existing or owned, acquired, or arising
hereafter (collectively, the “Collateral”): (a) all accounts; (b) all cash and cash equivalents; (c) all general intangibles;
(d) all deposit accounts, and any replacement or successor accounts relating thereto; (e) all documents; (f) all instruments; (g)
all inventory; (h) all chattel paper; (i) all commercial tort claims; (j) all equipment (including all software, whether or not
the same constitutes embedded software, used in the operation thereof); (k) all goods; (l) investment property, including, without
limitation, all swap contracts, commodity accounts, commodity contracts, securities, security entitlements and securities accounts;
(m) contract rights; (n) all books, records, ledger cards, files, correspondence, computer programs, tapes, disks, and related
data processing software (owned by Borrower or in which it has an interest) that at any time evidence or contain information relating
to any Collateral or are otherwise necessary or helpful in the collection thereof or realization thereupon; (o) furniture and removable
fixtures; and (p) to the extent not otherwise included, all accessions, proceeds and products of any and all of the foregoing.

 

Due on Sale: The unpaid balance, including
accrued interest, fees and penalties, is immediately due and payable in the event that the Premises is sold, transferred, or conveyed
in any manner, unless otherwise prohibited by law.

 

THIS DEED OF TRUST is entered into by the Trustor,
Trustee and Beneficiary. Trustor irrevocably grants and conveys to Trustee in Trust, with Power of Sale, the Property, together
with leases, rents, issues, profits, or income generated by the Property (collectively, the “Property Income”); SUBJECT,
HOWEVER, to the right, power and authority given to and conferred upon Beneficiary to collect and apply the Property Income; AND
SUBJECT TO existing taxes, assessments, liens, encumbrances, covenants, conditions, restrictions, rights of way, and easement of
record.

 

This Deed of Trust has been granted to secure:
1) performance of each agreement of Trustor contained in this Deed of Trust; 2) all indebtedness and interest that may arise out
of any construction financing advances provided by Beneficiary as contemplated under the Loan and Revenue Participation Agreement
(the “Loan Agreement”); as evidenced by that certain Promissory Note of even date herewith (the “Note”),
and any extensions or renewals of the Note, in the principal sum of up to $1,200,000.00 executed by Trustor, in favor of Beneficiary
or order; and 3) payment of additional sums and interest on these additional sums which may be loaned to Trustor, or Trustor’s
successors or assigns, after the date of this Deed of Trust when evidenced by a promissory note reciting that they are secured
by this Deed of Trust.

 

TO PROTECT THE SECURITY OF THIS DEED OF TRUST,
TRUSTOR AGREES:

 

1.To keep the
Property in good condition and repair; not to remove or demolish any building thereon; to complete or restore promptly and in
good and workmanlike manner any building thereon which may be damaged, or destroyed and to pay when due all claims for labor performed
and materials furnished therefor; to comply with all laws affecting the Property or requiring any alterations or improvements
to be made thereon; not to commit or permit waste thereof; not to commit, suffer, or permit any act upon the Property in violation
of law; and do other acts which from the character or use of the Property may be reasonably necessary, the specific enumerations
herein not excluding the general. If this Deed of Trust encumbers a unit in a condominium
or a planned unit development, Trustor shall perform when due all of Trustor’s obligations under the declaration or covenants
creating or governing the condominium or planned unit development, the bylaws and regulations of the condominium or planned unit
development and all related documents.

 

2.To
keep the improvements now existing or hereafter erected on the Real Property insured against loss by fire, hazards included within
the term “all risk,” in such amounts (including replacement cost coverage) and for such periods as Beneficiary may
require, but in no event less than the principal balance due under the Note secured by this Deed of Trust.
Trustor shall also insure all fixtures encumbered hereby against the same loss hazards in an amount acceptable to Beneficiary.
Beneficiary shall be named as an insured mortgagee. In the event of loss, all property and casualty insurance proceeds shall be
payable jointly to Trustor and Beneficiary and shall be applied as directed by Beneficiary in its sole discretion. Any application
for or release of any insurance proceeds shall not cure or waive any default under the Note or this Deed of Trust or any notice
of Trustee’s sale hereunder or invalidate any act done pursuant to such notice. In the event of a conveyance to Beneficiary,
or other transfer of title to the Property in extinguishment of the indebtedness secured by this Deed of Trust, all right, title,
and interest of Trustor in and to any insurance policies then in force and proceeds thereof shall pass to the purchaser or grantee.
The hazard insurance policy shall contain a standard non-contributory mortgage clause in favor of Beneficiary and shall provide
that the policies cannot be cancelled or materially changed without thirty (30) days' prior written notice to Beneficiary. Trustor
shall provide Beneficiary with satisfactory and complete certificates of insurance and copies of all policies. In the event of
loss, Trustor shall give prompt notice to the insurance carrier and to Beneficiary. Beneficiary may make proof of loss if not made
promptly by Trustor. If the Real Property is located in whole or in part in a flood hazard area as designated by the appropriate
government entity, Trustor shall procure and keep in force such flood insurance as may be required to meet any applicable requirements
of federal, state or local laws, regulations or ordinances. The insurance carriers providing all insurance shall be chosen by Trustor
subject to approval by Beneficiary.

 

3.Trustor
shall fully cooperate with respect to any action or proceeding which may reasonably affect the rights or powers of Beneficiary
or Trustee hereunder, and in connection therewith, permit Beneficiary or Trustee, at its election to participate in such proceedings.
In any suit brought by Beneficiary or Trustee to foreclose this Deed of Trust, Trustor agrees to pay all costs and expenses of
Beneficiary and Trustee, including reasonable attorney’s fees, actually incurred in connection therewith.

 

4.To pay
before delinquent all taxes and assessments affecting the Property; when due, all encumbrances, charges, and liens, with interest,
on the Property or any part thereof, which appear to be prior or superior hereto; all costs, fees, and expenses of the Trust, including,
without limiting the generality of the foregoing, the fees of Trustee for issuance of any Deed of Partial Release and Partial Reconveyance,
or Deed of Release and Full Reconveyance, and all lawful charges, costs, and expenses in the event of reinstatement of, following
default under, this Deed of Trust or the obligations secured hereby.

 

Should Trustor
fail to make any payment or to do any act as required in the Note or Deed of Trust, then Beneficiary or Trustee, but without obligation
so to do and without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof, may make or do
the same in such manner and to such extent as either may deem necessary to protect the security hereof, Beneficiary or Trustee
being authorized to enter upon the Property for such purposes; appear in and defend any action or proceeding purporting to affect
the security hereof or the rights or powers of Beneficiary or Trustee; pay, purchase, contest, or compromise any encumbrance, charge,
or lien which in the judgment of either appears to be prior or superior hereto; and, in exercising any such power, pay necessary
expenses, employ counsel, and pay his reasonable fees.

 

Should Trustor
fail to make any tax and assessment payment or fail to maintain the insurance required herein, Beneficiary may establish an account
servicing arrangement, with an account servicing agent designated by Beneficiary, at the Trustor’s sole cost and expense,
in order to impound for taxes, assessments, and insurance and to otherwise collect sums due under the Note and this Deed of Trust.

 

5.To pay
immediately and without demand all sums expended by Beneficiary or Trustee pursuant to the provisions hereof, together with interest
from date of expenditure at the same rate as is provided for in the Note secured by this Deed of Trust or at the highest legal
rate, whichever be the greater rate. Any amounts so paid by Beneficiary or Trustee shall become a part of the debt secured by this
Deed of Trust and a lien on the premises or immediately due and payable at option of Beneficiary or Trustee.

 

6.Not to
sell, convey, transfer, or dispose of the Property, or any part thereof, or any interest therein, either voluntarily or involuntarily,
or agree so to do, without the written consent of Beneficiary being first obtained, which consent shall be at the sole and absolute
discretion of Beneficiary. Consent to one such transaction shall not be deemed a waiver of the right to require such consent to
any future or successive transactions. Acceptance by Beneficiary from any transferee or person other than Trustor of any payment(s)
for application on the unpaid balance of the Note shall not constitute a waiver of Beneficiary's rights as granted pursuant to
this paragraph. In the event that Trustor is other than a natural person, any transfer or series of transfers of the capital stock
of or ownership interests in Trustor resulting in a change in ownership of more than forty nine percent (49%) of the voting stock
or ownership interests in the aggregate shall constitute a transfer within the meaning of this paragraph.

 

7.To indemnify
and hold Beneficiary harmless from and against and to reimburse Beneficiary with respect to, any and all claims, demands, causes
of action, loss, damage, liabilities, costs and expenses, including but not limited to Beneficiary's costs, of any and every kind
or character, known or unknown, fixed or contingent, asserted against or incurred by Beneficiary by reason of or arising out of
any violation of any "Applicable Environmental Law," as hereinafter defined, in effect (including without limitation
the presence on the Property or release from the Property of hazardous substances or solid waste disposed of or otherwise released
from the Property), The terms "hazardous substance" and "release" shall have the meanings specified in the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA"), and the terms "solid waste"
and "disposed" shall have the meanings specified in the Resource Conservation and Recovery Act of 1976 ("RCRA");
provided, in the event either CERCLA or RCRA is amended so as to broaden the meaning of any term defined thereby, such broader
meaning shall apply subsequent to the effective date of such amendment and provided further to the extent that state laws establish
a meaning for "hazardous substance," "release," "solid waste" or "disposal" which is broader
than that specified in either CERCLA or RCRA, such broader meaning shall apply. The provisions of this paragraph shall survive
the release of this Deed of Trust or any foreclosure of this Deed of Trust and shall continue thereafter in full force and effect.
As used herein, the term Applicable Environmental Law shall include CERCLA, RCRA and all other state and local government laws
of like nature, as each may now exist or be hereinafter amended, supplemented or replaced and any other laws of the United States
of America or state or local government now existing or hereafter enacted which pertain to hazardous or toxic substances on or
from the Property, the environmental condition of the Property or the environmental contamination of or from the Property.

 

IT IS MUTUALLY AGREED:

 

8.Trustor hereby absolutely
and unconditionally assigns to Beneficiary and Trustee, all of Trustor's right, title and interest in and to all current and future
leases and all Property Income arising therefrom; it being intended by Trustor that this assignment constitutes a present, absolute
assignment and not an assignment for additional security only. Nevertheless, Beneficiary grants to Trustor a revocable license
to collect and receive the Property Income provided that the existence or exercise of such license shall not operate to subordinate
the assignment provided for in this Deed of Trust to any subsequent assignment. The assignment contained herein shall be fully
operative without any further action on the part of either party, and upon any default, Beneficiary may at any time, without notice,
either in person, by agent, or by a receiver to be appointed by a court, and without regard to the adequacy of any security for
the indebtedness hereby secured, enter upon and take possession of the Property or any part thereof, in Beneficiary’s own
name sue for or otherwise collect the Property Income, including that past due and unpaid, and apply the same, less costs and expenses
of operation and collection, including reasonable attorney's fees, upon any indebtedness secured hereby, and in such order as Beneficiary
may determine. The entering upon and taking possession of the Property, the collection of the Property Income, and the application
thereof as aforesaid, shall not cure or waive any default or notice of Trustee's sale hereunder or invalidate any act done pursuant
to the notice.

 

9.Any award
of damages in connection with any condemnation or any such taking, or for injury to the Property by reason of public use, or for
damages for private trespass or injury thereto, is assigned and shall be paid to Beneficiary as further security for all obligations
secured hereby (reserving unto the Trustor, however, the right to sue therefor and the ownership thereof subject to this Deed of
Trust), and upon receipt of such monies Beneficiary may hold the same as such further security, or apply or release the same in
the same manner and with the same effect as the above provided or disposition of proceeds of fire or other insurance.

 

10. Time
is of the essence of this Deed of Trust, and that by accepting payment of any sum secured hereby after its due date, Beneficiary
does not waive its right either to require prompt payment when due of all other sums so secured or to declare default for failure
so to pay.

 

11. In
addition to creating a lien against the Property, this Deed of Trust constitutes a security agreement within the meaning of the
Arizona Uniform Commercial Code (“UCC”), and is intended to and does hereby create a security interest in favor of
Beneficiary in all fixtures, equipment, Property Income and other personal property of Trustor, and all replacements and substitutions
thereof (collectively, the "Personal Property") at any time situated on or used in connection with the maintenance and
operation of the Property. This Deed of Trust shall constitute a “fixture filing” within the meaning of the UCC and
shall be self-operative with respect to such Personal Property, but Trustor shall execute and deliver on demand from Beneficiary
one or more security agreements, financing statements and other instruments as Beneficiary may request in order to impose the lien
hereof more specifically upon any such Personal Property, the terms and conditions thereof to be as required by Beneficiary, in
Beneficiary's sole and absolute discretion. The security interest in the Personal Property as created hereby (the “Security
Interest”) shall be subject to the right of Trustor and tenants of Trustor to replace any such Personal Property from time
to time so long as the replacement Personal Property has a fair market value, as determined by Beneficiary, in Beneficiary's sole
and absolute discretion, equal to, or greater than the fair market value of the Personal Property replaced. The Personal Property
may be moved about and relocated from time to time within the Property without the prior consent of Beneficiary first obtained.
Trustor agrees that all Property of every kind and nature and description, whether real or personal, covered by this Deed of Trust,
together with all Personal Property covered by the security interest granted hereby, encumbered as one unit, and upon default by
Trustor under the Note secured hereby, or under this Deed of Trust, or any security agreement given pursuant to this paragraph,
in addition to the remedies available to a secured party under the Code, this Deed of Trust and such Security Interest, at Beneficiary's
option, may be foreclosed or sold in the same proceeding in accordance with the provisions of Arizona law, and all of the Property
(both realty and personalty) may, at Beneficiary's option, be sold as such in one unit as a going business. The filing of any financing
statement relating to any Personal Property or rights or interest generally or specifically described herein shall not be construed
to diminish or alter any of Beneficiary's rights or priorities hereunder.

 

The Security Interest, at all times,
shall be prior to any other interests in the Personal Property except any lien or security interest granted in connection with
any permitted exception. Trustor shall act and perform as necessary and shall execute and file all security agreements, financing
statements, continuation statements and other documents requested by Beneficiary to establish, maintain and continue the perfected
Security Interest. Trustor, on demand, shall promptly pay all costs and expenses of filing and recording, including the costs of
any searches, deemed necessary by Beneficiary from time to time to establish and determine the validity and the continuing priority
of the Security Interest.

 

Except as provided herein, Trustor shall
not sell, transfer, assign or otherwise dispose of any Personal Property or any interest therein without obtaining the prior written
consent of Beneficiary, except Personal Property that Trustor may dispose of Personal Property in the ordinary course of business
that is obsolete and which Trustor replaces with Personal Property of similar value and function. Trustor shall keep the Personal
Property free of all security interests or other encumbrances, except the Security Interest and any security interests and encumbrances
granted in connection with any Permitted Exception. Although proceeds of Personal Property are covered hereby, this shall not be
construed to mean that Beneficiary consents to any sale of the Personal Property. Trustor shall keep and maintain the Personal
Property in good condition and repair, and shall promptly replace any part thereof that from time to time may become obsolete.
Except for purposes of replacement and repair, Trustor, without the prior written consent of Beneficiary, shall not remove, or
permit the removal of, any Personal Property from the Land.

 

Trustor hereby warrants, covenants and
agrees that: (i) the Personal Property is or will be used primarily for business (other than farm) purposes; (ii) the Personal
Property will be kept at the Land; and (iii) Trustor's records concerning the Personal Property will be kept at Trustor's address
as set forth in the beginning of this Deed of Trust.

 

Trustor represents and warrants that:
(i) the name specified above for Trustor is the true and correct legal name of Trustor, and (ii) the address specified above is
the mailing address of Trustor. Trustor shall give Beneficiary immediate written notice of any change in the location of: (i) Trustor's
chief executive office as set forth in the beginning of this Deed of Trust; (ii) the Personal Property or any part thereof; or
(iii) Trustor's records concerning the Personal Property. Trustor shall give Beneficiary sixty (60) days prior written notice of
any change in the name, identity, state of formation, organizational identification number, or organizational structure of Trustor.

 

Upon its recording in the real property
records, this Deed of Trust shall be effective as a financing statement filed as a fixture filing. In addition, a carbon, photographic
or other reproduced copy of this Deed of Trust and/or any financing statement relating hereto shall be sufficient for filing and/or
recording as a financing statement. The filing of any other financing statement relating to any personal property, rights or interest
described herein shall not be construed to diminish any right or priority hereunder.

 

12.That upon
written request of Beneficiary stating that all sums secured hereby have been paid, and upon surrender of this Deed of Trust and
the Note to Trustee for cancellation and retention, and upon payment of its fees, Trustee shall release and reconvey, without covenant
or warranty, express or implied, the Property then held hereunder. The recitals in such reconveyance of any matters or facts shall
be conclusive proof of the truthfulness thereof. The Grantee in such reconveyance may be described as "the person or persons
legally entitled thereto."

 

13.Except as
otherwise required by applicable law, all notices or other communications required or permitted under this Deed of Trust shall
be in writing, and shall be personally delivered or sent to the mailing address of the party entitled to receive such notice by
registered or certified mail, return receipt requested, with postage fully prepaid or receipted overnight courier, and shall be
deemed received upon the earlier of (a) the date of delivery, if personally delivered, (b) three (3) business days after the date
of deposit in the U.S. Mail, if mailed, or (c) the one (1) business day after delivery to an overnight courier.

 

14. That
(a) upon default by Trustor in the payment of any principal or interest under the Note secured by this Deed of Trust when due,
with such failure continuing for 10 days after written notice thereof to Trustor, (b) upon default by Trustor in the payment of
any other indebtedness secured by this Deed of Trust that is not subject to reasonable dispute or controversy, with such failure
continuing for ten days after written notice thereof to Trustor, or (c) upon the occurrence
of one or more of the following events, each of which is an event of default under this Deed of Trust: (i) Trustor voluntarily
files a petition or case under any state insolvency law or any Federal Bankruptcy Code, and that petition is not withdrawn within
60 days, (ii) an involuntary petition or case is filed against Trustor under any state insolvency law or any Federal Bankruptcy
Code and the petition is not withdrawn, discharged, stayed, or dismissed for more than 60 days or the court in which such petition
is pending approves it or Trustor is adjudicated a bankrupt or becomes a debtor or debtor in possession in any such proceeding,
or (iii) Trustor makes an assignment for the benefit of creditors , then Beneficiary may, at its option, and in its sole
discretion, declare all sums secured hereby immediately due and may, at its option, and in its sole discretion, by delivering to
Trustee a written declaration setting forth the Trustor’s default and may demand that the Property be sold pursuant to a
trustee’s sale. Beneficiary will also deposit with Trustee this Deed of Trust and all note(s) and other documents evidencing
expenditures secured by this Deed of Trust. Trustee will record and give notice of trustee’s sale in the manner required
by law. Trustee will sell, in the manner required by law, the Property at public auction at the time and place fixed in the notice
of trustee’s sale to the highest bidder for lawful money of the United States, payable at time of sale. Trustee may postpone
or continue the sale by giving notice of postponement or continuance by public declaration at the time and place last appointed
for the sale. Trustee will deliver to the purchaser its deed conveying the property so sold, but without any covenant or warranty,
expressed or implied. Any person, including Trustor, Trustee, or Beneficiary may purchase at the trustee’s sale. After deducting
all costs, fees and expenses of Trustee and of this Trust, including the cost of evidence of title in connection with sale and
reasonable attorney’s fees of Trustee, Trustee will apply the proceeds of sale to payment of all sums then secured by this
Deed of Trust including all other sums due under the terms of this Deed of Trust. To the extent permitted by law, an action may
be maintained by Beneficiary to recover a deficiency judgment for any balance remaining unsatisfied after application of the proceeds
of the trustee’s sale. In lieu of sale pursuant to the power of sale conferred by this Deed of Trust, this Deed of Trust
may be foreclosed in the manner provided by law for the foreclosure of mortgages on real property. Beneficiary also retains all
other rights and remedies available to it at law or in equity. All rights and remedies are cumulative. If the Property encumbered
by this Deed of Trust is located in more than one county, regardless of whether the Property is contiguous or not, the Trustee
may sell all of the Property in any one of the counties in which part of the Property is located; and, unless Trustee receives
contrary written instructions from the Beneficiary or Trustor, Trustee may sell all of the Property either in parcels or in whole.
If the indebtedness secured hereby is secured by one or more other Deeds of Trust, then upon default of Trustor in the payment
of the indebtedness or performance of any other agreement secured hereby, the Trustee may sell the Property subject to the Deed
of Trust and to any other Deeds of Trust securing the indebtedness at Trustee's sales conducted serially. The undersigned Trustor
requests that a copy of any notice of Trustee's sale hereunder be mailed to Trustor at the mailing address set forth herein.

 

15.Beneficiary
may appoint a successor Trustee in the manner prescribed by law. A successor Trustee herein shall, without conveyance from the
predecessor Trustee, succeed to all the predecessor's title, estate, rights, powers, and duties. Trustee may resign by mailing
or delivering notice thereof to Beneficiary and Trustor.

 

16.This Deed
of Trust applies to, inures to the benefit of, and binds all parties hereto, their heirs, legatees, devisees, administrators, executors,
successors, and assigns. The term Beneficiary shall mean the owner and holder of the Note secured hereby, whether or not named
as Beneficiary herein. In this Deed of Trust, whenever the context so requires, the masculine gender includes the feminine and
neuter, and the singular number includes the plural.

 

17.That Trustor
for itself and all who may claim through or under Trustor, waives, to the fullest extent permitted by law, any and all (a) homestead
rights, (b) rights to reinstatement, and (c) rights to have the property comprising the Property marshaled upon any trustee’s
sale or foreclosure of all or any portion of the Property. Beneficiary named on this Deed of Trust shall be subrogated to the lien,
notwithstanding its release of record of any prior mortgage, Trust Deed or other encumbrance paid or discharged from the proceeds
of the Note secured hereby or from any advance made by the Beneficiary. This right of subrogation shall not be affected by the
creation or declaration of homestead on the Property.

 

18.That Trustee
accepts this Trust when this Deed of Trust, duly executed and acknowledged, is made a public record as provided by law. Trustee
is not obligated to notify any party hereto of pending sale under any other Deed of Trust or of any action or proceeding in which
Trustor, Beneficiary or Trustee shall be a party unless brought by Trustee.

 

19.This Deed
of Trust will be governed by the laws of the State of Arizona without regard to its conflicts of law provisions. This Deed of Trust
has been accepted by Beneficiary in the State of Arizona. If any provision or clause of this
Deed of Trust or the Note conflicts with applicable law, such conflict shall not affect other provisions of this Deed of Trust
or the Note which can be given effect without the conflicting provision, and to this end the provisions of this Deed of Trust and
the Note are declared to be severable.

 

20.This
Deed of Trust secures an obligation incurred for the construction of improvements on land. This Deed of Trust is a “construction
mortgage” and is entitled to the benefits of A.R.S. Section 47-9334.

 

 

Remainder
of Page Intentionally Left Blank

 

Signature
Appears Next Page

 

    	 

    	 

    

 

IN
WITNESS WHEREOF, the undersigned hereto has duly executed this Deed of Trust as of the Date set forth above.

 

TRUSTOR:

 

BSSD GROUP, LLC,

an Arizona limited liability company

 

By:
   Item 9 Labs Corp.,

a
Delaware corporation

Its:    Manager
and Member 

 

By: _________________________

Name: Bryce Skalla

Its:     President

 

STATE OF ARIZONA    )

) SS:

County of __________  )

 

The foregoing instrument
was acknowledged before me this ____ day of ______________, 2019, by Bryce Skalla, President of Item 9 Labs Corp., a Delaware corporation,
the Manager and Member of BSSD GROUP, LLC, an Arizona limited liability company, being authorized to do so.

 

 

My Commission Expires:

_______________________

Notary Public

    	 

    	 

    

EXHIBIT A

(Legal Description)

 

A parcel
of land lying in and being a part of the Southwest quarter of Section 24, T6S-R7E, G&SRM, Pinal County, Arizona, more particularly
described as the follows:

 

Commencing
at the South quarter corner of said Section 24, a found Arizona Department of Transportation brass cap in hand hole, from whence
the Southwest corner of said Section 24, a found Arizona Department of Transportation brass cap in hand hole, bears N89°36'44"W,
a distance of 2606.89'; thence, N01°14'53"E along the cast line of the Southwest quarter of said Section 24, a distance
of 1388.14', a set 1⁄2” iron pin capped LS 17278, to the TRUE POINT OF BEGINNING;

 

Thence, S89°59'36"W,
a distance of 755.60', a set 1⁄2'' iron pin capped LS 17278;

Thence, N01°14'55"E,
a distance of 288.25', a set 1⁄2'' iron pin capped LS 17278;

Thence, N89°59'36"E,
a distance of 755.60', a set 1⁄2'' iron pin capped LS 17278;

Thence, S01°14'53"W,
a distance of 288.25', to the TRUE POINT OF BEGINNING.

 

Contains
in all 5.00 Acres or 217,750.0 SF more or less.

    	 

    	 

    

Exhibit
D

 

Promissory
Note 

Nevada

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 

    	 

    

 

PROMISSORY NOTE

 

	Total Principal Amount:	$1,500,000
	Issue Date:	September 28, 2018
	Location of Execution:	Scottsdale, Arizona
	Promissory Note Due Date:	September 27, 2023
	Interest Rate:	0% interest in lieu of Gross Revenue Participation
	Payment Obligations:	Monthly Payments to begin 30 days after Nevada Facility construction commences; Gross Revenue Participation payments due quarterly and applied in lieu of interest to the principal balance of this Note, with such payments to begin at the end of Deferment Period.
	Borrower:	Item 9 Properties, LLC
	Borrower’s Address:	2033 N. Overfield Rd, Casa Grande, AZ 85194
	Lender:	Viridis Group I9 Capital, LLC
	Lender’s Address:	2727 N. 3rd Street, Suite 301
	 	Phoenix AZ 85004

  

For Value Received, the
Borrower, with its address of record being Borrower’s Address, promises to pay to the order of the Lender the Total Principal
Amount advanced to the Borrower, from time to time, until paid in full pursuant to the terms of this Promissory Note (this “Note”).
The Principal shall be due and payable, if not sooner paid, on or before the Promissory Note Due Date.

 

1.
  Definitions. In addition to: (i) terms defined in the Secured Promissory Note and Revenue
Participation Purchase Agreement of even date herewith (the “Loan Agreement”), and (ii) terms
defined above or otherwise defined in the body of this Note, the following terms will have the meanings indicated below and
will be used as defined terms in connection with this Note.

 

“Borrower’s
Interest” means only the Borrower’s ownership interest in the Nevada Operations.

 

“Nevada
Construction” means the construction for an approximately 20,000 square foot facility located at LOT
ONE (1) IN BLOCK THIRTY-SEVEN (37) OF CALVADA VALLEY UNIT NO. 11 AS SHOWN BY MAP THEREOF RECORDED FEBRUARY 5, 1974 AS FILE NO.
40749 IN THE OFFICE OF THE COUNTY RECORDER OF NYE COUNTY, NEVADA.

 

“Nevada
Operations” means the commencement of operations resulting from the completion of the Nevada Construction.

 

“Deferment
Period” means the period commencing on the Issue Date and ending on the date which is 90 days after the Borrower
commences revenue generation from Nevada Operations.

 

“Distribution(s)”
means the distribution of Gross Revenues to Lender.

 

“Gross
Revenue” means all revenues of the Company from Borrower’s Interest in the Nevada Operations of the Company,
including, but not limited to, (i) investment income, (ii) rental income, (iii) income from the operations of the
Company, (iv) net proceeds of business interruption insurance, if any, (v) income from fees and charges (whether such
fees and charges are paid by or on behalf of patients or by any other party) and (vii) without duplication, all other accounts
receivable, revenues, profits and receipts derived by or on behalf of the Company from any source relating to Borrower’s
Interest in the Arizona Operations.

 

“Note”
means this Note and each amendment hereto as entered into from time to time.

 

“Principal
Amount” means the total dollar amount actually advanced to the Borrower under this Note.

 

“Revenue
Participation Payments” means the payments described in Section 2.A, and Section 2.B, and Section 2.C below.

 

2.
Interest; Repayment; Revenue Participation. This Note shall not accrue any interest (0% Interest); the Borrower
hereby agrees to pay and Lender expressly agrees to receive the Revenue Participation Payments herein in lieu of interest. All
payments made by Borrower to Lender, including Monthly Payments and Revenue Participation Payments, shall be applied towards the
unpaid Principal Amount of this Note. Borrower shall begin making payments of 1% of the Principal Amount, or $1,250, whichever
is lower, per month 30 days after commencement of the Arizona Construction (the “Monthly Payments”).
In addition to Monthly Payments, Borrower hereby grants to Lender the right to participate in the Gross Revenues generated from
Borrower’s Interest in the Nevada Operations commencing on the first calendar quarter following the Deferment Period, and
continuing on the fifteenth day after the close of each calendar quarter thereafter, unless earlier terminated pursuant to the
terms of this Note. Borrower shall make Distributions of Revenue Participation Amounts generated from Gross Revenues during the
immediately preceding calendar quarter pursuant to the following schedule:

 

		6)	5% of Gross Revenues generated by the Borrower’s Interest in the Nevada Operations until the
Principal Amount is repaid; such payments are estimated to be between $765,000 to $1,500,000 annually once the Borrower’s
Interest in Nevada Operations are fully operational, however, actual results may vary and a lower annual revenue amount shall not
constitute a default or breach; then,

 

		7)	2% of Gross Revenues generated by the Borrower’s Interest in the Nevada Operations until Lender
has recouped two times the Principal Amount; such payments are estimated to be $300,000 to $600,000 annually, however, actual results
may vary and a lower annual revenue amount shall not constitute a default or breach; then,

 

		8)	1% of Gross Revenues generated by the Borrower’s Interest in the Nevada Operations in perpetuity
or until a Change in Control (as defined in Section 3) triggering a Mandatory Buyout (as defined in Section 3), notwithstanding
the repayment of the Principal Amount of the Note.

 

		9)	No distributions of Revenue Participation Payments shall be made during the Deferment Period.

 

		10)	Upon payment of 200% of the Principal Amount of this Note, the
Note shall be deemed repaid in full, except with respect to Lender’s right to the Revenue Participation Payments under Section
2.C above, and Lender shall release its UCC-1, its security interest against the Company’s collateral, and the NV Deed of
Trust (as defined in the Loan Agreement).

 

		11)	Lender expressly acknowledges the Borrower owns only a 51% interest in the Nevada Operations and that
Lenders’ interest in any Gross Revenues from the Nevada Operations is limited based upon Borrower’s Interest therein.

 

3.
  Mandatory Buyout. Upon the
occurrence of a Change in Control (defined below) the Lender shall be entitled to receive: (i) the balance of 200% of the Principal
Amount of this Note, which balance will be calculated after crediting to the Borrower any and all Monthly Payments and Revenue
Participation Payments paid by Borrower to Lender through the date of the Change in Control, and (ii) 1% of the aggregate sales
price or consideration received pursuant to such Change in Control (the “Sales Price”) and thereafter
this Note shall be deemed to be satisfied in full.

 

		A.	“Change in Control” means the occurrence of any of the following events:

i.
A change in the ownership of the Borrower which occurs on the date that any one person, or more than one person acting as
a group (“Person”), acquires ownership of the stock of the Borrower that, together with the stock held
by such Person, constitutes more than fifty one percent (51%) of the total voting power of the stock of the Borrower; provided,
however, that for purposes of this subsection, the acquisition of additional stock by any one Person, who is considered to own
more than twenty percent (20%) of the total voting power of the stock of the Borrower will not be considered a Change of Control;
or

 

ii.
A change in the ownership of all or substantially all of the Borrower’s assets which occurs on the date that any Person
or entity acquires (or has acquired during the period ending on the date of the most recent acquisition by such person or persons) assets
from the Borrower that have a total gross fair market value equal to or more than fifty one percent (51%) of the total gross
fair market value of all of the assets of the Borrower immediately prior to such acquisition or acquisitions. For purposes of this
subsection, gross fair market value means the value of the assets of the Borrower, or the value of the assets being disposed of,
determined without regard to any liabilities associated with such assets.

 

4.
 Prepayment. The Borrower may prepay the Principal Amount of the outstanding balance of the Note, in
whole or in part at any time in Borrower’s sole discretion for any reason. Prepayment of the Note shall have no effect on
any outstanding Revenue Participation Payments under Section 2.B and Section 2.C. For example, if Borrower repays Principal in
full, Lender shall still receive 2% of Gross Revenues from Borrower’s Interest in the Nevada Operations, until Lender has
been paid 200% of the Principal Amount, and the 1% of such Gross Revenues in perpetuity or until a Change in Control.

 

5.
 Default. If: (1) Principal Amount of this Note is not paid by the Promissory Note Due Date; or (2) Borrower
has failed, after the Deferment Period, to make Distributions to Lender for two consecutive quarters, or (3) if the Company becomes
insolvent, files a petition in bankruptcy or similar proceedings, or is adjudged a bankrupt, or (4) is the Company is in default
under the Loan Agreement or any other Note or obligation of the Company to Lender, each will constitute a default (“Default”)
under this Note. Upon the occurrence of a Default, Lender shall provide written notice of Default to Borrower and provide the Company
the opportunity to cure such default within 10 business days; if Borrower does not cure the Default, then (a) all amounts payable
under this Note will be due and payable immediately, and (b) the Lender shall be entitled to exercise any and all rights and remedies
available to the Lender under this Note, Lender’s security interest, the NV Deed of Trust, or under applicable law.

 

6.
 Secured Obligation. The Borrower further agrees as follows:

 

A.
Grant of Security Interest: Subject to the rights and security interests of a secured party, as defined in
the Arizona Uniform Commercial Code, and without interfering with or diminishing the Borrower’s right to dispose of, transfer,
or sell any of the assets set forth below (provided any disposition, transfer or sale would remain subject to Lender’s security
interest therein, unless and until this Note is paid as provided in Section 2.E), the Borrower hereby unconditionally grants, assigns,
and pledges to the Lender to secure the obligations evidenced by this Note, a continuing security interest in all of the Borrower’s
right, title, and interest in and to the following, whether now owned or hereafter acquired or arising and wherever located (the
“Collateral”),:

 

i.
all of the Borrower’s accounts (as that term is defined in Article 9 of the Arizona Uniform Commercial Code, as in
effect from time to time (the “Code”; any terms (whether capitalized or lower case) used in Section 1 and this Section
6 Note that are defined in the Code shall be construed and defined as set forth in the Code unless otherwise defined herein; provided,
that to the extent that the Code is used to define any term used herein and if such term is defined differently in different Articles
of the Code, the definition of such term contained in Article 9 of the Code shall govern;

 

ii.
all of the Borrower’s books and records;

 

iii.
all of the Borrower’s chattel paper (as that term is defined in the Code);

 

iv.
all of the Borrower’s commercial tort claims (as that term is defined in the Code);

 

v.
all of the Borrower’s deposit accounts and securities accounts (as each such term is defined in the Code);

 

vi.
all of the Borrower’s equipment (as that term is defined in the Code);

 

vii.
all of the Borrower’s general intangibles (as that term is defined in the Code);

 

viii.
all of such the Borrower’s inventory (as that term is defined in the Code);

 

ix.
all of the Borrower’s investment property (as that term is defined in the Code);

 

x.
all of the Borrower’s letters of credit, letter-of-credit rights, instruments, promissory notes, drafts and documents
(as each such term is defined in the Code);

 

xi.
all of the Borrower’s supporting obligations, and includes letters of credit and guaranties issued in support of accounts,
chattel paper, documents, general intangibles, instruments or investment property (as each such term is defined in the Code);

 

xii.
all of the Borrower’s money, cash equivalents, or other assets of the Borrower that now or hereafter lawfully come
into the possession, custody, or control of the Lender (or its agent or designee); and

 

xiii.
all of the proceeds (as such term is defined in the Code) and products, whether tangible or intangible, of any of the foregoing.

 

B.
 Authorization to File Financing Statements: Borrower shall execute and deliver to Lender, concurrently with
Borrower’s execution of this Note and at any time or times hereafter at the request of Lender, all financing statements,
continuation financing statements, assignments, certificates of title, affidavits, reports, schedules of account, designations
of inventory, letters of authority and all other documents that Lender may request, in form satisfactory to Lender, to perfect
and maintain a perfected security interest in the Collateral in order to fully consummate all of the transactions contemplated
hereunder.

 

C.
No Further Encumbrances: Borrower shall not further encumber, transfer, abandon or dispose of the Collateral
without the written consent of Lender, which may not be unreasonably withheld.

 

D.
Control Arrangement: Borrower and Lender acknowledge Borrower’s pledge of a security in the interest
in the Collateral pursuant to the Code, so that Lender’s possession, direct or indirect, of the Collateral, will, upon giving
value, perfect Lender’s first lien security interest in the same. Borrower acknowledges the right of Lender, in the event
of an uncured Default, to have the Collateral sold or liquidated, and agrees to comply with written notices from Lender directing
the transfer, redemption, sale, or liquidation of all or a portion of the Collateral without further consent by Borrower in the
event of an uncured Default by Borrower. It is the intention of the parties hereto that the provisions of this Section 6 confer
on the Lender “control” over the Collateral, as defined in the Code. The Borrower and Lender agree that the Company
will register the pledge on the books of the Company with respect to the Collateral.

 

7.
Representations, Warranties, Covenants and Agreements of the Borrower: The Borrower represents and warrants,
and covenants and agrees, as follows:

 

A.
The Borrower has the requisite power and authority to execute, deliver this Note and perform the obligations under this
Note. This Note constitutes a legal, valid and binding obligation of the Borrower enforceable in accordance with its terms.

 

B.
The name (within the meaning of Section 9-503 of the Code) of the Borrower is Item 9 Labs Corp. and the jurisdiction of
organization of the Borrower is the State of Delaware.

 

C.
As of the Date of this Note, the Borrower does not hold any commercial tort claims.

 

D.
All information heretofore, herein or hereafter supplied to the Lender by or on behalf of the Borrower with respect to this
Note is accurate and complete in all material respects as of the date furnished.

 

E.
All reasonable attorneys’ fees, expended or incurred by the Parties in connection with the enforcement of any rights
or obligations set forth under this Note of the Loan Agreement shall be paid to the prevailing party in the prosecution or defense
of any action in any way related to this Note, including without limitation, any action for declaratory relief, whether incurred
at the trial or appellate level, in an arbitration proceeding or otherwise, and including any of the foregoing incurred in connection
with any bankruptcy proceeding (including without limitation, any adversary proceeding, contested matter or motion brought by the
Lender or any other person) relating to the Borrower or any other person or entity.

 

8.
Rights and Remedies Upon Default:

 

A.
Upon occurrence of Default as defined herein and subject to the rights and security interests of a secured party as set
forth under the Code, the Lender shall have the right to exercise all of the rights and remedies of a secured party under the Code
or any other applicable law.

 

B.
Each right, power, and remedy of the Lender as provided for in this Note, now or hereafter existing at law or in equity
or by statute or otherwise shall be cumulative and concurrent and shall be in addition to every other right, power, or remedy provided
for in this Note now or hereafter existing at law or in equity or by statute or otherwise, and the exercise or beginning of the
exercise by the Lender, of any one or more of such rights, powers, or remedies shall not preclude the simultaneous or later exercise
by the Lender of any or all such other rights, powers, or remedies.

 

9.
Term of this Note: The Promissory Note Due Date of this Note is described in Section 1 above. Principal amounts,
calculations and payments for this Note shall be determined by the amount(s) of the funds actually delivered by the Borrower and
received by the Lender in the Lender’s bank account on the date(s) of said receipt. The Principal Amount is due and payable
on the Promissory Note Due Date. This Note shall be deemed repaid in full, except with respect to Lender’s right to the Revenue
Participation Payments under Section 2.C above, on the date on which all payments under Section 2.A, Section 2.B, and any other
costs or expenses to which Lender may be entitled paid in full, and all other obligations under this Note and the Loan Agreement
have been paid or discharged.

 

10.
Notices: All notices, requests, demands and other communications hereunder shall be in writing, with copies
to all the other parties, and shall be deemed to have been duly given when delivered personally or mailed by first-class certified
mail, return receipt requested, five (5) days after posting in the U.S. mail, in each case if delivered to the addresses given
for each of the parties.

 

11.
Miscellaneous:

 

A.
No course of dealing between the Borrower and the Lender, nor any failure to exercise, nor any delay in exercising, on the
part of the Lender, any right, power or privilege under this Note will operate as a waiver of any term of this Note, nor shall
any single or partial exercise of any right, power or privilege under this Note preclude any other or further exercise of the right,
power or privilege or the exercise of any other right, power or privilege. No waiver of any breach or default or any right under
this Note will be considered valid unless in writing and signed by the party giving such waiver, and no such waiver will be deemed
a waiver of any subsequent breach or default or right, whether of the same or similar nature or otherwise.

 

B.
In the event that any provision of this Note is held to be invalid, prohibited or unenforceable in any jurisdiction for
any reason, unless such provision is narrowed by judicial construction, this Note shall, as to such jurisdiction, be construed
as if such invalid, prohibited or unenforceable provision had been more narrowly drawn so as not to be invalid, prohibited or unenforceable.
If notwithstanding the foregoing, any provision of this Note is held to be invalid, prohibited or unenforceable in any jurisdiction,
such provision, as to such jurisdiction, shall be ineffective to the extent of such invalidity, prohibition or unenforceability
without invalidating the remaining portion of such provision or the other provisions of this Note and without affecting the validity
or enforceability of such provision or the other provisions of this Note in any other jurisdiction.

 

C.
This Note shall be binding upon and inure to the benefit of each party and its successors and assigns.

 

D.
Each party shall take such further action and execute and deliver such further documents as may be necessary or appropriate
in order to carry out the provisions and purposes of this Note.

 

E.
Except as to applicable provisions of the Code with respect to the security interest granted in Section 6, and except as
to the terms and enforcement of the NV Deed of Trust, this Note shall be construed in accordance with the laws of the State of
Arizona and the Parties irrevocably submit to the exclusive jurisdiction of any court sitting in Maricopa County, Arizona over
any action or proceeding arising out of or relating to this Note, and the Parties irrevocably agree that all claims in respect
of such action or proceeding may be heard and determined in such Arizona State or Federal court. The Parties agree to waive its
respective rights to a jury trial of any claim or cause of action based upon or arising out of this Note. The Parties acknowledge
that this waiver is a material inducement for the Parties to provide financial accommodations as described in this Note and that
the Parties rely on this waiver.

 

F.
This Note may be amended from time to time by mutual agreement of Borrower and Lender.

 

G.
Insofar as there is no interest payable under this Note, and in lieu thereof, the Borrower has agreed to pay Lender the
Monthly Payments and Revenue Participation Payments, the Borrower and Lender agree, that to the extent such Monthly Payments and
Revenue Participation Payments constitute “interest” that the Borrower and Lender agree that the provisions of A.R.S.
Section 44-1201.A shall apply and that the Borrower and Lender have agreed the Monthly Payments and Revenue Participation Payments
constitute “a different rate contracted for in writing” for purposes of A.R.S. Section 44-1201.A and that there is
no maximum rate of interest applicable to this Note.

 

IN WITNESS WHEREOF,
the Borrower has caused this Note to be duly executed to be effective as of the Date of this Note at the Location of Execution
above written.

 

Borrower:

 

ITEM 9 PROPERTIES, LLC

A Nevada limited liability company

 

By:      ITEM 9 LABS CORP.

A Delaware corporation

Its Manager

 

By: _______________________________

Bryce Skalla,
President

 

    	 

    	 

    

Exhibit
E

 

Guaranty

NEVADA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 

    	 

    

 

GUARANTY AGREEMENT

 

THIS GUARANTY AGREEMENT
is dated and effective September 28, 2018, and is made by Item 9 Labs Corp., a Delaware corporation (“Guarantor”)
to and for the benefit of Viridis Group I9 Capital, LLC, an Arizona limited liability company (“Lender”).

 

Recitals

 

D.
For sufficient value, Item 9 Properties LLC, a Nevada limited liability company (“Borrower”) executed
a Promissory Note dated September 28, 2018 (the “Note”) in the principal amount of up to $1,500,000 for the
benefit Lender as Note Holder in connection with the Loan and Revenue Participation Agreement dated September 12, 2018 for the
facility development and expansion of Borrower’s Nevada operations.

 

E.
In order to induce Lender to provide the loan to Borrower, Guarantor agrees to personally guarantee the obligations of Borrower
under the Note as provided herein.

 

F.
Guarantor is the owner of 100% of the membership interests in the Borrower, and acknowledges that it is receiving an indirect
benefit from the funding of the Note by the Lender.

 

Agreement

 

IN CONSIDERATION of the
foregoing and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Guarantor agrees
as follows:

 

15.
Guarantee.

 

		(a)	Guarantor, severally and unconditionally, guarantees to Lender the full and prompt payment of the
principal and any interest at the rate specified under the Note, in lawful money of the United States, upon demand when due, whether
at maturity or by acceleration or otherwise, including but not limited to, all of Borrower’s present and future obligations
under the Note, and all modifications, amendments, restatements, extensions and renewals thereof, whether for principal, interest
or otherwise.

 

		(b)	In addition, Guarantor agrees to pay Lender any and all expenses, including, without limitation, attorneys’
fees, court costs and related legal expenses incurred by Lender in connection with the enforcement of this Guaranty.

 

		(c)	All of the obligations, indebtedness and liabilities of Guarantor set forth in this Section 1
are referred to herein as the “Obligations.”

 

16.
Obligations Absolute. The Obligations of the Guarantor hereunder are primary, absolute and unconditional and are
intended as a continuing guaranty of payment and performance by Guarantor. Guarantor acknowledges having been provided with a copy
of the Note and having consulted with counsel concerning Guarantor’s Obligations hereunder.

 

17.
No Impairment of Liability. Guarantor agrees that Guarantor’s liability hereunder will not be released, reduced,
impaired or affected by any one or more of the following events: (a) Lender’s obtaining additional collateral from Borrower
or any other person to secure payment or performance of the Note; (b) the assumption of liability by any other person (whether
as guarantor or otherwise) for payment or performance under the Note; (c) the release, surrender, exchange, loss, termination,
waiver or other discharge of any collateral securing payment or performance under the Note; (d) the subordination, relinquishment
or discharge of the Lender’s rights relating to the Note or any collateral described therein; (e) the foreclosure upon
any collateral given to secure any liability of Borrower by judicial or non-judicial sale (though it is acknowledged that no collateral
was pledged in connection with the origination of the Note or this Guaranty); (f) the loss or impairment of any right of subrogation
of the Guarantor; (g) removed and reserved (h) the insolvency, bankruptcy, reorganization, discharge, waiver or other
exoneration of the Borrower or any other person now or hereafter liable for payment or performance of the Obligations; (i) the
renewal, consolidation, extension, modification, rearrangement or amendment from time to time of the Note, including, without limitation,
the extension of the maturity date of the Note; (j) the failure, delay, waiver or refusal by Lender to exercise any right
or remedy held by Lender under the Note; (k) Lender’s application of any monies available to Lender in payment or reduction
of any of the Obligations in such manner and such amounts and at such times and in such order of priority as Lender may see fit
to the payment or reduction of such portions of the Obligations as Lender may elect; (l) the sale, encumbrance, transfer or
other modification of the ownership of the Borrower or the Borrower’s assets, or the change in the financial condition or
management of the Borrower; (m) the invalidity, unenforceability or insufficiency of any provision of the Note or any collateral
securing payment or performance thereunder; or (n) the failure of the Guarantor to receive notice of any one or more of the
foregoing actions or events.

 

18.
Waivers by Guarantor. Guarantor hereby expressly waives (a) diligence, presentment, protest, notice of dishonor,
demand for payment, notice of nonpayment or nonperformance; (b) notice of the acceptance of this Guaranty; (c) notice
of the existence or creation of all or any part of the Obligations of Borrower; (d) notice of termination as to future liability
given by any other guarantor; (e) notice of demand, advertisement or notice of time or place of sale of any Collateral securing
any of the Borrower’s Obligations; (f) all presentments, demands for performance, notices of nonperformance, protests
and all other notices whatsoever; (g) any right to require Lender to proceed against Borrower or any security held in relation
to the Borrower’s Obligations or to pursue any other right or remedy in Lender’s power; (h) any right to contest
the enforcement of this Guaranty by virtue of any statute of limitations or other law varying the terms of this Guaranty; (i) any
other defense available to Guarantors at law or in equity; or (j) and the right to interpose counterclaims or setoffs of any
kind or description in any litigation arising under this Guaranty.

 

19.
Amendments. No provision or term of this Guaranty may be amended, modified, revoked, supplemented, waived or otherwise
changed except by a written instrument duly executed by Guarantor and Lender and designated as an amendment, supplement or waiver

 

20.
Transfer of Assets. Guarantor will not voluntarily or involuntarily transfer title to any of his or her material
assets without fair consideration or take any other action or suffer the same to be done, which would have a materially adverse
effect on Guarantor’s ability to fulfill his Obligations to Lender hereunder.

 

21.
Notices. Any notice given to any party in connection with this Guaranty shall be in writing, shall be (i) hand
delivered, (ii) sent by registered or certified mail, return receipt requested, postage prepaid, or (iii) sent by Federal
Express or other nationally recognized overnight courier service, and if hand delivered shall be deemed received when delivered,
if mailed shall be deemed received one day after having been deposited in the United States mail, postage prepaid, and if sent
by Federal Express or other nationally recognized overnight courier service shall be deemed received one business day after having
been deposited with Federal Express or other nationally recognized overnight courier service if designated for next-day delivery,
addressed as follows:

 

If to Lender to:

Viridis Group I9 Capital, LLC

2727 N. 3rd Street, Suite 301

Phoenix AZ 85004

 

If to Guarantor to:

Item 9 Labs Corp.

2033 N. Overfield Road

Casa Grande, AZ 85194

 

Either party may change its address for notices
by giving the other party notice thereof.

 

22.
Counterparts. This Guaranty may be executed in two or more counterparts, each of which shall be deemed an original
and all of which together shall constitute one instrument.

 

23.
Captions and Pronouns. The captions and headings of the various sections of this Guaranty are for convenience only,
and are not to be construed as confining or limiting in any way the scope or intent of the provisions hereof.

 

24.
Binding Effect. This Agreement will be binding on the Guarantor and his successors and permitted assigns, and will
inure to the benefit of the Lender and all successors and permitted assigns of the Lender. Guarantor consents to the assignment
of all or any portion of the rights of the Lender hereunder in connection with any assignment of the rights of the Lender under
the Note without notice to the Guarantor.

 

25.
Rights Cumulative. Each right, power and remedy of Lender under this Guaranty and the Note is cumulative and in addition
to every other right, power or remedy, existing or implied, given now or hereafter existing, at law or in equity, and each and
every right, power and remedy set forth herein or otherwise so existing may be exercised from time to time as often and in such
order as may be deemed expedient by Lender, and the exercise or the beginning of the exercise of one right, power or remedy shall
not be a waiver of the right to exercise at the same time or thereafter any other right, power or remedy; and no delay or omission
of Lender in the exercise of any right, power or remedy accruing hereunder or arising otherwise shall impair any such right, power
or remedy, or be construed to be a waiver of any default or acquiescence therein.

 

26.
Waiver. Lender shall not be deemed to have waived any provision of this Guaranty or the Note unless such waiver is
in writing and is signed by Lender.

 

27.
Choice of Law. This Agreement has been negotiated, executed and delivered in Scottsdale Arizona, and is intended
to be construed in accordance with the laws of the State of Arizona.

 

28.
Time of the Essence. Time is of the essence hereof with respect to the dates, terms and conditions of this Guaranty.

 

IN WITNESS WHEREOF, the
Parties have duly executed this Personal Guaranty the date first above written.

 

ITEM 9 LABS CORP.

A Delaware corporation

 

By: ________________________

Bryce Skalla, President

 

    	 

    	 

    

Exhibit
R

 

DEED
OF TRUST and Security Agreement 

NEVADA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 

    	 

    

 

When Recorded Return To:

 

Viridis Group I9 Capital, LLC

AND WHEN RECORDED MAIL TO:

2727 N. 3rd Street, Suite 301

Phoenix AZ 85004

Attn: Andrew Bowden, Manager

 

DEED OF TRUST, SECURITY AGREEMENT,

AND ASSIGNMENT OF RENTS AND FIXTURE FILING

[Nevada]

 

	Date:	September 28, 2018
	 	 
	Trustor:	Item 9 Properties, LLC, a Nevada limited liability company
	whose address is:	2033 N. Overfield Rd
	 	Casa Grande, AZ 85194
	 	 
	Beneficiary:	Viridis Group I9 Capital, LLC, an Arizona limited liability company
	whose address is:	2727 N. 3rd Street, Suite 301
	 	Phoenix AZ 85004
	 	Attn: Andrew Bowden, Manager   
	 	 
	Trustee:	First American Title Insurance Company
	 	1000 W. Charleston Blvd., Suite 180
	 	Las Vegas, NV 89135

 

This Deed of Trust, Security Agreement,
Assignment of Rents and Fixture Filing (“Deed of Trust”) is made on the above date between the Trustor, Trustee, and
Beneficiary above named.

 

WITNESSETH: That Trustor irrevocably
grants and conveys to Trustee in Trust, with Power of Sale, all of the following described property, both real and personal:

 

A. The certain tract
or parcel of land being legally described on Exhibit A hereto (the “Land”);

 

B. All buildings,
structures and improvements of every nature whatsoever now or hereafter situated on the Land, and all fixtures, machinery, appliances,
equipment, furniture and personal property of every kind and nature whatsoever now or hereafter owned or leased by Trustor and
located in, on or attached to, and used or intended to be used in connection with the Land, buildings, structures or other improvements,
or in connection with any construction being conducted or which may be conducted on the Land, and owned by Trustor, and all extensions,
additions, improvements, betterments, renewals, substitutions and replacements to any of the foregoing (collectively, the “Improvements”
and together with Land, the “Property”);

 

C. All easements,
rights-of-way, gores or strips of land, streets, ways, alleys, passages, sewer rights, water courses, water rights and powers,
and all appurtenances whatsoever, in any way belonging, relating or appertaining to any of the Land, or which hereinafter shall
in any way belong, relate or be appurtenant thereto, whether now owned or hereafter acquired by Trustor;

 

D. All of the estate,
right, title and interest of Trustor of, in and to (i) all judgments, insurance proceeds, awards of damages and settlements hereafter
made resulting from condemnation proceedings or the taking of the Property or any part thereof under the power of eminent domain,
or for any damage (whether caused by such taking or otherwise) to the Property or any part thereof, or to any rights appurtenant
thereto, and all proceeds of any sales or other dispositions of the Property or any part thereof, and Beneficiary is hereby authorized
to collect and receive the awards and proceeds and to give proper receipts and acquittances therefor, and (if it so elects) to
apply the same toward the payment of the indebtedness and other amounts secured hereby, notwithstanding the fact that the amount
owing may not then be due and payable; (ii) all contract rights, general intangibles, actions and rights in action, including
without limitation all rights to insurance proceeds and unearned premiums arising from or relating
to the Property; and (iii) all proceeds, products, replacements, additions, substitutions, renewals and accessions of and to the
Property;

 

E.
All rents, issues, profits, other income and other benefits that are now due or hereafter may become due by reason of the lending,
leasing, or bailment of all or a portion of the Property or use or occupancy thereof to which Trustor may now or hereafter be
entitled to (collectively, the "Property Income"), to be applied against the indebtedness and other sums secured
hereby; and

 

F.
Subject to the rights of the Trustor hereunder, all right, title and interest of Trustor in and to any and all leases now or hereafter
which grant a possessory interest in, or the right to use or occupy, all of part of the Property, together with all security therefor
and all amounts payable thereunder, and all books and records which account for payments made under the leases and all security
therefor (collectively, the “Leases”).

 

Due on
Sale: The unpaid balance, including accrued interest, fees and penalties, is immediately due and payable in the event that the
Premises is sold, transferred, or conveyed in any manner, unless otherwise prohibited by law.

 

THIS DEED
OF TRUST is entered into by the Trustor, Trustee and Beneficiary. Trustor irrevocably grants and conveys to Trustee in Trust,
with Power of Sale, the Property, together with leases, rents, issues, profits, or income generated by the Property (collectively,
the “Property Income”); SUBJECT, HOWEVER, to the right, power and authority given to and conferred upon Beneficiary
to collect and apply the Property Income; AND SUBJECT TO existing taxes, assessments, liens, encumbrances, covenants, conditions,
restrictions, rights of way, and easement of record.

 

This Deed
of Trust has been granted to secure: 1) performance of each agreement of Trustor contained in this Deed of Trust; 2) payment of
the indebtedness evidenced by the promissory note of even date herewith (the “Note”), and any extensions or renewals
of the Note, in the principal sum of $1,500,000.00 executed by Trustor in favor of Beneficiary or order; and 3) payment of additional
sums and interest on these additional sums which may be loaned to Trustor, or Trustor’s successors or assigns, after the
date of this Deed of Trust when evidenced by a promissory note or notes reciting that they are secured by this Deed of Trust.

 

TO PROTECT
THE SECURITY OF THIS DEED OF TRUST, TRUSTOR AGREES:

 

1.
To keep the Property in good condition and repair; not to remove or demolish any building thereon; to complete or restore promptly
and in good and workmanlike manner any building thereon which may be damaged, or destroyed and to pay when due all claims
for labor performed and materials furnished therefor; to comply with all laws affecting the Property or requiring any alterations
or improvements to be made thereon; not to commit or permit waste thereof; not to commit, suffer, or permit any act upon the Property
in violation of law; and do other acts which from the character or use of the Property may be reasonably necessary, the specific
enumerations herein not excluding the general. If this Deed of Trust encumbers a unit in
a condominium or a planned unit development, Trustor shall perform when due all of Trustor’s obligations under the declaration
or covenants creating or governing the condominium or planned unit development, the bylaws and regulations of the condominium
or planned unit development and all related documents.

 

2. To
keep the improvements now existing or hereafter erected on the Real Property insured against loss by fire, hazards included within
the term “all risk,” in such amounts (including replacement cost coverage) and for such periods as Beneficiary may
require, but in no event less than the principal balance due under the Note secured by this Deed of Trust.
Trustor shall also insure all fixtures encumbered hereby against the same loss hazards in an amount acceptable to Beneficiary.
Beneficiary shall be named as an insured mortgagee. In the event of loss, all property and casualty insurance proceeds shall be
payable jointly to Trustor and Beneficiary and shall be applied as directed by Beneficiary in its sole discretion. Any application
for or release of any insurance proceeds shall not cure or waive any default under the Note or this Deed of Trust or any notice
of Trustee’s sale hereunder or invalidate any act done pursuant to such notice. In the event of a conveyance to Beneficiary,
or other transfer of title to the Property in extinguishment of the indebtedness secured by this Deed of Trust, all right, title,
and interest of Trustor in and to any insurance policies then in force and proceeds thereof shall pass to the purchaser or grantee.
The hazard insurance policy shall contain a standard non-contributory mortgage clause in favor of Beneficiary and shall provide
that the policies cannot be cancelled or materially changed without thirty (30) days' prior written notice to Beneficiary. Trustor
shall provide Beneficiary with satisfactory and complete certificates of insurance and copies of all policies. In the event of
loss, Trustor shall give prompt notice to the insurance carrier and to Beneficiary. Beneficiary may make proof of loss if not made
promptly by Trustor. If the Real Property is located in whole or in part in a flood hazard area as designated by the appropriate
government entity, Trustor shall procure and keep in force such flood insurance as may be required to meet any applicable requirements
of federal, state or local laws, regulations or ordinances. The insurance carriers providing all insurance shall be chosen by Trustor
subject to approval by Beneficiary.

 

3. Trustor
shall fully cooperate with respect to any action or proceeding which may reasonably affect the rights or powers of Beneficiary
or Trustee hereunder, and in connection therewith, permit Beneficiary or Trustee, at its election to participate in such proceedings.
In any suit brought by Beneficiary or Trustee to foreclose this Deed of Trust, Trustor agrees to pay all costs and expenses of
Beneficiary and Trustee, including reasonable attorney’s fees, actually incurred in connection therewith.

 

4. To
pay before delinquent all taxes and assessments affecting the Property; when due, all encumbrances, charges, and liens, with interest,
on the Property or any part thereof, which appear to be prior or superior hereto; all costs, fees, and expenses of the Trust, including,
without limiting the generality of the foregoing, the fees of Trustee for issuance of any Deed of Partial Release and Partial Reconveyance,
or Deed of Release and Full Reconveyance, and all lawful charges, costs, and expenses in the event of reinstatement of, following
default under, this Deed of Trust or the obligations secured hereby.

 

Should Trustor or
Parent fail to make any payment or to do any act as required in the Note or Deed of Trust, then Beneficiary or Trustee, but without
obligation so to do and without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof, may
make or do the same in such manner and to such extent as either may deem necessary to protect the security hereof, Beneficiary
or Trustee being authorized to enter upon the Property for such purposes; appear in and defend any action or proceeding purporting
to affect the security hereof or the rights or powers of Beneficiary or Trustee; pay, purchase, contest, or compromise any encumbrance,
charge, or lien which in the judgment of either appears to be prior or superior hereto; and, in exercising any such power, pay
necessary expenses, employ counsel, and pay his reasonable fees.

 

Should Trustor fail
to make any tax and assessment payment or fail to maintain the insurance required herein, Beneficiary may establish an account
servicing arrangement, with an account servicing agent designated by Beneficiary, at the Trustor’s sole cost and expense,
in order to impound for taxes, assessments, and insurance and to otherwise collect sums due under the Note and this Deed of Trust.
Notwithstanding anything to the contrary contained in this Deed of Trust, all impounds shall be subject to Nevada Revised Statutes
(“NRS”) 100.091.

 

5. To
pay immediately and without demand all sums expended by Beneficiary or Trustee pursuant to the provisions hereof, together with
interest from date of expenditure at the same rate as is provided for in the Note secured by this Deed of Trust or at the highest
legal rate, whichever be the greater rate. Any amounts so paid by Beneficiary or Trustee shall become a part of the debt secured
by this Deed of Trust and a lien on the premises or immediately due and payable at option of Beneficiary or Trustee.

 

6. Not
to sell, convey, transfer, or dispose of the Property, or any part thereof, or any interest therein, either voluntarily or involuntarily,
or agree so to do, without the written consent of Beneficiary being first obtained, which consent shall be at the sole and absolute
discretion of Beneficiary. Consent to one such transaction shall not be deemed a waiver of the right to require such consent to
any future or successive transactions. Acceptance by Beneficiary from any transferee or person other than Trustor of any payment(s)
for application on the unpaid balance of the Note shall not constitute a waiver of Beneficiary's rights as granted pursuant to
this paragraph. In the event that Trustor is other than a natural person, any transfer or series of transfers of the capital stock
of or ownership interests in Trustor resulting in a change in ownership of more than forty nine percent (49%) of the voting stock
or ownership interests in the aggregate shall constitute a transfer within the meaning of this paragraph.

 

7. To
indemnify and hold Beneficiary harmless from and against and to reimburse Beneficiary with respect to, any and all claims, demands,
causes of action, loss, damage, liabilities, costs and expenses, including but not limited to Beneficiary's costs, of any and every
kind or character, known or unknown, fixed or contingent, asserted against or incurred by Beneficiary by reason of or arising out
of any violation of any "Applicable Environmental Law," as hereinafter defined, in effect (including without limitation
the presence on the Property or release from the Property of hazardous substances or solid waste disposed of or otherwise released
from the Property), The terms "hazardous substance" and "release" shall have the meanings specified in the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA"), and the terms "solid waste"
and "disposed" shall have the meanings specified in the Resource Conservation and Recovery Act of 1976 ("RCRA");
provided, in the event either CERCLA or RCRA is amended so as to broaden the meaning of any term defined thereby, such broader
meaning shall apply subsequent to the effective date of such amendment and provided further to the extent that state laws establish
a meaning for "hazardous substance," "release," "solid waste" or "disposal" which is broader
than that specified in either CERCLA or RCRA, such broader meaning shall apply. The provisions of this paragraph shall survive
the release of this Deed of Trust or any foreclosure of this Deed of Trust and shall continue thereafter in full force and effect.
As used herein, the term Applicable Environmental Law shall include CERCLA, RCRA and all other state and local government laws
of like nature, as each may now exist or be hereinafter amended, supplemented or replaced and any other laws of the United States
of America or state or local government now existing or hereafter enacted which pertain to hazardous or toxic substances on or
from the Property, the environmental condition of the Property or the environmental contamination of or from the Property.

 

IT IS MUTUALLY AGREED:

 

8. Trustor
hereby absolutely and unconditionally assigns to Beneficiary and Trustee, all of Trustor's right, title and interest in and to
all current and future leases and all Property Income arising therefrom; it being intended by Trustor that this assignment constitutes
a present, absolute assignment and not an assignment for additional security only. Nevertheless, Beneficiary grants to Trustor
a revocable license to collect and receive the Property Income provided that the existence or exercise of such license shall not
operate to subordinate the assignment provided for in this Deed of Trust to any subsequent assignment. The assignment contained
herein shall be fully operative without any further action on the part of either party, and upon any default, Beneficiary may at
any time, without notice, either in person, by agent, or by a receiver to be appointed by a court, and without regard to the adequacy
of any security for the indebtedness hereby secured, enter upon and take possession of the Property or any part thereof, in Beneficiary’s
own name sue for or otherwise collect the Property Income, including that past due and unpaid, and apply the same, less costs and
expenses of operation and collection, including reasonable attorney's fees, upon any indebtedness secured hereby, and in such order
as Beneficiary may determine. The entering upon and taking possession of the Property, the collection of the Property Income, and
the application thereof as aforesaid, shall not cure or waive any default or notice of Trustee's sale hereunder or invalidate any
act done pursuant to the notice. Notwithstanding anything contained herein to the contrary, this Deed of Trust is subject to the
Uniform Assignment of Rents Act, NRS Chapter 107 A.

 

9. Any
award of damages in connection with any condemnation or any such taking, or for injury to the Property by reason of public use,
or for damages for private trespass or injury thereto, is assigned and shall be paid to Beneficiary as further security for all
obligations secured hereby (reserving unto the Trustor, however, the right to sue therefor and the ownership thereof subject to
this Deed of Trust), and upon receipt of such monies Beneficiary may hold the same as such further security, or apply or release
the same in the same manner and with the same effect as the above provided or disposition of proceeds of fire or other insurance.

 

10. Time
is of the essence of this Deed of Trust, and that by accepting payment of any sum secured hereby after its due date, Beneficiary
does not waive its right either to require prompt payment when due of all other sums so secured or to declare default for failure
so to pay.

 

11. Reserved.

 

12. In
addition to creating a lien against the Property, this Deed of Trust constitutes a security agreement within the meaning of the
Nevada Uniform Commercial Code, NRS 104.1101 et seq. (the "Code"), and is intended to and does hereby create a security
interest in favor of Beneficiary in all fixtures, equipment, Property Income and other personal property of Trustor, and all replacements
and substitutions thereof (collectively, the "Personal Property") at any time situated on or used in connection with
the maintenance and operation of the Property. This Deed of Trust shall constitute a “fixture filing within the meaning of
the Code and shall be self-operative with respect to such Personal Property, but Trustor shall execute and deliver on demand from
Beneficiary one or more security agreements, financing statements and other instruments as Beneficiary may request in order to
impose the lien hereof more specifically upon any such Personal Property, the terms and conditions thereof to be as required by
Beneficiary, in Beneficiary's sole and absolute discretion. The security interest in the Personal Property as created hereby shall
be subject to the right of Trustor and tenants of Trustor to replace any such Personal Property from time to time so long as the
replacement Personal Property has a fair market value, as determined by Beneficiary, in Beneficiary's sole and absolute discretion,
equal to, or greater than the fair market value of the Personal Property replaced. The Personal Property may be moved about and
relocated from time to time within the Property without the prior consent of Beneficiary first obtained. Trustor agrees that all
Property of every kind and nature and description, whether real or personal, covered by this Deed of Trust, together with all Personal
Property covered by the security interest granted hereby, encumbered as one unit, and upon default by Parent or Trustor under the
Note secured hereby, or under this Deed of Trust, or any security agreement given pursuant to this paragraph, in addition to the
remedies available to a secured party under the Code, this Deed of Trust and such security interest, at Beneficiary's option, may
be foreclosed or sold in the same proceeding in accordance with the provisions of NRS 104.9604, and all of the Property (both realty
and personalty) may, at Beneficiary's option, be sold as such in one unit as a going business. The filing of any financing statement
relating to any Personal Property or rights or interest generally or specifically described herein shall not be construed to diminish
or alter any of Beneficiary's rights or priorities hereunder.

 

13. That
upon written request of Beneficiary stating that all sums secured hereby have been paid, and upon surrender of this Deed of Trust
and the Note to Trustee for cancellation and retention, and upon payment of its fees, Trustee shall release and reconvey, without
covenant or warranty, express or implied, the Property then held hereunder. The recitals in such reconveyance of any matters or
facts shall be conclusive proof of the truthfulness thereof. The Grantee in such reconveyance may be described as "the person
or persons legally entitled thereto."

 

14. Except
as otherwise required by applicable law, all notices or other communications required or permitted under this Deed of Trust shall
be in writing, and shall be personally delivered or sent to the mailing address of the party entitled to receive such notice by
registered or certified mail, return receipt requested, with postage fully prepaid or receipted overnight courier, and shall be
deemed received upon the earlier of (a) the date of delivery, if personally delivered, (b) three (3) business days after the date
of deposit in the U.S. Mail, if mailed, or (c) the one (1) business day after delivery to an overnight courier.

 

15. That
(a) upon default by Parent in the payment of any principal or interest under the Note secured by this Deed of Trust when due, with
such failure continuing for 10 days after written notice thereof to Trustor, (b) upon default by Parent in the payment of any other
indebtedness secured by this Deed of Trust that is not subject to reasonable dispute or controversy, with such failure continuing
for ten days after written notice thereof to Trustor or (c) upon the occurrence of one or
more of the following events, each of which is an event of default under this Deed of Trust: (i) Parent or Trustor voluntarily
files a petition or case under any state insolvency law or any Federal Bankruptcy Code, and that petition is not withdrawn within
60 days, (ii) an involuntary petition or case is filed against Parent or Trustor under any state insolvency law or any Federal
Bankruptcy Code and the petition is not withdrawn, discharged, stayed, or dismissed for more than 60 days or the court in which
such petition is pending approves it or Trustor is adjudicated a bankrupt or becomes a debtor or debtor in possession in any such
proceeding, or (iii) Parent or Trustor makes an assignment for the benefit of creditors then Beneficiary may, at its option,
and in its sole discretion, declare all sums secured hereby immediately due and may, at its option, and in its sole discretion,
prepare and record on its own behalf, or to deliver to Trustee for recording, if appropriate, a Notice of Breach and Election to
Sell pursuant to NRS 107.080(3) which, to the extent applicable, complies with NRS 107.087 to cause the Trust Estate to be sold
to satisfy the obligations secured by this Deed of Trust, and in the case of delivery to Trustee, Trustee shall cause said notice
to be filed of record. Beneficiary shall, concurrently with its recordation or delivery to Trustee of the Notice of Breach and
Election to Sell, deliver to Trustee the original Note and such receipts and evidence of expenditures made and secured hereby as
Trustee may require. After the lapse of time as may then be required by law following the recordation of said Notice of Breach
and Election to Sell, Trustee shall cause to be recorded, published and delivered to Trustor such notice of sale as then required
by applicable law including, but not limited to, NRS 107.080 (the “Notice of Sale”). Trustee shall, without demand
on Trustor, after lapse of such time as may then be required by applicable law and after recordation of such Notice of Sale and
Notice of Sale having been given as required by applicable law, sell the Property at the time and place of sale fixed by it in
said Notice of Sale, either as a whole, or in separate lots or parcels or items as Trustee shall deem expedient, and in such order
as it may determine, at public auction to the highest bidder for credit or cash in lawful money of the United States payable at
the time of sale. Subject to NRS 107.081, Beneficiary may be a purchaser at such sale and, if Beneficiary is the highest bidder,
Trustee may credit the portion of the purchase price that would be distributed to Beneficiary against the Obligations in lieu of
paying cash. Trustee shall deliver to the purchaser or purchasers at the sale good and sufficient deed or deeds conveying the property
so sold, but without any covenant or warranty, express or implied. Subject to NRS 107.030(8), the recitals in such deed of any
matters or facts shall be conclusive proof of the truthfulness thereof. Subject to NRS 107.081, any person, including, without
limitation, Trustor, Trustee or Beneficiary, may purchase at such sale and Trustor hereby covenants to warrant and defend the title
of such purchaser or purchasers. After deducting all costs, fees and expenses of Trustee and of this Trust, including, without
limitation, Trustee’s fees and reasonable attorneys’ fees, and costs of evidence of title in connection with the sale,
Trustee shall, subject to NRS 40.462, apply the proceeds of sale in the following priority, to payment of (i) first, to all amounts
expended under the terms of the Loan Documents, not then repaid, with accrued interest thereon; (ii) second, to all amounts due
under the Note; (iii) third, to all other amounts secured by this Deed of Trust; and (iv) fourth, the remainder, if any, to the
person or persons legally entitled thereto or as provided in NRS 40.462 or any similar or successor statute. Subject to NRS 107.082,
Trustee may postpone sale of all or any portion of the Property by public announcement at such time and place of sale, and from
time to time thereafter may postpone such sale by public announcement or subsequently noticed sale, and without further notice
make such sale at the time fixed by the last postponement, or may, in its discretion, give a new notice of sale. Beneficiary may
foreclose this Deed of Trust as a realty mortgage. If the Property encumbered by this Deed of Trust is located in more than one
county, regardless of whether the Property is contiguous or not, the Trustee may sell all of the Property in any one of the counties
in which part of the Property is located; and, unless Trustee receives contrary written instructions from the Beneficiary or Trustor,
Trustee may sell all of the Property either in parcels or in whole. If the indebtedness secured hereby is secured by one or more
other Deeds of Trust, then upon default of Trustor in the payment of the indebtedness or performance of any other agreement secured
hereby, the Trustee may sell the Property subject to the Deed of Trust and to any other Deeds of Trust securing the indebtedness
at Trustee's sales conducted serially. In the absence of written instructions from the Beneficiary to the contrary, the Trustee
may, in its sole discretion, designate the order in which property subject to the various Deeds of Trust is to be sold. The undersigned
Trustor requests that a copy of any notice of Trustee's sale hereunder be mailed to Trustor at the mailing address set forth herein.

 

16. Beneficiary
may appoint a successor Trustee in the manner prescribed by law. A successor Trustee herein shall, without conveyance from the
predecessor Trustee, succeed to all the predecessor's title, estate, rights, powers, and duties. Trustee may resign by mailing
or delivering notice thereof to Beneficiary and Trustor.

 

17. This
Deed of Trust applies to, inures to the benefit of, and binds all parties hereto, their heirs, legatees, devisees, administrators,
executors, successors, and assigns. The term Beneficiary shall mean the owner and holder of the Note secured hereby, whether or
not named as Beneficiary herein. In this Deed of Trust, whenever the context so requires, the masculine gender includes the feminine
and neuter, and the singular number includes the plural.

 

18. That
Trustor for itself and all who may claim through or under Trustor, waives, to the fullest extent permitted by law, any and all
(a) homestead rights, (b) rights to reinstatement, and (c) rights to have the property comprising the Property marshaled upon any
trustee’s sale or foreclosure of all or any portion of the Property, including any rights provided under NRS 100.040 and
100.050. Beneficiary named on this Deed of Trust shall be subrogated to the lien, notwithstanding its release of record of any
prior mortgage, Trust Deed or other encumbrance paid or discharged from the proceeds of the Note secured hereby or from any advance
made by the Beneficiary. This right of subrogation shall not be affected by the creation or declaration of homestead on the Property.

 

19. That
Trustee accepts this Trust when this Deed of Trust, duly executed and acknowledged, is made a public record as provided by law.
Trustee is not obligated to notify any party hereto of pending sale under any other Deed of Trust or of any action or proceeding
in which Trustor, Beneficiary or Trustee shall be a party unless brought by Trustee.

 

20. This Deed of
Trust will be governed by the laws of the State of Nevada without regard to its conflicts of law provisions. This Deed of Trust
has been accepted by Beneficiary in the State of Nevada. If any provision or clause of
this Deed of Trust or the Note conflicts with applicable law, such conflict shall not affect other provisions of this Deed of
Trust or the Note which can be given effect without the conflicting provision, and to this end the provisions of this Deed of
Trust and the Note are declared to be severable.

 

TRUSTOR

 

ITEM 9
PROPERTIES, LLC,

A Nevada
limited liability company

 

By:      Item
9 Labs Corp.,

a
Delaware corporation

Its
Manager

 

By:
_________________________

Bryce
Skalla, President

 

 

NOTARY
ACKNOWLEDGMENT(S) TO DEED OF TRUST

 

State of
Arizona                                          } ss:

County of
Maricopa                                 

 

Acknowledged
before me this                   
day of        2019        by Bryce Skalla,
Preisident of Item 9 Labs Corp., the Manager of Item 9 Properties, LLC

 

Signature
                                                                  

  Notary Public
                                                      My Commission expires: 

 

    	 

    	 

    

 

EXHIBIT
A

(Legal
Description)

 

 

LOT ONE (1)
IN BLOCK THIRTY-SEVEN (37) OF CALVADA VALLEY UNIT NO. 11 AS SHOWN BY MAP THEREOF RECORDED FEBRUARY 5, 1974 AS FILE NO. 40749 IN
THE OFFICE OF THE COUNTY RECORDER OF NYE COUNTY, NEVADA.

 

 

    	 

    	 

    

Exhibit
G

 

DEFINITION
OF ACCREDITED INVESTOR

 

In connection with
the potential offer and sale by the Company of the Notes, each Purchaser hereby represents and warrants to the Company that such
Purchaser meets at least one (1) of the categories of "accredited investors" set forth below and intends that the Company
rely upon these representations and warranties.

 

		1.	A natural person who had an individual income[1]
in excess of $200,000 in each of the two (2) most recent years or joint income[2]
with that person's spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income
level in the current year.

		2.	A natural person whose individual net worth, or joint net worth with that person's spouse, at the
time of his/her purchase exceeds $1,000,000. Please note that, when calculating your individual or joint net worth for purposes
of this representation and warranty, you should not include the estimated fair market value of your primary residence as an asset
nor should you include indebtedness secured by your primary residence as a liability (except to the extent that such indebtedness
at the present time exceeds the estimated fair market value of your primary residence).

		3.	A bank as defined in Section 3(a)(2) of the Securities Act of 1933, as amended (the "Act"),
or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Act whether acting in its individual
or fiduciary capacity; any broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934, as amended;
any insurance company as defined in Section 2(13) of the Act; any investment company registered under the Investment Company Act
of 1940, as amended, or a business development company as defined in Section 2(a)(48) of that Act; any Small Business Investment
Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of
1958, as amended; any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality
of a state or its political subdivisions for the benefit of its employees, if such plan has total assets in excess of $5,000,000;
any employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974, as amended, if the investment
decision is made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association,
insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000 or,
if a self-directed plan, with investment decisions made solely by persons that are accredited investors.

		4.	A private business development company as defined in Section 202(a)(22) of the Investment Advisers
Act of 1940, as amended.

		5.	An organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended,
a corporation, a Massachusetts or similar business trust, or a partnership, not formed for the specific purpose of acquiring the
Interest, with total assets in excess of $5,000,000.

		6.	A trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring
the Interest, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) of Regulation D.

		7.	An entity in which all of the equity owners are accredited investors.

		8.	A director, executive officer, or manager of the Company, or director, officer, or managing member
of the manager of the Company.

___________________________ 

[1]
For purposes of this item, "individual income" means adjusted gross income as reported for federal income tax purposes,
less any income attributable to a spouse or to property owned by a spouse, increased by the following amounts (but not including
any amounts attributable to a spouse or to property owned by a spouse): (i) the amount of any interest income received which
is tax-exempt under §103 of the Code; (ii) the amount of losses claimed as a limited partner in a limited partnership
(as reported on Schedule E of Form 1040); (iii) any deduction claimed for depletion under §611 et seq. of the
Code; and (iv) any amount by which income from long-term capital gains has been reduced in arriving at adjusted gross income
pursuant to the provisions of §1202 of the Code prior to its repeal by the Tax Reform Act of 1986.

[2]
For purposes of this item, "joint income" means adjusted gross income as reported for federal income tax
purposes, including any income attributable to a spouse or to property owned by a spouse, increased by the following amounts (including
any amounts attributable to a spouse or to property owned by a spouse): (i) the amount of any interest income received which
is tax-exempt under §103 of the Code; (ii) the amount of losses claimed as a limited partner in a limited partnership
(as reported on Schedule E of Form 1040); (iii) any deduction claimed for depletion under §611 et seq. of the
Code; and (iv) any amount by which income from long-term capital gains has been reduced in arriving at adjusted gross income
pursuant to the provisions of §1202 of the Code prior to its repeal by the Tax Reform Act of 1986.

 

    	 	 	 

     

    

Exhibit
D

 

Form
of DEED OF TRUST

ARIZONA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 

    	 

    

 

 

Exhibit
E

 

Form
of DEED OF TRUST

NEVADA

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