BLMH Blum Holdings Inc (QB)

Exhibit 10.1

Certain identified information has been excluded from the exhibit because it both (i) is not material and (ii) would be competitively harmful if publicly disclosed. Information that has been omitted from the exhibit are indicated with brackets.

BINDING LETTER OF INTENT

This Binding Letter of Intent (the “LOI”) dated as of January 31, 2025 (the “Effective Date”), sets forth the terms of the agreement among Blum Holdings, Inc., a publicly traded Delaware corporation (the “Buyer” or “Blüm”) via a newly formed Blüm subsidiary created for the purposes of culminating the transactions contemplated herein (“Blüm Acquisition Co.”), [***] (the “Seller(s)” or “[***]”), and [***] (the “Target”), on the other hand. The Buyer and the Target may be referred to collectively as “Parties” and each separately a “Party”.

BINDING PROVISIONS

[Remainder of Page Intentionally Blank]

IN WITNESS WHEREOF, the Parties have executed this LOI as of the Effective Date.

Schedules to Exhibit 10.1 have been omitted under Regulation S-K Item 601(a)(5) and listed below:

Annex A: Performance-Based Milestones for Executive Team

Exhibit 10.2

Certain identified information has been excluded from the exhibit because it both (i) is not material and (ii) would be competitively harmful if publicly disclosed. Information that has been omitted from the exhibit are indicated with brackets.

Execution Version

THE SECURITIES REFERENCED HEREIN HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

SECURED CONVERTIBLE PROMISSORY NOTE

For value received, [***], a California corporation (the “Company”), promises to pay to Blum Management Holdings, Inc. (including its permitted assigns and successors, the “Holder”), the principal sum of Five-Hundred-Thousand Dollars ($500,000). Interest shall accrue from the date of this Secured Convertible Promissory Note (this “Note”) on the unpaid principal amount at a rate equal to 8% per annum, computed as simple interest on the basis of a year of 365 days (the “Interest Rate”). This Note is subject to the following terms and conditions.

1.        Basic Terms.

(a)        Maturity. While this Note is outstanding, principal and any accrued but unpaid interest under this Note shall be due and payable (subject to Section 2(b)) upon demand of the Holder at any time on or after March 31, 2025 (the “Maturity Date”). Subject to Section 2 and 3 below, interest shall accrue on this Note and shall be due and payable with each installment of principal.

(b)        Event of Default. Notwithstanding the foregoing, the entire unpaid principal sum of this Note, together with accrued and unpaid interest thereon (collectively, the principal and such interest, the “Purchase Amount”), shall become immediately due and payable (each such event, an “Event of Default”):

(i)       upon demand of the Holder, in the event of any of the following: (1) failure to pay any accrued but unpaid interest or principal under the Note when due and payable; (2) any material breach by the Company of the terms (including the representations and warranties) of this Note or the Security Agreement (as defined below) and the failure to cure such material breach within 30 days of the receipt of written notice of such breach from the Holder if such breach is capable of cure; (3) any default by the Company under any other material indebtedness and the failure to cure such default within 10 days of the receipt of written notice of the default; (4) the liquidation, winding up or dissolution of the Company; or (5) any material breach by the Company of the Affirmative Covenants; or

(ii)      automatically, in the event of the filing by or against the Company of a petition in bankruptcy or any petition for relief under the federal bankruptcy code or the continuation of such petition without dismissal for a period of 60 days or more, or the appointment of a receiver or trustee to take possession of the property or assets of the Company, or the Company makes any assignment for the benefit of creditors or takes any action in furtherance of any of the foregoing, or fails to generally pay its debts as they become due.

For purposes herein, “Affirmative Covenants” shall include the following:

a. Expense Reduction; Payroll, Payroll-Associated Expenses, and Employee Benefits (collectively “Payroll Expenses”):

b. Expense Reduction; Professional and Consulting Fees (“Professional and Consulting Fees”):

c. Expense Reduction; Contracted Labor (“Contracted Labor”):

d. Expense Reduction; Total Labor Costs:

e. Positive EBITDA and Net Income:

Upon the occurrence of any Event of Default as set forth in this Section 1(b), the Interest Rate shall automatically adjust as of the date of such Event of Default, through and until the cure of such Event of Default or otherwise payment in full of the Purchase Amount, at the rate equal to 10% per annum, computed as simple interest on the basis of a year of 365 days.

(c)        Securities. The Note and the equity securities issuable upon conversion thereof are collectively referred to herein as the “Securities.”

(d)        Payment; Prepayment. All payments shall be made in lawful money of the United States of America at such place as the Holder hereof may from time to time designate in writing to the Company. Payment shall be credited first to costs and expenses under Section 7, if any, then to the accrued interest then due and payable, and the remainder shall be applied to principal. The Company may prepay this Note at any time with the written consent of the Holder, provided that the Company shall also pay all interest calculated to the Maturity Date, as well.

(e)        Security Interest. The indebtedness represented by this Note shall be secured by all assets of the Company in accordance with a UCC-1 financing statement pursuant to the Security Agreement.

2.        Conversion.

(a)        Conversion at Payee’s Election.  $500,000 of the unpaid principal under this Note, plus accrued interest and accelerated interest, is, at the Holder’s election, convertible at any time into the Class A and/or Class B shares of the Company based on a Company valuation of $2,000,000 subject to decrease pursuant to Performance-Based Tranche Reductions as defined in that certain Binding Letter of Intent dated of even date herewith.

(b)        Mechanics and Effect of Conversion.  Upon conversion of this Note pursuant to this Section, the Company will, at its own expense and as soon as practicable thereafter, issue and deliver to the Holder, at the address of the Holder most recently furnished in writing to the Company, a certificate or certificates or evidence of book entries in the records of the Company for the shares to which the Holder is entitled upon such conversion.

(c)        No Dilution or Impairment.  The Company covenants that it will not, by voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Note, but it will at all times in good faith assist in carrying out all those terms and take all action necessary or appropriate or protect the rights of the Holder against dilution or other impairment.

3.        Mechanics and Effect of Conversion. In connection with any conversion of this Note, the Holder shall surrender this Note, duly endorsed, to the Company or any transfer agent of the Company, and shall deliver to the Company any other documentation reasonably required by the Company in connection with such conversion (including, in the event of a conversion of this Note into capital stock, the applicable transaction documents). The Company shall not be required to issue or deliver the capital stock or other property into which this Note may convert until the Holder has surrendered this Note to the Company and delivered to the Company such documentation. Upon conversion of this Note, the Company will be forever released from all of its obligations and liabilities under this Note with regard to that portion of the principal amount and accrued interest being converted including without limitation the obligation to pay such portion of the principal amount and accrued interest.

4.        Interest Rate Limitation. Notwithstanding anything to the contrary contained in this Note or Security Agreement (the “Loan Documents”), the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable law (the “Maximum Rate”). If the Holder shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied first to costs and expenses under Section 7, if any, then to the principal remaining owed under this Note or, if it exceeds such unpaid principal, refunded to the Company. In determining whether the interest contracted for, charged, or received by the Holder exceeds the Maximum Rate, the Holder may, to the extent permitted by applicable law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of this Note.

5.        Action to Collect on Note. If action is instituted to collect on this Note, the Company promises to pay all of the Holder’s costs and expenses, including reasonable attorney’s fees, incurred in connection with such action.

6.        Loss of Note. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Note or any Note exchanged for it, and indemnity satisfactory to the Company (in case of loss, theft or destruction) or surrender and cancellation of such Note (in the case of mutilation), the Company will make and deliver in lieu of such Note a new Note of like tenor.

7.        No Fractional Shares. Upon the conversion of a Note into Shadow Preferred Stock, in lieu of any fractional shares to which the holder of the Note would otherwise be entitled, the Company shall pay the holder of this Note cash equal to such fraction multiplied by the Conversion Price.

8.        Miscellaneous.

(a)        Governing Law. The validity, interpretation, construction and performance of this Note, and all acts and transactions pursuant hereto and the rights and obligations of the Company and Holder shall be governed, construed and interpreted in accordance with the laws of the state of California, without giving effect to principles of conflicts of law.

(b)        Entire Agreement. This Note, the Security Agreement, and the documents referred to therein, constitute the entire agreement and understanding between the Company and the Holder relating to the subject matter herein and supersedes all prior or contemporaneous discussions, understandings and agreements, whether oral or written between them relating to the subject matter hereof.

(c)        Amendments and Waivers. Any term of this Note may be amended or waived only with the written consent of the Company and the Holder; provided, however, that no such amendment, waiver or consent shall: (i) reduce the principal amount of this Note without the Holder’s written consent, or (ii) reduce the rate of interest of this Note without the Holder’s written consent. Any amendment or waiver effected in accordance with this Section 9(c) shall be binding upon the Company, the Holder and each transferee of any Note.

(d)        Successors and Assigns. The terms and conditions of this Note shall inure to the benefit of and be binding upon the respective successors and assigns of the Company and the Holder. Notwithstanding the foregoing, the Company may not assign its obligations under this Note without the written consent of the Holder. Subject to the preceding sentence, this Note may be transferred only upon surrender of the original Note for registration of transfer, duly endorsed, or accompanied by a duly executed written instrument of transfer in form satisfactory to the Company. Thereupon, a new note for the same principal amount and interest will be issued to, and registered in the name of, the transferee. Interest and principal are payable only to the registered holder of this Note.

(e)        Notices. Any notice, demand or request required or permitted to be given under this Note shall be in writing and shall be deemed effectively given upon the earlier of actual receipt or (a) personal delivery to the party to be notified, (b) when sent, if sent by electronic mail or facsimile during normal business hours of the recipient, and if not sent during normal business hours, then on the recipient’s next business day, (c) one (1) business day after deposit with a nationally recognized overnight courier, freight prepaid, specifying next business day delivery, with written verification of receipt shall be in writing, or (d) 48 hours after being deposited in the U.S. mail as certified or registered mail with postage prepaid, addressed to the party to be notified at such party’s address as set forth on the signature page, as subsequently modified by written notice, or if no address is specified on the signature page, at the most recent address set forth in the Company’s books and records.

(f)        Counterparts. This Note may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, and all of which together shall constitute one and the same instrument.

[Signature Page Follows]

IN WITNESS WHEREOF, the Company has executed this Convertible Promissory Note as of the date first set forth above.

AGREED TO AND ACCEPTED:

THE HOLDER:

By:                                                                         
Name:

Title:

Address:
                                               
                                               
Email:                                    

Exhibit 10.3

 Certain identified information has been excluded from the exhibit because it both (i) is not material and (ii) would be competitively harmful if publicly disclosed. Information that has been omitted from the exhibit are indicated with brackets.

Execution Version

SECURITY AGREEMENT

THIS SECURITY AGREEMENT, dated as of January 31, 2025, is entered into between Blum Management Holdings, Inc., a California corporation ("Secured Party"), and [***], a California corporation ("Debtor").

The parties agree as follows:

1.        DEFINITIONS. In addition to the definitions contained in the first paragraph of this Agreement, the following terms as used in this Agreement shall have the following definitions:

1.1      The term "this Agreement" means this Security Agreement and any extensions, supplements, amendments, or modifications to this Security Agreement.

1.2      The term "the Code" means the California Uniform Commercial Code, and any and all terms used in this Agreement which are defined in the Code shall be construed and defined in accordance with the meaning and definition ascribed to such terms under the Code.

1.3      The term "Collateral" means the assets of Debtor listed on Exhibit A attached hereto.

1.4      The term "Event of Default" means the occurrence of any one of the events set forth in Section 4 of this Agreement.

1.5      The term "Judicial Officer or Assignee" means any trustee, receiver, controller, custodian, assignee for the benefit of creditors or any other person or entity having powers or duties like or similar to the powers and duties of a trustee, receiver, controller, custodian or assignee for the benefit of creditors.

1.6      The term "Note" means that certain Convertible Secured Promissory Note, of even date herewith, in the original principal amount of Five Hundred Thousand and 00/100 Dollars ($500,000), executed by Debtor to the order of Secured Party, and any amendments, restatements and modifications thereof.

1.7      The term "Obligations" means the loan evidenced by the Note, including, without limitation, all principal and interest.

2.        CREATION OF SECURITY INTEREST. Debtor hereby grants to Secured Party a security interest in all presently existing and hereafter acquired or arising Collateral in order to secure prompt repayment of any and all Obligations owed by Debtor to Secured Party.

3.        EVENTS OF DEFAULT. Any one or more of the following events shall constitute an Event of Default by Debtor under this Agreement:

3.1      If Debtor fails to pay when due and payable or when declared due and payable, all or any portion of the Obligations owing to Secured Party or there occurs any Event of Default under the Note or any related documents;

3.2      If any material representation, statement, report, or certificate made or delivered by Debtor, or any of its officers, employees or agents, to Secured Party is not true and correct;

3.3      If all or any of Debtor's assets are attached, seized, subjected to a writ or distress warrant, or are levied upon, or come into the possession of any Judicial Officer or Assignee;

3.4      If Debtor is enjoined, restrained or in any way prevented by court order from continuing to conduct all or any material part of its business affairs;

4.        SECURED PARTY'S RIGHTS AND REMEDIES

4.1      Upon the occurrence of an Event of Default by Debtor under this Agreement, Secured Party may, at its election, without notice of its election and without demand, do any one or more of the following, all of which are authorized by Debtor:

(a)    Declare all Obligations immediately due and payable;

(b)    Exercise all rights and remedies of a secured creditor under the Code.

4.2      Secured Party's rights and remedies under this Agreement and all other agreements shall be cumulative. Secured Party shall have all other rights and remedies not inconsistent herewith as provided by law or in equity. No exercise by Secured Party of one right or remedy shall be deemed an election, and no waiver by Secured Party of any default on Debtor's part shall be deemed a continuing waiver. No delay by Secured Party shall constitute a waiver, election or acquiescence by it.

5.        NOTICES. Unless otherwise provided in this Agreement, all notices or demands by any party relating to this Agreement shall be in writing and either personally served or sent in accordance with the notice provisions set forth in the Note.

6.        GOVERNING LAW; WAIVER OF JURY TRIAL. This Agreement and the provisions hereof are to be construed according to and are governed by the laws of the State of California, without regard to principles of conflicts of laws thereof. Debtor agrees that the California State Court located in the County of Los Angeles, State of California shall have exclusive jurisdiction in connection with any dispute concerning or arising out of this Agreement or otherwise relating to the parties' relationship. In any action, lawsuit or proceeding brought to enforce or interpret the provisions of this Agreement and/or arising out of or relating to any dispute between the parties, Secured Party shall be entitled to recover all of its costs and expenses relating collection and enforcement of this Agreement (including without limitation, reasonable attorney's fees and disbursements) in addition to any other relief to which Secured Party may be entitled and all costs of collection, including any legal fees associated with this Agreement will be paid by Debtor. Each party agrees that any process or notice to be served or delivered in connection with any action, lawsuit or proceeding brought hereunder may be accomplished in accordance with the notice provisions set forth above or as otherwise provided by applicable law.

DEBTOR HEREBY WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM, WHETHER IN CONTRACT OR TORT, AT LAW OR IN EQUITY, ARISING OUT OF OR IN ANYWAY RELATING TO THIS AGREEMENT.

7.        GENERAL PROVISIONS

7.1      This Agreement shall bind and inure to the benefit of the respective successors and assigns of each of the parties; provided, however, that Debtor may not assign this Agreement or any rights hereunder without Secured Party's prior written consent and any prohibited assignment shall be absolutely void. No consent to an assignment by Secured Party shall release Debtor from its Obligations to Secured Party. Secured Party may assign this Agreement and its rights and duties hereunder.

7.2      Section headings and section numbers have been set forth herein for convenience only. Unless the contrary is compelled by the context, everything contained in each section applies equally to this entire Agreement.

7.3      Neither this Agreement nor any uncertainty or ambiguity herein shall be construed or resolved against Secured Party or Debtor, whether under any rule of construction or otherwise. On the contrary, this Agreement has been reviewed by all parties and shall be construed and interpreted according to the ordinary meaning of the words used so as to fairly accomplish the purposes and intentions of all parties hereto.

7.4      Each provision of this Agreement shall be severable from every other provision of this Agreement for the purpose of determining the legal enforceability of any specific provision.

7.5      This Agreement cannot be changed or terminated orally. All prior agreements, understandings, representations, warranties and negotiations, if any, are merged into this Agreement.

7.6      In the event either party hereto shall institute an action to enforce or interpret any rights hereunder, the prevailing party therein shall be entitled, in addition to any other relief which may be awarded, to reasonable attorneys, fees and litigation expenses.

[SIGNATURE PAGE TO FOLLOW]

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first hereinabove written.

EXHIBIT A

Description of Collateral

The collateral consists of all of Debtor’s right, title and interest in and to the following personal property:

All assets of Debtor, including without limitation, all personal property, and all goods, accounts, equipment, inventory, contract rights or rights to payment of money, leases, license agreements, franchise agreements, general intangibles, any commercial tort claims, documents, instruments (including any promissory notes), chattel paper (whether tangible or electronic), cash, deposit accounts, fixtures, letters of credit rights (whether or not the letter of credit is evidenced by a writing), securities, and all other investment property, supporting obligations, and financial assets, whether now owned or hereafter acquired, wherever located; and

All of Debtor’s books and records relating to the foregoing, and any and all claims, rights and interests in any of the above and all substitutions for, additions, attachments, accessories, accessions and improvements to and replacements, products, proceeds and insurance proceeds of any or all of the foregoing.

Exhibit 99.1

Blüm Holdings Moves Forward with Binding LOI for Key Acquisition

DOWNEY, Calif., Feb. 04, 2025 (GLOBE NEWSWIRE) -- Blum Holdings, Inc. (OTCQB: BLMH) (the “Company,” “Blüm,” “Blüm Holdings,” “we” or “us”), a California-based publicly traded holding company and cannabis operator, today announced that it has entered into a Binding Letter of Intent (“LOI”) to acquire a premier Northern California dispensary (“Target”). This follows the previously announced Non-Binding Letter of Intent disclosed in the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on January 15, 2025.

For the twelve months ended December 31, 2024, the Target generated approximately $18.0 million in annual gross revenue and approximately $13.0 million in net revenue. These revenue figures have not been audited and remain subject to adjustment.

Pursuant to the terms of the LOI, a wholly own subsidiary of Blüm will acquire 100% of the issued and outstanding stock of the Target for a total purchase price of $2.0 million structured as a combination of cash and equity, and subject to a performance-based bonus award​.

Concurrently with the parties’ execution of the LOI, Blüm entered into a senior secured convertible promissory note in the principal amount of $500,000 (the “Note”). The Note includes performance-based milestone requirements. The Note carries interest at a rate of 8% per annum and matures on March 31, 2025. The Note may be converted into shares of the Target and is currently expected to be either converted into equity of the Target or have its maturity date extended, subject to completion of due diligence and final negotiations as the case may be. The LOI and Note include structured operational targets, such as operating expense reductions and EBITDA improvements, to align incentives and drive sustainable growth​.

No assurances can be made that the Company will successfully negotiate and enter into definitive agreements for the transactions contemplated by the LOI (the “Transaction”) or that the Company will be successful in completing the Transaction.

“This agreement is a testament to the hard work and dedication of our team and shareholders over the past two years as we continue executing on our turnaround strategy and enter a new era of growth. The progress we have made would not have been possible without the trust and support of our employees, corporate team, partners, and shareholders, and for that, I am incredibly grateful. Their belief in our vision has allowed us to take bold but disciplined steps which we believe will stabilize and grow our business. We expect this Transaction to represent a significant and meaningful milestone in our journey, and we remain committed to driving durable value for our team, shareholders, partners, and customers,” said Sabas Carrillo, CEO of Blüm Holdings.

“Beyond acquiring a dispensary with strong gross and net revenues, we are equally excited to welcome such a hardworking and dedicated team to Blüm. Their experience, resilience, and commitment to excellence align well with our culture, and we look forward to working alongside them to build something truly special together while integrating their operations into our expanding platform,” Sabas added.

“That said, job’s not finished. We still have work ahead of us to successfully close this Transaction—work that must be done during a particularly turbulent time in both the cannabis industry and the broader political climate. While challenges remain, I have confidence in our team’s ability to navigate this moment with the same determination and discipline that have brought us this far, ” concluded Sabas.

About Blüm Holdings

Blüm Holdings is a leader in the cannabis sector. Our commitment to quality, innovation, and customer service makes us a trusted name in the cannabis industry, dedicated to shaping its future. Blüm Holdings, through its subsidiaries, operates leading dispensaries throughout California as well as several leading company-owned brands including Korova, known for its high potency products across multiple product categories, including the legendary 1000 mg THC Black Bar. As both a holding company and a marketing platform, Blüm aims to leverage its growing ecosystem to accelerate customer and retail investor acquisition, increase brand awareness, and create value across its portfolio.

For more info, please visit: https://blumholdings.com.

Follow us on Instagram @blumholdings

Contact:

Jason Assad

LR Advisors LLC.

jassad@blumholdings.com

678-570-6791

Cautionary Language Concerning Forward-Looking Statements

Certain statements contained in this communication regarding matters that are not historical facts, are forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, known as the PSLRA. These include statements regarding management's intentions, plans, beliefs, expectations, or forecasts for the future, and, therefore, you are cautioned not to place undue reliance on them. No forward-looking statement can be guaranteed, and actual results may differ materially from those projected. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise, except to the extent required by law. The Company uses words such as “anticipates,” “believes,” “plans,” “expects,” “projects,” “future,” “intends,” “may,” “will,” “should,” “could,” “estimates,” “predicts,” “potential,” “continue,” “guidance,” and similar expressions to identify these forward-looking statements that are intended to be covered by the safe-harbor provisions of the PSLRA. Such forward-looking statements are based on the Company’s expectations and involve risks and uncertainties; consequently, actual results may differ materially from those expressed or implied in the statements due to a number of factors.

New factors emerge from time-to-time and it is not possible for the Company to predict all such factors, nor can the Company assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Such risks may include, among other things, the risk that the Company will not achieve the anticipated benefits of Transaction, such as the stabilization and growth of the Company’s business; the risk that we may not be able to execute our growth strategies; the risk that we may not successfully negotiate and enter into definitive agreements for the Transaction; and the risk that even if we are able to negotiate and enter into definitive agreements, the Transaction may not be completed. Additional risks and uncertainties are identified and discussed in the “Risk Factors” section of the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other documents filed from time to time with the SEC. Forward-looking statements included in this release are based on information available to the Company as of the date of this release. The Company undertakes no obligation to update such forward-looking statements to reflect events or circumstances after the date of this release.

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