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Item
1.01.
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Entry
into a Material Definitive Agreement.
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Stock
Redemption Agreement
Effective
January 1, 2019, Zoned Properties, Inc. (the “Company”), Christopher Carra, Alan Abrams, Clayton Abrams Revocable
Trust (the “Clayton Abrams Trust”), and Kyle Abrams Revocable Trust (the “Kyle Abrams Trust” and together
with the Clayton Abrams Trust, the “Trusts”) entered into a Stock Redemption Agreement (the “Stock Redemption
Agreement”). Prior to entry into the Stock Redemption Agreement, (i) Mr. Carra was the owner 2,028,335 shares of the Company’s
common stock, representing approximately 11.6% of the Company’s outstanding shares as of January 1, 2019, and (ii) Mr. Abrams,
together with the Trusts (collectively, the “Abrams Affiliates”), owned 3,611,669 shares of the Company’s common
stock, representing approximately 20.7% of the Company’s outstanding common stock as of January 1, 2019. Pursuant to Securities
and Exchange Commission (the “SEC”) rules, each of Messrs. Carra and Abrams was deemed to be a “related person”
due solely to their status as significant stockholders of the Company. Pursuant to the terms of the Stock Redemption Agreement,
the parties agreed that the Company would redeem an aggregate of 5,640,004 owned by Mr. Carra and the Abrams Affiliates (the “Stock
Redemption”) such that Messrs. Carra and Abrams would no longer be significant and stockholders of the Company and would
no longer be deemed to be “related persons” under SEC rules. In exchange for the Stock Redemption, the parties agreed
that:
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The
Company, on behalf of Chino Valley Properties, LLC, a wholly owned subsidiary of the
Company (“Chino Valley”), and Broken Arrow Herbal Center, Inc. (“Broken
Arrow”), which is owned, in whole or in part, directly or indirectly, by Messrs.
Abrams and Carra, will amend the Broken Arrow CASA (as defined below) to reduce the gross
revenue fee payable by Broken Arrow from 10% of gross revenue to 0% of gross revenue,
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The
Company, on behalf of Zoned Arizona Properties, LLC, a wholly owned subsidiary of the
Company (“Zoned Arizona”), and CJK, Inc. (“CJK”), which is owned,
in whole or in part, directly or indirectly, by Messrs. Abrams and Carra, will amend
the CJK CASA (as defined below) to reduce the gross revenue fee payable by CJK from 10%
of gross revenue to 0% of gross revenue,
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The
Company and Mr. Abrams will amend the convertible debenture dated January 9, 2017 (the
“Abrams Debenture”) to extend the maturity date of the Abrams Debenture from
January 9, 2022 until January 9, 2030, and
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Chino
Valley and Broken Arrow will amend the Licensed Medical Marijuana Facility Triple Net
(NNN) Lease Agreement dated May 1, 2018 (the “Chino Valley Lease”) to increase
the monthly base rent payable by Broken Arrow from $35,000 to $40,000.
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Following
effectiveness of the Stock Redemption and the transactions set forth above:
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Messrs.
Carra and Abrams will no longer beneficially own any shares of the Company’s common
stock. Accordingly, they will no longer be significant stockholders of the Company or
“related persons” under the SEC rules.
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Broken
Arrow will continue to be owned, in whole or in part, directly or indirectly, by Messrs.
Abrams and Carra, and Broken Arrow will continue to be a tenant of the Company.
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CJK
will continue to be owned, in whole or in part, directly or indirectly, by Messrs. Abrams
and Carra, and CJK will continue to be a tenant of the Company.
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The Licensed Medical Marijuana Facility Triple Net (NNN) Lease Agreement
dated May 1, 2018 between Chino Valley and Broken Arrow will continue in full force and effect, except as amended by the Chino
Valley Lease Amendment (as defined below) to increase the monthly base rent payable by Broken Arrow from $35,000 to $40,000.
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The
Licensed Medical Marijuana Facility Triple Net (NNN) Lease Agreement dated May 1, 2018
between Green Valley Properties, LLC, a wholly owned subsidiary of the Company (“Green
Valley”), and Broken Arrow will continue in full force and effect.
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The
Licensed Medical Marijuana Facility Triple Net (NNN) Lease Agreement (concerning the
Company’s Tempe, Arizona property) dated May 1, 2018 between Zoned Arizona and
CJK will continue in full force and effect.
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The
Licensed Medical Marijuana Facility Triple Net (NNN) Lease Agreement dated May 1, 2018
between Kingman Property Group, LLC, a wholly owned subsidiary of the Company, and CJK
will continue in full force and effect.
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The
foregoing description of the Stock Redemption Agreement is not a complete description of all of the parties’ rights and
obligations under the Stock Redemption Agreement, and is qualified in its entirety by reference to the Stock Redemption Agreement,
a copy of which is filed as Exhibit 10.1 to this current report on Form 8-K and incorporated herein by reference.
Broken
Arrow Confidential Advisory Services Agreement
On
January 1, 2019, the Company, on behalf of Chino Valley, and Broken Arrow entered into the First Amendment to Confidential Advisory
Services Agreement (the “Broken Arrow CASA Amendment”). The Broken Arrow CASA Amendment amended the Confidential Advisory
Services Agreement by and between the Company and Broken Arrow (the “Broken Arrow CASA”) to (i) reduce the gross revenue
fee payable by Broken Arrow from 10% to 0%, and (ii) add a $250 hourly advisory fee payable by Broken Arrow.
Except
as set forth herein, the terms of the Broken Arrow CASA remain in full force and effect.
The
foregoing description of the Broken Arrow CASA Amendment is not a complete description of all of the parties’ rights and
obligations under the Broken Arrow CASA Amendment, and is qualified in its entirety by reference to the Broken Arrow CASA Amendment,
a copy of which is filed as Exhibit 10.2 to this current report on Form 8-K and incorporated herein by reference.
Amendment
to CJK Confidential Advisory Services Agreement
On
January 1, 2019, the Company, on behalf of Zoned Arizona, and CJK entered into the First Amendment to Confidential Advisory Services
Agreement (the “CJK CASA Amendment”). The CJK CASA Amendment amended the Confidential Advisory Services Agreement
by and between the Company and CJK (the “CJK CASA”) to (i) reduce the gross revenue fee payable by CJK from 10% to
0%, and (ii) add a $250 hourly advisory fee payable by CJK.
Except
as set forth herein, the terms of the CJK CASA remain in full force and effect.
The
foregoing description of the CJK CASA Amendment is not a complete description of all of the parties’ rights and obligations
under the CJK CASA Amendment, and is qualified in its entirety by reference to the CJK CASA Amendment, a copy of which is filed
as Exhibit 10.3 to this current report on Form 8-K and incorporated herein by reference.
Amendment
to Abrams Convertible Debenture
On
January 9, 2017, the Company issued the Abrams Debenture in the aggregate principal amount of $2,000,000 in favor of Mr. Abrams,
in exchange for receipt from Mr. Abrams of $2,000,000. On January 2, 2019, the Company and Mr. Abrams entered into an amendment
of the Abrams Debenture (the “Debenture Amendment”), pursuant to which the parties agreed to extend the maturity date
of the Abrams Debenture from January 9, 2022 to January 9, 2030. Except as set forth herein, the terms of the Abrams Debenture
remain in full force and effect.
The
foregoing description of the Debenture Amendment is not a complete description of all of the parties’ rights and obligations
under the Debenture Amendment and is qualified in its entirety by reference to the Debenture Amendment, a copy of which is filed
as Exhibit 10.4 to this Current Report on Form 8-K and incorporated herein by reference.
Chino
Valley Lease Amendment
On
January 1, 2019, Chino Valley and Broken Arrow entered into that the First Amendment to the Chino Valley Lease (the “Chino
Valley Lease Amendment”), pursuant to which the monthly base rent was increased from $35,000 to $40,000. Except as set forth
herein, the terms of the Chino Valley Lease Amendment remain in full force and effect.
The
foregoing description of the Chino Valley Lease Amendment is not a complete description of all of the parties’ rights and
obligations under the Chino Valley Lease Amendment, and is qualified in its entirety by reference to the Chino Valley Lease Amendment,
a copy of which is filed as Exhibit 10.5, to this current report on Form 8-K and incorporated herein by reference.